Hi people, Through further research and kind answers from posters in previous Q's, I have a refined Q. Scenario - 16 yr old sets up sole trader small business, some legal banking roadblocks require business restructure. (likely business turnover - only in the $10's of thousands P.A.) What are the setup costs, running costs involved for each & the tax implications.... 1. - Bare Trust (trustee agreement / certification) sorry I'm not sure of the correct terminology - setup cost??? approx - (I assume a lot more than a company setup cost?) - Taxation - if done correctly with 16 yr old as sole beneficiary I assume 16yr old would be taxed at his PAYG scale - according to his circumstances..... - ballpark accounting running cost P.A. ?? 2. - I understand a company would cost approx $1k to setup.... - what is totally foreign and ignorant to me is how the taxation works.... Is there a good link i have'nt found yet ie: in short - Does the company gets taxed on its sales, then the distribution of those said sales profits remaining after the company is taxed at 27.5%? is then distributed to the shareholders who are then taxed again based on their personal tax circumstances..... Can distributions to shareholders be at any % amount ie: shareholder 1 get 95%, shareholder 2 gets 5%.... etc - ballpark accounting running cost P.A. ?? Any general advice is greatly appreciated, next stop an accountant
Company would be taxed on its profits NOT sales. Profit after tax could either be distributed to shareholders (whom will pay their marginal tax rate on it minus the franking credits for the company paid tax) or retained with in the company. Shareholder percentages can be whatever you want, however if it is expected to have a lot of growth in the business you might want to look into having shares held by a discretionary trust so there is flexibility in how the distributions can be made. I’d say $1-2k per year running costs if the financials are fairly simple. Asic Annual fee, accounting fees etc. Regards, Jason
You would need legal advice on the bare trust. It could be an express trust set up by deed or an informal without a deed. Trustee is legal owner but it would be the sole beneficial owner that is taxed
perhaps a little Paul, per start of this post - i was trying to explain - that I have a refined question so as not to muddy with variety of other questions i had in previous different post
