When to Switch from a Sole Trader to a Company | Sole Trader vs. Company
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- เผยแพร่เมื่อ 21 ก.ค. 2024
- When starting a business, you may come across the situation of should you run as a sole trader or should you get up a Pty Ltd Company. In today’s video, I will talk about the pros and cons of being a sole trader or running a small company. I also talk about when you should switch from a sole trader to a company.
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📖 Chapters
0:00 Intro
0:17 Sole Trader vs. Company
0:55 Sole Trader Basics
2:32 Company Basics
4:42 When to Switch to a Company
7:57 Summary
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Ethan 'Rooshock' (Rucioch) is an Australian business owner in his mid 20's. He is the owner and director of Rooshock Accounting, an accounting firm. He is also the creator of an NFT project, Rooshocks. In his spare time, he enjoys travelling as well as watching countless hours of sport. On this channel you will find a range of different content, including personal finance, business advice, tax tips, crypto tax tips, NFT discussions and even some social media marketing content.
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Disclaimer
The information in this video and on this TH-cam channel is for entertainment and general information purposes only. It should not be taken as constituting professional advice. You should not rely on it as financial advice. There are always risks in any financial decision and all decisions should be made on an individual basis. You should conduct your own research and seek independent professional advice where needed. Some of the links in this video or video description may be affiliate links. Ethan Rucioch, Rooshock Enterprises Pty Ltd, Rooshocks NFT Pty Ltd or any other related party may receive a commission through these.
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#soletradervscompany #soletrader #company
Looking for further advice on this topic, get in touch with my business Rooshock Accounting and we would be happy to help. All the links are in the video description.
This might be the simplest way I’ve ever heard it described! 🙌
Glad that’s how you found it!
Such good advice! Thanks Ethan 💖
No worries!!
really good information, thank you. I am at that stage of going from Sole trader potentially however, your video has given me more to consider. Appreciate your video mate.
Glad it has been helpful!
the last few vids have been 🔥🔥🔥
Thanks!!
Great video but you just missed about the PSI when setting up a company. That wouldn’t change anything in terms of tax flexibilitycompared to sole trader. Just more overhead right ?
If you have PSI income then it is a completely different conversation if you're looking at things just for tax purposes.
@@EthanRooshock Do you have a video focusing on PSI income with strategies or tax benefits we can still have? or do you reckon this would be pretty much as working as payg with same rules for deductions?
Not at the moment but in general the rules are going to be similar to working PAYG.@@jordanpio2945
Would love a video on your thoughts about this self payment structure:
- set up a pty ltd company (2 shareholders)
- both shareholders also set up a sole trader ABN
- rather than the shareholders taking money out of the company via dividends or wages, instead funds are taken out by invoicing the company from the shareholders sole trader ABN
This way the shareholders are able to get paid based on the work completed which is itemised in each invoice, but as the shareholders are not deemed as employees of the company there is no superannuation or workers comp required to be paid. Of course these amounts received via the invoices are added to the shareholders personal income tax, so the same amount of tax is paid to the ATO.
Are there any issues with this approach?
Definitely way too specific for me to answer on TH-cam sorry. You should be speaking to a tax agent directly.
Just one note, you should look into when a contractor is required to be paid super. You can't just avoid super by paying contractors.
Hi mate, your videos are awesome. I am a sole trader, is it safe to take cash in my cleaning business though not providing invoice. Is it safe not showing as income. Thanks
Thanks! I mean if you’re asking if you can take cash and not declare it, that would be tax fraud so I can’t advise that haha
Is it worth having a sole trader and company business? Does the company profit get added to my sole trader income
Depends on the situation. As discussed in the video, there are certain situations where a company may make sense.
No. A company however may pay you a wage or dividends that get added to your personal taxable income.
Just moved to AUS from NZ and my previous employer wants to keep me engaged but as a contractor, would you recommend doing this as a sole trader or company? Thanks
You'd need to get individual advice. I can't provide that on TH-cam. I cover the basics steps in this video.
Ive heard that with a company you can claim more deductions on business related expenses compared to a sole trader.
Im currently a sole trader and i spent a good amount on online tools, and trainings, etc that are all business related.
Would there be a difference in how these deductions effect my taxs whether im a sole trader or set up a company?
As long as they are business related, they will be claimable no matter the entity.
$45,001 - $120,000 $5,092 plus 32.5 cents for each $1 over $45,000. How come company tax with 25% is not a better option for 100K?
Do you need access to that $100K? If so, you would then need to pay yourself a wage/dividend and then be taxed at marginal rates anyway.
I have an ABN (sole trader), I registered a business name, registered a Domain name, Planning to buy a car to travel and meet clients to generate some income, But the initial set up and the qualifications that I am doing, like getting a training on software to do my drafting, also I earn a salary and I pay tax on TFN, can I offset any of those with my loses on setting up my business, may be I make some money in few years till I get ready.
You'll need to look into the Non Commercial Loss rules
Bro can you be my tax accountant please
Sure send me an email.
Great advice my man even though I think you might be guy who does the bunnings skit commercials 😀
Thanks lol