Your Business Angels - Why we would never recommend you to be a sole trader
You pay too much tax to start with.

Why we would never recommend you to be a sole trader
You pay too much tax to start with.


You could contact us now and see what we are able to do to help you reduce tax and save for the future, and / or you can read on.

So, it was a good idea to go into business; you applied for an ABN thought that being a sole trader was the way to go, and now a few years later, you’re wondering why you pay so much tax and sometimes things are so tricky.

Here are the reasons we will always recommend you trade in a company if you have an income over $75,000+

  1. As a sole trader, you can pay more tax than other structures. As you earn more money, you move into a higher tax bracket, and therefore you spend more and more tax on the structure. Unless you purposely put money aside in your superannuation or negatively geared investments (and most sole traders don’t), the more you earn, the more you pay tax.

In a company structure, you can pay yourself a salary and then save money at the company rate of tax which is probably a lot lower than your higher rate of tax as a sole trader. This simple move can fix your mind to tax planning, saving, and creating wealth.

  1. As a sole trader, you are liable for everything. If something goes wrong and your insurance won’t cover whatever happened, you are personally responsible. Have a debt with a creditor. Even if they don’t have a personal guarantee, you are still liable, which is the same with the taxman.

In a company structure, you can have some protection if you are careful that you take your salary and have timely compliance. While a company doesn’t protect you from everything, it’s well ahead of what can happen as a sole trader.

  1. By being salaried within your own company, you can plan how to protect your home. For example, if your partner has an income, your partner would pay all your mortgage to minimise the arguments about contribution of something that went wrong. No one ever plans to screw up their business and have things go wrong when operating a business, but it’s best to have some protection in place, and trading and a company instead of a sole trader ABN is a good start.

Apart from purchasing a company structure, in our experience, there is little a few additional costs an accounting to complete company accounts or sole trader accounts. The only difference is you are processing a salary for yourself if you’re the only person working in the company, and that may have some cost but a tremendous amount of benefit.

Serviced by related company Fresh Number Pty Ltd

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