Choose the right business structure for your online store business
If you are starting up alone or with your family member, the best business structure would be a ‘sole trader’
A sole trader is the simplest form of business structure and is relatively easy and inexpensive to set up than any other business structures. As a sole trader you will be legally responsible for all aspects of your business. You’ll be the only responsible on making decisions about starting up and operating your business and you can employ people like in any other business structures. Sole traders are taxed as individuals and pay income tax at personal rates.
There are few advantages and disadvantages of working as a sole trader. But, if you are starting up alone with small budget or just trying out an online business, you should definitely go with sole trader type of business structure. It will save your time and money. In the future, if your business grows, you can switch to a different business structure.
You can get information about other business structures online. All the countries have same types of business structures, so, you can visit business websites of any country to understand the meaning and obligations of different business structures.
Mostly, the rules for GST or VAT depends upon countries and states, so, it is highly recommended that you visit the business support website of your country or visit your local business advisory office. For example, business website of Western Australia state has written a lot about taxation and business structures. Read more about business structures.
- Read about business structures in the USA
- Read about business structures in the UK
- Read about business structures in Canada
- Read about business structures in Australia
- Read about business structures in Finland
Whichever business structure you choose, make sure you find out the following information on your country’s business websites:
a. Income threshold: What is the threshold for registering to GST or VAT or Sales tax ? For example, in Australia, you will need to register your business for goods and services tax (GST) if your annual turnover(revenue) is expected to be more than AU$75,000. Every country has its own threshold, so, find out the threshold for your business specifically in your country. Check out one more example of VAT threshold in the UK.
b. Tax percentage: If you are registering for GST or VAT, find out how much percentage you need to charge from your customers. The VAT or GST or Sales tax percentage depends upon countries, states and types of goods you are selling.