Running your own business is rewarding but it can be hard work, so it’s understandable if you’re tempted to take on a partner or incorporate. If you’re wondering whether it’s worth maintaining the status quo consider these benefits to being a sole trader.
Save time and money
If you’re not one for paperwork, then being a sole trader is the simplest business structure you can have. It doesn’t cost much to set up and there are less legal and taxation requirements to keep it running smoothly.
It’s up to you whether you register a business name and bank account. You don’t even need to register a new Tax File Number as you can include all your business revenue and expenses in your personal tax return. You may even be able to offset losses from your business against other personal income.
You may however be required to register for an ABN and GST if your turnover is expected to be more than $75,000 per annum, so it’s worth checking with your taxation advisor to ensure you cover all your obligations. But that’s about the extent of the paperwork, there’s no company registrations, accounting audits or partnership returns to complete.
Reap all the profits
One of the biggest advantages to being a sole trader is that you get to keep all the after-tax profits. You’re also responsible for all the expenses, losses and debts, but writing those cheques is a little easier when you know you reap all the rewards.
Enjoy the flexibility
As the sole decision maker you’re answerable only to yourself for every aspect of your business. That means you have the flexibility to decide how you want to operate and what direction your business will take..
You’re still free to employ people to work with you, but that choice is yours to make. Just be sure to check with your lawyer about any additional employee obligations like superannuation contributions, worker’s compensation, payroll tax and PAYG.
The most flexible part of being a sole trader is that you always have the freedom to change your mind. If you decide at a later date that you want to take on a partner, incorporate or even shut up shop, it’s a relatively easy process.
There are many advantages to being a sole trader, but it’s always a good idea to discuss the benefits and risks of a business structure with an expert before making a decision. If you’d like to talk through your choices contact one of the experienced advisors at PMF Legal.