Setting yourself up as a sole trader small business
Features and benefits of a sole trader business structure in Australia
If you’re weighing up whether to start your new business as a sole trader, you might consider the following points as some of the key elements of this particular business model. A sole trader business structure:....
1. Is simple to set up and operate
2. Gives you full control of your assets and business decisions
3. Will require fewer reporting requirements and is generally a low-cost structure
4. Allows you to use your individual tax file number (TFN) to lodge tax returns
5. Doesn’t require a separate business bank account, although this is often recommended to make it easier to keep track of your business income and expenses
6. Requires you to keep financial records for at least 5 years
7. One risk is that you have unlimited liability and all your personal assets are at risk if things go wrong
8. The sole trader structure doesn’t allow you to split business profits or losses made with family members
9. You are personally liable to pay tax on all the income derived
10. You can employ staff under this structure - however there are tax, workers compensation insurance and superannuation obligations that then must be met
So, there are several things to consider when you are assessing whether the sole trader structure is the right business model for you. But those things still beg the more fundamental question, are you ready to be your own boss?