TABLE OF CONTENTS
Sole Trader
Pro | Con | |
| Creation /Admission / Exit | Straight forward registration process | Only yourself |
| Tax | Beneficial if taxable income < $90k | Once you get into the 37% income tax bracket (taxable income > 90k), this structure is no-longer tax-effective. Cannot utilise income splitting that other business structures have. |
| Other | Simple structure. Nothing complex | You will have to look after your superannuation/retirement savings yourself. You do not get entitlements like annual leave pay. |
Partnership
Pro | Con | |
| Creation /Admission / Exit | Exiting of partners or admission of new partners will result in a new business partnership registration + possible CGT + possible payout | |
| Tax | Beneficial if taxable income < $90k for each partner Can use income splitting | |
| Other | You will have to look after your superannuation/retirement savings yourself. During the JobKeeper period, only 1 partner could receive JobKeeper whilst the other partners were left out. |
Company
Pro | Con | |
| Creation /Admission / Exit | Director exit + wanting their share of the business assets can be VERY MESSY compared to a partnership | |
| Tax | Beneficial if taxable income > $90k for the business Can use income splitting | Cannot access the 50% CGT discount |
| Other | Can remunerate via dividend (very tax-effective) The company can fund your superannuation/retirement savings. |
Trust
Discretionary
Pro | Con | |
| Creation /Admission / Exit | ||
| Tax | ||
| Other | During the JobKeeper period, only 1 beneficiary could receive JobKeeper whilst the other partners were left out. |
Fixed unit
Pro | Con | |
| Creation /Admission / Exit | ||
| Tax | ||
| Other | During the JobKeeper period, only 1 beneficiary could receive JobKeeper whilst the other partners were left out. |
Unit trust
Pro | Con | |
| Creation /Admission / Exit | ||
| Tax | ||
| Other | During the JobKeeper period, only 1 beneficiary could receive JobKeeper whilst the other partners were left out. |
Hybrid trust
Pro | Con | |
| Creation /Admission / Exit | ||
| Tax | ||
| Other | During the JobKeeper period, only 1 beneficiary could receive JobKeeper whilst the other partners were left out. |
Self-managed superfund
Pro | Con | |
| Creation /Admission / Exit | ||
| Tax | ||
| Other |
Other responsibilities involved when...
You want a trading business name
- When you create your business, it will be registered using your LEGAL NAME. If you want a trading name, say M Anderson trading as McDonalds Wollongong, you will have to apply for this from ASIC
You hire employees
- FairWork minimum wage rates & entitlements (annual leave, sick leave, public holiday pay, weekend loading, night loading, long service leave, etc)
- Workers Compensation
- Single Touch Payroll lodgement per pay period (weekly, fortnightly, monthly, etc.)
- Lodge Business Activity Statements declaring the Gross wages and tax withheld on a periodic basis (quarterly, monthly, etc)
You hire contractors
- Note contractors are if you (the customer) deal directly with the person doing the labour and the job. Whereas sub-contractors occur when you (the customer) deal with an agent/company that will supply THEIR CONTRACTORS - you will call these as sub-contractors
- Superannuation when they meet these conditions here.
- Workers compensation when they are classified as https://www.icare.nsw.gov.au/employers/who-needs-workers-insurance/classifying-your-workers DEEMED workers
- You may need to prepare an Annual Taxable Payment Annual report for them. Depending on their industry.
You are involved in the Building & Construction, or the Cleaning industry/profession
- You will need to annually submit to your state department your long service leave. For NSW contractors, see here