Sole Proprietorship
What Is Sole Proprietorship?
A sole proprietorship is a simplest form of business structure that is owned and operated by single individual. Entire business of sole proprietorship business can be operated under the name of its owner. Registration of business name can be done in owners own state in order to protect against violations of trade practices.
Formation Procedure of Sole Proprietorship Business.
- Australian Business Number is necessary to enroll
- GST registration (if applicable)
- Registration of business name with state authority(if applicable)
- PAYG-W registration(If applicable)
Benefits
Establishing and administering a sole proprietorship business is an effortless procedure
A sole proprietor retains management of assets
Lower maintenance cost
Establishing cost of sole proprietorship business is zero
Minimum compliances are required
Benefits of capital gains tax discounts can be earned (if applicable)
PAYG-W registration (if applicable)
Drawbacks
It is obliged to register an Australian Business Number (ABN)
Annual submission of tax return documents
Submission of Business Activity Statement (monthly or annually)
GST registration if turnover exceeds $80,000
Acknowledgement of financial statements (income and expenditure)
Analysis
An individual who retains minimum or no assets and expecting limited turnover can appropriately operate sole proprietorship business. Settlement of income tax can be done either at the end of the year subsequent to lodgment of Tax Return or Paid through an Income Activity Statement (IAS) during the year and an adjustment can be accomplished at the end of the year Public liability insurance and other indemnity insurance are obliged for sole proprietor to insure. Drawings arise from company wages through owner are constituted in business profits.
