Do you have a fantastic new business idea but not sure how to set it up for tax purposes? Let us guide you through your options.

How your business structure is established can impact on how tax is paid, who can make important decisions, ages, how profits and losses are shared, legal obligations and how much it will cost you!

There are four different types of setup:

  • Sole trader– the simplest form of business structure. It is also relatively easy and inexpensive to start and maintain.
  • Pty Ltd Company– a separate legal entity from its owners and needs to be registered with the Australian Securities and Investment Commission. Set up costs are higher and the company must lodge its own return, however it offers your personal assets protection from liability and only your company assets are at risk in the event of any legal actions and company debts.
  • Partnership– when two or more people jointly in business with the view of making a profit. And each partner is individually liable for debts incurred by the other partners. This means you have unlimited liability, unlike a Company structure.
  • Trust– a separate legal entity, which also a greater flow of income to many beneficiaries in order to pay less tax. The trustee of the trust controls the trust and determines who receives income.

Each set up provides advantages and disadvantages to the business owner depending on your circumstances, so it is advisable to discuss this with your Taxpro accountant who can guide you through the details.

It is important to consider the pros and cons of each, along with your current and projected future expectations of the business. This includes having an estimated level of profitability in mind because this can help assess the best tax advantages for your likely profits.

Like most decisions, it can be changed and you are not locked in for life, however it can and will incur costs that could be avoided. We work with many businesses and have seen how the right business structure can positively impact the business itself, so it’s well worth spending the time to research your options during the start-up phase.

Taxpro has had first-hand experience of what life is like for a start-up. We have experienced the ups and downs and know the best way to structure a business for performance and compliance. We will work with you to make your new venture a success.

Give us a call on 08 9240 7629 or email Chloe to schedule an appointment with one of our accountants. For more background information about setting up a business, visit our business start-up page.

Here’s to a prosperous 2019!