where can I find info on Ltd companies

Hi Meld

The advantage with a company is that it is a separate legal entity, so that if the business is sued, it is the company that goes down – not the shareholders or directors (unless acting illegally).

Another advantage is that it is a separate entity for tax purposes. The company can retain profits and be taxed at 30% max, and/or it can pay wages to directors, or employees, or contractors. Profits can also be distributed as dividends.

So what this all means is that you can pay yourself and your husband equal amounts up to the point where you would pay more than 30% tax. Instead of having one person earning more and paying a higher tax percentage it will work out cheaper if split evenly. You can also work out how much you have to earn before you are paying 31%+ tax – then it is best to leave it in the company, maybe.

If you are setting up your own company it is best to have only one director. This is for risk reasons. If the company folds, it is the director that takes the heat – which may be an adverse credit report or maybe being sued for something they did which was in breach of some unknown law.

Have one person as the fall guy and the other person as the asset holder. If the  guy is sued it is best if they have no assets. The family law court will still be able to divide things fairly – it doesn't matter whose name.

Also consider having the shares of the company owned by a family trust – maybe with the -risk person acting as trustee. This will help in the future with tax minimisation as well as protection from creditors in the unlikely event that the non-risk person is sued.

I don't think that there are any books which explain this sort of thing in easily understood terms. Probably look at some websites such as accountant/law firms. one good one is http://www.lawcentral.com.au and http://www.taxlawyer.com.au . The best book on trusts for the lay person is Dale Gatherum Goss' Trust Magic.

BTW, many if not most accountants do not have an understanding of trusts and often company law and taxation. It maybe a good idea to ask at least 2 for their opinion and do some research yourself.

I am not sure if it would be a good idea to buy in your company name as your company would have to pay stamp duty and CGT on any profit, even if transfered to yourselves.

It is probably best to buy in your own name(s) for the first one and then form a discretionary trust for subsequent ones. A trading company should never buy assets as these will be at risk if the company gets into trouble.