Business Setup Structuring & Registrations

Choosing the right business structure can protect your family assets and minimise your tax liabilities.

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HOW TO CHOOSE RIGHT BUSINESS STRCTURE

Business Structure Accounting For Your Small Business

ATO allows businesses to take advantage of business structures and small business concessions to legally minimize their tax affairs and pay a fair share of tax.

However, 58% of small business owners overpay the ATO by more than they ought to as a result of not starting the business with the right foundation.

The business structure you choose can have a significant impact on your tax and legal liability. Let us help you step up and select the right business structure to help optimize your tax situation and set you up for overall financial success.

Let us help optimize your tax situation, protect your personal assets and feel the difference compared to your business’ last 2 years.

Choosing Business Structure Avoid Following Risk

We find that most of the small business owners end up paying high tax liabilities due to not having right business structure to minimise the tax and personal liabilities

High Tax Liabilities 

Once you know your business structure, forecasting your business cash flow facilitates in your ability to offset uncertainty by predicting peaks and troughs in your businesses cash flow.  The purpose of the forecast is to highlight cycles in your business and predict your cash flow on a monthly basis.

Personal Assets at Risk 

Ensuring you have the correct business structure can enable you to limit putting your personal assets at risk rather actually protecting them against any risks. For more information and to accurately decipher how to do this book your free business structure advice call!

Risk as a Business Owner

As a business owner you may not know the correct business structure for you at that point in time.  Hence by making this decision on your own without any specialist guidance could lead you down an unwarranted pathway and put you face on with significant risks.

For Small Businesses, We Provide Business Structure & Startup Services

Business structures are one of the first considerations when starting a business, however choosing an a wrong  structure can lead to higher taxes and unforeseen personal liabilities. That is why Oyster Hub Accountants can help you choose the right structure for your use case. Book a discovery call and talk to us today.

01

Start-up Business Advice

If you decide to use a company name, it must show the legal status of the company. For example “My Business Pty Ltd”.

You can only choose a company name not already registered to another company or as a business name.

One of the key decisions you’ll make when starting a business is its structure. While most business owners dive right in and skip planning and research, selecting the right business structure can impact your ability to secure financing, protect your personal assets and optimise your business to achieve success.

Are you unsure about which business structure to choose? Contact us now and get the answers you need. 

Starting a business without proper planning is like setting sail without a map or compass – you’ll end up lost and directionless. 

Many startups dive headfirst into business without a plan— not realizing that understanding their target audience, product value proposition, and their financial position are crucial to success. Don’t make the same mistake.

Our expert team can help you prepare a year’s worth of profit and cash flow forecast. With a clear roadmap to success, you can navigate the tumultuous waters and confidently steer your business towards profit and growth. Set sail with our expert team and let us help you find your pearl.

Before you choose a right busienss strdturte fro busine needs theres are certerin consideration taht needs tobe made so i can fit your ciricytamcnes. 

  1. Protecting Your Family Business 
  2. Protecting Your Assets.
  3. Understanding your business group  entities;
  4. Understanding correct bookkeeping and record-keeping processes.
  5. Having an ongoing relationship with their accountant to plan and review. 
  6. Estate and Sucesson planning when you exit the business or die. 

There is no best structure, because it all depends on the circumstances on which the company is formed and its projected growth. At Oyster Hub we consider all considerations when advising our customers on the most suitable structure for their business.

More information about the differences between business structures can be found on ASICS setting up a business structure site.

Your business structure can have a huge impact on your tax position.

Here is a simplified example to show the different tax outcomes for three common business structures – each one earning $80,000. We have made a few assumptions but the outcome is clear: the right structure can save thousands of dollars in tax. Getting your structure right is critical to business success.

You can register your company and other key business registrations through the Business Registration Service. Before you register, make sure you:
choose a company name, decide whether your company will be proprietary or public and understand your legal obligations.

There can be a number of potential commercial, regulatory, legal and tax benefits in forming a group company structure.

Corporate groups are attractive for a range of legal, business, tax and governance reasons, and are often very important for financial growth and in the mitigation of risk. For instance, the creation of a subsidiary allows a corporate group to reduce commercial risk by importing that risk to the subsidiary, which will act as a separate legal entity. In mitigating this risk, subsidiaries also allow for diversification of a corporate group’s business and can provide a vehicle for holding companies to enter into acquisitions or joint ventures.

Reason to Setup Group Business Structure:

  • Ringfencing assets and liabilities
  • Regulatory advantages
  • Tax benefits

Your business plan isn’t something you should ‘set and forget’. You should revisit your plan as your business grows, and your needs change to evolve your business plan as you go. If you haven’t looked at your business plan since you created it, don’t stress – it’s not too late. Get in touch with us today and let’s get started.

In Australia, over 65 per cent of buyers purchase their property in their own name. But other ownership structures may be suitable for you, depending on your intentions with the property investments and how it fits into your wider portfolio. Below, we outline a few different property ownership structures and when each structure may be suitable.

  • Buying under personal Name
  • Buying under company 
  • Buying under Unit or family  trust 
  • Buying under self managed super funds

Estate planning is not just about having a Will.  It involves the review and management of your personal, family and business affairs while you are alive as well as developing a strategy to deal with your assets after you die.  This includes the legal instruments and structures you put in place to transfer your assets in the event of your death. 

An estate plan is necessary to ensure your assets go exactly where you wish them to go & should consider:

  • your current lifestyle need
  • your business arrangements
  • your tax position
  • trigger events such as marriage or commencement of a de facto relationship, divorce or the end of a de facto relationship
  • when families blend
  • when a spouse dies
  • on commencing the pension phase
  • health concerns of you or family members
  • existing or potential family disputes

Our succession planning team works with you, your accountant and financial advisors (if required) to review your financial and personal circumstances and then decide on the most appropriate estate planning strategy for you. 

Our society is becoming increasingly litigious. If a business or rural enterprise is carried on in the same name as the assets are held, then all of the assets will be ‘at risk’ if there is a liability action. Asset protection is ensuring the assets are ‘off risk’. ​ Asset protection strategies are also applied to protect and preserve your beneficiaries’ inheritance. This may be required because a beneficiary is a minor, is incapacitated or may have a former spouse who seeks to make a claim on their inheritance. ​ To cope with all the likely factors and events, it may be necessary to create different structures, such as companies, discretionary trusts and self-managed superannuation funds. However, the use of these structures may complicate the estate plan. Where these structures are purely tax-driven and succession is overlooked, greater difficulties can occur, leaving fertile ground for dispute in the next generation. Many advisers overlook the fact that the assets of a discretionary (“family”) trust or superannuation fund cannot always be left by a Will. ​ One structure used to protect and preserve your wealth when planning your estate is a ‘testamentary trust’. It is a trust established under a Will but it does not come into effect until after the death of the person making the Will.

02

Growing Business Structure Advisory

Automated accounting involves the use of software to automate important finance operations. Accounting operations like accounts reconciliation, updating financial data, and preparing financial statements can be completed without human interaction using accounting software. These are just a few of the automated accounting functions:

Accounting automation is the use of advanced software for automating accounting tasks. Accounting software can automate repetitive tasks without the need for you to enter any data manually. Modern technology and innovative software solutions make it possible to automate accounting processes. This has made it possible to automate the accounting process for small business owners that are able to do it themselves

03

Choosing Business Structure Types

Learn advantages and disadvantages of each different business structure and work out which structure best suits your needs.The most common types of business structures in Australia are:

A sole trader is the simplest form of business structure and is relatively easy and inexpensive to set up. As a sole trader you will be legally responsible for all aspects of the business. You’ll generally make all the decisions about starting and running your business and you can employ people.

Advantages

  • Simple to set up and operate.
  • You retain complete control of your assets and business decisions.
  • Fewer reporting requirements.
  • Any losses incurred by your business activities may be offset against other income, such as your investment income or wages (subject to certain conditions).
  • Allows you to use your individual tax file number (TFN) to lodge tax returns.
  • You are not considered an employee of your own business and therefore don’t pay payroll tax, superannuation or workers’ compensation on income you draw from the business.
  • Relatively easy to change business structure if your business grows or if you wish to wind things up.

Disadvantages

  • Unlimited liability which means all your personal assets are at risk if things go wrong.
  • Little opportunity for tax planning – you can’t split business profits or losses with family members and you are personally liable to pay tax on all the income from the business.

Other factors to consider

Business name

You don’t have to register a business name if you use your own name. If you choose not to use your own name you will need to register a business name with the Australian Securities and Investments Commission.

You will need to get an Australian Business Number (ABN) before applying to register a business name. It is free to apply online for an ABN with the Australian Business Register.

TIP: Before choosing a business name check its availability as a trademark, business name and domain name (your website address). If the name is already registered by someone else as a trademark in Australia, in a class relevant to your business you’d be wise to choose another name. If you register the name as a trademark in relevant classes, this may give you exclusive rights to that name in those classes. Registering only as a business name, company name or domain name doesn’t give you the same type of exclusive rights

Tax requirements

Sole traders are taxed as individuals and pay income tax at personal rates.

You will need to register your business for goods and services tax (GST) if your annual turnover is expected to be more than $75,000.

For more information regarding tax obligations for sole traders visit the ATO website.

Insurance

A sole trader is responsible for the liabilities of the business. Liability is unlimited and includes all personal assets, including any assets jointly-owned with another person, such as a house.

You are also not covered by workers’ compensation should you injure yourself at work. This may result in a loss of income if you cannot work and you may still be required to pay any expenses for your business, such as loan repayments.

A partnership involves two or more people (up to 20, with some exceptions) going into business together with a view to making a profit. In Western Australia, partnerships are governed by the Partnership Act 1895.

There are two types of partnership – general and limited.

A general partnership is where all partners participate to some extent in the day-to-day management of the business.

A limited partnership is one formed by up to 20 people. It has at least one general partner who controls the company’s day-to-day operations and is personally liable for business debts, and passive partners called limited partners.

A limited partner contributes a defined amount of capital to the business, but is generally not liable for its debts or obligations. The Department of Mines, Industry Regulation and Safety has administrative responsibility for theLimited Partnerships Act 1909 in Western Australia.

Advantages

  • Simple and inexpensive to set up.
  • Minimal reporting requirements.
  • Shared control and management with other partners.
  • A partner’s share of the business’s tax losses may be offset against other personal income, subject to certain conditions.
  • More opportunities for tax planning (such as income splitting between family members) than that of a sole trader.
  • Relatively easy to dissolve the partnership or to resign and recover your share.
  • Partners are not employees. Superannuation contributions and workers’ compensation insurance are not payable for partners.

Disadvantages

  • A partnership is not a separate legal entity. Each partner is fully responsible for debts and liabilities incurred on behalf of the business by other partners – with or without their knowledge.
  • Potential for disputes over profit sharing, administrative control and business direction.
  • Changes of ownership can be difficult and generally requires a new partnership to be established.

Other factors to consider

Partnership agreement

Before entering into a partnership it is advisable to have a lawyer prepare a formal agreement outlining:

  • each partner’s role and level of authority
  • each partner’s financial contribution
  • a procedure for resolving disputes
  • a procedure for ending or resigning from the partnership.

It is important to have a formal agreement because personal liability is unlimited for each partner.

You will be held liable for any shortfall if the business fails and a partner can’t afford to pay their share of any debts. You are also jointly responsible for any debts your partner incurs on behalf of the business, with or without your knowledge.

If there is no agreement in place, each partner is deemed to own equal shares of each asset.

For more information read our publication: Partners in business

Tax requirements

A partnership doesn’t pay tax on its income. Instead, each partner pays tax on the share of net partnership income each receives.

TIP: A formal partnership agreement is an important tax document if profits and losses are not distributed equally amongst the partners.

A company is a separate legal entity and can incur debt, sue and be sued. The company’s shareholders (the owners) can limit their personal liability and are generally not responsible for company debts.

A company is a complex business structure and has high set-up and reporting costs. You can form a company as either a private (also known as proprietary) or public entity.

A registered company must have at least one director (and a company secretary unless it is a private company). A director is responsible for managing the company’s business activities.

To become a company, an entity must:

  • be incorporated under the Corporations Act 2001
  • be registered with the Australian Securities and Investment Commission (ASIC).

Advantages

  • Limited liability for shareholders.
  • Well understood and accepted structure.
  • Able to raise significant capital.
  • Can carry forward losses indefinitely to offset against future profits.
  • Easy to sell and pass on ownership.
  • Profits can be reinvested in the company or paid to the shareholders as dividends.

Disadvantages

  • Significant set-up and maintenance costs.
  • Do not retain complete control.
  • Complex reporting requirements.
  • Can’t distribute losses to its shareholders.

Other factors to consider

Tax requirements

The tax requirements for a company are different to those of other business structures. A company pays income tax on its income (or profits) at the company tax rate. There is no tax-free threshold for companies and tax is paid on every dollar earned.

Legal requirements

Company officers and directors have legal obligations that specify how they perform their duties and manage the company’s affairs. These obligations are outlined in the Corporations Act 2001.

A trust is a structure where a trustee carries out the business on behalf of the trust’s members (or beneficiaries). A trust is not a separate legal entity.

A trustee may be an individual or a company. The trustee is legally liable for the debts of the trust and may use its assets to meet those debts. However, if there is a shortfall the trustee is responsible for the difference.

A trust is set up through a trust deed and there are two main types: discretionary or unit trusts.

In a discretionary trust, the trustee has discretion in the distribution of funds to each beneficiary. In a unit trust, the interest in the trust is divided into units with their distribution determined by the number of units held by each member.

Advantages

  • Reduced liability especially if corporate trustee.
  • Assets are protected.
  • Flexibility of asset and income distribution.

Disadvantages

  • Can be expensive and complex to establish and administer.
  • Difficult to dissolve, dismantle, or make changes once established particularly where children are involved.
  • Any profits retained to reinvest into the business will incur penalty tax rates.
  • Can’t distribute losses, only profits.

Other factors to consider

Tax requirements

A trustee must apply for a tax file number (TFN) and lodge an annual trust return. The trust is not liable to pay tax. Instead tax is assessed to the trustee or the beneficiaries that are entitled to receive the trust net income.

You must apply for an Australian Business Number if you own a business (ABN). An Australian Company Number (ACN), on the other hand, is a number that is only granted to businesses. A company is a particular entity (different from a sole trader business, partnership or trust) that carries on a business. There are various similarities between ABNs and ACNs. Furthermore, some business owners will require both an ABN and ACN.

RESCUE EXPERTS

How to Know That You Need a Rescue Accountant

Get a SECOND rescue opinion for your Small Business for your previous year’s tax returns if you have PAID High Tax Bills. 
We find that most business owners are heading toward a business crisis if they identify the following in your business. 

Drowning In Paperwork​
Low Business Cashflow
Paying High Tax Bills
Accountant is working like a sloth

Need an expert wizard?

Come and have a chat with our friendly staff about your next big steps.

Why Choose Oyster Hub Wizard Accountants ?

Managing your business’s finances can be overwhelming. With Oyster Hub, our award-winning accountants can provide expert aid and support to help you expand your business while maintaining complete tax compliance.

When you work with us, you are bound to get the best results. Whether you need help with bookkeeping, tax planning, or financial reporting, we’ve got you covered.

Oysterhub understands the importance of effective communication for successful business operations. Our team of experts is well-versed in cloud technology and proficient in utilizing video conference platforms like Zoom and Microsoft Teams Meetings so you can you can connect and collaborate with us seamlessly from anywhere you are.

Oysterhub does not only take your small business and startup to new heights. We empower every small business owner to unlock their inner wizardry, enabling them to achieve their goals while making a profound social impact in their communities.

Moreover, we are proud advocates of the UN’s Sustainable Development Goals—  inspiring our clients to  amplifying their value and impact while driving positive change in the world.

Every businesses comes face to face with unique challenges when it comes to managing their accounting, bookkeeping, and finance needs. Our team of experienced professionals go beyond simply crunching numbers and tailor our services accordingly, allowing you to focus on what matters most: driving your small business towards unparalleled growth and scalability.

Sorting out payroll, taxes, and accounts can be an arduous task and could be better spent on completing new projects.

Countless clients have experienced a significant boost in revenue by redirecting their focus back into their core operations while allowing our skilled accountants to handle their financial matters. When you partner with us today, you will experience the difference our expertise can make for your business while providing additional support to fuel your business’s growth.

Clear financial records are the compass that guides successful businesses towards profitability. At Oyster Hub, our experienced accountants specialise in putting your financial records back on track.

In a world brimming with opportunities, we believe that every individual and business possesses a unique Pearl waiting to be discovered.

From managing budgets to optimizing staff resources and closely monitoring your profit and loss, we provide the insights you need to drive your business forward.

Let Oyster Hub be your trusted guide in uncovering the hidden treasures within your business and life. We will focus on finding your pearl so you can enjoy doing the things you love the most.

In the aftermath of the COVID-19 pandemic, numerous business owners find themselves grappling with tax debts, causing significant financial strain. Our expert team is dedicated to surmounting these tax debt hurdles by implementing highly effective strategies tailored to your unique circumstances.

If you find yourself being hounded by the Australian Taxation Office (ATO) and have received distressing correspondence and notices, it is crucial to take immediate action.

ATO Payment Plan
Tax Debt Negotiations

Did you know that a staggering 80% of errors in small business finances are directly related to bookkeeping and tax? These mistakes can have a significant impact on your bottom line, leading to penalties, fines, and even potential legal consequences.

Running a business is no easy feat. At Oysterhub, we specialize in helping small businesses regain control of their financials— from struggling with bookkeeping, overdue tax lodgements, mounting ATO debts, and dwindling business cashflow. Our tailored solutions are designed to address your specific needs for regaining control and working towards resolving ATO tax debts.

Rescure Tax Accounting

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Your business is a journey; create an impact and build a business that has a purpose to make a difference to your family, community, and yourself. We have put together everything you need to know about how we create an impact at Oyster Hub with ‘Your Journey with Oyster Hub Guide.’ Download the PDF and learn more about how you can create an impact in your business

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