Setting Up Business and Financial Reporting Essay

Setting Up Business and Financial Reporting - Essay ExampleIncome tax differs as per different forms of profession structure like the sole proprietorship, partnership, and company. Pass-through tax entities like sole proprietorships, partnerships and limited liability companies are charged taxes as per the net meshing they generated (Business.gov.au, 2015b). Australian industrial or business milieu system requires sound understanding and selecting feasible business structures to gain success. Owners have to explore the guideline promoted by Australian Taxation Office. It will help in learning income tax rules for different type of business in Australia. Unincorporated business owners are creditworthy to pay income taxes on the basis of net profits earned by the business during any fiscal period. Reserves and provisions are not considered as a part of profits while calculating income tax. It creates issues for the partnership or sole proprietorship businesses (Business.gov.au, 201 5c). On the other hand, partnership business is quite complex as partners many a time vitiate reporting their shares on corporate profits, which reduces personal tax returns. Partners report salaries, bonuses and dividends incomes as their taxable income. Therefore, it heap be said that owners of partnership firms enjoy the tax advantage. In this scenario, all the four partners Mary, Martha, John, and James are responsible to pay tax individually and on-behalf of their new day spa business. Australian Taxation Office can face the potential avoidance of reporting share from the business.