Sharon: When setting up your business, it’s so important to ensure that you’ve got the right business structure to set you up legally, so that you don’t come into any pitfalls and leave yourself open to any kind of legal issues. It’s also important to make sure that this is set up correctly from a tax and profit perspective. That’s probably something to really look at and speak to someone about (like yourself or one of your team) and make sure they’ve got that structure right.
Ben: That’s a good point, actually – tax is often a huge component. You’ve got to pay tax on profit, so the profit is not all yours. However the amount of tax you need to pay, varies depending on how your business is set up:
Sole trader: You might pay up to 47% in tax in Australia, which is almost half of your profit,
Company: Company tax rate as a business is sitting around 26% as a flat rate of tax,
Trust: If you’re structured as a trust, you get to choose who you give that profit to. It could be you, it could be to other family members who are on a lower tax bracket than you – so you might pay even less than the 26% company tax, so it does make a huge difference.
Over the years, we’ve saved our clients close to $12 million in tax, which is huge. But the biggest impact on that number has to do with the client’s business structure. So, yeah, getting your business structure right is extremely important.
Listen to the full episode of this interview at The @SharonCliffe Podcast at https://podcasts.apple.com/au/podcast/ben-walker-the-3-keys-to-wealth-creation/id1555815785?i=1000512309094
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