So, your business is growing and you’re thinking that now is the time to move from a sole trader to a company.
Firstly, you need to understand the difference between the two, as they have different tax, legal and compliance obligations, which are outlined in our blog ‘Business Structure Basics – Know the Terminology’.
Secondly, you need to consider the reasons why you wish to restructure. Whether it be financial, operational or management reasons, as these will impact your decision on whether a company is right for you. Changing your business structure may change things such as your tax, your personal liability, asset protection and ongoing costs.
Thirdly, you should speak with your accountant as to how to handle the restructure from a books and records and taxation point of view. Then speak with a solicitor as to the new company structure. It may be a simple company or their might be a trust involved. Speaking with a solicitor will provide clarity on the benefits and negatives of the options available to you.
After assessing all of the above, if you decide that a company structure is right for your business, then you need to follow these steps (as provided by the Federal Government Department of Industry, Innovation and Science at business.gov.au).
Apply for a company name or business name (if relevant)
This involves registering for an Australian Company Number (ACN), canceling your current ABN and reapplying under your company structure, and applying for any relevant registrations or licences.
Set up a company