Home – New Forums Starting your journey 2013 Construction Company Reply To: 2013 Construction Company

  • Total posts: 2,344

Echoing Jason’s points; that a company (e.g. Pty Ltd) is a very different thing (from a tax and operating perspective) to running a business as a sole trader. A company is a legal entity and you are a legal entity – 1 abn per ‘entity’. On the assumption you will be setting up a company (eg. Pty Ltd) I offer the following and hope it helps:

When I start my company do I use my personal ABN or do I get a seperate one?

The company will obtain its own ABN, which is usually derived from the ACN it is allocated on registration

I will be receiving 100k deposits in my bank account from an investor, I will have to pay tradesman when they give me their invoices. Then whatever is left over will be my profit? How do I go about Tax on this?

If you set up the company (pty ltd) and the company receives the money… then the difference between its income and expenses will be the profit and at the end of the year the company pays tax on profits. (I believe its 30% of the profit)… This is separate to your personal taxes and tax return. (If you operate as a sole trader then the ‘profits’ form a part of your income for the year and you’re taxed as you are normally)… This said, 100k deposit from an investor might not be viewed as taxable income depending on how it’s done and set up etc… best to speak to an accountant to determine best way of recording this from a tax perspective.

There will be 3 Full time employees including myself, they are registered as sole traders, Do I still have to be responsible for their earnings too?

Are they going to be employees or contractors? If they are going to contract to your company and invoice under their own ABNs, you would pay their invoices like any other supplier.. but, seek advice on doing this for yourself versus receiving either a director’s salary or similar… And, in some cases if the ‘contractors’ only contract to you and no-one else they’ll be viewed in some ways still as employees so you need to understand obligations there. If they are employees (not contractors) then you need to pay their wages, and pay taxes to the ATO that you withhold from their wages etc. These are further expenses you get to deduct at tax time.

Should I have a seperate bank account for the company or do I use my personal one?

Absolutely a separate one in my opinion. This will either be for the company (pty ltd), or might be “your name trading as ” if you go down the sole trader route, but, definitely easier to keep things organised with a separate account.

How do I sort out what I get paid from the company’s pay? are we not the same?

No. As noted above, a company is its own legal entity. So if you set up an actual company (eg. Pty Ltd) its a separate entity to you – you would be paid by that company just as you would be any other company.

All the best :)