Business structure change: when & how to move from sole trader to company
If you have started a business, it is meant to grow for sure. Your sole trading firm might have good growth, thus keeping it within small business limits seems ambiguous. Therefore, you can decide to transform your business into a limited company. This can make your business more tax effective, and you may want it to grow quickly. But the road to make such a switch is not so simple since you have to meet various obligations. That’s where you need the right guidance through Business Advisory Services Melbourne from a trusted partner. Ideally, you can seek these services from a reputable business accounting firm.
Guide on When to Switch to a Big Business Structure
Switching to a new business environment does not have a common scenario for all sole traders. Some unique perspectives and situations can influence your decision. However, your Business Advisors Melbourne can outline situations where you can consider this change, including:
- Sustained Business Growth
Being a sole trader, you may initially experience personal wealth growth. But when business profits reach a certain extent of a higher tax bracket, you can change its structure. If you have surpassed the threshold of 18200 AUD, you have to pay taxes at a higher slab rate.
- Business Expansion Plans
If you are considering growth for your business, such as opening an office or a new location, you can switch. Also, if you have a plan to create a franchise business model, you should switch from sole trading to a restricted liability corporation.
- Business Partners Involvement
Sole trading is a lonely affair, but if you want to involve a trusted partner in your business, switch to a company. This enables you to structure a business with an agreement including clear rules. You can structure a limited liability partnership firm for reduced personal liability.
Guide on How to Alter Your Business Structure
Business Accountants and Advisors Melbourne are well-versed in the procedure of changing business structure. So, they help with the workings of the procedure, such as:
- Understanding Tax Requirements
You should understand tax requirements and obligations to meet ATO regulatory compliance. Also, there are legal requirements to accomplish the business transformation procedure, which you should know with expert help.
- Company Registration
You should notify ASIC and register your company name with the authority to receive an Australian Company Number. Also, apply for a new ABN and TFN for your company with the cancellation of the sole trader ABN.
- GST Registration & Company Account
Consult Melbourne Business Advisors and register your company for GST and PAYG. Also, you need a separate bank account for the company that you can open with the help of an accountant.
- Updated Company Information
You shouldn’t skip updating your company’s information with ATO for taxation and compliance. This ensures that your company’s setup is ready to pay the right taxes on time.
Consult Kirpa Tax for Reliable Business Transformation Guidance
As leading Melbourne Business Accountants and Advisors, we have helped many sole traders to structure a company. We are expert accountants and offer precise guidance and support for these processes.
FAQ’s
Why should I change my sole trading business to a company?
Changing your business from a sole trading firm to a limited liability company is great for growth. You can protect your personal assets as well from debts and obligations.
Can forming a company bring reputation to my business?
Yes, you can switch to a company to attract investors and enhance the reputation of your business. Seek expert advice from Business Advisors Melbourne Kirpa Tax regarding the transformation.
How can you help me register the company?
We can help you by suggesting a unique company name, outlining its structure with ASIC, and appointing directors. Our Business Advisory Services Melbourne simplify the process to switch your business form.
Should I transfer my assets from a sole trading firm to a company?
Transferring your assets to a new company proves really beneficial for you. Determine the value of your assets being transferred and outline a written agreement for the transfer terms.
What is the primary step of registering as a company?
You should first register a company with ASIC to attain an ACN. Also, you should apply for an Australian Business Number and a Tax File Number during registration.
How can you help me with the sole trader to company transfer?
We are the best Business Accountants and Advisors Melbourne, offering the right business structure advice. Also, we maintain accounts of your company, prepare financial statements, and comply with the ATO tax.
How can I simplify the process of company formation?
Consult Kirpa Tax for Melbourne Business Advisory Services and structure a company with no obstruction. We provide you with relevant and comprehensive advice for the same.