There are many benefits – but the time has to be right.
New business registrations have skyrocketed in Australia in recent years, especially during the COVID-19 pandemic. Most businesses commence as sole traders but as they grow it may make good sense to convert o a company. Establishing a company is also a good choice if you want to take on employees, limit your personal liability, obtain working capital/capital expenditure finance, or because your employer or people you contract to would prefer to deal with a company rather than a sole trader.
There also can be significant tax savings, especially in light of the governments’ proposed reduction in company tax rates which have recently dropped to 26%, reducing to 25% for the 2021/2022 financial year.
When is the best time to convert to a company structure?
If you do decide to operate your business from a company, how do you set up your new company specifically for your needs now and in the future, and, how do you appropriately close down your sole trader business and transfer the trading history to your new company?
There are many other considerations, but the first question to answer is ‘should I transition to a company now or later’.
Want more info? A great place to start is to take our 60-second quiz here.