Sole Trader
A sole trader is an individual who owns and operates a business on their own. The sole trader is legally responsible for all aspects of the business, including debts, liabilities, and legal obligations. This business structure allows the sole trader to hire employees, even though the ownership and primary responsibility rest with the individual. This means that while you can employ staff to help run your business, the ultimate accountability remains with you as the sole proprietor.
Partnership
A partnership consists of two or more people who combine their resources to form a business and agree to share profits and losses. Under a partnership business structure, partners collaborate and make decisions jointly, sharing the responsibilities and liabilities of the business. This structure also allows for the hiring of employees to help run the business, with the partners collectively managing the workforce and overseeing operations.
Family Trust
Family trusts are a common type of trust used to hold assets or run a family business. They offer several benefits, including asset protection and tax minimization. By distributing income to family members, a family trust can effectively reduce the overall tax burden. Additionally, assets held within the trust are generally protected from creditors, providing a safeguard for the family's wealth and business interests. This structure allows for strategic financial planning and management of family assets, ensuring long-term security and potential tax advantages.
Company
A company is an entity that has a separate legal existence from its owners, who are known as shareholders. This means that the company itself can own assets, incur liabilities, and enter into contracts independently of its shareholders. Every company must have at least one shareholder and one director. The shareholders own the company through their shareholdings, while the directors are responsible for managing the company's operations and making key decisions. This separation of ownership and management provides a layer of protection for shareholders, limiting their liability to the amount they have invested in the company.
GST Registration
You must register for Goods and Services Tax (GST) if your business has a turnover of $75,000 or more a year. Additionally, GST registration is mandatory if you are a taxi driver or provide limousine travel for passengers, including ride-sourcing services such as Uber, Ola, or DiDi. This registration ensures that you comply with tax obligations and correctly charge GST on your goods and services.
PAYG Registration
You must register for Pay As You Go (PAYG) withholding if you:
- Pay employees.
- Pay contractors with whom you have voluntary agreements.
- Pay businesses that do not provide you with their Australian Business Number (ABN).
|