Company Benefits??

[divapromotions]

My hubby is about to start his own business, and we are both trading as sole traders. We are looking at forming a company but wanted other peoples experiences in doing this.

Why did you do it?

What are your main benefits from it?

Was it a hassle to do?

Thanks!!

[Warren Cottis]

The company tax rate is 30% so unless your personal taxable income is over (about) $130,000 the only reason to form a company is to protect yourself from creditors if the business goes belly up... and that assumes you have not given director's guarantees to your suppliers.

With the ATO for every plus there is a minus .... with the company you could split your income with your husband if he doesn't have another job (that's the plus) but then you are forced to have workers comp, pay superannuation etc.

Setting up a company can be done within one working day these days

[Warren Cottis]

sorry, I see that your husband is going to have his business and your business in the same company so really we are talking about you earning $130,000 (average tax rate 30%) and he earning $130,000 before a company is justified for tax rate reasons

[fiona@vas]

There can be other benefits around the limit of liability...I first formed a company because at the time I published a trade journal and wanted to be able to publish a rather controversial article without fear of my personal belongings and savings being at risk if I was sued (which was being threatened).

What's prompted you to look at becoming a company?

[mike@engagemarketing]

Hi Emma,
the benefits of forming a company over a sole prop. are:

- less personal liability
- tax benefits (in some situations as outlined by others)
- greater ability to raise capital
- allows for easier division of shares in the company

Generally a company is preferred in a business model that allows for medium to high growth.

Cheers,
Michael