You’ll need to look at the benefits and drawbacks of each different business structure if you’re planning to start a business. Working out which structure best suits your needs is one of the initial steps in the inception of any business.
In Australia, the 4 most common types of business structures are:
- Sole trader — an individual trading on their own.
- Company — The owners and a legal entity are separated from each other.
- Partnership — a business is run together by a number of people or entities. It’s not a company.
- Trust — an entity holds the property or income for the benefit of others.
In deciding on a structure for your business, choose the one that best suits your business needs. It’s important to look into each option carefully.
Seek advice from a professional business adviser — a lawyer or an accountant — before you decide which business structure to use as the steps may differ.
Your business structure can determine:
- if you’re the owner of the business or an employee
- required licenses
- the amount of tax you pay
- ongoing costs and volume of paperwork for your business
- the control you have over the business
- your potential personal liability
There are various legal obligations associated with starting a business, depending on its nature. These may include registrations, licensing, employing staff, leasing premises, taxation, and insurance, among others.
Make sure you understand your legal obligations to avoid any fines or penalties. Seek legal and business advice beforehand.
You’re not locked into one business structure forever. You may choose to change your business structure as your business grows and expands — or choose to restructure your business.
Before you make a decision, consider the varying legal, business, and operational requirements for each industry.
State governments can also help you with information and guidelines on your business opportunity assessment.
You may like to consider franchising if you’re unsure about starting a business just yet.
- Know the main types of business structures.
- For help on how to decide on your company structure, go to the Australian Securities and Investments Commission’s (ASIC) website.
- Look for tips on managing your finances.
- Check out the Australian Taxation Office’s guide to find out whether you should incorporate your business.
Are you planning to start a business? Is your small business expanding? Access to funds is probably what you need as your business grows.
Finding the right start-up loan shouldn’t be a problem when you can get help.
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