What You Need To Know About Business Structures
If you want to start a new business in Australia, it is important to choosing the right business structure. Your decision has to take into account factors such as: the kind of business it is, whether you’ll need to hire others, how many people will be involved in the company, how much income you expect, and how you plan to grow your enterprise. Each legal business structure comes with quite different risks and costs. When deciding which business structure to choose ,you will need to analise issues such as your time, money, and required paperwork. For this reason, it is recommended that you hire the services of a legal firm specialised in assistance for business registration. The experienced lawyers can help you deciding what is the best business structure suitable to your needs and assist you with the registration process.
Business types in Australia
In Australia there are four main types of business structure, each with its own set of pros and cons:
This is the simplest business structure and with it you have all the control and are the sole owner. A sole trader business can trade either under a registered business name or just under your name. With this business structure all you have to do is to get an ABN and register a business name. For the income that comes from a sole trader business you will have to pay tax at the individual tax rate because the income is treated as your own. Among the advantages of this business type is that you keep all the profit and have 100 control, it is low cost to set up, and you have less legal requirements.
In a business partnership, the income is received jointly and the enterprise is owned by two or more. The partnership will its own tax file number besides an ABN. Among the advantages of a partnership is that partners share responsibility and risks. You will have to pay income tax only on your share of profits.
A discretionary trust or a family trust works similar to a company. Setting up a trust involves getting a tax file number and an ABN. With a trust it is possible to have limited liability and the advantage of a greater flexibility in income distribution.
A company has shareholders and profits are either reinvested in the company or shared out as dividends among the shareholders. If you want to register your business as a company, this is done through ASIC. Once registered and you have your ACN, you will also need to apply for an ABN and a tax file number. The advantage of this business structure type is that the ownership can be easily transferred and the financial liability is limited only to the company assets.
As a full service legal firm we can advise you on the most suitable business structure for your situation and help you manage the registration process. To get started contact Joe Gilles.
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Giles Payne & Co.
506 Bunnerong Road
Matraville NSW 2036
PO Box 70
Matraville NSW 2036
+61 2 9311 1295