We understand that every business is unique. What works well for one business, may no fit the next, which is why we take the time to understand what your business needs are so we can tailor a solution that works for you.
It is important that a business has the right business structure to suit your business. We will discuss the different options and work out the one for you. Once the business structure has been arranged, we will then discuss with you the other registration the business may need. Such as:
- Registration of your Australian Business Number
- Registration of a Business Name – do you want to operate under a different name to your structure
- Registration for group tax – will you be employing people
- Registration for GST – will your Turnover be over $75,000?
Bookkeeping can be a daunting experience for a lot of people in business. Collating and recording all the transactions relating to your business can be a tedious and time-consuming task. We will discuss with you about the type of system you would like to use in recording your transactions to enable you to meet your Tax and/or BAS needs. Whether a manual system will suffice for your needs or if you want to use an accounting program. Or if this is something you would like us to handle on your behalf, this is available as well.
Once your business is up and running or you are already established, we are here to help. Some other services we can offer include:
- Interim Reports
- End of Financial Year Planning
- Estimates and discussions on Capital Gains Tax Events ie sale of your business
- The small business concessions that are available to you
- Or you have any questions regarding your business
Sole Trader
Sole traders are individuals operating a business in their own right. They can trade under their personal name or a registered business name. The sole trader is personally responsible to pay tax on any profits they make at their individual marginal rates. Some key points to consider include:
- The simplest type of business structure as the individual owns the business
- Low cost option and quick to establish
- No tax or legal separation between the individual and the business
- You maintain control over the business operation and the direction
- If the business is to trade under a business name (other than your personal name) you need to register the business name with ASIC
- Provides minimal asset protection
Partnership
A general-law partnership is a relationship between two or more persons carrying on a business with a view to profit. Usually a partnership agreement is drawn up and will include:
- profit-share arrangements,
- arrangements for partners’ salaries,
- admission of new partners, and
- retirement of partners.
- Two or more individuals or entities carrying on business together
- Relatively low cost to establish and quick to setup
- Each partner is jointly liable for the liabilities of the business and each other’s business actions
- Governed by a Partnership Agreement - a written document that is designed to avoid disputes and specifies each partner’s role in the business plus their share of profits
Company
A company is a legal entity separate from its shareholders, who own the company.
A company’s operations are governed by its constitution there are different types of companies, however most small business would operate under a company limited by shares. Limited companies protect shareholders by limiting their liabilities to the amount of unpaid share capital. All companies must have at least one director and one shareholder. The company secretary may also be a director.
As the company is a separate legal entity the only way the shareholder can take income from the company is to become a wage earner, whereby superannuation, workcover and long service leave will come into play or to take a dividend. If the shareholding is equal, each shareholder would receive the same amount of dividends. If the company has paid tax, franking credits maybe available to offset tax on the dividends. The wages and dividends would then become taxable income to the shareholder and be taxed at their individual marginal rates.
A company pays a flat rate of income tax on its taxable income. The tax rate for companies with a turnover less then $10 million is currently 27.5%.
Trusts
A trust is not a separate legal entity, but refers broadly to an obligation accepted by a person or persons (the “trustee”) in relation to property (the “trust property”), for the benefit of another person or persons (“beneficiaries”).
Trustees are required to undertake all obligations and transactions on behalf of the trust. As this role carries a legal liability for the activities undertaken, trustees are often companies to limit liability.
A trust deed sets out a trustee’s obligations and the relationship between the trustee, the beneficiaries and the trust property. A trust must obtain its own tax file number and lodge an annual income tax return. The beneficiaries must include their share of the trust’s net income in their personal tax return for the year and are taxed at their individual marginal rates.
In summary – discretionary trusts are:
- Established by a family member for the benefit of their family
- The trustee has the discretion on how the trust income is distributed. A trust resolution is prepared before the 30th June each year to show how the distributions are to be made.
- Can assist in protecting the family assets from the liabilities of one or more of the family members i.e. in the event of a family member's bankruptcy or insolvency
- Provides a mechanism to pass family owned assets to future generations
- Can provide tax benefits in the form of income splitting