Owning a small business can be risky and challenging.
Have you considered forming a company? By forming a company, there will be more paperwork and expense but you could also gain legal and tax advantages.
The main advantage of forming a company is that you can protect your personal assets. A company is considered to be a separate legal entity which means that it can own property, carry on business, sue and be sued in its own name. A company is responsible for its own debts. This means that creditors of a company can only seek payment from the company’s assets, not your personal assets. Therefore, a business owner does not risk losing their home, car or savings.
Generally, suppliers and customers often view companies as more stable than other small businesses. When you put “Pty Ltd” after your business name, the impression given is that the business is permanent, credible and stable.
Finally, companies are taxed on their profits. They can reduce their taxable profits by claiming genuine business expenses such as marketing, travel and advertising.
If you would like to find out more information about changing your small business into a company, seek advice from a qualified accountant.