We Make Tax Time Easy
If you’re self-employed or running a business, we understand the tax laws and accounting issues you need to know about.
You can ask us about choosing the right business structure, applying for an ABN, registering for GST, lodging BAS’s, paying contractors and employees, keeping records and planning ahead for taxation. We provide cost-effective and efficient bookkeeping and BAS solutions.
We can set you up with the right accounting system for your type of business, or suggest ways to improve the system that you’re already maintaining.
BAS Review & Lodgement
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We Can Help You Restructure
We can discuss with you smart options to grow your business and protect your assets along the way. There are many strategies that assist in the growth from sole trader to reaching your full business potential.
A sole trader is the simplest form of business structure and is relatively easy and inexpensive to set up. As a sole trader, you will be legally responsible for all aspects of the business. You’ll generally make all the decisions about starting and running your business and you can employ people.
- Simple to set up and operate.
- You retain complete control of your assets and business decisions.
- Fewer reporting requirements.
- Any losses incurred by your business activities may be offset against other income, such as your investment income or wages (subject to certain conditions).
- Allows you to use your individual tax file number (TFN) to lodge tax returns.
- You are not considered an employee of your own business and therefore don’t pay payroll tax, superannuation or workers’ compensation on the income you draw from the business.
- Relatively easy to change the business structure if your business grows or if you wish to wind things up.
- Unlimited liability which means all your personal assets are at risk if things go wrong.
- Little opportunity for tax planning – you can’t split business profits or losses with family members and you are personally liable to pay tax on all the income from the business.
A company is a separate legal entity and can incur debt, sue and be sued. The company’s shareholders (the owners) can limit their personal liability and are generally not responsible for company debts.
A company is a complex business structure and has high set-up and reporting costs. You can form a company as either a private (also known as proprietary) or public entity.
A registered company must have at least one director (and a company secretary unless it is a private company). A director is responsible for managing the company’s business activities.
To become a company, an entity must:
- be incorporated under the Corporations Act 2001
- be registered with the Australian Securities and Investment Commission (ASIC).
More information on starting a company is available from the ASIC website.
- Limited liability for shareholders.
- Well understood and accepted structure.
- Able to raise significant capital.
- Can carry forward losses indefinitely to offset against future profits.
- Easy to sell and pass on ownership.
- Profits can be reinvested in the company or paid to the shareholders as dividends.
- Significant set-up and maintenance costs.
- Do not retain complete control.
- Complex reporting requirements.
- Can’t distribute losses to its shareholders.
Other factors to consider
The tax requirements for a company are different to those of other business structures. A company pays income tax on its income (or profits) at the company tax rate. There is no tax-free threshold for companies and tax is paid on every dollar earned.
A trust is a structure where a trustee carries out the business on behalf of the trust’s members (or beneficiaries). A trust is not a separate legal entity.
A trustee may be an individual or a company. The trustee is legally liable for the debts of the trust and may use its assets to meet those debts. However, if there is a shortfall the trustee is responsible for the difference.
A trust is set up through a trust deed and there are two main types: discretionary or unit trusts.
In a discretionary trust, the trustee has discretion in the distribution of funds to each beneficiary. In a unit trust, the interest in the trust is divided into units with their distribution determined by the number of units held by each member.
- Reduced liability especially if corporate trustee.
- Assets are protected.
- Flexibility of asset and income distribution.
- Can be expensive and complex to establish and administer.
- Difficult to dissolve, dismantle, or make changes once established particularly where children are involved.
- Any profits retained to reinvest into the business will incur penalty tax rates.
- Can’t distribute losses, only profits.
Other factors to consider
A trustee must apply for a tax file number (TFN) and lodge an annual trust return. The trust is not liable to pay tax. Instead tax is assessed to the trustee or the beneficiaries that are entitled to receive the trust net income.