Many small businesses start out as a sole trader and at a certain point, people want to know whether they should have a company.
The top two pros and cons of each are:
Quick and easy to get going
Controlled, managed, and owned by one person
Profit cannot be split for tax purposes
Personally liable for all business taxes, debt, and claims against you - your home may be placed at risk
Personal liability is restricted - owners have protection from creditors and other claims
Greater tax flexibility - profits can be retained in the company or paid to shareholders*
Incorporation costs money - Beany can organise this for $245 plus GST, or you use the self-service offered by the Companies Office website which totals $124.39 plus GST
A separate tax return needs to be prepared for the company and filed with the IRD - Beany packages include the preparation of up to three tax returns, whether they be for individuals or a company, or both
* Unless one person performs most of the services, or services are mostly performed for just one client.
At Beany, the cost for preparing annual accounts for either a sole trader or company are the same and filing of your Companies Office annual return is also included within your accounting fee.
Every situation is unique, so please feel free to reach out to your accountant or our firstname.lastname@example.org team. We're here to help.