The Company Business Structure Explained

The company structure is one of the most common business structures.

Clients who have already done their research, or new clients who are looking at setting up a business, a company structure is usually what they opt-in.

For this structure, we have two different tax rates

25% – It used to be 27.5% last 2021 financial year, and it has dropped to 25% in the 2022 financial year.
30% – The 30% is for big entities that are over $10 million, and entities that have passive income.

If they’re receiving income from rental property dividends and they have millions of dollars in shares, they will be taxed at 30% for those kinds of entities.

A company structure gives us some kind of flexibility when it comes to tax planning – if the structure is set up correctly

There are two key roles that we put in place in a company:

Director – A director is someone who controls and does the daily lease agreement and looks after the day-to-day activities of the company.
Shareholder – A shareholder is someone who benefits from the company’s profit. If the company’s making a profit, they can take benefits of that profit when we declare dividends. The shareholder’s job is to make sure that the shares are held correctly. We can hold the shares personally through a discretionary family trust or a self-managed super fund. There are different ways you can hold shares.

Asset Protection

We want to make sure when you’re trading via company, we have those asset protections in place. Make sure that the director of the company doesn’t have too many assets in their name. That is just to protect their wealth aside.

If something happens in the company, people can only go after the company’s money, nothing personally in the director’s name. We want to make sure that the director’s wealth or the assets they have bought outside the company are protected.

If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.

From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.

Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.