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NickKaro
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downhaul, post: 210828 wrote:
Hi everyone,

I’ve been running an IT consultancy business for the last 5 years with no incorporated company. There is a registered trading name, but legally the business’s money and my money are the same and I only pay personal income tax.
Turnover is well above $100k a year, but it’s mostly international and less than $5k of that is from Australian business.

The question is whether this is the best structure. Does anyone have advice on this?

Some potential factors include:
– How onerous are the legal requirements of a limited company?
– Is a limited company a better form of protection than professional indemnity insurance? I don’t have a huge amount of personal (except superannuation) or business related assets.
– How could I use an incorporated company to reduce my tax bill?

Thanks in advance.

You need to be very careful around re-structuring where you are running a business and most/all of the income is generated for your professional services. There are complex tax provisions to overcome (Personal Services Income) and the ATO have also noted they may apply the General Anti-Avoidance provisions in certain fact patterns.

I strongly suggest speaking with an expert tax lawyer and/or accountant. My firm’s details are linked below if you do want that level of expertise.

Regards
Nick