Difference between a sole trader and a company

what can a sole trader claim

What is the volume of paperwork and ongoing costs?

A sole trader is a simple business structure so it generally has less paperwork and lower ongoing costs.

  • Business income and expenses go in your individual tax return using a separate business schedule – you do not need to lodge a separate return for your business.
  • Must keep tax records for at least five years. either electronically or on paper.

Ongoing costs:

A company is a more complex business structure so it generally has more paperwork and potentially higher ongoing costs.

  • Company must lodge its own tax return in addition to your individual return, and the returns of any

    associated trusts.

  • Must keep financial records for seven years to comply with requirements under the Corporations Act 2001 .
  • Must keep tax records for at least five years. either electronically or on paper.
  • Company is subject to annual review by the Australian Securities and Investments Commission (ASIC).
  • Obligations and legal requirements include. having a registered officer, principal place of business, regular company meetings – including a written record (minutes) of resolutions, notifying ASIC of key changes etc.
  • A company will continue to exist, even if it has ceased trading, until it is formally deregistered .

Note: The level of complexity changes depending on what kind of company you’re setting up.

Ongoing costs:

Source: www.business.gov.au

Category: Forex

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