“I need help with company structures”
When starting a business, there are a number of different considerations to take into account. Choosing the right company structure is one of the first steps to starting a business, and it’s an important one to get right as it will have a large impact on the tax you pay as well as your financial obligations.
As your business grows, the right company structure for you may change, and it can be difficult to know which structure is best suited to your needs, and it’s important that business owners familiarise themselves with the options available to them and consider the pros and cons of each. Each of these options can serve many different purposes depending on your current needs as well as the future direction of the business:
Working as a sole trader is the easiest structure to set up, and is usually the best option for those who intend to work alone. Generally very few legal and tax formalities, however, it should be noted that if you earn more than $75,000 per year you’re required to pay GST.
A partnership involves two or more people and can be a slightly more complex company structure. The advantage of a partnership is that it allows you to raise more finance due to there being more people contributing to the business and sharing the risk. The most common disadvantage of a partnership is that disagreements can occur – so make sure you choose your partner wisely.
Trusts require complex administration and are subject to extensive regulation, however they afford far more privacy of information than other company structures. Trusts can also have far more tax benefits than other options, as they offer much more flexibility in terms of how income is distributed.
Enterprises registered under the company business structure are considered separate legal entities which conduct business on behalf of its shareholders. A company must be registered and regulated by the Australian Securities and Investments Commission (ASIC) and can be costly to set up, however you will be required to pay income tax at the company tax rate. On the upside, you may be eligible for tax concessions.
At Rising Tide, your business goals are important. We’re here to help you put together an effective financial plan to support you on your way to achieving success.