Business Start Up
I want to become a salesperson but as an incorporated company
How Will That Work:
Most DSO’s will accept incorporated companies as independent agents or distributors. However, it must be remembered that direct selling is a people oriented industry
DSO’s spend a great deal of time and money on promoting their businesses and, in particular, their independent salespersons.
When the "salesperson" is a Company it is difficult, if not impossible, to properly recognise the achievements of that "salesperson".
For this reason DSO’s, while accepting an incorporated company as an agent or distributor, will ask that a particular person be nominated as the representative of the company for purposes of recognition. It is this “nominated person” who will be recognised at conferences, seminars, meetings etc as the achiever.
In addition, the “nominated person” will be responsible for the company’s activities and contractual obligations to the DSA, including compliance with the DSO’s Code of Ethics and the DSAA Code of Practice.
The DSO will generally ask for the names and other details of all members of the Company and the names and other details of Directors and other Officers. The DSO will also make it a condition of appointment that any changes in the membership, Directors or Officers of the Company be promptly sent to the DSO.
What are the statutory compliance issues when operating as a company:
When considering a Company structure for your direct selling business you should be aware of the number of compliance and taxation issues which may apply to the operation.
Corporation lawWorkers compensation
Occupational health and safety
Superannuation contributions
Fringe Benefits Tax (FBT)
Pay As You Go Tax (PAYG)
Goods and Services Tax (GST)
Business Activity Statement (BAS)
Australian Business Number (ABN)
Corporation Law
Once the company is incorporated, the members must appoint one or more Directors, one of whom must be an Australian resident. The Directors must appoint a Company Secretary, and Public Officer. One person may act as Director, Secretary and Public Officer. The Director or Directors (if more than one) is responsible for the company’s operations and its compliance with the corporations law. It is recommended that independent salespersons considering the use of an incorporated company within which to conduct their direct selling business should seek appropriate professional advice before doing so.
Workers Compensation
If a company is used to conduct a direct selling business, the persons directly involved will generally be employed by the company. In this situation the Company will be required to establish a workers compensation policy with the relevant Sate or Territory government scheme, and pay the appropriate premium.
Occupational Health and Safety
As an employer, the company will be responsible for all aspects of workplace health and safety. If the business is conducted from a private home, that home will be the Company's place of business for purposes of the Act.
Superannuation Contributions
Under Commonwealth Superannuation law, the operating company (the employer) will be required to pay superannuation contributions (currently 9% of gross earnings) for each employee. These contributions are required to be paid quarterly to an approved superannuation fund.
Fringe Benefits Tax (FBT)
This tax is payable on non cash benefits provided to or for employees. The most common fringe benefits are motor vehicles and the use of telephones for private purposes. Where fringe benefits are provided an FBT return must be prepared each year and lodged with the Australian Taxation Office on or before 30 April. The FBT year, for tax purposes is 1 April to 31 March.
Pay as You Go Taxation (PAYG)
The company will be required to deduct tax from the earnings of its employees and remit the tax to the Australian Taxation Office quarterly with a completed Business Activity Statement (BAS).
Goods and Services Tax (GST)
The company will be required to obtain GST registration from the Australian Taxation Office when total gross revenue reaches $75,000 per annum.
There are special rules which set out how the $75,000 threshold is to be calculated.
Business Activity Statement (BAS)
Once registered for GST the Company will be required to lodge a Business Activity Statement with the Australian Taxation Office, quarterly.
Australian Business Number (ABN)
Before commencing business the Company will be required to obtain an Australian Business Number from the Australian Taxation Office.
As was mentioned earlier, those wishing to operate a direct selling agency or distributorship through an incorporated company are strongly advised to seek appropriate professional advice on the many corporate, compliance and taxation issues involved.
