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  • #987582
    write2slappy
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    Hi,

    My wife is considering starting a catering company. We want to get prepared in May/June although wont be formally trading until after July 1. Our intent is to register a company after July to give us to legal coverage including taking out insurance etc.

    However given only two months to go I would like to avoid starting a company now only to have to lodge (and have the costs) of a company tax return in 2 months.

    So my question is:

    • Is there any way to register the company now but avoid the tax return this year as there will be no revenue this year, just costs?
    • If not, can we start the next few months as a sole trader and carry the loss over to the company?
    • If not, are there any other solutions or do we have to register a company now and wear the tax return fee from an accountant

    Is there any way to register the company now but avoid the tax return this year as there will be no revenue, just costs?

    Would appreciate any suggestions.

    Kind Regards,

    Andrew

    #1163439
    Anonymous
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    Hi Andrew,

    Great questions! I hope one of our resident experts will pop in shortly to give you some general advice on all this.

    In the meantime, thanks for joining Flying Solo. :)

    Jayne

    #1163440
    Chris H
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    Hi Andrew,

    I’m sure one of the accountants here will give you a fantastic detailed response and perhaps contradict me.

    My understanding is that you have to file a return for any activity whether that’s revenue or an expense.

    Any losses a sole trader would probably be claimable, but again my understanding is that they would be costs against your personal income, not your future Pty Ltd structure.

    Again, I am sure an accountant will correct me. :)

    #1163441
    JacquiPryor
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    Hi Andrew,

    As others have mentioned an accountant will hopefully be along to confirm – but, as Chris noted an sole trader ‘expenses’ would be claimable by the sole trader. To elaborate further – each ‘entity’ would have its own ABN. A sole trader is an entity so would have an ABN, the company will be its own entity and have its own ABN. Ultimately the tax returns and accounts etc will link up to the ABN.

    There may be ways to track expenses that you might incur now as ‘loans’ to the eventual company, which could avoid the need to incorporate the company this financial year and therefore avoid the tax return etc. I’d imagine then the company would start with a directors loan account on which it already owes – then it could still claim the costs/expenses ultimately and pay you back for that loan. I am not sure of the legalities/technicalities in doing this though before a company is registered … so, something to discuss with your accountant perhaps if no confirmation is seen here.

    #1163442
    Tony Manto
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    If you are starting the company from scratch, what’s your rush. Why not just wait…

    You can secure your web address and business name but not formally start until next financial year. Having said all that, if there is no income, all you have to do is let your tax agent know but there will be no tax implications. I don’t even think you can claim your expenses.

    As already suggested, you should talk to an accountant.

    #1163443
    James Millar
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    If you incorporate the company before 30 June 2014 but don’t transact until after then you can simply notify the ATO that a return is not required for 2014. I recommend having everything in place and ready to go by 1 July. That means incorporate and procure TFN and ABN in mid June latest.

    And no you cannot easily transfer the loss to the company (There may however be other methods of utilising group losses). Your accountant can advise on this.

    Regards
    James

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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