kevinbloomfield

Hi

I will be setting up a business when we arrive in Australia in October. Anyone know if it is best setting up as a sole trader or setting up as a limited company?
In the UK it is best (for taxation) as a Ltd company but for simplicity a sole trader is the route I have taken.

Anyone help on this?

julesandco

We were a parnership in the UK, but have set up here as a Family Trading Trust. I beleive you can add the kids into the business and other family members if they apply.

Sorry, don't know too many details as it was all handled for us by an Accountant, but this seems a very good option. Our bank accounts are in the Company Name Pty Ltd, but all the legal stuff behind it states the family trading trust. Could be worth looking into.

Good luck

Jules

NKSK version 2

It all depends on what you are trying to achieve and the environment which you will be operating in.

If you are going to be exposed to financial risk then undoubtedly you will need to go for Pty Ltd. If you are unlikely to be exposed then ST might be better. What about fund raising - if you want others to put in cash as shareholders then Pty Ltd may be better.

Don't forget that profits on Pty Ltds will be taxed at 30% and (I assume) profits on ST will be taxed at your personal tax rate.

Ptys will require a bit of form filling though - BAS for example (do STs have to do these?)

kevinbloomfield

I know I have a lot to learn when I get to Australia. Already I have been trying to get an ABN, for this I firstly have to get a TFN. For this I have to send off documents to Australia which I don't have time to do (we are off in 4 weeks).

It's more the taxation position (Ltd or ST). In the UK it is far better to be a Ltd company due to taxation but it is also much more complicated.

I suppose I'll have to speak to an Australian accountant or business advisor?

BTW The business is PC repairs / Networking / Sales Etc. So if there is anyone in or around Buderim who wants their PC fixed??

ptlabs

STs are taxed at personal income tax rates.

STs need to fill up BAS.

Peter

nicola411

Hi Kevin

I agree with Jules.

We moved over here last month and have bought a business, after consulting with an accountant we have set up a trust. Its probably going to be your best bet to have a family trust. Once you get over here you will see most businesses are set up as trust from huge business broker firms turning over millions to apartment buildings to small little one man bands.

HOnestly for what its going to cost you and what they can save you in the long run I would definatly get an accountant. YOu can register for a TFN online when you get here and it takes seconds. Also the accountant will get your ABN literally in days. Also accountant fees vary from $100 dollors an hour up to $250 plus.

Just shop around speak to people and you will be right as they say over here. Dont worry it doesnt take ages to do anything.



good luck
Nicola

Alan Collett

Kevin,

The same sort of issues apply in Australia as in the UK - ie sole trader = lower compliance costs, easier to understand, but net profits are assessed as your personal income and therefore can give rise to a higher tax liability as compared with trading as a limited company.

For reference the assessable income of a limited company in Australia is taxed at 30%; personal rates of income tax for the year ended 30 June 2007 are shown here:
http://www.ato.gov.au/individuals/co...u=5053&mfp=001

In Australia, as others have said, family trusts are also commonly used as the vehicle for businesses. They have the advantage of being flexible and allow you to distribute income to family members more easily. As such the overall burden of taxation can be reduced if you use a trust structure.

As to compliance generally, if you register for the GST (Australia's "equivalent" of VAT) you will be required to submit a quarterly return called a Business Activity Statement, whether or not you trade as a self employed person or as a limited company. The BAS also includes details of Pay As You Go tax which you have to remit to the Australian Taxation Office if you withhold tax from salaries paid to employees, or from any payments to subcontractors.

Hope this helps. Feel able to contact me if you'd like further assistance in setting up your business in Australia.

Best regards.