Creating a business to protect assets and reduce the tax burden is an art.
The following article is a simple crash course on business structure, which means that it covers only the basics. As far as everyone’s pros and cons, setup, and proverbs are concerned, it might be a good idea to check: Think about your business structure. This is a valuable asset for anyone in business or planning to start a business.
Business Structures
Solel Traders
A sole trader is a natural person who runs a business. This is the most common type of business structure and is the cheapest and easiest to set up. An individual is legally responsible for all aspects of the business, including debt and losses.
As a sole proprietor, you will be responsible for making all decisions related to your business. Your business name will also need to be registered with the Australian Securities and Investment Commission (ASIC).
Partnership
The partnership business structure involves several individuals running the company together. It allows two or more people to combine their assets and skills to benefit your business. It’s relatively inexpensive to install and run.
This type of business structure is not a separate legal entity, so you and your partners are responsible for all business debts and legal obligations.
Company
A company is a separate legal entity with high administrative costs and additional reporting requirements. It is managed by its directors and owned by its shareholders. Running your own business builds the reputation of your business, and if you are interested in government grant opportunities, many of them will be given to businesses only. This process is not as simple as setting up a single trader or partnership, and a member of the Numbers Pro team is advised to assist you with this.
Although the corporation is a separate entity, managers can still be held responsible for their actions and in some cases for the company’s debts.
The company must be registered with ASIC and the officers and directors of the company must comply with their legal obligations as stated in the Companies Act, 2001.
limited company and a public limited company
A limited liability company is a business structure consisting of one or more natural or legal persons under a special legal agreement. An Australian company in which Limite or Limite is known as a public company only after its name. Such as a company listed on the Australian Stock Exchange (ASX).
Family trust
A family trust is an organization set up by a family member for tax or asset protection purposes. It has many potential benefits, such as avoiding problems and resisting a will in the event of the death of an elderly relative. It can also help protect family assets from debt when a family member goes bankrupt or goes bankrupt.
Contact our Bookkeeping Services in Melbourne to help you find out which business structure will benefit you the most.
