Tax tips, tax rate, ato, tax, startups, small business, startups

Looking at the tax rate for your business is something many small businesses ask about. But it all depends on the type of business structure that you have. So lets get to the bottom of it:

What is Your Business Structure?

The structure of the business will determine the tax rate. The different structures include; Sole Trader (Individual), Partnership and a Company. You can read more about different business structures here.

1. What is a Sole Trader?

As a sole trader there is no separation in business ownership between yourself and the business. Therefore there is unlimited liability, so if your business can’t pay its creditors, your own personal assets could be up for sale.

2. What is a Partnership?

A partnership requires 2 or more people and like with a sole trader, the partners individually share in the business assets as well as its liabilities.

3. What is a Company?

A company has a director(s) as well as shareholder(s). The directors are responsible for the management of the company, whereas the shareholder(s) own the company.

What are the tax rates?

1. Sole Trader
Due to the business income being treated as your individual income you are therefore solely responsible for any tax the business must pay. As a sole trader, you pay the same tax as individual taxpayers. How much tax you will pay can be determined by the table below:

Income Tax on this

0 – $18,200 Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 – $180,000 $17,547 plus 37c for each $1 over $80,000
$180,001 and over $54,547 plus 45c for each $1 over $180,000

2. Partnership
The tax rate for a partnership is that similar to a sole trader, whereby all partners are required to lodge an individual tax return and the tax rate is based on that of an individual taxpayer which can be seen above. While a partnership is not required to pay tax you are still required to lodge a partnership tax return.

3. Company
For a company the tax rate is a flat 30% for the 2015 financial year.

This Tax Tips Tuesday is brought to you with love by Nudge Accounting. You can read other Tax Tips here.