Are you a Sole Trader?
Already operating or considering starting a business as a sole trader?
Berwick Tax Accountants Tax Accountants in Caulfiled can help as we are a 'one-stop-shop' for accounting services and tax advice for small businesses and self-employed individuals.
At Berwick Tax Accountants, we offer a number of accounting solutions to assist you as a sole trader. Although being a sole trader is one of the simplest ways to get started in business, there are many processes that need to be followed.
A sole tradership is but one of the many different ways in which to operate a business.
What Is a Sole Trader?
Depending on your circumstances or situation, there may be benefits of operating as a sole trader rather than as a company. However, whether a sole trader is right for you will depend on your business objectives, purpose and unique character.
The team at Berwick Tax Accountants can help you determine which structure is suitable for you. Specifically, Berwick Tax Accountants accountants are highly experienced in helping individuals, families and partners set up new businesses.
A sole trader conducts business as an individual and without the benefit of a separate legal entity that is unconnected with the individual. Accordingly, all assets and liabilities of the business are essentially the assets and liabilities of the individual.
The nature of the business of the sole trader, having no separate legal identity, exposes the individual to unlimited liability for the debts and liabilities of the business, meaning that in circumstances where the business fails, the sole trader will become directly accountable to creditors and the personal assets of the sole trader (which may not necessarily be involved with the business) may also become the subject of claims.
Our services include all aspects of tax accounting and planning, pre-30 June reviews, tax cost minimisation strategies, capital gains tax record keeping, BAS and IAS requirements, and cloud bookkeeping services. We will make sure you comply with all statutory requirements at both state and federal levels – it is our job, not yours, to keep up with all the legislation.
Let Berwick Tax Accountants, we take care of your XERO and MYOB bookkeeping needs while you focus on growing your business! We offer bookkeeping services for small businesses in all the major suburbs in Melbourne. We will take care of your books while you focus on making more sales for your small business. Check out our accounting solutions and see which suits your needs.
We ensure that you are structured in the most tax-effective manner so that you can be confident that you are paying the least amount of tax possible. Legally minimising the amount of tax payable is strongly dependent on having the appropriate structure in place so that you can apply the funds towards growing a sustainable business.
Tax Advice for Sole Traders
From a tax perspective, sole traders are unable to reduce tax through income splitting and in their ability to claim business deductions (which must be substantiated as fringe benefits). On the other hand, the sole trader structure is often more simplistic in nature. As well as CGT advantages, the profits raised by the business forms part of the assessable income of the individual which can mean tax is paid at a lower marginal rate, but also quite possibly at a higher marginal rate. Accordingly, in many circumstances, operating a business under a sole trader structure is not only suitable but the most appropriate.
The main advantages of setting up as a sole trader are:
- Total control – You have total control over the business. Decisions can be made quickly and easily, from accounting and financial decisions to general business decisions.
- Easy to change to another operating identity. It is relatively easy to change your operating identity from that of a sole trader to an incorporated company.
- Keep the profit – As the owner of the business, all the profit belongs to you.
- Business affairs are private – When you run an unincorporated business your accounts are not made available to the public, therefore, competitors cannot see what you are earning hence they will know less about how your business works and how it succeeds.
- No need to apply for a separate TFN – Your business profits are taxed with your other income on your personal Income Tax Return.
The reasons why sole traders are often successful are:
- They can offer a more personal approach – A smaller business can have closer contact with their customers and develop a close rapport in order to give a high level of service and customer care.
- They can be sensitive to the needs of their customers – Since you are closer to the customer that allows you to react more quickly to their needs than a larger business.
- Can cater for the needs of local people – Small local businesses will be closer to the community and can develop good business relationships with their understanding of the area and local knowledge.
Are you already operating or considering starting a business as a sole trader? Berwick Tax Accountants can help as we are a 'one-stop-shop' for accounting services and tax advice for sole traders and small businesses.
Providing accounting, tax and business advisory to professional services industries comes naturally to Berwick Tax Accountants. We have a large clientele of professional services clients who seek advice and knowledge specific to their industry.
The main disadvantages of being a sole trader are:
- You are personally liable and accountable for all your businesses debts – Should your business fail you could end up losing your personal assets such as your home, car, etc.
- Can be difficult to raise finance – When you run a small unincorporated business, banks will not lend you large sums and you may find raising finance for the business is very difficult unless you are prepared to change your ownership status.
- Can be difficult to enjoy economies of scale – Smaller business often find that they cannot buy supplies in bulk and do not enjoy the same discounts as larger businesses.
Building and maintaining a successful business in today’s rapidly changing environment is a balancing act. Sustaining year on year growth, while keeping up to date with commercial and legislative compliance and managing the challenges of daily business operations, places huge demands on business owners and directors.
Our specialist advisors work with you in a role to help you plan and implement contemporary business practices that will allow you to keep a close eye on the detail while not losing sight of the big picture.
Our Self Managed Super administration service can help you achieve the benefits of an SMSF by taking care of the administration and compliance of your SMSF, creating free time for you to focus on the critical job of managing the investments of your fund.
With a self-managed super fund, you are in charge of your super and where it is invested, plus you manage those investments yourself.
At Berwick Tax Accountants we provides comprehensive financial advice to our clients with an enthusiastic and proactive approach. Our strong team of experienced professionals will work with you towards identifying valuable solutions on how best to achieve your goals. Berwick Tax Accountants is a Melbourne based Chartered Accounting firm offering timely and cost-effective services to both individuals and businesses. We consist of a team of accountants and business consultants dedicated to providing the highest quality accounting, taxation, bookkeeping, and business advisory services.
Sole traders are one of the easiest and cheapest ways to get started in business, but there are many legal and tax formalities which can be confusing.
If you are like most tradies or sole traders, you just want to get on with what you do best, and let someone else deal with your receipts, tax obligations; GST, BAS and general paperwork.
As a small business, Berwick Tax Accountants Accounting services can relate, we understand that it’s hard to do everything yourself. Finding good reliable partners is also difficult.
The team at Berwick Tax Accountants are flexible in our sole trader solutions. We can look after all your books, help you with your invoicing, BAS and be there to support you. We can be your full time accounting partner or just the typical once a year tax compliance or even somewhere in between.
At Berwick Tax Accountants, we look after many sole trader businesses from various industries, hair dressers, carpenters, electricians, home maintenance, florist’s plumbers and cake makers, just to name a few.
Since its inception, Berwick Tax Accountants has been at the forefront of tax and accounting, providing a broad range of services to local businesses in Melbourne. We offer Individual Tax Returns, Business Taxation and Accounting, Financial Planning, Self Managed Superannuation Funds, and Bookkeeping services.
We have extensive experience in servicing the manufacturing industry, including the provision of accounting, information technology, and audit services, and regular periodic management reporting. Supplemented with more detailed financial analysis, this lies at the heart of astute commercial decision making.
Whether you are running an SME, are in a partnership or a sole trader, the calculation of tax will differ.
Taxation compliance and the calculation of tax varies markedly dependant upon the type of business entity. Any new or existing business should stay well informed by their Berwick accountants of the laws to ensure that compliance needs are met. Taxation and accounting laws vary from state to state. Where possible it’s always a good idea to check on the ATO website for more information.
Going at it alone and working for yourself may seem intimidating at first, but it can also be deeply rewarding. Getting the tax and accounting part right is the bread and butter part of running a business as a sole trader. Sole traders declare their business income (or loss) within their personal income tax and pay individual tax rates. Call on the experience and expertise of the team at Berwick Tax Accountants Accounting Services in Berwick, to have all of your sole trader financial needs addressed under one roof.
For sole traders, partnerships and companies, the ATO will assess whether or not these business entities should be using PAYG instalments. Instalments that are paid to the ATO are then credited against the income tax assessment. This happens when you lodge the tax return at the end of the fiscal year.
Sole traders and other entities should always be mindful of income tax that they need to pay. Either by setting aside this money in a separate account, or arranging to make voluntary payments to the ATO. Another important factor to being a sole trader is making voluntary and regular payments into Superannuation. This is a much neglected and tedious part of working for oneself, that is often overlooked.
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Our experience and relationship with franchise groups give us real-time insight into franchise systems and their performance. We provide franchises with business, taxation and accounting services. We can also act as consultants to the head franchisors in setting up cloud accounting & business and structures.
At Berwick Tax Accountants, our specialist property tax accountants in Melbourne are renowned for their property tax accounting services for property investors. Our property tax accounting and tax advice extend to the various estate planning factors including ownership and control of assets.