Home Forums Money matters Business structure – bare trust or company

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  • #1000283
    boots72
    Member
    • Total posts: 14

    Hi people,

    Through further research and kind answers from posters in previous Q’s, I have a refined Q.

    Scenario – 16 yr old sets up sole trader small business, some legal banking roadblocks require business restructure. (likely business turnover – only in the $10’s of thousands P.A.)

    What are the setup costs, running costs involved for each & the tax implications….

    1. – Bare Trust (trustee agreement / certification) sorry I’m not sure of the correct terminology
    – setup cost??? approx – (I assume a lot more than a company setup cost?)
    – Taxation – if done correctly with 16 yr old as sole beneficiary I assume 16yr old would be taxed at his PAYG scale – according to his circumstances…..
    – ballpark accounting running cost P.A. ??

    2. – I understand a company would cost approx $1k to setup….
    – what is totally foreign and ignorant to me is how the taxation works….
    Is there a good link i have’nt found yet
    ie: in short – Does the company gets taxed on its sales, then the distribution of those said sales profits remaining after the company is taxed at 27.5%? is then distributed to the shareholders who are then taxed again based on their personal tax circumstances…..
    Can distributions to shareholders be at any % amount ie: shareholder 1 get 95%, shareholder 2 gets 5%…. etc
    – ballpark accounting running cost P.A. ??

    Any general advice is greatly appreciated, next stop my accountant

    #1223715
    Paul – FS Concierge
    Moderator
    • Total posts: 3,121

    In short, there are different types of beneficiary Trusts.

    Generally, the costs of setting up and on-going Accounting fees are cheaper than Companies and Trusts have more flexible accounting rules as well.

    Of course there are other options such as Company as Trustee for Trust, Sole Trader and Partnership outside of or within an entity.

    My advice is to go an see an Accountant and discuss your options.

    Different entities may have different tax outcomes and offer different levels of asset protection.

    In most cases, I personally would have taken Jason’s advice in the other thread and essentially acted as guarantor to a bank account for a sole trader business but of course YMMV and that is why it is important to see an Accountant.

    #1223716
    boots72
    Member
    • Total posts: 14
    Paul – FS Concierge, post: 270395, member: 78928 wrote:
    In short, there are different types of beneficiary Trusts.

    Generally, the costs of setting up and on-going Accounting fees are cheaper than Companies and Trusts have more flexible accounting rules as well.

    Of course there are other options such as Company as Trustee for Trust, Sole Trader and Partnership outside of or within an entity.

    My advice is to go an see an Accountant and discuss your options.

    Different entities may have different tax outcomes and offer different levels of asset protection.

    In most cases, I personally would have taken Jason’s advice in the other thread and essentially acted as guarantor to a bank account for a sole trader business but of course YMMV and that is why it is important to see an Accountant.
    – Thanks for your comments, I must find Jasons advice – re gaurantor – cheers

    #1223717
    Paul – FS Concierge
    Moderator
    • Total posts: 3,121
    #1223718
    bb1
    Participant
    • Total posts: 4,472

    The best advise I would give a 16 year old, but in reality anyone starting a business, looking at various and many types of structures, skip and ignore any advise provided on a forum, you have most likely only given 10% of the information required to give any decent advise, so any advise provided is most likely not suited to your circumstance.

    Ignore the forum, and spend a couple of hundred, or even a 1000 bucks, and get the structure and setup correct from the start. A few dollars now, could save you a truck load of money and headaches down the track. See an accountant.

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