When it comes to the process of setting up a business, deciding on your product or service is just step one. You will also need to determine your business structure then register with the Australian Taxation Office (ATO). A tax specialist, therefore, comes in handy at the early stages of establishing your business.
Sensible advice on the most suitable structure for your business is one of the many things a tax professional can give you. Currently the ATO recognises four structures: http://studiompls.com/map192
- A sole trader is the simplest and possibly the most inexpensive business structure. As the name suggests, a sole trader is entirely responsible for all aspects of the business.
- If you decide to jointly share your trade's management, income, and losses with a group of people, then a partnership is the right structure for you.
- A more complex structure that is owned by shareholders and controlled by directors is referred to as a company. Regulated by the Australian Securities & Investments Commission, starting a company entails more responsibilities than the first two setups and demands higher costs.
- Another expensive business structure is a trust. Here, one person--the trustee--is legally responsible for holding property or assets for the benefit of its beneficiaries. Like a company, a trust also has additional reporting requirements.
While all four structures have varying levels of legal obligations, they all need to register with the ATO for tax compliance. With the exception of sole traders, who will use their individual Tax File Number (TFN), all business entities should get their own TFN for lodging income tax returns.
All four business structures may also apply for an Australian Business Number (ABN), a unique 11-digit identifier that facilitates interaction among other businesses and government offices. Having an ABN allows a business to claim credits such as fuel tax credits and Goods and Services Tax (GST) credits.
The TFN, ABN, and GST are just the basics. Depending on your chosen structure, you'll need to know the prerequisite for each registration. For instance, a company must first have an Australian Company Number (ACN) before it can get an ABN.
Hiring a tax professional can help you with the nitty-gritty of these business requirements. Your agent can explain each business structure in detail and, after you have made your choice, help you determine if you are entitled to get an ABN. You can also count on a tax professional to prepare and lodge your ABN and ACN applications. And do not forget the additional tips you can get such as keeping a good record, paying superannuation for your employees, lodging your BAS, and updating your business details just click for source.
Starting a business is probably one of the biggest decisions you'll make in your life, so if you're unsure of what to do, call C. Borg & Co. for your questions. The sooner we help you decide on your structure and register your business, the sooner you'll be able to make your first profit read more.