If there is more than one director, you will not have full control. In a company structure, if you are the only director, you will have full control over your business, but certain decisions must still be recorded as resolutions of the company. This also means that you are personally liable and responsible for all aspects of running the business. In a sole trader structure, you will have full control over your business. You may also receive money via shares, dividends or loans. The company is liable.Īs a sole trader you can take money out of your business account as personal drawings.Ī separate business bank account isn’t compulsory for sole traders, but it is recommended to keep track of your business finances.Ī separate business bank account is mandatory for a company.Īs a director, the company may pay you a salary, wages or director's fees, but you cannot simply withdraw money as ‘personal drawings’ from the company. Generally, directors will not be held liable for the debt of a WorkCover claim. You require workers’ compensation insurance if you employ staff.Īs with sole traders, your business activities will determine the type of insurance you need.ĭirectors and officers liability insurance is not compulsory but may be considered by directors. You should consider insurance for personal injuries, disability and death, as sole traders aren’t covered by workers’ compensation insurance. Your business activities will determine the type of insurance you need, for example the business type, whether you sell products or services and if you employ people. The company may sell these assets to help pay its debts. Even when you cease as a director, you are liable for the period you were a director.Ī company can own property or assets, and these belong to the company – not the directors nor the shareholders. However, your personal assets can also be at risk if you’re a director of a company and the company can’t pay its debts.Īs a director, you are personally liable for pay as you go (PAYG) withholding and superannuation debts. The company is generally liable for all business debts. There is no division between business assets or personal assets (including your share of joint assets such as houses or cars).Īssets in your name can be used to pay business debts. You are personally liable for financial or tax debts in a sole trader business structure. If you receive funds from your company, then you must show the funds on your individual tax return. Even if you own the company (you are a shareholder), the money belongs to the company.Ī separate business bank account is mandatory for a company.Īs a director, the company may pay you wages or directors’ fees, but you cannot draw money from the company as personal drawings. Money the company earns belongs to the company. You can withdraw money from your business bank account. You can claim deductions for costs incurred in running your business. This means you are also responsible for any tax your business must pay. The Australian Taxation Office (ATO) treats the money you earn in your sole trader business as your individual income. These requirements include having:Ī written record of meetings and resolutions. You will also need to keep records that show your compliance with your other obligations and legal requirements of companies. Record and explain transactions and financial position and performanceĮnable true and fair financial statements to be prepared and audited.Ĭompanies are subject to annual review by the Australian Securities and Investments Commission (ASIC) keep financial records for at least 7 years to comply with the Corporations Act 2001.You need to make sure you notify government agencies of any business changes within 28 days.Ī company generally has more paperwork and potentially higher ongoing costs. You need to keep your financial records, including tax returns, for 5 years.
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |