Operate a company can be expensive, but it is often referred as the best option to protect yourself.

Most business prefer operating in a business structure of company which generally provides access to different Tax Savings Plan & strategies and a corporate protection in terms of debts and action consequences liabilities.

Choosing the right business structure is not always an easy decision and we Tax Ideas Accountants & Advisers are here to help you out.

There is a preconceived notion of 'grand & prestige' about the image of being in a business as an incorporate company, but the truth is that you are nevertheless exposed, e.g. your company profile and state of financial health are reported openly to the public. 

An incorporate company has its own individual legal entity that can enter into contracts in its own name and terms. The fact that a company is operated under another separate legal entity from its owner is crucial as it means that all shareholders are protected under the 'incorporate veil', all shareholders are not liable for the actions and debts of the incorporated company.

  • E.g. The ‘Incorporate veil’ can be penetrated when a director offers a bank or other creditor a personal guarantee to repay the company's debt, then that particular individual director will be personally liable to repay the debt. 

Significant advantages:

  • Limited liabilities – The company is a separate legal entity which acts as a veil to protect your personal assets from business creditors when the company is liable to its debts and has ceased to operate.
  • As discussed before, business structure of company is more of a secure protection to business owners.
  • Presentation – the business coveys a more professional image to investors and clients.
  • Tax in business– the business structure as an incorporated company is tax-effective, however, this also depends on the average turnover rate. The higher amount of the income, the more Tax Savings a company can have. 

Significant disadvantages:

  • Expensive – the company structure is expensive to set up, including its maintenance and winding up, and the reporting requirements are complex in respect to the ATO rules.
  • Companies must prepare their accounts along with other documents in public record and lodge with ATO, and therefore companies have more to present to the public than unincorporated businesses.
  • Any losses generated by the company cannot be used by the directors or shareholders; and all profits distributed are taxable.
  • Directors may be held personally liable for company’s debt if failing to meet legal obligations.

Tax Ideas Accountants & Advisers would love to discuss with you in terms of your business requirements and undertake a thorough assessment in risk and business features to help you choosing the best business structure to start if off. Whether you would like to proceed a proprietary limited company or as an unincorporated business, we will assess your circumstances and plan a beneficial tax arrangement that suits you the best and help you to make a sensible choice in minimising risks and increasing Tax Savings. 

Call (02) 8318 1545