Companies for rural business

Most companies in the rural sector are proprietary companies except for the rural supplies companies and other large trading groups.

If you are involved in a small company it will probably be a proprietary one, and a small proprietary company at that. This type of company has assets of less than $5 million, an annual gross income of less than $10 million and less than 50 employees. If in any year your company exceeds two of these criteria, it becomes a large proprietary company and has more legal and accounting obligations.

Some companies are formed for community reasons rather than profit motives. The local RSL club and a supported employment organisation are two examples. This type of company does not issue shares, but its members guarantee a sum of money should the company need it. It is therefore called a company limited by guarantee and is a special sort of public company.

Advantages of forming a company

The advantages of incorporating (forming a company) compared with a partnership are:

your liability for the company's debts is limited;
changes in membership do not affect the company; (this is called perpetual succession);
members can be employed by the company; and
taxation rates are more favourable (though you will have to consult your accountant about whether this provides an overall benefit).

These advantages will vary in significance depending on the particular company you have chosen.