Tax Issues You Need To Watch Out For

Tax Issues You Need To Watch Out For

Have you set up a business and want to know about the tax liabilities you will be responsible for? To assess the exact tax liability you will be held accountable for, you need to know what factor affects your tax the most. The answer is the business structure of your company.

The business structure you choose will make you liable for a set of taxes, which you will need to pay in order to avoid a legal action in court. The tax liabilities for each business structure is different, therefore it is important that you decide very carefully about your business, and know about all the taxes that will be charged to your company as they will need to be paid in time.

You need to have sufficient knowledge about your tax liabilities under the heads of the business structure, and payoff taxes if you want to avoid any tax issues in the future.

Take a look at how some of the business structures are taxed as per the legal statutes of Australian law;

Business Structures and Tax Liabilities

The tax liabilities differ from one business structure to another as per the law

A sole trader business structure uses an individual TFN tax file number. All the income of the business is included in the account, along with all other incomes like salary, investment income and wages, and an individual tax return is filed and paid by the sole owner.

In a partnership structure, there is a separate tax file number and a partnership tax return is lodged. But the partnership does not pay the tax. The partnership tax just details which partner is entitled to which share of the business income or loss. Every partner is liable to declare their partnership loss or profit in their individual tax returns.