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Before starting any business you have an idea about the structure of your business because later you will regret it if your business is not well structure. Still, there is four standard business structure:
- Company
- Partnership
- Sole Trader
- Trust
What goes into these?
- Company: The company is a legal entity that is separate from you. Owners (members or shareholders) can limit personal liability as needed. Tax Accountants can help you figure out whether the company qualifies for tax advantages also, help in to lodge the company tax return. Net losses of the company will be trapped for future use, while net income should be taxed at the company tax rate and reported in the income tax return of the company.
- Partnership: A business structure with two or more individuals and/or entities receive income jointly and operate things as partners. With this structure of the business, control or management of the entire business is shared amidst partners. Both net losses and income that they earned through their business will be equally distributed among the partners as agreed upon, and the respective partners will have to report that in their respective income tax returns.
- Sole Trader: Amongst the four, this is the simplest business structure. Setting it up is inexpensive, as there are few formalities in terms of taxes and legalities required. Sole trader means you are the only one responsible for your business. Any net losses or income of the business should be reported along with your income tax return on a personal scale.
- Trust: Essentially, a trust is an obligation that is imposed on a person or entity (trustee) in order to hold property or assets (for example, assets of the business) in order for others to benefit (beneficiaries). This is one of the more complex business structures out there since the administrative costs are higher. The cost of setting up is also quite high.
You don't need to confuse about choosing the structure of your business you can easily consult with Tax Consultant Perth, they have the years of experience and they know how to choose the right structure for your business which is totally fit for you and your business and will give the future benefits.
