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  • #988257
    TFbond
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    Hi FS forumites,
    My Fiancee and I are getting ready to set up our bond cleaning business but we have a few newbie questions that are lingering in our minds if anyone could help answer them it would be greatly appreciated.

    1. Which is a better set up for a small cleaning business Sole trader or Company?
    2. Is it better to buy the equipment before the financial year ends or at the start?
    3. Can you draw the profit out of the business easily with a company setup(I’ve heard it can be difficult)?

    Thanks tony

    #1166338
    MissSassy
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    Hi Tony

    You really need to speak with your accountant about these issues as they are able to take all your circumstances into account. I can recommend another member here http://www.irinahollander.com.au if you don’t have one.

    #1166339
    Lauzy
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    TFbond, post: 192641 wrote:
    Hi FS forumites,
    My Fiancee and I are getting ready to set up our bond cleaning business but we have a few newbie questions that are lingering in our minds if anyone could help answer them it would be greatly appreciated.

    1. Which is a better set up for a small cleaning business Sole trader or Company?
    2. Is it better to buy the equipment before the financial year ends or at the start?
    3. Can you draw the profit out of the business easily with a company setup(I’ve heard it can be difficult)?

    Hi,
    Picking a catorgory really comes down to what you and your partner want security wise. Some say ‘go company Pty Ltd, your covered then if something goes bad down the track BUT its very costy to start up and AND the company is basically a person, has its own TFN so there are rules about taking/touching the money you make. You cant just touch the money that you make when ever you please. It must all go to the companies bank account and you can only have the money if you draw a wage or directors fee. But you’d need to read up about it its a long process but you must pick the one you both like the sound off.

    Yes buy all the equiptment needed before the finacial year ends, so you can claim it all back in July.
    Can you draw the profit out of the business easily with a company setup(I’ve heard it can be difficult)? – no as i said you cant just take money out of it when you want for example “buy a boat, or take $800 out to go clothes shopping” It must be all documented, so the company will pay you a wage because basically you work for ‘company’.

    But I sat down for a few nights to read up on what title was best and in the end for peace of mind and security, even though there were alot of set up fees.. i chose to open as a company. Thats just my opinion :)

    hope this has kind of help answer your qestions…

    #1166340
    TFbond
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    Thanks for the replies,

    Sassy: we have booked in but unfortunately we cant get in to our normal accountant until the 28th and we are really keen to start now :) lol
    lauzy: thanks for the replies. Yeah we are split minded on company or soletrader. So much information overload I think is making us to indecisive lol

    #1166341
    alliedib
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    Hi TF Bond,

    Which State will you be operating from?

    Regards,

    Mark

    #1166342
    TFbond
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    Hi Mark we will be operating from NSW

    #1166343
    alliedib
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    TFbond, post: 192725 wrote:
    Which is a better set up for a small cleaning business Sole trader or Company?
    we will be operating from NSW

    Hi TFBond,

    Thanks for letting me know – the state you are operating from can have a bearing on how your business operates.

    Generally speaking, in NSW if you are sole trader or partnership then you are not covered by Workers Compensation – you need to take out your own Personal Accident or Income Protection policy to protect you if you are injured at work.
    If you set up as a Company, then you can choose to either become a Working Director or Employee of the Company – either way you can then obtain cover under Workers Compensation (you get automatic cover from Workcover if you pay less than $7,500 total wages and don’t engage any apprentices or trainees – if you don’t fall into this category then you need to take out a policy through a scheme agent). The approximate rate is 5.5% of ‘wages’ (which includes working directors fees).

    Some people who have issues obtaining Personal Accident cover (due to medical conditions or similar) choose to set up as a company as they can get cover under Workers Compensation for whilst they are working. I know some of my clients have chosen to do it this way for this reason – its not the sole reason to become a company but should be considered.

    Another reason to look at setting up a company – many principals (real estates or other hiring bodies) prefer to deal with companies – it alleviates the need to worry about whether the cleaner is considered a ‘contractor for whom you are liable’. I know in the ACT in certain industries (eg. construction) you cannot get work if you a sole trader or partnership – they only deal with companies.

    Let me know if you need to clarify anything or have any further questions.

    Regards,

    Mark

    #1166344
    TFbond
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    Thanks for the information Mark that helps heaps :)

    #1166345
    TFbond
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    Ok so we’ve decided to go company and get the equipment before the end of the FY(the equipment is less than $6500) apparently it is an immediate deduction will we be able to get the money back next FY even though we probably wont have any clients so will have no tax to claim it off? (The 28th to see this accountant can’t come soon enough lol)

    #1166346
    Lauzy
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    Hi TFBOND
    Glad you went with company, yes the first out lays are tough but in years to come it will be well worth it.
    Mark great info! I never thought about the workers comp thing until you mentioned it.

    Hope its all going well TFBond.
    Good luck :)

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