So I'm looking at starting up a web hosting company,. I already have a full time job and it's something I'd be looking to work on after work and on weekends. What's the best way to go about setting the company up as I want to make sure it's done the right way. I don't want a massive tax bill at end of year want everything to be done right. Could anybody offer me any advice?
First question about setting up a company: You can either do it yourself as there are a few DIY websites that will allow you to do this, you must have knowledge about how the company structure works and if it is right for you. You can alternatively approach an accountant who can go through the structures with you and advise you accordingly.
I am glad you asked about the tax side of things as that is the place many new businesses get a shock at the end of the financial year. In your case as you already have a full time job it becomes even more critical to get the tax side right. Below are two options for you:
1. If you are going to leave the money in the business in the first year or so then it becomes pretty straightforward. From your net income every week/fortnight/month set aside 27.5% as tax (assuming you would be small business)to be paid to ATO at end of financial year. Note also GST may be applicable depending on where your customers are.
2. If you are going to be taking the money out as your wages then you would need to withhold from your wages the tax as per ATO's PAYG withholding table/calculator (and pay the PAYG Withholding to ATO) and pay yourself the net wages.
I suggest you keep a very close eye on things and review your revenue/expenses/tax every quarter if not monthly.
It's Paul Ryan from simplyaskit
It's great that you'd like Suresh to make contact as his answers are very thorough and informative.
All you need to do is click on Suresh profile and click contact me and request how you'd like Suresh to contact you.
Your contact details will then be forwarded to Suresh in confidence.
All the best in the new venture - thank you for using simplyaskit and we hope you continue to enjoy the experience