Gold Coast Accountant

Business Structuring

Business Structuring

A partnership that transforms your future business for the better. You’ll be opting into an ongoing business partnership with an accounting firm that’s focused on giving you financial direction.

You can of course start with something simple initially and then look to more formal structures later.

Did you know we offer ‘same day’ turn around on Business Structure set-up?

Different Types of Structures:- 

Company – Great for Tax Minimisation and Asset Protection
A proprietary limited company is a separate legal entity with its own income tax liability.  The company must have at least one director and one shareholder (who can be the same person).

  • The initial set up and ongoing costs of a company are higher than those of a sole trader and partnership.
  • The process of establishing a company correctly for tax minimisation purposes is complex and therefore should be undertaken by an accountant
  • A company pays income tax on its taxable income for the year at a fixed rated (currently 26%) for base rate entities.
  • Transfer of company ownership can be relatively easy; the company doesn’t have to be wound up in the event of the death, disability or retirement of any of the key people in the business

Trust – Great for Tax Minimisation and Asset Protection (with Corporate Trustee)
A trust is an arrangement where the trustee (either a person or a company), carries on business and holds assets for the benefit of the beneficiaries.

  • A trust is a complex structure, therefore, establishing a trust should be done by a solicitor or accountant
  • Ownership of the business by a corporate trustee provides asset protection and limits liability in relation to the business
  • Beneficiaries of a trust pay tax on income they receive from a trust at their own marginal rates
  • Beneficiaries of a trust are generally not liable for the debts of the trust – assets of the trust may be controlled by the beneficiaries but they are not owned by them.

Sole trader  – Common for new Start-Up Businesses
A sole proprietor who controls and manages the business.  This structure is appropriate where the business is small, Net Profit is under $80k and monies invested in the business is minimal.

  • Simple and inexpensive to set up
  • The owner retains all the profits but is responsible for all debts and liabilities, which means that personal assets can be used to pay for business debts
  • A sole trader pays tax as part of their personal income tax return at their marginal income tax rate – as the business earnings increase so does the owner’s tax rate
  • Business Tax Offset is capped at $1k
  • The business can easily cease or be sold

 

Partnership – Not very common
A Partnership consists of two or more people (up to 20) who hold joint ownership of a business.

  • Simple and inexpensive to set up, however, a written partnership agreement is not mandatory but is highly recommended for partners, not Husband and Wife
  • Profits of the business are distributed to the partners who then pay income tax at their marginal tax rate less any applicable Business Tax Offset
  • Partners don’t have to hold equal shares in the business, however, each partner is jointly and individually liable for all debts and liabilities of the business
  • Transfer of ownership from one partner to another person can be complex

It is important to consider the advantages and disadvantages of the various business structures available and to choose the best structure to suit your personal circumstances.  We will sit down with you and listen to your situation, so we can recommend the best solution for you.

Accounting Tax Solutions look forward to helping you Today.

Need help with your Business Structuring? Call us now 07 5559 1200