Ready to start-small obstacle (company vs soletrader)

[BenSchi]

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Hi everyone

I am excited to announce that as of Monday 3rd April I will be running my own business. I will be providing consulting services in construction.

I already won two small projects, are close to signing a deal on two bigger projects and agreed with my current Employer that I would continue with them on a Contractor basis. All in all a really good start as my financial situation is kind of secured for the first 4 to 6 months.

However, I am currently set up as a soletrader and after I agreed the contract T&C’s with my Employer they suddenly said I would have to be set up as a company (it is their policy so not worth to argue).

They offered me two options:

– Setting up my own company or

– Work as a casual employee on an hourly basis (and work as soletrader for my other clients)

I am not quite sure what to do? What is the best option from a financial/tax point of view?
Has anyone been in a similar situation or has any suggestions which help me arriving at a decision?
FYI
Predicted turnover for the rest of FY16/17 is $70 to $90k (plus my previous salary), expected turnover for next FY is $280 to$360k.

Thanks in advance for any help!

Cheers
Ben

[James Millar]

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At that level of forecast revenue you may be able to justify a company. It also depends somewhat on whether you will pass the tax PSI tests for the relevant financial year (as that effects your ability to split income).

Our setup fees include the appropriate analysis and advice on optimal structure. You are looking at around $1000 for a company fully setup with all registrations. The biggest issue is that your annual reporting costs for a company is significantly different to that of a sole trader. However the tax and other benefits may well and truly exceed this.

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

[Paul – FS Concierge]

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BenSchi, post: 246411, member: 87175 wrote:

Hi everyone

I am excited to announce that as of Monday 3rd April I will be running my own business. I will be providing consulting services in construction.

I already won two small projects, are close to signing a deal on two bigger projects and agreed with my current Employer that I would continue with them on a Contractor basis. All in all a really good start as my financial situation is kind of secured for the first 4 to 6 months.

However, I am currently set up as a soletrader and after I agreed the contract T&C’s with my Employer they suddenly said I would have to be set up as a company (it is their policy so not worth to argue).

They offered me two options:

– Setting up my own company or

– Work as a casual employee on an hourly basis (and work as soletrader for my other clients)

I am not quite sure what to do? What is the best option from a financial/tax point of view?
Has anyone been in a similar situation or has any suggestions which help me arriving at a decision?
FYI
Predicted turnover for the rest of FY16/17 is $70 to $90k (plus my previous salary), expected turnover for next FY is $280 to$360k.

Thanks in advance for any help!

Cheers
Ben
Hi Ben,

I just wanted to say well done and good luck going forward!

Cheers

[DavidChin]

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Hi Ben

Congratulations on your new venture.

Have you considered the additional costs involved, such as insurance for the company in addition to your own?

As an employee, insurance is usually covered or not applicable. However, super may need to be factored into your salary package.

Regards
David

[elissa.doxey]

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With the industry your targeted clients operate in, I’d suggest you will be better off going ahead with the company structure. Yes, there’s tax & gst implications, but there’s also WorkCover, PI insurance, etc.
Even if you go ahead with the casual option for this first engagement, you might come across this same issue with future contracts.

All the best,
Elissa

[Sparrow-Sean]

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Sounds like an excellent business venture, my previous jobs were consulting with construction workers, go figure. Best of luck with your success with your business and it’s growth

[BenSchi]

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Thanks everyone for your replies and apologies for my delayed response. It has been a busy few weeks
I have decided to remain a sole trader for this FY and set up a company for next year. That makes accounting etc much easier.

Cheers
Ben

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