Business Tax for partnerships?

Question

Hi, my partner and i own a small business but i also work full time in another job, basically my partner conducts the works and i just look after the paerwork side of things. Our tax we have just done has calculated my "other" employments earnings and we owe the tax depo allot more than we expected to. Are we better as a sole trader than a partnership so my wage stays out of the pitcure?

Answer 1

partnerships are taxed same as sole trader that is, each parter's share of profit forms under their personal tax bracket.

partnership is a good structure for a family as you can do income spliting. this means that the partnership does not have to distrubute profit to you so you only pay tax on income from your full time job.

another structure you may want to look at is establishing a company.

company based on new tax rates starting jul 08:

if business generates net profit before tax >80K better to trade as company as it has fixed tax rate of 30%. Your individual tax rate >80K would be 40%.  If you wern't working full time then you wouldnt need to reg a company yet until net profit before tax was >180K because of income splitting.

Further to that  your husband would be director of the company so he can pay himself a director's salary of only $6K. he therefore inncurs no personal tax and director salary is a deductable expense for company. (depends on your company net profit to be worthwhile)