Correct'ish - In fact I am a Chartered Accountant, but tax is not my specialty ( I was an auditor), so I have a tax accountant (like everyone else), well 2 actually - its a complex structure, for historic reasons, not because of the trading we now focus on - and a general accountant that does the book keeping, tax, employment reporting, BAS reporting, and company secretarial work,etc. None are full time (obviously) but it costs a few tens of thousands each year none-the less. I don't do any of the accounting work on my businesses. I'm not even sure what amounts are in some of them, or how much I actually pay them. I just sign stuff they give me to sign, and watch the net profit. They work out all the details.
The point was more that a company can be a good way to house high volume trading activity, but it has reporting overheads that require expenditure on experts that a sole operator does not need. So the overheads are higher but the tax stays constant at the company rate - not varying with how much you personally earn in a year and there are more options for managing money, expenses and income than an individual has. So I find with actively trading for a living a proper corporate structure has been worthwhile, in spite of the extra overhead it involves.
A company can stream cash out in more ways than just a salary, it has shareholders - so dividends - directors (directors fees), employees, inter-company loans, royalties, rents, interest payments, etc. A company can be a trustee of unit and discretionary trusts which split income across an even wider group of participants. Companies carry forward losses indefinitely, and smooth tax obligations over longer periods than individuals. The downside is higher external reporting obligations and a disconnect between ownership, responsibility and income, as well as higher fiduciary obligations. A company also allows you to warehouse cash and draw down personally only what you need to spend, thus personal income and thus tax is minimized to the essentials.
AKE Price at posting:
$13.91 Sentiment: Buy Disclosure: Held
