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  • #1000069
    vogesknows
    Member
    • Total posts: 4

    Hey guys I am looking for some advice mostly on Business B (but if I can get the whole article answered it will make my week!) on the best way to structure my business’.
    I’ll explain this as simply as I can…

    Business A – I run an Australian owned contracting company under an ACN and is registered for GST. I am currently employed full time by the company however I am thinking about moving away from a full time employee to either a trust or ABN so I can play around with my tax a little more.

    Business B – I am about to start a side hustle that is targeting overseas markets and no products enter or leave from Australia (drop shipping and print on demand). Because I cannot charge GST to my customers as the products are not entering/leaving Australia, what are my options for registering a business? Keep in my mind if i have to register for GST with this company it would extremely hard to stay competitive.

    Business C – Once the first side hustle finds its legs I plan on starting some more and potentially targeting customers in Australia so i will have to register this business for GST.

    I was thinking of starting an incorporated trust to manage and divert funds to all of these business’ but I’m hoping their is a cheaper way to do it!

    Thanks in advance,
    JV.

    #1222603
    Jason Ramage
    Participant
    • Total posts: 3,161

    Howdy

    For business B, have you considered registering it internationally in the location that will incur most of the sales?

    As a second thought, and just reading the post, have you considered focussing on a main business and then growing the other two once and if the first succeeds? In my experience, you may stretch yourself to wide and cause a negative ripple across your 3 businesses IF you cant focus…

    Just thoughts.

    Good luck with studying your options

    Jason Ramage | Lucas Arthur Pty Ltd | E: hello@lucasarthur.net.au   P: 61 3 8324 0344    M: 61 412 244 888
    #1222604
    JamesMillar
    Participant
    • Total posts: 1,685
    vogesknows, post: 268952, member: 117338 wrote:
    Hey guys I am looking for some advice mostly on Business B (but if I can get the whole article answered it will make my week!) on the best way to structure my business’.
    I’ll explain this as simply as I can…

    Business A – I run an Australian owned contracting company under an ACN and is registered for GST. I am currently employed full time by the company however I am thinking about moving away from a full time employee to either a trust or ABN so I can play around with my tax a little more.

    Business B – I am about to start a side hustle that is targeting overseas markets and no products enter or leave from Australia (drop shipping and print on demand). Because I cannot charge GST to my customers as the products are not entering/leaving Australia, what are my options for registering a business? Keep in my mind if i have to register for GST with this company it would extremely hard to stay competitive.

    Business C – Once the first side hustle finds its legs I plan on starting some more and potentially targeting customers in Australia so i will have to register this business for GST.

    I was thinking of starting an incorporated trust to manage and divert funds to all of these business’ but I’m hoping their is a cheaper way to do it!

    Thanks in advance,
    JV.

    There is awful lot going on there and you won’t get a suitable response online. Have you considered asking your accountant? What do they think about the current Business A Structure and how it could be changed to save you some tax?

    #1222605
    vogesknows
    Member
    • Total posts: 4
    LucasArthur, post: 268953, member: 34537 wrote:
    Howdy

    For business B, have you considered registering it internationally in the location that will incur most of the sales?

    As a second thought, and just reading the post, have you considered focussing on a main business and then growing the other two once and if the first succeeds? In my experience, you may stretch yourself to wide and cause a negative ripple across your 3 businesses IF you cant focus…

    Just thoughts.

    Good luck with studying your options

    No, I hadn’t really thought about registering the business in the United States.
    But if it is an option do you have some further information?
    And yes I have thought a lot about stretching myself too thin. However I am looking at the possibilities as to where I want my business’ to head and the best business structure to setup now to avoid a restructure down the track.

    #1222606
    vogesknows
    Member
    • Total posts: 4
    JamesMillar, post: 268955, member: 5318 wrote:
    There is awful lot going on there and you won’t get a suitable response online. Have you considered asking your accountant? What do they think about the current Business A Structure and how it could be changed to save you some tax?

    Hi James,
    I have spoken with my accountant about this and he has given me some options but I was hoping to get some feedback from people that have done something similar. (starting an online business that operates in a different country).
    Business A has multiple directors and we are looking at setting up incorporated trusts to hold the director’s shares of the company.
    From what I’ve been told I can save tax this way by delegating profits through my incorporated trust to my wife as well.
    Does this sound right?

    #1222607
    Ben_Mandeville_Clarke
    Member
    • Total posts: 8

    Hello vogesknows,

    So, obviously none of what I’m saying constitutes formal advice and you use anything I say at your own risk:

    Business A – I believe incorporated trusts as shareholders of an operating company are a useful tool for liability protection and potentially with some tax advantages. You can set up a discretionary trust that has your wife as a beneficiary. If she does not currently earn any other income you could benefit from the lower tax bracket. If she does, the extra profit could actually bump her into a higher tax bracket and be counterproductive. However, be aware that the ATO / Gov has been cracking down on tax loopholes for trusts in recent years. Again, your accountant should be able to steer you through all the intricacies.

    Business B – Here’s some info on how GST works to overseas sales…you don’t need to pay it: https://community.ato.gov.au/t5/Business-Registration/Sole-trader-with-overseas-clients-only-and-GST-registration/td-p/4596 and https://community.ato.gov.au/t5/Business-tax-questions/GST-for-overseas-trading/td-p/24575 if your service / product is “not connected” to Aus.

    Also, https://www.austrade.gov.au/contact/faqs/do-i-need-to-charge-goods-and-services-tax-gst-on-sales-to-overseas-customers

    Of course check with your accountant, but this advice from ATO and Austrade itself seems pretty good.

    #1222608
    JamesMillar
    Participant
    • Total posts: 1,685
    vogesknows, post: 268960, member: 117338 wrote:
    Hi James,
    I have spoken with my accountant about this and he has given me some options but I was hoping to get some feedback from people that have done something similar. (starting an online business that operates in a different country).
    Business A has multiple directors and we are looking at setting up incorporated trusts to hold the director’s shares of the company.
    From what I’ve been told I can save tax this way by delegating profits through my incorporated trust to my wife as well.
    Does this sound right?

    ok comments

    1. No such thing as an incorporated trust. There are however several types of trust in Australia and each have difference tax outcomes. You can have a corporate trustee (manager) but that has no relevance to the tax outcomes. You can also have individual trustees. Pros and cons of each and depends on circumstances.

    2. Not sure if your income splitting proposal is even legal with the bounds of both ATO PSI requirements and ATO anti avoidance income splitting requirements. Depends on detail.

    3. Having a discretionary trust hold shares in trading entity can be beneficial in some cases but there may be limitations on use of franking credits of appropriate choices are not made. If you miss out on franking credits you will pay tax twice on the profits.

    To be honest it sounds to me like your accountant (presume a paid professional) has not solved your problems. If they had then you would not need to seek advice from non accountants here.

    So the bigger question for me is why is your accountant not solving these problems for you because frankly that is their job.

    #1222609
    vogesknows
    Member
    • Total posts: 4

    Thank you for all of your advice.
    I’m going to take this up with my accountant again and see what we can come up with.
    Thanks again!

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