Sole Trader or LLC for my new Contract business

Hi all,

I'm seeking tax and financial advices on my future business/plans. I'm currently owning my primary residence and one IP (under my name). Currently me and my wife both are working and we are in 180K+ tax band.

I'm planning to switch from PAYG to set up a business and get attractive daily rate (through contracting) + GST. If it's gonna generate more than 200K per annum. What's the best way to set up my company in order to reduce tax payments.

I wanted to keep buying IPs also; recently my broker let me know that it's hard to buy properties under LLC.

It would be highly appreciated if you could share your thoughts with me.

 

Are you in America?

 

PSI will be the killer. PSI entity may not be a whole lot useful either sine your partner is in a high tax bracket as well.
Will each of you have more than one client to satisfy some of the PSB rules?
Australian employer?

Generally speaking, a high PAYG income is far superior in servicing than a tiny bit more in self employed income. You can still buy in trusts for asset protection reasons etc.

 

It may also be personal services income and the tax issues should be given advice. Typically you would use a (Pty Ltd) company. A LLC is a different form of US cpm company entity.

Access to finance once you are self employed many be impacted. Your broker should guide this.

 

No. I'm in Australia. I've learnt a bit about company structuring last few weeks. Now I have better idea about how to reduce tax through a Family Trust (with PTY LTD trustee) and bucket companies.

 

LLCs are a special type of company set up in America. It has no application in Australia.

You should keep reading to get some ideas, pay special attention to the 'alienation of personal services income' PSI rules

 

Just make sure the information you are reading applies to Australia.