Many independent contractors don’t realize the benefits of setting up their own company. As a person conducting business activity in Australia and internationally soon, I realized how totally naive it was of me not to set up my own corporation. So this is exactly what I am doing.
One of the huge bonuses of operating under a corporation is image. Outsiders and prospective clients are often more impressed by an nation-wide incorporated company name than a mere state-registered business name. People who know a thing or two about business know that it costs more to set up a company than merely to register a business name in a state. This often results in prospective clients more willing to do business with you because they have the perception that you are more serious about your business.
There are so many benefits of having your own corporation, if you think about it – for a small initial investment (about$A860), and legal and accounting advisers you can trust, you own a CORPORATION! Rocket science? For all the benefits, I think not.
Any business is an entity that requires a structure, and in general – there are bad entities, and there are good ones. Bad entities are generally sole trader and general partnerships. Why are they bad? Well, if your business screws up, you screw up. The creditors will be running after your house, your car, anything of value that is attached to your name! It’s like a marriage. If you’re a man with kids about to divorce, you better have some cash under the mattress (or offshore accounts!) because the wife can literally wipe you clean of every single cent and asset that you own. Lesson? Pre-nups. No actually, it’s that you should operate under good entities and have a good relationship with your partner.
If you’re a start-up company, it’s likely that you’ll operate as a proprietary company (X Pty Ltd). This way, you get incorporated, protect your assets, limit liability, pay a flat company tax rate of 30% instead of the disgusting income tax rate of up to 46.5% for individuals.
If you’re an entrepreneur and setting up your business, and Australian, definitely think about registering an Australian company. I suggest checking out the Australian Securities and Investments Commission site (http://asic.gov.au), Australian Tax Office (http://ato.gov.au), and read “Own your own company” by Garrett Sutton, corporate attorney to Robert Kiyosaki.
Little Miss Entrepreneur