1. Protect your business name
Your business name is a valuable asset. It's what
customers recognise you and your business by. They come to
associate it with quality, service and value for money. By
forming a company your business name is secure. No one
else can form a company using your, or a nearly identical,
business name.
2. Increase your credibility
Enter the market place with a fundamental level of
credibility already in place. Your customers and suppliers
will feel more confident and comfortable doing business
with you. A company is a well recognised, accepted and
trusted way of doing business.
3. Grow your business more easily
Your bank will be more willing to lend to your company as
it is a business structure they are familiar with. With a
company you can issue new shares and bring in more money,
enabling your business to grow.
4. Protect your personal assets
Business is not easy. If you are a sole trader or partner
and you find yourself in financial difficulty your
personal possessions such as your car, house and furniture
can be seized to pay business debts. With a company no
business liability will overlap to your personal assets
and you can keep your personal finances completely
separate from your business activities.
5. Minimise your tax
If you choose to setup up a loss attributing qualifying company (LAQC) you can elect to pass on any loss the company makes to its shareholders. The shareholders can then offset the loss against their other income, effectively reducing their income for tax purposes, resulting in lower provisional liability or a refund of PAYE (pay as you earn) tax.
You can also minimise your tax by employing relatives. Anything you earn over $60,000 is taxed at the highest tax
rate of 39%. By splitting this income among family members
who you make employees or shareholders reduces the amount
of tax you have to pay on high levels of earnings. Also, you don't need to get approval from the Inland Revenue
Department to pay wages to a relative for any
work they may undertake for your company.
6. Make it easy to sell your business
Your successful company can be sold. You have the
structure and records available for a new owner to make a
speedy and informed decision to buy.
» Form a company now
