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PKF Australia

Accountants and Business Advisers

Are you thinking of changing from sole trader to a company?

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Darren Shone

Partner

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Are you thinking of changing from sole trader to a company?

As your business develops you may need to adapt to changing needs. One common change is moving from a sole trader to a company business structure.

Company vs sole trader: what’s the difference?

Understanding the key differences between these two structures is important as it can affect how you run your business.

Tip:

Speak to your tax adviser today to discuss your options and tax obligations.

A list of did-you-knows:

  • Do you know as a company director you may also have potential personal liabilities for the tax withheld on employee wages and super payments?
  • Do you know that different tax rates apply for a sole trader compared to a company?
  • Do you know that as a company director you need to lodge two income tax returns – your individual tax return and a company tax return?
  • Do you know that you don’t have to become a company to employ people – you can employ staff under either structure?
  • Do you know that sole trader business structures have the fewest compliance costs and lowest volume of paperwork? Other structures, such as a company, have more paperwork and ongoing costs.
  • Do you know that as a company director, even if you are not hands-on (e.g. a silent director) and/or you later leave the company, you are still responsible and liable for the period you were a director?
  • As a company director, do you know what your obligations are to the company, its members (owners) and any creditors?
  • Do you know that a company must have at least one person who is over the age of 18 and resides in Australia to act as a director?
  • Do you know your legal obligations and the difference between being a company director and a company member?
  • If you are running a company, do you know what to do if things go wrong, such as getting into financial difficulties?
  • Do you know how to update ASIC when certain details regarding the running of your company change?
  • If you want to resign as a company director, do you know what you need to do?

 


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