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Business

Structuring

We provide advice on business structures for clients in Newcastle and the Hunter Valley.

Whether you’re running an established business or starting a new one, choosing the right business structure is very important.

Your business structure not only affects the way you are taxed, but also how you run and manage your business, how you work with clients, how you protect your assets, how you employee people, how you plan for growth, and a range of other areas.

There are generally four main business structures to choose from:

Sole Trader

Best for people who trade as a sole entity and take sole responsibility for the management of the business.

Partnership

Best for people who trade as part of a group or association with shared management responsibility for the business.

Company

Best for larger businesses with operations controlled by a board of directors and owned by its shareholders.

Trust

Best for family businesses and other organisations where the members – or beneficiaries – don’t take an active role in the management and running of the business.

Hamilton Taggart Business Advisors will guide you through the complicated world of business structures and ensure you choose the right structure to suit your business goals and growth strategy.

Find out the best way to structure your business and speak with one of our team members today on 4962 2022.

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Sole Trader

Operating as a sole trader is the simplest and most inexpensive business structure and is often used by start-up businesses that operate as a sole entity such as tradesmen and a wide range of professional services providers.

The sole trader structure allows you to start a business while still working for an employer, and is the easiest to administer from a tax reporting and compliance perspective, which can save you time and money while you’re building your business. It’s also possible to restructure your sole tradership into a partnership or company as you grow.

However, operating as a sole trader comes with some risk. It provides little protection of your personal assets and also exposes the operator to legal liabilities. You are also responsible for your own superannuation payments and may be able to claim eligible contributions as a personal tax deduction.

Find out the best way to structure your business and speak with one of our team members today on 4962 2022.

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Partnership

A partnership is relatively simple and inexpensive to set up and operate. Control and management of the business is shared between partners. However, it is not a separate legal entity and doesn’t pay tax on the income it generates. Rather, the partners pay personal income tax on the profit split they each receive as set out a formal partnership agreement. The partnership may, however, be eligible for some small business tax concessions such as capital gains tax exemptions or reductions.
Partners are not considered employees of the business, and are therefore responsible for their own superannuation contributions and cannot claim tax deductions on money drawn from the business. Partnerships must, however, lodge an annual partnership tax return and are not eligible to pay PAYG instalments.

This is a common structure for family businesses and sole traders that seek growth through the addition of business partners.

However, operating as a partnership comes with some risk. It provides little protection for partners personal assets and also exposes the partners to legal liabilities. Partners are also responsible for your own superannuation payments and may be able to claim eligible contributions as a personal tax deduction.

Find out the best way to structure your business and speak with one of our helpful consultants today on 4962 2022.

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Companies

The key way a company differs from a sole trader or partnership is that incorporated companies are considered a separate legal entity to its owner or owners, which offers better protection of your personal assets.

Companies tend to have higher set up and administration costs due to more complex reporting requirements, including compliance to Australian Securities & Investments Commission (ASIC) regulations, and pays tax on its profits. However, there is no tax-free threshold for companies, and usually pay PAYG instalments in addition to submitting an annual company tax return.

As a company director, you are considered an employee of the company, which means the company must make super contributors equal to 9.5 per cent of your ordinary time earnings on your behalf.

Find out the best way to structure your business and speak with one of our team members today on 4962 2022.

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Trusts

There are several different types of legal trusts and understanding which might be right for your business is a complicated undertaking.

Generally speaking, trusts empower a trustee to hold property or assets on behalf of a beneficiary or beneficiaries, and come with a significant investment in the need for a formal deed that outlines how the trust is to operate, along with required annual administrative tasks.

The trustee, not the beneficiaries, is legally responsible for the operation of the trust, and a trust must have its own Tax File Number (ABN) and Australian Business Number (ABN) to lodge annual tax returns.

Trusts may not be liable to pay tax if its entire income is distributed to beneficiaries who are adult Australian residents. However, if a trust accumulates net income, it may be taxed at the highest individual marginal rate.

Find out the best way to structure your business and speak with one of our team members today on 4962 2022.

Contact Us
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