If you plan to grow your business or launch a new venture, you may consider setting up a company. While the process to register a company may sound like a big move for small business owners, the benefits that will come with this type of trading may be worth the effort.
Trading using a company business structure comes with plenty of perks. As such, here are some of the best reasons why choosing to register your business as a company could be the best decision you could make for your venture:
Reduce Your Personal Liability
Registering your business as a sole trader or partnership requires you to take all the legal responsibility, including handling all the debts and losses. In addition, you will also have personal liability if you sell a damaged product or commit a mistake in your services. Because of this, running a business in this structure can put you in a risky situation since your personal assets will also be on the line.
But if you choose to register your business as a company, you and your venture will become a separate legal entity. It means your assets are protected no matter what your business transactions are. As a result, you will not incur the debts incurred by your business.
Minimise Tax Liability
Businesses in a company structure usually have lower tax obligations than the sole trading or partnership structures. For example, the current tax rate for small business companies implemented in Australia is lower than the individual tax rate. But, in case you are a sole trader, you have to pay taxes as an individual and for the profits generated by your business as part of your personal income.
Also, you will enjoy several tax deductions for education, repairs and maintenance, personal training, and advertising if you register a company in Australia.
Prevent Conflict With Your Founders
Having a registered company business structure will benefit you if you and your co-founder get into a conflict. Once you register your company, the owners can only have the right to control it based on their shares. In addition, the owners will better understand their involvement in the company because everything is put on paper instead of verbal or written agreements.
When a dispute arises, the one who has the most significant shares in the company will have the most decision-making capabilities. In addition, companies let you segregate the ownership and the business management duties. It means your company can have plenty of shareholders, but you can choose to hire a manager who does not have a share in the company. It will ensure that the business will be under professionals who will only think about generating profits for the owners.
Prove Legitimacy and Raise Brand Awareness
All the most prominent enterprises in the world use the company business structure. Companies have a better reputation and enjoy positive public perception for your business because it has a separate entity from yourself.
Your business will be considered a company if it operates with an Australian Company Number (ACN) and is registered under the Australian Securities and Investments (ASIC). And since you are registered, your clients and third-party service partners will not think twice about trusting you.
Having your business registered as a company will let you enjoy all these perks. Meanwhile, it may require you to go through several steps to complete the process, but the advantages you will get from it will be worth all the hard work. But, if you have no time to register the business under the company structure by yourself, you can look for service providers to help you complete the file the requirements.