How To Choose The Right Business Structure?
Choosing the right business structure is important for tax planning, asset protection and compliance costs. The following considerations should guide your decision:
- Complexity of your business
- Client base
- Exposure to personal assets
- Future plans
- Set up and compliance costs
The most commonly used business structures in Australia are Sole Trader, Company, Partnership and Trusts.
Here’s What You Need To Know:
Sole trader – this is the most simple business structure with minimal setup and maintenance but you will be personally liable for all business decisions.
Company – this will give you better asset protection and less personal liability but the setup and maintenance costs are higher.
Partnership – this is easily established with low costs and greater borrowing capacity but each individual is liable for the actions and debts of the partner.
Trust – this can give you flexibility and limited liability but the structure can be complex and expensive.
You may be able to use a combination of structures, for example a company with a trust as a shareholder, or a trust with a company as a corporate trustee.
Choosing a suitable business structure is essential for a start-up, but established businesses that have seen significant growth or have plans to scale their business may also benefit from a structure review.