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In Australia, a small business entity refers to a business structure, such as a sole trader, partnership, company, or trust, that is actively engaged in a trade or profession that generates income with an annual turnover (revenue) less than $10 million
Small business entity (SBE):
- Carries on a business: The entity is actively engaged in a trade or profession that generates income.
- Aggregated turnover: The entity's annual turnover (revenue) is less than $10 million. This includes the combined turnover of any businesses you're connected or affiliated with (refer to aggregation rules for details).
Key Points:
- The $10 million turnover threshold is set by the Australian Taxation Office (ATO) for eligibility to various tax concessions available to small businesses.
- Other government agencies, like the Australian Securities and Investments Commission (ASIC), may have slightly different definitions of a small business for their specific purposes (e.g., employee headcount).
Benefits of being a Small business entity:
- Access to simplified tax reporting requirements.
- Eligibility for tax concessions, including lower tax rates and increased instant asset write-off thresholds.
- Potentially less complex regulatory compliance compared to larger businesses.
Resources:
- Australian Taxation Office: https://www.ato.gov.au/about-ato/learn-about-tax-and-the-ato/tax-and-small-business
- ASIC - Setting up a business structure: https://asic.gov.au/for-business/small-business/
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