1. Do I have to register GST?
If your business turnover is less than $75,000, you are not required to register GST. However, you can register it if you choose to do so. But if your turnover is more than $75,000, you must register GST. If you are a taxi driver, you must register GST regardless of your income.
2.Should I incorporate my business?
It depends, in a certain stage, incorporate your business will be your best solution for tax structure, assets protections, market image and people management.
3.What does assets protection mean?
Put simply, conducting a business through a company can shield you and your personal assets from the debts of the company as your personal liability. The larger the business grows, the larger risk to personal assets, and the more they need to be protected.
4.What about tax implications for company?
A company pays tax at the corporate rate, which is currently 30% with speculations to drop. Sole traders pay tax depending on their personal marginal rate. This is because income earned through a business operated by a sole trader is assessable income in the hands of the sole trader.
5.Are there any fees associated with incorporating a company?
Yes, it includes ASIC registration fee of $488 and an ASIC annual review fee of $265 per year. You would then have accounting and advice cost on top of that.
6.How do I incorporate my business?
Register You may have registered your business name and trading name (abr.gov.au) . However this is not a legal entity. You need to register that and the company name with ASIC.. If you want your company to trade under a different name you are also required to register the trading name as a business name. Of course that means making sure the company has an ACN, an ABN and a TFN. All of this can be done at asic.gov.au andato.gov.au. 3) Establish directors Next you have to establish the directors, who by name are responsible for the corporate actions of the company and are generally the key decision makers in running the business. Asset protection for the directors is where incorporating has an advantage over operating as a sole trader, as directors are part of a Ltd (Limited Company), which means the assets at risk are limited to company assets.This differs heavily from a sole trader, which is not limited. If a sole trader cannot repay or satisfy a debt, then creditors can sue the sole trader to recover it. If successful, the creditors potentially have access to the sole traders assets which could include the family home! As you can imagine, the risk of personal bankruptcy is much higher for a sole trader.
7.What is the big disadvantage of incorporating?
The disadvantage to incorporating is the increased paperwork and cost. Right now we have a government proposing to cut red tape but at present small incorporated businesses have to do BAS PAYG statements (if they have employees) pay superannuation track leave, have clear job descriptions allow sick leave and file tax returns.
8.What is the big disadvantage of incorporating?
It depends. Online software heavily relies on internet connection. Without good internet connect you will not able to access your record. You normally have to pay subscriptions monthly for online software which will be another cost for you. But it will save you much time to do reconciliations and data entries. You also dont need to worry about data backup software upgrade communication with your bookkeeping and electronic receipts.