When you set out to open up a business, you need to decide on the structure which is most suitable to your circumstances. Different rules have different implications including tax consequences and personal liability.

The chart below outlines the various features of the most used structures:

Note that individuals are taxed at a sliding scale whereby the higher the income, the higher the tax rate. Individuals also enjoy a tax-free threshold. Meaning any amount earned up to and less the threshold amount which is $18,200 for FY2021-2022, will not attract tax liability.

In a company structure, directors are not liable for company’s debt or losses as long as they have not breached any of director duties or other obligations of Corporations Act, exposing them to personal liability.

A company must be registered for GST, if its turnover is above $75,000 and PAYG if it employs anyone.  

Please note that this short note does not constitute legal advice and should not be relied as such. If you require legal advice please contact us on 02 8014 5818 or email info@checkslaw.com.au.