One of the initial decisions you must make when beginning a business in Australia is whether to apply for an Australian Business Number (ABN) or run your enterprise as a sole proprietor. Despite having similar benefits and drawbacks, they are not the same.
A solitary proprietorship is not an ABN. An individual who owns and runs a firm as a lone proprietor is individually responsible for all debts and liabilities of the company. An ABN, in contrast, is a special 11-digit number that businesses are given by the Australian government to identify their company to the general public and other entities.
An ABN does not provide a business a legal framework, but it is necessary for those with an annual GST revenue of $75,000 or more. Additionally, a business needs an ABN in order to apply for permits, register for the Goods and Services Tax (GST), and accept payments from clients via electronic invoicing.
A business structure called an LLC (Limited Liability Company) combines the liability protection of a corporation with the tax advantages of a partnership. An LLC does not receive a 1099 if it is taxed as a partnership or a single proprietorship. Instead, a K-1 form will be sent to the LLC’s owner or owners.
A 1099 form, however, might be issued to an LLC if it is taxed as a corporation for some payments. For instance, if the LLC renders services to another business and is paid $600 or more, the latter is required to send the LLC a 1099-MISC form. If my LLC generated no revenue, do I still need to file taxes?
You might not need to file a tax return if your LLC had no income or outgoings during the tax year. Even if you had no revenue or costs, you will still need to file a tax return if your LLC is taxed as a partnership or corporation.
If your LLC is taxed as a sole proprietorship, you might be able to use Schedule C or Schedule C-EZ to record your business’ revenue and expenses on your personal tax return. You will need to submit a separate tax return for the business if your LLC is taxed as a partnership or corporation, though.
A member of an LLC is referred to as the owner. Members can be people, businesses, or other LLCs. An LLC does not have shareholders like a corporation. Membership units, which resemble shares of stock in a company, are how the LLC is actually owned.
An ABN is not a sole proprietorship, to sum up, but it is required for enterprises that fit certain requirements. Depending on its tax status and the sort of money received, an LLC may or may not receive a 1099. Even if an LLC had no income or costs, they might still be required to file a tax return. The owner of an LLC is referred to as a member in the end.