Monday, May 23, 2011
123 Business Partners: New Website
123 Business Partners: New Website: "New Website up and running with more updates and changes to come ... so make sure you stay tuned. www.123bp.com.au"
New Website
New Website up and running with more updates and changes to come ... so make sure you stay tuned. www.123bp.com.au
Sunday, May 15, 2011
What Business Structure should you choose? Are you currently the right structure to benefit you?
Are you starting a new business you need to think what Business structure you will operate as, or are you currently already operating but are you the best structure to benefit you? Will you be a sole trader, in a partnership, a company or a trust? There are advantages and disadvantages to consider for each. Factors to consider are the cost of set-up, the taxation implications, the expense of ongoing administration and your personal financial liabilities.
SOLE TRADER
Operating as a sole trader is the most common structure used when starting a business.
Advantages
The structure is simple and inexpensive to set up and operate
You have full control of the business
Sole traders are taxed as individuals and pay income tax at personal tax rates
You receive full benefits of profit made by the business
You are not considered an employee of your own business and are free of any obligation to pay payroll tax, superannuation contributions or workers' compensation on income your draw from the business
Things to think about
You are legally responsible for all aspects of the business
Unlimited liability which means all your personal assets are at risk if things go wrong
PARTNERSHIP
A partnership is an agreement between two or more people to finance and operate a business
Advantages
Partnerships are inexpensive to set up and are relatively easy
There are more people to share the work load and the losses and legal responsibilities
With more than one owner the ability to raise funds may be increase
Partners provide moral support and more creative brainstorming
Things to think about
Profits must be shared with others
You and your partners are responsible for the debts of the partnership unlimited liability
The partnership may end with the withdrawal or death of a partner
You cannot mae decisions on your own you must negotiate with your partner
COMPANIES
If you operate your business as an incorporated company, the business is a distinct legal entity that is regulated by the Australian Securities and Investment Commission.
Advantages
A company pays tax on its own profits
Asset protection. If the company’s business fails, the personal assets of the shareholder are protected
It is easy to admit or retire partners by simply buying or selling shares, or alternatively by issuing shares.
Shareholders have a fixed interest in the company so they can be certain of their entitlements. Franked dividends can be passed to shareholders who can claim a refund of any excess imputation credits.
The tax is a 30% flat rate
Things to think about
A company is more expensive to set up and are more complex to administrate
Cannot distribute losses to individuals
No easy way for a company to pass tax-free amounts to shareholders without them being taxed in the shareholders hands
A change in share ownership can cause pre-CGT assets to be treated as post-CGT assets
A change in asset ownership can cause pre-CGT shares to be taxed as post-CGT shares
Companies can be costly to wind up
Your company must make super contributions for any eligible workers it employs.
TRUST
If you operate your business as a trust, you’re a trustee you are responsible for holding property or income for the benefit of others (the beneficiaries).
Advantages
Reduced liability - especially if corporate trustee
Asset protection.
Flexibility of asset and income distribution
A trust has perpetual existence and does not cease
with the death of a beneficiary.
Things to think about
Can be expensive and complex to set up
Can not distribute losses, only profits
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
SOLE TRADER
Operating as a sole trader is the most common structure used when starting a business.
Advantages
The structure is simple and inexpensive to set up and operate
You have full control of the business
Sole traders are taxed as individuals and pay income tax at personal tax rates
You receive full benefits of profit made by the business
You are not considered an employee of your own business and are free of any obligation to pay payroll tax, superannuation contributions or workers' compensation on income your draw from the business
Things to think about
You are legally responsible for all aspects of the business
Unlimited liability which means all your personal assets are at risk if things go wrong
PARTNERSHIP
A partnership is an agreement between two or more people to finance and operate a business
Advantages
Partnerships are inexpensive to set up and are relatively easy
There are more people to share the work load and the losses and legal responsibilities
With more than one owner the ability to raise funds may be increase
Partners provide moral support and more creative brainstorming
Things to think about
Profits must be shared with others
You and your partners are responsible for the debts of the partnership unlimited liability
The partnership may end with the withdrawal or death of a partner
You cannot mae decisions on your own you must negotiate with your partner
COMPANIES
If you operate your business as an incorporated company, the business is a distinct legal entity that is regulated by the Australian Securities and Investment Commission.
Advantages
A company pays tax on its own profits
Asset protection. If the company’s business fails, the personal assets of the shareholder are protected
It is easy to admit or retire partners by simply buying or selling shares, or alternatively by issuing shares.
Shareholders have a fixed interest in the company so they can be certain of their entitlements. Franked dividends can be passed to shareholders who can claim a refund of any excess imputation credits.
The tax is a 30% flat rate
Things to think about
A company is more expensive to set up and are more complex to administrate
Cannot distribute losses to individuals
No easy way for a company to pass tax-free amounts to shareholders without them being taxed in the shareholders hands
A change in share ownership can cause pre-CGT assets to be treated as post-CGT assets
A change in asset ownership can cause pre-CGT shares to be taxed as post-CGT shares
Companies can be costly to wind up
Your company must make super contributions for any eligible workers it employs.
TRUST
If you operate your business as a trust, you’re a trustee you are responsible for holding property or income for the benefit of others (the beneficiaries).
Advantages
Reduced liability - especially if corporate trustee
Asset protection.
Flexibility of asset and income distribution
A trust has perpetual existence and does not cease
with the death of a beneficiary.
Things to think about
Can be expensive and complex to set up
Can not distribute losses, only profits
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
Tax Time
Its almost that time of year again. This financial year is fast getting away from us. Can you believe it’s May already. Its time we start preparing for tax time. Start finding all those receipts, now is the time to start preparing for the end of the financial year.
What you should be thinking about:
Are you an employee or a business?
You will need group Certificates, bank statements, tax receipts on expenses and deductions, motor vehicle finance reports?
Do you have a rental property?
Rental and other rental-related income is the full amount of
rent and associated payments that you receive, or become
entitled to, when you rent out your property.
For a detailed checklist of what you will need please contact our
office 3133 0105.
What you should be thinking about:
Are you an employee or a business?
You will need group Certificates, bank statements, tax receipts on expenses and deductions, motor vehicle finance reports?
Do you have a rental property?
Rental and other rental-related income is the full amount of
rent and associated payments that you receive, or become
entitled to, when you rent out your property.
For a detailed checklist of what you will need please contact our
office 3133 0105.
Subscribe to:
Posts (Atom)