How to Reduce your tax and accounting fees while paying the correct amount of tax and not a cent more?
Home 
Advice Reports Business Structures Tax Comparison for Companies
Casino Advice Reports Business Structures Tax Comparison for Companies
Buy percocet
| Tax Comparison for Companies |
 |
 |
 |
|
Below are some of the Advantages and Disadvantages of trading as a company.
Advantages
Disadvantages
Tax Calculation Comparisons 2010/2011 At what point is it more tax effective to trade from a company?
The following examples outline the tax savings based on net profit of $100,000.
Total Sales $ 200,000
Total Expenses $ 100,000
Net Profit $ 100,000
Option 1 – (Individual Pays normal tax rates)
Individual Pays Normal Rates on $100,000 $ 26,450
Option 2 – (Profit is split between the owner and the company)
¨ If $100,000 is split into 2 (i.e.)
Individual $ 50,000 $ 8,600
Company $ 50,000 $ 15,000
Total Tax Payable $ 23,600
Option 3 – (Profit is split between 2 people and company)
¨ If $ 100,000 is split into 3 (i.e.)
Individual $ 33,334 $ 3,233
2nd Individual $ 33,333 $ 3,233
Company $ 33,333 $ 10,000
Total Tax Payable $ 16,466
You can see that each time the net profit is split, lower tax is paid.
It is important to appreciate that working directors and shareholders must receive a market value return for their services and ownership.
Tax Calculation Comparisons 2010/2011 At what point is it more tax effective to trade from a company?
The following examples outline the tax savings based on net profit of $150,000.
Total Sales $ 300,000
Total Expenses $ 150,000
Net Profit $ 150,000
Option 1 – (Individual Pays normal tax rates)
¨ Individual Pays Normal Rates on $150,000 $ 45,700
Option 2 – (Profit is split between the owner and the company)
¨ If $150,000 is split into 2 (i.e.)
Individual $ 75,000 $ 17,175
Company $ 75,000 $ 17,175
Total Tax Payable $ 34,350
Option 3 – (Profit is split between 2 people and company)
¨ If $ 150,000 is split into 3 (i.e.)
Individual $ 50,000 $ 8,600
2nd Individual $ 50,000 $ 8,600
Company $ 50,000 $ 15,000
Total Tax Payable $ 32,200
You can see that each time the net profit is split, lower tax is paid.
It is important to appreciate that working directors and shareholders must receive a market value return for their services and ownership.
Tax Calculation Comparisons 2010/2011 At what point is it more tax effective to trade from a company?
The following examples outline the tax savings based on net profit of $200,000.
Total Sales $ 400,000
Total Expenses $ 200,000
Net Profit $ 200,000
Option 1 – (Individual Pays normal tax rates)
¨ Individual Pays Normal Rates on $200,000 $ 66,550
Option 2 – (Profit is split between the owner and the company)
¨ If $200,000 is split into 2 (i.e.)
Individual $100,000 $ 26,450
Company $100,000 $ 26,450
Total Tax Payable $ 52,900
Option 3 – (Profit is split between 2 people and company)
¨ If $ 200,000 is split into 3 (i.e.)
Individual $ 66,667 $ 14,516
2nd Individual $ 66,667 $ 14,516
Company $ 66,666 $ 20,000
Total Tax Payable $ 49,032
You can see that each time the net profit is split, lower tax is paid.
It is important to appreciate that working directors and shareholders must receive a market value return for their services and ownership.
Disclaimer: This is not advice. Items herein are general comments only and do not constitute or convey advice per se. The information contained in this article is for guidance only and should not be relied upon without obtaining professional advice having regard to your specific circumstances. |