Home Blog Want to be your own boss?

Want to be your own boss?

Many of us dream of being our own boss and striking out on our own. The company tax rate has recently been reduced to 28.5% for small businesses. Individuals are also entitled to a 5% tax discount on their business income up to a maximum of $1,000.

However, you should never go into business just for the tax benefits. It takes determination and resilience, so you need to make sure you have developed a clear business plan, budgets and cash flow projections.

You also need to consider the right structure for you. Some options are:

Sole traders are the simplest business structure. All income from your business is treated as personal income so your personal marginal tax rates will apply. Decisions about the business rest entirely with you.

Partnerships can be used when you plan to run your business with one or more other people. While the income of the business is received jointly, each partner pays their own tax. When it comes to debt, each partner is liable.

With a company structure, shareholders own the company and directors run the company. Establishment and ongoing costs are generally higher than other structures. But there can be advantages; such as liability can be limited and tax rates on earnings are at a flat rate.

Discretionary Trusts (or family trusts) are managed by the trustees. Establishments costs can be high but this structure gives you flexibility to distribute income to various beneficiaries.

Setting up a business demands a great deal of thought and planning. We strongly recommend talking to your accountant, financial planner and solicitor before making a decision. While it’s possible to change structure down the track, it makes sense to get it right in the first place. For that reason, it’s vital to get professional advice specifically for your business.

Print Friendly

David Briese

About the author

With close to 30 years accounting experience, David is a highly respected member of the BMO team and was appointed Associate Partner in July 2009, going on to become Partner in July 2013. David started out with BMO in 1988 working his way to a senior accounting role and heading up the (former) Chinchilla office of BMO. In 1995, David went to work with a reputable accounting firm in Mackay. READ MORE


Related posts

It’s time to talk about debt

Australia’s household debt is among the highest in the world and Read on...

Tax relief for start-ups

To encourage innovation and new small businesses, the government Read on...

New year, new financial you

$2.1 trillion. That’s how much Australian households owe right now, Read on...

Fire up your small business in 2018

The holidays are upon us and with a bit of luck you will be able to Read on...