Have A Glance At The Most Common Business Structures
- Sole Trader
One of the simplest and most cost-effective business structures is operating as a sole trader. This is often used by start-ups that operate as a sole entity like professional service providers.This structure enables you to start a business while still working for an employer. From the tax reporting and compliance perspective, the sole trader structure is the easiest to administer. It can help you save a lot of money and time while you’re building your business. It also enables you to restructure your sole tradership into a company or a partnership as you grow.But, there are some risks that come along with the sole tradership. It renders very little protection for your personal assets while exposing you to legal liabilities. On the other hand, you’re responsible for your own superannuation funds. You may be able to claim eligible contributions as a part of your personal tax deduction.
- Partnership
A partnership is also simple and cost-effective to set up and operate. Here, the control and management of the business are shared between the partners. But, it is not a separate legal entity and you need not pay tax on the generated income. In fact, the partners pay personal tax on the profit split between them. Partners are not the employees of the business. Partnerships are not eligible to pay PAYG installments and must lodge annual partnership tax returns.Again, partnership structure brings its own risk. It offers little to no protection for partners' personal assets and exposes them to legal liabilities. Partners are also responsible for their own superannuation payments. - Companies
The most common difference between sole traders or partnerships and companies is companies are treated as separate legal entities to their owners. Hence, it offers better options for personal asset protection.However, companies need high setup, administration, and management costs due to critical reporting needs that include Australian Securities & Investment Commission (ASIC) regulations. They also need to pay tax on profits. Along with this, there is no tax-free option for companies and they usually pay PAYG installments to submit an annual company tax return.
- Trusts
This structure enables you to start a business while still working for an employer. From the tax reporting and compliance perspective, the sole trader structure is the easiest to administer. It can help you save a lot of money and time while you’re building your business. It also enables you to restructure your sole tradership into a company or a partnership as you grow.Here, the trustees are legally responsible for the operations and management. They must have their own Australian Business Number (ABN) and Tax File Number (TFN) to lodge their annual tax returns.If the entire income of the trust is distributed to the beneficiaries who are adult Australian residents, the trust is not liable to pay taxes. However, they may be taxed at the highest individual marginal rate if it gathers net income.
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Which Business Structure Works Best For You?
- Sole Trader – This one is the best for people who trade as a sole entity and take sole responsibility for managing their business.
- Partnership – This business structure works best for people who trade as a part of an association or a group and have shared responsibility for their business.
- Company – This type of business structure is meant for small to big businesses wherein the management and operations are handled by a board of directors and it is owned by shareholders.
- Trust – This type of business structure works best for family-owned businesses or any other enterprises where the beneficiaries or the members don’t take an active part in managing the business.
Choose The Right Business Structure To
Make Best Business Decisions
Whether you are an established business or starting a fresh one, choosing the right business structure is very important. Australian tax laws are much more complex and changing your business structure may trigger a capital gains tax event that may adversely affect your business. Your business structure directly affects the way you are taxed.
At GrowthSure, we help you choose the best business structure for your enterprise to help you save a huge amount of tax and maximize asset protection while complying with the legislation. Our professionals are highly qualified and have years of experience that can help you choose the best business structure for your growth.
Make the Right Choice For Your Business
people about us
I have used GrowthSure as my advisers for both my business and personal affairs. Not only do they provide quick, personal response to any of my requests, they are also always thinking ahead and have provided valuable advise and tax planning over the years. We look forward to building our business to the next level with their help in the years to come.
B Patel
Yogi Foundation – Albury/Wodonga
GrowthSure tax accountant have always dealt with our business matters in a prompt efficient manner. We always find their approach friendly and polite and would recommend them unreservedly to anyone requiring a professional accountancy service.
D Shah
LPO – Dural
We have a long-standing relationship with GrowthSure Tax Accountant, based om trust, value and respect. GrowthSure Tax Accountant gives us excellent advice, delivered in a very easy and understandable way.
F Wang
Jordan Springs
Chirag has been my financier for the past 5 years now, managing my property mortgages, from lending to refinancing and tax returns. I am happt with his work and breadth of knowledge that was assisted me in developed a valuable property portfolio. Definitely recommend him to anyone.
J Brar
Schofields
Frequently Asked Questions
FAQs Related To Queries
Do you prepare tax returns?
Yes, our professionals can prepare tax returns for individuals and businesses. Our highly skilled and qualified accountants prepare and check all the tax returns before they are lodged. We strictly comply with the taxation laws and legislations and deliver high-quality service that ensures maximum tax returns without breaching any laws.
Can you help us to set up structures for my new business?
Definitely. At GrowthSure, we offer consultation and get advice to help you set up a business successfully. During the initial stages, we assess personal circumstances, cash flow, business risks, etc., and work with you to set up the best business structure that will be most beneficial for you.
Can you do bookkeeping for my Business Activity Statement?
At GrowthSure, we do more than just ‘keep the books’. Our experts help you get a holistic view of your business finances and tailor strategies to fulfill short-term and long-term goals. We can take the pain out of your paperwork with our leading bookkeeping and payroll service. Our robust bookkeeping and payroll services help you out with accurate financial reports every time.
Do you provide tax planning services?
Yes. We offer an entire range of services in areas including personal and business structures, investments, finance and mortgage, tax returns, etc. At GrowthSure, we help you get maximum financial benefits while strictly complying with the laws and legislation.
Can you help us with getting personal or business finance?
Of course. We employ our 10+ years of expertise to help you plan out your personal/business finance in a manner so you can gain maximum benefits while securing your financial future. Our professionals are highly qualified and will craft a custom strategy and implement solutions that can meet your exact finance requirements.
Why is tax planning important?
Whether you are an individual or a business owner, tax planning is very important to gain benefits and feel secure about your current as well as the future situation. Strategic tax planning is vital to help you meet your short-term and long-term financial goals.
What is a Self-Managed Superannuation Fund (SMSF) and how does it differ from a regular super fund?
An SMSF (Self-Managed Superannuation Fund) is a private super fund that can be managed by yourself. They are different from professionally managed funds like retail or industry funds.
When you manage your own super fund, You put your money in your own SMSF instead of adding it to a professionally managed fund. You can choose the insurance, investments, and many other aspects of your fund.
On the other hand, APRA-regulated funds need a highly-skilled professional to manage them properly. You need to be smart and confident in choosing your investments to perform better.
At GrowthSure, we have an entire team of professional accountants who have the right knowledge and experience to advise you for building and managing your SMSF.
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