Brother, I appreciate your efforts. I research this stuff from time to time but get discouraged. It's just so nice to have a human being speak clearly on how this stuff works. I'm very serious about starting my business this year, so I NEED this information. Good man.
Am starting a business an I asked today a lady who’s running another business she gave me exactly the same advice to opt for a company thank you so much
Yooo Davie, this is really informative and easy to digest. I know you posted this video awhile back, but I was wondering what if I also want to buy a house? Should I buy it through the company or my own name? What if I live in it?
Thank Davie! Using your example of $200K income, if you have a company, get taxed at 26% and are the only owner of the business. When you distribute all the profit, wouldn't you ultimately pay the 45% because you'd need to declare the $200K as dividends in your individual return?
Yes, thats if you distribute the profit. The director determines what dividend to pay each year. If they dont pay the dividend out then the tax on the profit is only 26%. And to answer your next question, you dont have to always invest in your own name so there isnt always a need to pay it all out as a dividend and pay 45%. Why not use the money to invest in the business/company or grow you business with it. If you are going to use the money personally because you need it then yes you will ultimately pay the 45%.
@@DavieMach how do you recommend a director (who is also working for the company) pays themself? If they take a wage then that gets taxed at the individual tax rate, so does dividends. What other option is there?
@@kyzzlee Hard to say unless we review the situation. Depends on the profit of the business and income level of the director personally (if they have other income). Is the director a sole shareholder? Its quite difficult to say without knowing the full picture. Maybe good for you to organise a free consultation or speak to your accountant.
You only need to lodge 1 tax return for soletrader but with company you need to lodge personal and company return. Most clients who open up a Pty Ltd company require an accountant to do the returns whereas soletraders can do their own taxes
Please do best structure for individual high income earner >$180k annually that planning to side hustle into investing properties. Is it a trust with corporate as trustee or just a company to run the the business better? Thanks
if in a hypothetical case, I have 10 vehicles under my name and I rent them. What is the best way to formalize myself and how would taxes apply? What could I discount?
Hey Davie, great video thanks for simplifying the differences. Just wanted to clarify when mention 180k is the sign to move from sole trader to company - is that purely total ABN revenue only or total personal income (including salary and other income you might have)?
Hey mate, what options does a sole trader have to reduce personal assets risk? Does personal and/or professional indemnity insurance cover genuine mistakes, damage etc that are not wilful or illegal?
so what happens if we want both a sole trader for a smaller busines and a company for larger different bisness or do u just have it a company and do both
How about if you are a non-resident and moving overseas and you have an ongoing company that does digital works for Australian businesses such as websites etc. here in Australia? Should I pay more tax?
Hello, that's a good question but hard to answer without the full picture. Best you book a consultation with the BOXAS team or speak to your accountant.
Surely there are also different tax deduction benefits to a company structure vs sole trader, right? It would be nice to see a video on that. Further, as a sole trader you don't pay payroll tax (though are taxed at income tax anyway for the whole business), which I imagine is more than the company 27.5% + payroll tax & super?
@@DavieMach Hi Davie great video, Ryan asked the question and I think the answer given is what I was looking for. Could you confirm if that would be similiar as a stocktrader/investor? I was looking at investing a substantial amount, and thought it's best to go straight into company structure, however makes sense to do that when the income is coming through first at around 180k plus, would that be right?? Thank you in advance for any reply.
@@janenes2782 when share trading it gets messy if you have to restructure from soletrader to company as you may have to sell all your shares in your name and pay the tax then move to a company. Could be a better idea to move straight to company from the start if you are investing a substantial amount. Best to have a chat to an accountant and get detailed advice. I wouldn’t get advice on RUclips if you are investing a significant amount
@@DavieMach Thank you Davie, appreciate your reply. Will do, as I wanted to combine investment properties into the mix also, have been watching and learning from many of your videos yesterday, theyre so helpful and I've learnt so much, thank you for the awesome content you share, have a fabulous day!
Sorry you will have to check with Amazon with that question. You need to setup GST and Income tax registrations with ato and lodge BAS. Best to speak to an accountant to show you the way.
If you start as a sole trader can you convert your business in a company later on? Or do you have to create a completely new business with ABN and everything?
@@DavieMach Thanks. So pretty much if you're 3 years in a sole trader business trader with active staff etc... you have to create a whole new entity/business?
@@techsavytronicstechsavytro528 Yes thats correct, it has to be a separate entity. Thats the reason why its useful. Its separated from your personal name.
Hey, you dont get double tax. The tax paid by the company is passed over to the employee/you. The wage is a tax deduction for the company. The company pays the wage to you but withholds some of the wages for income tax. This gets paid to the ATO. Then when you lodge your personal tax return you would have your wages as your income but tax credit paid by your company.
Is it easy to transfer a Sole Trader ABN to a Company ABN? I will not be earning the amount required to pay personal tax anywhere. I am looking at self-publishing books through online platforms. Some are asking for an ABN even though the profit generated is relatively low initially and may stay that way for some time. I was thinking of starting as a Sole Trader and transferring down the track to a company if I undertake another more successful venture.
Hi there . I am a New Zealand citizen planning to move to Australia. Can I be a Sole Trader or open a company by my own or do I need to do it with an Australian? For both way? Thanks alot
What is the T7 field in the bas form? It's provided from the ato. Is that like a company tax installment so that you can help meet paying company tax at the end of financial year?
It’s a prepayment of income tax. The ato received your previous years tax return and there was a tax payable so now they want you to prepay taxes for the current year. It will give you a credit so you don’t pay so much when you lodge your next tax return.
@@DavieMach What happens if you are PSI? The ATO is taking money i'd have to spend anyway. I assume from the previous years if I was PSI in previous years, the T7 field would be zero.
I don't quite understand how you claim that 27.5% tax rate if you pay taxes at you personal income tax levels when you pay yourself from the company as company income is not your income.
Your scenario is if you take all the profits of the business and spend it personally. But when you run businesses you would like to reinvest your profits so then you would want the cheapest tax rate so why not pay yourself a modest wage then keep the profits in the company at 27.5 (25% currently) to grow your business more?
@@DavieMach So you roll over to the next financial year to reduce the total tax percent and then pay the employee the next following financial year?. I can't anyway as I'm on PSI.
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Very helpful, thank you 🙂
No problem, glad you found it helpful.
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
Brother, I appreciate your efforts. I research this stuff from time to time but get discouraged. It's just so nice to have a human being speak clearly on how this stuff works. I'm very serious about starting my business this year, so I NEED this information. Good man.
No problem mate. Glad its helping. Focus on providing value and the money will come. You got this!
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
Am starting a business an I asked today a lady who’s running another business she gave me exactly the same advice to opt for a company thank you so much
Nice to hear :)
Good luck and enjoy the journey
One of the best videos I've watched, so straightforward. Thank you. We are based in the UK 🙂
No problem, my video was tailored to Aussie laws so definitely do some more research into this for UK laws! Thanks for watching mate
This is the exact information I was looking for - very helpful thanks!
Glad it’s helped!
Thanks Davie, I'm on the business register page now, big help!
No problem!
Yooo Davie, this is really informative and easy to digest. I know you posted this video awhile back, but I was wondering what if I also want to buy a house? Should I buy it through the company or my own name? What if I live in it?
Thank Davie! Using your example of $200K income, if you have a company, get taxed at 26% and are the only owner of the business. When you distribute all the profit, wouldn't you ultimately pay the 45% because you'd need to declare the $200K as dividends in your individual return?
Yes, thats if you distribute the profit.
The director determines what dividend to pay each year. If they dont pay the dividend out then the tax on the profit is only 26%.
And to answer your next question, you dont have to always invest in your own name so there isnt always a need to pay it all out as a dividend and pay 45%. Why not use the money to invest in the business/company or grow you business with it. If you are going to use the money personally because you need it then yes you will ultimately pay the 45%.
@@DavieMach how do you recommend a director (who is also working for the company) pays themself? If they take a wage then that gets taxed at the individual tax rate, so does dividends. What other option is there?
@@kyzzlee Hard to say unless we review the situation. Depends on the profit of the business and income level of the director personally (if they have other income). Is the director a sole shareholder?
Its quite difficult to say without knowing the full picture. Maybe good for you to organise a free consultation or speak to your accountant.
But you can’t use company money for your living right? You need to pay yourself salary then it will be taxed anyways??
How much more demanding are the *_'compliance'_* requirements for a Pty Ltd compared to a Sole Trader?
You only need to lodge 1 tax return for soletrader but with company you need to lodge personal and company return. Most clients who open up a Pty Ltd company require an accountant to do the returns whereas soletraders can do their own taxes
Please do best structure for individual high income earner >$180k annually that planning to side hustle into investing properties. Is it a trust with corporate as trustee or just a company to run the the business better? Thanks
Great video and explanation. Thank you
Which one is better structure for a small online clothing business… 🙏🏻
if in a hypothetical case, I have 10 vehicles under my name and I rent them. What is the best way to formalize myself and how would taxes apply? What could I discount?
Hey Davie, great video thanks for simplifying the differences. Just wanted to clarify when mention 180k is the sign to move from sole trader to company - is that purely total ABN revenue only or total personal income (including salary and other income you might have)?
Thank you! Really simple and easy to understand.
Glad it was helpful!
This video will help my clients enormously, thank you, Davie!
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
Hey mate, what options does a sole trader have to reduce personal assets risk? Does personal and/or professional indemnity insurance cover genuine mistakes, damage etc that are not wilful or illegal?
Best to chat to an insurance broker but in general I believe yes.
This was super helpful. Cheers.
no problem!
Very formative, Thank you.
Glad it was helpful!
So clear and well explained, thanks you!
No problem
Thanks for watching
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
Good content mate. Thanks
so what happens if we want both a sole trader for a smaller busines and a company for larger different bisness or do u just have it a company and do both
Good simple advice
Cheers !
How about if you are a non-resident and moving overseas and you have an ongoing company that does digital works for Australian businesses such as websites etc. here in Australia? Should I pay more tax?
Hello, that's a good question but hard to answer without the full picture. Best you book a consultation with the BOXAS team or speak to your accountant.
Thank you, really appreciate it
Glad it helped, Jacob!
Surely there are also different tax deduction benefits to a company structure vs sole trader, right? It would be nice to see a video on that.
Further, as a sole trader you don't pay payroll tax (though are taxed at income tax anyway for the whole business), which I imagine is more than the company 27.5% + payroll tax & super?
Yes we go through that in the when to setup a company structure video.
Is this the same concept for pass through entities, like holding corporations for investments?
Thanks mate appreciated.
No problem 👍
Thank you for the helpful video
thanks
Would you say that it makes more sense to start out as a Sole Trader and convert to a company once you reach a certain income?
Yes that’s correct.
It does depend but most of the time yes
@@DavieMach Hi Davie great video, Ryan asked the question and I think the answer given is what I was looking for.
Could you confirm if that would be similiar as a stocktrader/investor?
I was looking at investing a substantial amount, and thought it's best to go straight into company structure, however makes sense to do that when the income is coming through first at around 180k plus, would that be right??
Thank you in advance for any reply.
@@janenes2782 when share trading it gets messy if you have to restructure from soletrader to company as you may have to sell all your shares in your name and pay the tax then move to a company. Could be a better idea to move straight to company from the start if you are investing a substantial amount. Best to have a chat to an accountant and get detailed advice.
I wouldn’t get advice on RUclips if you are investing a significant amount
@@DavieMach Thank you Davie, appreciate your reply. Will do, as I wanted to combine investment properties into the mix also, have been watching and learning from many of your videos yesterday, theyre so helpful and I've learnt so much, thank you for the awesome content you share, have a fabulous day!
@@janenes2782 that’s so great to hear :)
Thank you for watching
I am an IT professional. Can we get save more tax if we move from PAYG to ABN? Many people are telling that it is risky, is it true?
We should have a video on this coming out in a month. stay tuned!
What happens if you have a full the job but want to start a side hustle.
Thanks clear and helpful
No worries Moji, glad it was helpful.
Can we sell as individuals on amazon without registering any company nd how to pay gst and tax to Australia govt?
Sorry you will have to check with Amazon with that question.
You need to setup GST and Income tax registrations with ato and lodge BAS. Best to speak to an accountant to show you the way.
Great video. Subscribed!
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
If you start as a sole trader can you convert your business in a company later on? Or do you have to create a completely new business with ABN and everything?
You have to create a new entity with new abn, bank account and etc
@@DavieMach Thanks. So pretty much if you're 3 years in a sole trader business trader with active staff etc... you have to create a whole new entity/business?
@@techsavytronicstechsavytro528 Yes thats correct, it has to be a separate entity.
Thats the reason why its useful. Its separated from your personal name.
If you start a company and pay yourself a wage from the company do both the company and yourself have to pay a seperate tax each?
Hey,
you dont get double tax. The tax paid by the company is passed over to the employee/you. The wage is a tax deduction for the company. The company pays the wage to you but withholds some of the wages for income tax. This gets paid to the ATO. Then when you lodge your personal tax return you would have your wages as your income but tax credit paid by your company.
Is it easy to transfer a Sole Trader ABN to a Company ABN? I will not be earning the amount required to pay personal tax anywhere. I am looking at self-publishing books through online platforms. Some are asking for an ABN even though the profit generated is relatively low initially and may stay that way for some time. I was thinking of starting as a Sole Trader and transferring down the track to a company if I undertake another more successful venture.
ABNs are unique numbers that cannot be transfered. So you will have a separate ABN for a Soletrader and Company.
Hi there . I am a New Zealand citizen planning to move to Australia. Can I be a Sole Trader or open a company by my own or do I need to do it with an Australian? For both way? Thanks alot
Yes as a New Zealand Citizen you should be fine to setup a soletrader or a company.
For a company you must be based in Australia
@@DavieMach thank you so much . I am very appreciate that.
What is the T7 field in the bas form? It's provided from the ato. Is that like a company tax installment so that you can help meet paying company tax at the end of financial year?
It’s a prepayment of income tax. The ato received your previous years tax return and there was a tax payable so now they want you to prepay taxes for the current year. It will give you a credit so you don’t pay so much when you lodge your next tax return.
@@DavieMach What happens if you are PSI? The ATO is taking money i'd have to spend anyway. I assume from the previous years if I was PSI in previous years, the T7 field would be zero.
Thanks, very helpful info 👍
Thanks for watching! Glad you found it helpful :)
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
Hey! It looks like this video is broken and wont play
Hey Chris, should be up and running again now!
Thanks mate
Can't seem to play this one
Thanks should be working now!
helped a lot thanks
Glad it helped
I don't quite understand how you claim that 27.5% tax rate if you pay taxes at you personal income tax levels when you pay yourself from the company as company income is not your income.
Your scenario is if you take all the profits of the business and spend it personally. But when you run businesses you would like to reinvest your profits so then you would want the cheapest tax rate so why not pay yourself a modest wage then keep the profits in the company at 27.5 (25% currently) to grow your business more?
@@DavieMach So you roll over to the next financial year to reduce the total tax percent and then pay the employee the next following financial year?. I can't anyway as I'm on PSI.
thank you
You're welcome
Great imfo
Thank u
Thank you for watching!
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
Thanks, that was helpful
Glad you found this video helpful. Thanks for watching!
You can trade with Mr timothy strategies,his the best ever known on bit coin forex trade crypto,coinbase and others
timothygart @ gmail com
🙏🙏🙏🙏🙏
Thanks for watching Kat!
now is 25% for a small company
Thank you
You're welcome!