Company formation (PTY LTD) vs Sole Trader: which is right for you in Australia?
In the competitive Australian business market, commencing a business with the right structure is essential to make it grow. If you compare a sole trader and a company, you would likely discover many options to consider. However, this could seem like a challenging decision to make. Therefore, Accountants for Business Setup in Epping can assist you in navigating important considerations. They can help you find key differences between operating a sole trading firm and registering a company. Also, you will know about legal liabilities, taxes, cost for business setup. Subsequently, you will know about the right structure of your business and how to manage it well.
Comparing Company Formation & Sole Tradership
A sole trading firm and a company have different working to manage day-to-day operations. Hence, it’s worth understanding what each structure really means. This can help you in making an informed decision and empower you with the right knowledge. So, let’s begin with Sole Trader, which has a simple structure as you are the business. You can start it quickly and flexibly, being personally liable for debts, tax obligations, and finances. Your personal assets would be at risk if the business fails.
Business Setup Accountants in Epping can also help you to start a separate legal entity, which is a company. It is run by directors and owned by the shareholders, with the advantage of limited liability. It means your personal assets are protected from business debts, and it comes with more compliance. Also, the company exists regardless of changes to its directors and shareholders. You can also avail tax benefits, which are filed separately from its shareholders.
Get Business Startup Advisory Services in Epping from Experts
After knowing the basic difference in both business structures, know how they overlap across other areas. In the context of setup, tax, and liability, there are key differences. So, let’s find out about each of them below.
- Legal Liabilities
In sole trading, liability is unlimited as your personal assets might be considered for debt payment. In a company, shareholders are not liable for the company’s debts, and liability is limited. Thus, risk in sole proprietorship is higher due to personal assets involvement. But lower in the company, as liabilities are limited.
- Arrangement & Working Costs
The setup cost for sole trading is minimal due to free ABN registration, whereas ASIC registration is charged for a company. The cost of maintaining compliance is lower due to limited filings and lodgments. Company tax filings by Epping Business Setup Accountants are charged on a service or fixed-priced basis.
- Business Taxation
In sole tradership, personal tax slab is applicable, which is 45% for income above 190000 AUD. You don’t need to file a separate business return for sole trading. Company tax is charged @ 25% base rate and 30% for others, and you must lodge a company tax return.
Ask for expert help from Kirpa Tax Accounting for business setup
Choosing a business structure is not just about cost and liability. It’s all about aligning your goals and expected achievements. You can get Epping Business Startup Advisory Services from Kirpa Tax to make the right decision.
FAQ’s
What is the key difference between a sole trader and a company (PTY LTD)?
A sole trader operates as an individual firm means you and your business are the same. A company is considered a separate legal entity with limited liability and a different tax structure.
How can an accountant help me choose the right business structure?
Accountants for Business Setup in Epping assess your goals, risk level, and future expansion plans. Thus, Kirpa Tax recommends the right business and tax-efficient structure.
What services does Kirpa Tax provide for setting up a new business?
We handle ASIC registration, apply for TFN and ABN, and set up PAYG and GST with bank account guidance. Business Setup Accountants in Epping also provide you with accounting and taxation services.
Can you manage all legal registrations for the setup of a new business?
Kirpa Tax Accounting ensures full legal compliance by managing the entire business registration process. We handle ABN, TFN, GST, PAYG and manage financial accounting for businesses.
What are the tax obligations by the ATO for sole traders and companies?
For sole traders, the individual tax rate is applicable, whereas for companies flat rate is applicable. Epping Accountants for Business Setup minimizes your overall tax burden with precise accounting.
Why do I need expert business advisory services?
Business Startup Advisory Services in Epping from Kirpa Tax provide you with valuable insights and help navigate challenges. It helps you in making informed decisions for setup and business growth.
Can Kirpa Tax provide ongoing support after business setup?
We provide you with expert accounting support, preparing BAS, and tax lodgement. We guarantee that your business fulfils with ATO regulations.