Businesses – Pty Limited Company
A company is another common trading vehicle for carrying on a business in Australia. A company is a separate legal entity. Companies also have additional reporting requirements to other structures.
A company is run by its directors and owned by its shareholders.
Companies are regulated by the Australian Securities & Investments Commission (ASIC).
A limited company offers certain tax advantages as income not distributed (i.e. retained in the business) can often be taxed at a lower rate than would be suffered if the business were carried on by an individual as sole trader or partner. Withdrawals of profit would be by way of a salary or dividends.
Small limited company rates are presently 27.5% https://www.ato.gov.au/rates/company-tax/
The costs associated of setting up a private company are higher than a partnership or sole trader, as are ongoing compliance costs.
If you were looking to sell the business at some point, a company structure can be beneficial as a sale of the company’s shares is all that is required to transfer business ownership.
However, such an entity may also be subject to the personal services income provisions and such can markedly reduce the tax advantages of a company structure.
- Tax advice and guidance to ensure that a pty limited company structure is right for you and your business.
- Obtaining a Tax File & Australian Business Number for the company from the Australian Taxation Office.
- Registering a business name with ASIC.
- Registering for GST.
- Assisting with book-keeping, payroll administration, superannuation obligations and the lodgment of quarterly Business Activity Statements.
- Preparing company minutes, for example to record the distribution of income by way of dividend.
- Preparing the annual accounts and the tax return for the company and company directors for submission to the ATO.
Personal services income (PSI) is income produced mainly from your skills or efforts as an individual, examples include income payable under a contract which is wholly or principally for the labour or services of a person, or income derived by consultants from the exercise of personal expertise.
The PSI rules affect how you report your PSI and the deductions you can claim.
Should the PSI rules apply to your business the structure may still be useful to provide a measure of asset protection for you.
Please contact us at GM Tax to ensure you establish the business structure that is right for you and your business.
You can send an enquiry via our contact us button or you can call a GM Tax office closest to you.
GM Tax also offers the following services:
- Tax planning advice and guidance with regards to business structures to ensure that you are trading in the right structure for you and your business.
- Preparation of Financial Statements for all trading structures.
- Preparation of tax returns, with all returns electronically lodged where possible.
- Business advisory and guidance.
- Operation of payroll, including superannuation reporting obligations.
- Preparation and submission of quarterly business activity statements (BAS) including electronic submissions to ATO.
- Preparation and electronic submission of UK and Australian tax returns