BUSINESS STRUCTURES AND TYPES

Choosing a structure

When deciding on a structure for your business, it is imperative to choose the one that best suits your business needs, keeping in mind that there are advantages and disadvantages for each structure.

It’s important to investigate each option carefully, as choosing your business structure is an important decision.

 Business structure you choose depends on following factors –

• The licenses you require to run your business.
• Taxation and succession benefits.
• Whether you’re considered an employee, or the owner of the business
• Personal liability in case of a law suit against the business.
• Control you have over the business.
• Ongoing costs and volume of paper work for your business.

As your business grows and expands, you may decide to change your business structure, or to restructure your business. It is important to note that you can change your business structure throughout the life of your business but it comes along with pitfalls and complications. Therefore it’s best to decide your business structure right from onset of your business.

Obtaining legal or other professional advice can help you understand your own particular circumstances. It is important to determine your business structure and business type before you register a business or company as the steps may differ.

Following are the four structures that are most commonly used by small businesses in Australia –

• Sole trader: an individual operating as the sole person legally responsible for all aspects of the business. Like other structures, as a sole trader you can employ people to help you run your business.
• Company: a legal entity separate from its shareholders.
• Partnership: an association of people or entities running a business together, but not as a company.
• Trust: an entity that holds property or income for the benefit of others.

For further assistance, call Expert Tax on 0449 952 855 to book a no obligation appointment to discuss your business structuring needs before deciding on your business’s structure and type.