Setting up a company UK or Australia?

[deanblb]

Hi

I was wondering if anyone can give us some advice or your experience of setting up a business and in which country it would be best to base the business.

Our situation is that my wife and i are planning to emigrate to Australia from the UK later this year and we have both told our employers that we will be moving. Supringly to us both employers have asked if we can carry on doing some work for them from Australia. Neither of us have has our own business before and we are not sure on how to go about setting a new business up and which country we should establish the business in.

Many Thanks

[Ken]

2 hours ago, deanblb said:

Hi

I was wondering if anyone can give us some advice or your experience of setting up a business and in which country it would be best to base the business.

Our situation is that my wife and i are planning to emigrate to Australia from the UK later this year and we have both told our employers that we will be moving. Supringly to us both employers have asked if we can carry on doing some work for them from Australia. Neither of us have has our own business before and we are not sure on how to go about setting a new business up and which country we should establish the business in.

Many Thanks

If you are going to be living and working in Australia then that will be considered Australian income (despite the fact that your customers are in the UK) and taxed in Australia whether you are on a permanent visa (and so taxed on your worldwide income) or a temporary visa (and so taxed on just your Australian income). It will therefore be simpler for you tax wise to trade through an Australian company.

If you choose to trade through a UK company then that company will be subject to UK tax (including VAT) but you'll be responsible for Australian tax on salaries and/or dividends that you pay yourselves from that company.

Setting up a company in Australia is very easy once you are here and have a Tax File Number (you can't apply for one when abroad). It must be possible to do internationally as plenty of multinationals have Australian subsidiaries - but I've not needed to find out how to set up a company without the director being in the country and having a TFN.

[deanblb]

Thanks Ken that’s very helpful 

[Alan Collett]

I would consider obtaining Australian Business Numbers (ABNs) in a personal capacity once you have arrived, and to issue invoices to the UK company for your time.

Let me know if you would like to have a freebie chat on the phone to discuss.

Best regards,

[Marisawright]

Setting up in business in Australia is very easy.   You just need to apply for an Australian Business Number.  If your turnover is less than $75,000 a year then you don't need to register for GST (the equivalent of VAT).    You don't even need a company name.  You are then what's called a "sole trader".  You just do the work as it comes in, and issue the employer with a monthly invoice for the hours worked or project stage completed.   At tax time, you declare the income on your personal tax return like any other income, and you can claim legitimate business expenses.

Of course you need to keep good records (I find Toggl useful to track my hours).  

But that's if you're working as a freelance contractor in Australia for Australian companies.  When it comes to working out how to declare foreign income, which jurisdiction taxes what, etc, then my head starts to spin and that's where a chat to Alan will be invaluable. 

Edited April 10, 2019 by Marisawright

[Ken]

8 hours ago, Marisawright said:

But that's if you're working as a freelance contractor in Australia for Australian companies.  When it comes to working out how to declare foreign income, which jurisdiction taxes what, etc, then my head starts to spin and that's where a chat to Alan will be invaluable. 

It's not actually that complicated. If they are going to be working in Australia then it is not foreign income it is Australian income but they are exporting their services. The $75K threshold for having to register for GST still applies but there is no GST on export sales. If they are going to have a lot of expenses to pay that have GST on them then they'll want  to register for GST as soon as possible so they reclaim the GST (that's assume the exports won't quickly be replaced by domestic sales).

There are advantages and disadvantages of having a company rather than being a sole trader. The main advantage is the liability issue - but without even knowing what the business does it is hard to judge if that is needed.

If dealing with Australian companies they will prefer you to be a company rather than a sole trader because it removes from them the risk of you being deemed an employee and then having to pay super on top of your invoices. The same risk applies to UK companies but they are unlikely to be aware of this Australian legal problem.

[deanblb]

Thanks everybody for you advice. I am an accountant working for local government and charities and my wife designs library interiors for schools, universities and public libraries. It seems like Australia has similar rules to UK in regards to whether a person is an employee or a contractor. 

Alan, I will be in touch when we have settled down and found a house.

Kind Regards