Cost reduction is often resorted to by most companies in times of economic downturn. Option resorted is the reduction of employees or scheduling employees. Because of this most employees affected will start doing their small business.
Here ate Melbourne Accountant, we believe it is critical for businesses that they have to start right. They have to avoid legal, tax and financial issues that are the common causes of failure. To start right here are some tips to succeed in your launching;
Two options to consider is doing it on their own as sole proprietor or as a corporate entity. If you operate as a sole proprietor, you don’t have to shell out money to create corporate documents and tax returns. This will depend on your tolerance for business and personal risk.
Second option of having a corporate entity is the legal protection which it can provide. Setting yourself as business owner will expose you with some litigation as some people might try to dun you for bills. Forming into a corporate entity is not so necessary since this is expensive and is a waste of time and money. If your are positive you can be successful and if you have done your research and consulting work, and is the sole proprietor of the company, staying like this is the best option.
If there are other people with capital involved, whether in cash or in sweat, form an entity that identifies how much is owned and each responsibilities and make sure that there is an agreement as to whether taxes will be paid individually or at the corporate level.
Do not consider cost as your driving factor in structuring your business. You can search from online sources to allow you to create a corporate entity which would not cost you a lot.
You will be guided on how soon you will pay your taxes on your earnings by the structure of your business. Generally, if you are operating as a sole proprietor, you are not required to pay immediately your taxes. Under the Law, if the earning exceeds the minimum amount of $400, you are to file your taxes quarterly.
You will not be penalised though if during the year you will shift as an employee to self-employed so there is no need to prepare and pay quarterly for taxes. If it is a corporate entity, this is not possible as they are obligated to begin filing taxes on income as it is earned. If an entity earns money there is a need for a quarterly report.