Thinking of taking the leap from a sole trader, partnership, or trust to a company structure and have no idea where to start? Well buckle up, because we're about to serve you some tasty tidbits of wisdom to chew on!
So here are some Pro’s:
🎩 Capped Tax Rate: Picture this - a tax rate that's capped at a sweet 25% in the company. Now, who doesn't love a good tax cap party? (pesky disclaimers - unless you have Personal Services Income (PSI) or if you draw money out of the company then there may be further tax - take a read of this handy blog to get more info on this one)
🛡️ Asset Protection: With the right structuring, your assets get the VIP treatment - protection! Because, let's face it, who doesn't want to keep their financial ducks in a row? (and yes there are caveats to this, like personal guarantees, etc but you get the gist 😉)
💼 Professional Perks: Certain industries, banks and clients prefer to dance with a company rather than a sole trader, partnership or trust. It's like the tango of business structures!
🤝 Ownership Opportunities: Want to share the wealth? With shareholdings, you can sprinkle a little ownership magic on others.
🔄 Perpetual Succession: Like a cat with nine lives, a company keeps on going, no matter who's in the driver's seat. Talk about business immortality!
What's that we hear you say 'Sign me up now'? ... just hold that thought as there may be some of these that you need to consider, the Con’s:
📑 Admin Adventure: Brace yourself for a bit of administrative work when making the change. But hey, Rome wasn't built in a day, right?
💰 Cost Consideration: There's a one-off setup cost and annual fees (courtesy of ASIC and your friendly oh so cool accountant). But remember, you've got to spend money to make money, as they say!
💼 Money Matters: Once you switch to company mode, it's no longer just your money; it belongs to the company. And guess what? Tax will come knocking! Check out our handy blog for the lowdown on paying yourself in a company structure.
⚖️ Director Duties: Directors have some legal obligations to juggle, and if they drop the ball, they might find themselves in some hot water. So, keeping those obligations in check is a must!
OK so you've considered the pro's and con's and are ready to launch, so what next? Don't fret, we get it - the road to launching your brand-new company might seem like a winding rollercoaster, but hey, rollercoasters can be fun, right? 😉
To make it all feel like a breeze, we've whipped up a checklist that's as easy as pie (or should we say, "Pi" - get it? Accounting humour!)😉
So here we go:
1. Choose Your Company's Birthday Start with a bang! Pick the launch date, typically the start of a new financial year or quarter (if you're into quarterly GST), but it's flexible - just remember, if you roll over mid-year, there's a little tax tango you'll need to dance with the ATO.
2. Incorporate Like a Pro We've got your back on this one so leave the logistics up to us so we can get your company officially on the map.
3. Get Your Number Game Strong You may need an ABN, TFN, GST, PAYG - oh my! If needed, we'll hold your hand through this bureaucratic jungle. Not sure what these terms mean, here is a handy little blog we created earlier that provides all the deets.
4. Banking Bonanza Time to name-drop your company at the bank! Open that shiny new bank account, and don't forget the credit cards or loans.
5. Goodbye, Goodwill If you're transferring business goodwill, you'll need to get the legal lingo to make it legit.
6. Name Game Transfer your biz names to the company (if the company didn't take that name), and consider snagging domain names and trademarks if needed.
7. Payment Facelift Update payment methods like a boss - PayPal, Stripe, Afterpay, you name it, you gotta do it. Also inform clients of your new company's bank account for invoices - remember it's a brand new entity!
8. Direct Debit Shuffle Switch direct debits to your new company account with a flourish.
9. Insurance Alert Make sure your insurance policies salute the new company.
10. Supplier Spotlight Let your suppliers in on the secret - it's the company's time to shine on those invoices.
11. Xero Xpertise Set up a fresh brand spanking new Xero file, complete with payroll and invoicing (this is super dooper important and no you can't use your old one). Consider us your Xero fairy godparents if you need help with this one!
12. Cloudy with a Chance of Success Ensure any cloud software you use is updated or subscriptions transferred to the new company. You could even look to explore new cloud software options, like Hubdoc or Dext. And remember, we're here to provide guidance whenever you're ready.
13. Employee Essentials Ensure your employees complete new Tax File Number Declaration & Super Choice Forms, and let's get that payroll party started! You will also need to register the company for Return to Work and handle payroll tax if needed.
14. Asset Affair Transfer any assets from the old setup to the company - you will also need to take into account stamp duty on the transfer of motor vehicles and alerting your financier if there are any loans on the assets.
15. Farewell to the Old Complete a final BAS for your old structure, cancel all registrations, and close down old bank accounts and credit cards once the dust settles.
Phew, that's quite the checklist, but you're not alone on this adventure! We're here to make it all feel like a piece of cake (or "Pi"). 🍰 and remember we've got your back AND your numbers!
PS. Feel free to reach out if you have any questions or if you just want to share a good accounting pun, cos we are ALL IN to those 😆
Disclaimer: The information provided is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice