Whether or not you need to be a company

Whether or not you need to be a company

Now theoretically… I'm going to start this off with a disclaimer. I'm not an accountant, I'm not a lawyer. I'm not really able to advise you on whether or not you need to be a company. Having said that, my personal experience, the reasons I started a company from being just a sole trader is when I know that it’s going to be bigger than just a small operation. There are some benefits to being a company. You really probably need to look at your personal circumstance and talk to your accountant to make a thorough decision. But I can definitely share my thoughts on it.


Protecting other investments:


I think if you have other assets or investments; it’s could be a good idea to have a company because that could shield you a little bit if something was to go wrong. If you’re going to grow the business past the point of being just a small income for yourself, you may consider being a company because then there are some benefits in the way that the company can make purchases and assets and liabilities and all those things get handled a little bit differently. Company tax rate is lower than a personal tax rate is after a certain point, which means you can retain the earnings in the company, reinvest it, and pay a lower tax rate on that money rather than personally taking the money because you’re forced to. If you’re not a company, you’re forced to declare the money as yours. Once again, like I said at the beginning, I’m not an accountant so I can’t truly give you solid advice. Once again, these are just my thoughts and opinions. But it was a question I got asked, ‘Do I need to be a company?’


What is your goal for the business:


You've really got to make that decision, am I really going to be a sole practitioner, personal individual that trades my time for money and earns a salary, or am I going to grow something that’s multimillion dollar and I may want to issue shares to other people. It just depends. There are so many different variables that it really does depend.


If you’re serious about growing a big business, I would suggest it’s probably something that you need to look at. Go and talk to your accountant. Get some advice based on your personal circumstance. I’m not even going to really risk trying to answer the question this is definitely what you should do. Because otherwise I might be telling you the wrong information.


A company comes with responsibilities:

Now having said all of that, having a company is a responsibility. Being a director of a company brings a whole bunch of new responsibilities. You've got filing that you've got to do on a regular basis; annually you've got to file company statements. As a director you become liable for everything that’s going on, not that you’re not on your own anyway, but it’s a little bit more structured, more legal, more enforced as a company director.


There are more costs:


The other thing, as a company there are other expenses as well. It’s more expensive to do your tax return. It’s more expensive to set up. It can be more difficult to set up because you want to set it up in a company name. Setting up bank accounts, phone accounts, buying equipment, all of that becomes a little bit more difficult.


Staying as a Sole-trader:


If you’re looking to just be an individual and get an income, trade your time for money on a small level, probably not something you want to go to the trouble of. It’s an expense, there’s extra work, it’s a lot more extra work in fact than just a personal tax return. But if you’re somebody who’s looking to build a bigger business and you think you may want to issue shares to other people, you think it’s going to be a multimillion dollar business, then definitely look at the viability of whether or not you should be a company.


Speak with your Accountant:


Hopefully that’s helped you. I know I haven't given you a solid answer there. I don’t think anybody will in a YouTube video because they won’t know your personal circumstance. If anything, it at least gives you some insight into the way I think about it. Go and talk to your accountant. They’re the best people to give you the advice. If you've got any questions or comments, or if you are an accountant maybe you can leave some comments underneath the video to help answer this question.


About the Author


Ben Fewtrell is a sought-after Business Coach, Keynote Speaker and trainer who has featured in Virgin’s Inflight Magazine and Entertainment Portal, SKY Business and “Secrets of Top Business Builders Exposed”. He is also the host of the popular Business Brain Food Podcast where he interviews leading experts on anything and everything business.

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)

Leave a Reply

Your email address will not be published. Required fields are marked *

business plan template

Get Instant Access to the Business Plan Template that has helped thousands of Business Owners in every sector plan and grow their business.

Learn More
fees and benefits

Our Programs start from as little as $10 a day making it affordable for all business types.

Learn More

Top Rated Articles

How your company can adapt to the Digital Revolution

Over the last couple of years, technological innovation has brought about a rapid change in the customer service landsca


Will Marketing Automation Help Your Business Grow?

Marketing automation software can benefit your business in a number of ways. It is a great way to increase traffic, enco


How CRM Can Maximize Customer Lifetime Value (CLV)

"Keep your customers always on the frontline," this is a key philosophy to running a successful business. Customers are


Recently Viewed

The Top 5 Challenges of Scaling from Small to Medium

“How can I scale my empire?” If you've ever asked yourself this question, then keep reading to learn about the top 5


Business Coaching for Tradies

Tradies are typically good at what they do, and this can lead to a tradie spending all their time working in the busines


How to Work Less Hours in your Business

Welcome to this video! In this video, click play above to see it, we are going to address on the most requested things

  • Over the past 6 months the incredible team at MMP have supported us to shift our attitude towards our business & month on month our revenue is increasing to the point we will be able to employ additional staff to support our business goals long into the future. Do not regret our decision one single bit!

    • Emma Reece

  • Working with my coach has enabled me to see the areas where my business is failing. This was pretty confronting to me to be honest. MMP has the tools to improve these areas and the guidance on how to implement them.

    • Sharon Robinson

  • I have been working with Max My Profit for approx 3 years now, and over that time I have learnt a lot of things about not only what it takes to run a business, but I have also learnt things about myself. I don't believe i'd be the person or have the business I have today if it wasn't for Max My Profit and our Business Excelerator. Great team to work with if you want to take your business serious!

    • Ben Choy

  • As a new client for Max My Profit (MMP) it has taken no time at all to realise the benefits of business coaching. Despite many years of senior management experience starting a new business requires best practice systems and processes built on a solid platform of detailed planning. I look forward to the benefits of adopting the formula being shared by MMP.

    • Campbell MacLeod

  • Max My Profit Are truly awesome at what they do. They have helped me over the past 12 months to get off the tools in my business and start working on my business. I am looking forward to 2019 with enthusiasm not concern. Thanks so much.

    • Aaron Kemp

  • If you are committed to Growth the Max My Profit Team has the tools and expertise to excelerate all areas of your life. They Care, They Listen, They Understand You as an Individual first then they focus on Your business. Thank you Max My Profit my rating is a 6/5 - Kindest Regards The Mr Handyfix Team

    • Catherine Kavadas

  • The team at Max My Profit are an absolute pleasure to deal with. I love working with a team who is on top of what they are doing and have a clear view of what they are working on with you and helping ensure you get to the end goal.

    • Lauren Watts

  • I have been working with MaxMyProfit over the years and what they do for SME's in growing their business is fantastic. Also due to there knowledge and their supporting material for companies across the 5 lifestyle stages and assisting them through this process day in day out is extremely comforting as a small business owner and have referred them many businesses over the years.

    • Steve Laingy

  • Working with a business coach from MaxMyProfit has been one of the best things I have done for my business. I had several other coaches before MaxMyProfit but these guys are a step above the others. I have seen a significant increase in sales, now have a business that can run itself and the coaching program has paid for itself many times over.

    • Matthew Kitchin

  • Much more than just business coaches. There is an absolute treasure chest of business knowledge in their members site.

    • Iain Campbell

  • Max My Profit are unique as they really partner with you to develop and implement a plan that will drive success for the business. I was hesitant to proceed as previous business coaches tell you what to do and rely on you to implement.

    • Michael de Haan

  • I attended one of Max My Profits introductory events in Melbourne. Having been an accountant for almost 30 years, I was somewhat sceptical. Boy was I wrong. I not only enjoyed the presentation, but I gleaned so much from just that session.

    • Daniel Odd

  • These guys are an absolute wealth of knowledge for Small Business. The programme and support networks they have set up ensure learn more every day and can take your business from good to great. Thanks so much.

    • John Butler