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  • #999725
    haxton
    Member
    • Total posts: 1

    Hi all. I am about to start a publishing company but have a few questions about
    company/tax obligations I was hoping someone could help with.

    1. I am the only shareholder in the company. Do I need a shareholder’s
    agreement? If so, is there somewhere I can get a template for the simplest
    possible agreement?

    2. I do not intend to pay myself a salary, but I could potentially earn
    royalties on any sales of the material I have written. Basically, if I didn’t
    own the company I wouldn’t consider myself an employee, just another author
    (contractor?). I want to make sure I can distinguish me (the author) vs me (the
    company owner). Do I need to pay super on these royalties? Are there any other
    complications that could arise from this situation? I am presuming I do not
    have to pay super to other authors that will have the same royalty agreement my
    company has with me, is this correct?

    Thanks for any help.

    #1221075
    Dave – FS Concierge
    Moderator
    • Total posts: 2,523

    Welcome to the forums [USER=115687]@haxton[/USER]!

    Hopefully someone can point you in the right direction, but it sounds like seeing an accountant in person will be your best bet. That way you can tell them the full story.

    Great to have you here :)
    Dave

    #1221076
    PowerofWords
    Member
    • Total posts: 179

    Hi, I am an indie publisher too, so I understand some of your concerns. If I may back up a little, is there a reason you decided on a company structure? Are there services going to flow from the company, that you need the less risk for?

    There is a helpful site here about the shareholders agreement:
    https://legalvision.com.au/business-structuring/shareholders-agreement/
    and
    https://legalvision.com.au/need-shareholders-agreement/

    You will probably be putting all your publishing under your company name and registration, so any income is then taxable at the company rate of 29/30%. I’m not totally sure about royalties for your own works, but it will need to be accounted for on your tax return at some level. Remember to account for the costs of running a company.

    Here’s what ICB Australia says: (You are director)
    Dividends paid to a director of a company are not subject to super. According to the ATO Superannuation Guarantee Eligibility Tool, a contracted director who invoices the business directly, and who receives director fees is eligible for super.

    Agreements is where it gets tricky, again you need to see an accountant to see if you have the right business structure for you. I use Team Accounting, in Redcliffe. You don’t have to pay Super to authors, as they are not employees or directors. Good luck with your publishing! It’s a tough industry, so hang on for a bumpy ride.

    #1221077
    businesstrade
    Participant
    • Total posts: 210
    haxton, post: 266965, member: 115687 wrote:
    Hi all. I am about to start a publishing company but have a few questions about
    company/tax obligations I was hoping someone could help with.

    1. I am the only shareholder in the company. Do I need a shareholder’s
    agreement? If so, is there somewhere I can get a template for the simplest
    possible agreement?

    2. I do not intend to pay myself a salary, but I could potentially earn
    royalties on any sales of the material I have written. Basically, if I didn’t
    own the company I wouldn’t consider myself an employee, just another author
    (contractor?). I want to make sure I can distinguish me (the author) vs me (the
    company owner). Do I need to pay super on these royalties? Are there any other
    complications that could arise from this situation? I am presuming I do not
    have to pay super to other authors that will have the same royalty agreement my
    company has with me, is this correct?

    Thanks for any help.

    Your questions are not that simple. Best to speak to an accountant for the tax implications of your business as they will provide you with advice.

    Any information online is general only and since your situation is quite complicated, it is better to pay someone that legally has your interest and not only that, has all the facts.

    #1221078
    JacquiPryor
    Member
    • Total posts: 2,344

    As mentioned above, you’ll need to have a one on one with an accountant for proper advice around tax and super implications. I wanted to comment a little further on the ‘royalty’ part of your post in the hopes it helps.

    Backing up a bit to the royalty idea… ensure you have a very clear agreement in place with your company (remembering you as a person and your Pty Ltd are considered two separate legal entitites) that speaks to YOU being the owner of copyright in the written works and that you are licensing them to the company for certain purposes, and, therefore they’re paying you a royalty.

    This can be particularly important in the event you ever need to enforce rights in the copyright if it’s infringed… if you want your company to have the power to enforce your personal copyright rights, things need to be in place to ensure the company has that ‘standing’.

    #1221079
    JamesMillar
    Participant
    • Total posts: 1,675

    Not sure who ICB are but their terminology and reasoning is not what I would use.

    1. Dividends are paid to Members (shareholders). A director MAY be a shareholder but often not.
    2. For the purposes of the Super legislation, salary and directors fees paid to directors are subject to super guarantee level (9.5%) as they are “Ordinary times earnings” or OTE.
    3. Individual contractors can fall within the Super guarantee levy.
    4. Modifying online legal templates for anything other than the entity names and dates is risky. You may edit something that undermines the validity of the entire agreement.

    Perhaps try your readiness score here https://www.360partners.com.au/business-readiness-score

    #1221080
    bb1
    Participant
    • Total posts: 4,472
    JamesMillar, post: 267099, member: 5318 wrote:
    Not sure who ICB are but their terminology and reasoning is not what I would use.

    e

    Institute of Certified Bookkeepers, I’ve looked at their membership criteria, basically if you pay them dollars you can become a member. It’s a worry,

    #1221081
    JamesMillar
    Participant
    • Total posts: 1,675
    bb1, post: 267108, member: 53375 wrote:
    Institute of Certified Bookkeepers, I’ve looked at their membership criteria, basically if you pay them dollars you can become a member. It’s a worry,

    To be honest Bert a lot of the major accounting bodies are not necessarily mind blowing in terms of their quality. They play a big game with the “professional” card but I think we all know that term is often misused.

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