What is your ideal business structure?
Choice of the right business structure is one of the most important decisions that you will have to make for your business. Having the right structure can save you time and money.
The most common structures used by small businesses are:
Sole trader: This is an individual trading on their own. This structure is easy and inexpensive to setup. Some disadvantages are; unlimited liability and not being able to share profits which can result in paying up to 46.5% in tax.
Partnership: Two or more people or organisations running a business together. With this structure in place you are able to share profits with your business partners, but you will be personally responsible for any debts of the partnership.
Company: Defined as a separate legal entity from its owners/shareholders. Companies pay flat tax rate of 30%. Shareholders are not liable for the debts of the business, it is more expensive to establish and run than partnerships and sole traders.
Trust: An entity which can hold property or income on behalf of its beneficiaries. The main advantages are flexibility for profit distribution (if a discretionary trust) and asset protection but like a company can be costly and complex to run.
Your decision about the business structure will affect; how much tax you pay, asset protection, business operating costs, how others deal with your business and time you spend for running the business.
Determining your ‘ideal business structure’ is a complex question and you should always consult a professional before making any decisions.
Call us for 1hr free consultation about your busienss strucutre on 08 8260 8122.