What is an LLC in Australia? Pty Ltd explained for 2025

If you’ve looked into starting a business overseas, you've probably seen the term LLC, or Limited Liability Company. It’s a common business structure in the US. But if you’re an Australian entrepreneur or business owner, you might be asking yourself: What is an LLC in Australia? Does it exist here too, and how does it work?

This guide will detail what an LLC is (and isn’t). We’ll also explore the pros and cons of this business structure and how Wise can help you manage international business finances at scale.

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What is an LLC in Australia

An LLC is a structure that provides limited liability protection to its owners. This means that personal assets — home, savings, car etc. — can’t be taken if the business gets into costly legal trouble or debts. An LLC is a separate entity from its owners.

Technically speaking, a Limited Liability Company (LLC) does not exist as a legal business structure in Australia. The closest equivalent is a Proprietary Limited Company, or Pty Ltd company. It shares many of the same characteristics, including the “limited liability” aspect.

However, there are several key differences that affect how you’d run your business.

Unlike US LLCs where owners manage the business directly with flexible ways to distribute profits, Australian Pty Ltd companies have a more formal, stricter corporate structure.

• Elected directors manage day to day operations.
• Profits are distributed to shareholders, who own the company.
• Members are only liable for any unpaid amounts on their shares.
• There is a maximum of 50 non-employee shareholders.

How does it work in Australia?

Proprietary Limited is the most common type of company in Australia. To create one, you need to register via the Business Registration Service. Your application will then be processed by ASIC.

You’ll need both an Australian Company Number (ACN) and Australian Business Number (ABN) to operate a Pty Ltd legally. Check out our guide on the difference between an ABN and ACN for more clarity.

How is an LLC different from other business structures

The shielded liability aspect is what differentiates LLCs from other structures. In Australia, both sole traders and partnerships are personally liable for finances. This means there’s no separation between personal and business assets, which carries an element of risk.

They are easier to set up and the owner or partners have complete control. But if the business can’t pay its debts or gets sued, creditors can seize their assets.

Meanwhile, trusts also offer some liability protection. However, this structure is typically reserved for estate and tax planning rather than everyday business.

LLC or Pty Ltd is the only one that separates personal assets from business debts.

Advantages of an LLC/Pty Ltd

Proprietary Limited is a popular structure when starting a business in Australia for a reason. Here are some of the key benefits.

Limited liability protection

As we’ve already covered, a Property Limited company is a separate legal entity. This gives you legal and financial protections. If a third party successfully sued you for any reason, only the company’s assets would be used to pay the debt. Your personal assets are safe from creditors.

Tax benefits (and planning)

The company tax rate in Australia is 30%. This figure is standard and consistent. In contrast, sole traders (and partnerships) have to pay personal income tax at standard marginal rates, which can jump to 45% for the highest earners. This means companies typically pay tax on profits at a lower rate and can keep more money in the business. It’s also easier to plan for the annual tax season.

Professional credibility

Having ‘Pty Ltd’ in your name is almost a seal of approval — a sign that your business is professional and legitimate. This can help when dealing with bigger clients or trying to secure government contracts. Some larger companies or agencies prefer to do business with registered companies.

Easier to get finances

It’s also easier to open a business bank account to get finances as a company. The clearer corporate structure and legal protections will likely make you a more attractive prospect for banks and investors. Companies also have to publish new information and annual reports on the public ASIC register — everything is more transparent. This is an area where sole traders often run into challenges.

Better for growth (and international expansion)

As a Pty Ltd in Australia, you’ll have a structure in place to bring in new shareholders and issue shares as your business grows. This structure is also more appealing to overseas investors and clients if you plan on expanding beyond Australia, and it makes it easier to set up subsidiaries in other countries.

Disadvantages of an LLC/Pty Ltd

While there are lots of pros to Pty Ltd, no structure is perfect. Here are a few of the downsides to weigh against the benefits when making a decision.

Higher setup cost

Setting up a Proprietary Limited company is more expensive with additional registration steps. The initial set up cost is around $597¹. There are also ongoing ASIC annual fees and higher accounting expenses due to the more complex structure. While these aren’t beyond the reach of most startups, it’s something to consider.

More rules and paperwork

A sole trader is the simplest structure to set up and operate. In contrast, companies have more rules and paperwork. You’ll need to follow legislation for corporations and file annual returns based on ASIC’s reporting requirements. Companies also have to hold regular meetings and maintain a company register, which can add to your admin load.

More director responsibilities

ASIC sets out rules for all directors, or company officeholders. The duties are wide ranging but include legally acting in the interests of the company each day and when making decisions (governance). It’s important to fully understand all of these legal obligations before setting up a Pty Ltd company.

Less flexibility with funds

Sole traders can take profits out of the business at any time, a process known as ‘drawing’. It’s not as easy for companies. Directors have to follow rules for how to distribute and reinvest money.

Wise Business - Ideal and cost-efficient for any business type!

While there’s no official LLC in Australia, Pty Ltd offers many of the same protections. This includes limited liability and a structure built for stability and growth.

If you do register a Pty Ltd company, you’ll also be legally required to create a business bank account. This is to establish the clear separation of your personal and business finances. It’ll also make it easier to manage your incomings and outgoings when dealing with suppliers and paying employees, both in Australia and overseas.

What's more, you'll benefit from the following with a Wise Business account:

• Free to register — Hold and convert between 40+ currencies. Send to 140+ countries
• Debit cards for you and your team, which you can use in 150+ countries
• Multi-user access for team members, with ways to control and manage permissions
• Pay up to 1,000 recipients at once with the Wise batch payments feature
• Integrate with your favourite cloud accounting solutions like Xero, Quickbooks, and more
• Get account details to receive in 8+ currencies for a one-time fee of 65 AUD

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Sources:

1. ASIC - 201 application for registration as Australian company applicable fees