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  • #987491
    Sylvia Tavener
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    Hi,

    I’m Sylvia and I am at about to start a new small business with my brother and we we both work full time jobs at the moment but hope to go into full time business in the future.

    What I wonder is if we are better creating it as s joint company or a sole company for tax purposes. If its a joint venture we can both be directors of the company and if it is a Sole trader then I would sub contract to my brother and pay him from the sole company.

    Any help about this would be gratefully received

    Sylvia

    #1163001
    Greg Mawer
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    Hi Sylvia,

    Structuring your business correctly from day 1 is imperative.

    Tax is only one consideration. There are many factors to consider in making the decision.

    Regards,

    #1163002
    Stuart B
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    Sounds exciting Sylvia! What kind of business are you starting?

    #1163003
    MissSassy
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    Hi Sylvia and welcome

    I would suggest that you speak to an accountant about the structure as they can then take your personal circumstances into account before making a decision.

    As previously mentioned this is just one aspect and it varies depending on the business type too.

    #1163004
    Alex (LegalVision)
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    Hi Sylvia,

    Congratulations on your new business! It can be really confusing trying to decide how to structure your business.

    In terms of tax implications, incorporating as a company is a great option as unlike other business structures, companies are taxed at a lower company tax rate (currently 30%).

    Another bonus of choosing a company structure is that a company is a legal entity which is separate to its shareholders and directors. This means that if the company goes insolvent, directors are not personally liable for the company’s debts.

    A shareholders agreement is also really important if you are starting a business with your brother. A shareholders agreement will clarify roles, how much time each party will dedicate to the business, how disputes are resolved and what happens when one partner wishes to leave. Here is a really helpful article on shareholders agreements: buff.ly/Q5xdcS

    Let me know if you need any more help and good luck with your business goals!

    Cheers,

    Nikita

    LegalVision
    [email protected]
    http://www.legalvision.com.au

    #1163005
    StevenMelbourne
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    If you are a small business the tax considerations are probably not too much. I’m not a tax expert but I think most of the time you end up around the same in both these scenarios and end up paying around your personal marginal tax rate.

    Having your brother work for the company may be better as it limits his liability. If you subcontract to him then his work as a unincorporated sole trader may incur “unlimited” liability and if he has to incorporate another company to be contracted to then it can be a pain to pay extra ASIC fees and manage another set of accounts.

    If you are serious about the business should probably seek for some tax advice – it really depends on the size and nature of the business – but better to get it right from the start!

    Cheers,
    Steven

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