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The Pros of Running a Business as a Company

One may find it challenging to start a business in Australia, and one of the things to decide on is the suitable business structure. Businesses may operate as sole traders, partnerships, trusts, or companies. Each has its pros and cons. This article will focus on the pros of running a business as a company. A company is a separate legal entity from its owners that can enter contracts, borrow money, sue, be sued, and pay income tax.

 

Limited liability:

Because a company is a separate legal entity and can conduct business in its own name, it offers limited liability protection to its shareholders. Creditors can only access the company’s assets and not the shareholder’s personal assets when a company suffers from debts or legal obligations. This level of security is absent in other business structures.

Tax benefits:

Another advantage of a company structure is it offers tax benefits for small business owners. If a company manages its income efficiently, it can save on tax. A company pays tax on its profits at the corporate tax rate of 30%, and a company can distribute its profits to shareholders as dividends, which are taxed at the individual tax rate. Aside from saving on taxes, a company can claim deductions for expenses incurred in running the business, such as rent, salaries, and equipment.

Access to capital:

Small businesses with a company structure can also raise capital from investors, like angel investors, venture capitalists, and private equity firms. Investors choose to invest in a company rather than a sole trader or trust because they believe it is more stable and credible. A company can also issue shares to raise capital which can be used for expansion and growth. Compared to other structures, like sole traders or trusts, its owners rely on their personal savings or loans.

 Continuity and succession planning:

A company will continue to exist even after the shareholders leave or pass away. The company shares can also be transferred by selling, facilitating succession planning. Neither sole trader nor trust can do this as both are not a separate legal identity, and the business will end if the owner dies or retires. Establishing a company ensures the longevity and sustainability of the business.

Credibility and professionalism:

The credibility and professionalism of a business are important, and a company structure has this. A company creates an impression of stability and permanence as it requires to follow formalities such as annual general meetings and having a constitution. This is what customers, suppliers, and investors are looking for. Having a company name and logo builds brand recognition and awareness, which can improve sales and customer loyalty. On the other hand, sole traders or trusts may have different levels of the said opportunities.

Conclusion:

There are many benefits of having a company structure. It offers limited liability protection, tax benefits, access to capital, continuity and succession planning, and credibility and professionalism. Before choosing this as your business structure, we advise you to seek professional advice from a qualified accountant or lawyer to evaluate if this is the right option, as business structure depends on the business’s goals, size, and industry, among other factors.

If you’d like to setup a company, Taxopia offers company registration as a service.

Should you require any additional assistance please don’t hesitate to contact us.

Posted on 07-Jul-2023
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LIMITED-TIME OFFER – GET $100 OFF ON BASIC PACKAGE TODAY!*

You’ve chosen TAXOPIA LITE, a self-lodgment service. Please be aware that tax offices are starting to phase-out DIY paper lodgments and are encouraging the transition to digital.

Don’t be the last one to enjoy hassle-free digital lodgments. Upgrade to TAXOPIA BASIC PACKAGE today with a special limited-time $100 discount* and enjoy the benefits of having our accountants lodge for you.

As a bonus benefit for working with us, you get a lodgment deadline extension period to avoid penalties.

*The discount only applies to lodgments for one financial year. For clients requiring lodgment for multiple financial years, the discount applies only on the first year. all succeeding tax returns after that will be at regular price.

For the LITE Package: Please note that is a self lodgment service and does not include electronic lodgment by Taxopia. One of our qualified accountants will prepare your tax return, but it is your responsibility to print, sign & post to ATO to lodge.

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TAXOPIA LITE is a self-lodgement service. Please be aware that for majority of tax payers, the due date for self-lodged returns is 31st of October.

If you’re self-lodging overdue tax returns, it may put you at risk of incurring penalties from the ATO. We recommend you upgrade to TAXOPIA BASIC PACKAGE and enjoy the benefits of having our accountants lodge for you and get a lodgement deadline extension period to avoid penalties.

For the LITE Package: Please note that is a self lodgement service and does not include electronic lodgement by Taxopia. One of our qualified accountants will prepare your tax return, but it is your responsibility to print, sign & post to ATO to lodge.

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Taxopia’s standard turnaround for this Lite package is three business days. If you require your taxes to be completed faster, we have a premium Fast Lane option available. With this option, pay $220+ GST to get your taxes done within one business day!

*Excludes public holidays, weekends and office closure dates.

A friendly reminder…

Please note that is a self lodgement service and does not include electronic lodgement by Taxopia. One of our qualified accountants will prepare your tax return, but it is your responsibility to print, sign & post to ATO to lodge.

If this option suits your needs, please click below to get started.

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You’ve chosen the Taxopia Lite Package…

Please note that is a self lodgement service and does not include electronic lodgement by Taxopia. One of our qualified accountants will prepare your tax return, but it is your responsibility to print, sign & post to ATO to lodge.

If this option suits your needs, please click below to get started.

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* Sole Trader Package pricing conditions, please take note the pricing excludes the following items; however, these services can be provided for an additional cost.

If any of these exclusions apply to your businesses, please contact us, and we would be happy to provide you with a customised quote.

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* Premium Package pricing conditions ($1300+ GST):

Please note that ALL our plans exclude the following:

If any of these exclusions apply to your businesses, please contact us, and we would be happy to provide you with a customised quote for any additional work.

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* Standard Package pricing conditions ($850+ GST):

Please note that ALL our plans exclude the following:

If any of these exclusions apply to your businesses, please contact us, and we would be happy to provide you with a customised quote for any additional work.

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* Basic Package pricing conditions: ($425+ GST):

If you do not qualify for this option, you will need to consider our Standard Package ($850+ GST).

Please note that ALL our plans exclude the following:

Please contact us for a customised quote if you require help on any of the excluded items.

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Company or Trust Tax Return for Accountants & Bookkeepers

* BASIC PLAN ($425+ GST) CONDITIONS:

* STANDARD PLAN ($850+ GST) CONDITIONS:

Please note that ALL our plans exclude the following:

If any of these exclusions apply to your businesses, please contact us, and we would be happy to provide you with a customised quote for any additional work.

Get started now!

* Premium Package pricing conditions ($1300+ GST):

Please note that ALL our plans exclude the following:

If any of these exclusions apply to your businesses, please contact us, and we would be happy to provide you with a customised quote for any additional work.

Get started now!

* Standard Package pricing conditions ($850+ GST):

Please note that ALL our plans exclude the following:

If any of these exclusions apply to your businesses, please contact us, and we would be happy to provide you with a customised quote for any additional work.

Get started now!

* Basic Package pricing conditions: ($425+ GST):

If you do not qualify for this option, you will need to consider our Standard Package ($850+ GST).

Please note that ALL our plans exclude the following:

Please contact us for a customised quote if you require help on any of the excluded items.

Get started now!

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