Choosing a business structure can be tricky. How you choose to legally structure your business can have many tax, legal and financial implications.
There are four commonly used legal business structures in Australia: sole trader, partnership, company and trust. The advantage and disadvantages of each should be carefully considered before you decide which one is best for you.
Potential implications include:
- how difficult and expensive the structure is to set up and register
- ongoing costs and reporting obligations
- the degree of control you retain as the business owner
- your potential personal liability and protection of your assets
- your superannuation requirements
- how much tax you pay
With many issues to consider we recommend that you seek advice regarding the structure of your business. Our business advisers are happy to talk through the pros and cons with you to make sure that the specific circumstances of your business, as well as your personal and even family circumstances, are given consideration.
The business structure that works for one person or business – however similar – may not be the right business structure for you.
Want to know more?
- The Tasmania Government website provides a useful table comparing the four main business structures – sole trader, partnership, company and trust. When you meet with one of our advisers we will explore each of these considerations, and more, as they relate to your business and personal circumstances:
- Parliament recently passed legislation that will reduce the risk and complexity for small businesses who wish to change their business structure so that the structure of their business can grow and change with the business. Read more about the relief:
- Watch the Australian Taxation Office ‘Tax basics for small business’ video which explains the business structures available and some of the tax differences for each of the different business structures:
- You might also be interested in our comparison of the key differences and similarities between the structure of a sole trader and a company: