Business structure
The type of legal structure used for a business will effect the manner profit is taxed and the extent the owners are liable for debts of the business.

The main choices are:

	Sole trader or partnership Profits are taxed in the hands of the owners of the business and losses of the business may be offset against any other income they earn. The owners are liable to pay the debts of the business if it fails.
	Company Incorporation makes the business a separate legal entity with its owners being shareholders and directors. A company pays tax on its profits at the corporate tax rate (lower than the highest personal tax rate) and its losses cannot be deducted from shareholders’ (owners’) other income. Shareholders pay tax on dividends they receive from the company but they receive a rebate (franking credit) for tax paid by the company. Generally speaking (there are exceptions) shareholders/directors will not be responsible for the debts of the company if the business fails.
	Trust A Trust has a trustee who is appointed to run the business for the benefit of the trust’s beneficiaries. The beneficiaries would generally be those operating the business and/or members of their family. Profits are taxed in the hands of the beneficiaries but they can not claim losses of the business as deductions from their other income. If the trustee is a company the business will have limited liability. Many businesses start up as sole traders or partnerships and then progress to incorporation or trust status when they become established.

Business records
Record keeping is an unwelcome chore for many but it is important for all businesses to have adequate financial records which are kept up-to-date. Apart from the need to complete BAS reports and comply with legal requirements, businesses need to have proper financial controls and information necessary for effective business management.

When setting up a business owners should check what records the business will need to keep, how they should be kept and by whom.

It is important to choose a system and software that will grow with the business.

Employer responsibilities
If the business has employees (the owners themselves may be employees if the business is operated through a company) it will have a number of obligations.

These include:

	Registration for PAYG withholding from employees’ wages.
	Payment of award superannuation.
	Compulsory workers compensation insurance.
	Lodgement of fringe benefits tax return and payment of FBT.
	Superannuation.
	Payroll tax (for larger payrolls).

Taxation
Australia’s taxation system is complex and most businesses are required to pay taxes to both State and Federal governments. These include:

	Income tax – the manner in which the business is taxed on its profits will depend on its legal structure.
	Capital gains tax – is payable in respect to capital gains at rates determined in accordance with income tax legislation.
	GST – an indirect, broad based consumption tax payable at the rate of 10% on sales of most goods and services.
	Payroll tax – is payable by businesses with payrolls in excess of a specified threshold.
	The tax varies from state to state, and there are also national "grouping" provisions.
	Fringe benefits tax – is payable on designated fringe benefits paid to, or on behalf of, employees of the business.
	Land tax – may be payable with rates and tax thresholds varying from state to state.
	Customs and excise duties – are payable in for a range of imported goods and locally produced liquor and tobacco products.
	Withholding tax – must be deducted from interest and unfranked dividends paid to foreign residents.
	Stamp duty – imposed on a number of instruments and transactions.

Registration and licensing
Depending on the structure and type of business operated, most businesses will be required to register with different authorities.These could include:

	Registration of the business name(s) under which the business will operate.
	Registration for PAYG withholding.
	Obtaining an Australian Business Number.
	Obtaining a tax file number.
	Registration of an industrial workplace.
	Licences/authorities required to operate different types of businesses, store flammable products, hazardous chemicals etc.

Government assistance
Both Federal and State governments have programs specifically designed to assist businesses and provide employment and export opportunities, such as:

	AusIndustry programs.
	Export development grants and other assistance for exporters.
	Tax concessions and grants to encourage industrial research and development.
	Payroll tax concessions and subsidies payable to employers to encourage apprenticeships, traineeships and jobs for disadvantaged groups.
	Advice, training and publications for people starting new businesses.

Business advice
Sawyer Hill & Brooks are able to provide advice and assistance in relation to almost all aspects of starting a new business. Our business advisers can:

	Work with you to formulate your new business proposals and assess financial feasibility.
	Work with you to formulate your new business proposals and assess financial feasibility.
	Assist in obtaining finance for a new business.
	Advise on the most suitable legal structure for the business.
	Help you set-up your business records and financial controls and give advice on the most efficient and effective way to keep them.
	Arrange for PAYG withholding registration and advise on the obligations of the business in relation to its staff.
	Advise on the most effective tax planning arrangements for your business as well as ensuring compliance with the requirements of the various revenue authorities.
	Provide continuing advice on the financial management of the business including production of financial reports which show how the business is performing and its financial position.
	Arrange for you to receive proper advice and service as necessary from other professionals, eg solicitors, insurance brokers etc.