Sole Trade Accounting

Sole trader accounting
A sole trader business structure is a person trading as the individual legally responsible for all aspects of the business. This includes any debts and losses, which can’t be shared with others. Sole trader can employ people.

 

If your business turnover is greater than $75000, you have to register GST and lodge BAS quarterly.  There is optional GST if your turnover is less than $75000. And you can choose whether to lodge quarterly or yearly if you register GST.

 

Generally sole traders use their name as their business name (trading name), but they can register a business name under their ABN as well.

 

Sole traders are taxed with an individual income rate, currently they have a tax threshold $18200, in practice it can be up to $20500.

Partnership
A partnership is an association of people up to 20 who carry on a business and distribute income or losses between themselves. A formal partnership agreement is an important tax document if profits or losses are not distributed equally among partners.

 

In order for a partnership to be entitled to an Australian business number (ABN), it must be carrying on an enterprise.

For ABN purposes, a partnership can be:

1: A family partnership is where two or more partners are related to one another.

2: A limited partnership is where the liability or one or more partners for the debts and obligations of the business is limited. A limited partnership is formed when the partnership is registered with the relevant state or territory authority.

3: An ‘other’ partnership is commonly known as a general law partnership. A general law partnership is where all the partners are equally responsible for the management of the business and each has unlimited liability for the debts and obligations it may incur.

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