Are you looking to start your own, or expand your existing jewellery business? If so, you should now consider which business structure best suits your needs. Choosing a business structure can be a challenging and exciting process as each structure presents its own advantages and disadvantages. Before deciding which structure you will use for your jewellery business, it is important that you take the time to research each option, and know the legal consequences for you and your business. Below, we step you through two common business structures you may choose to run your jewellery store through – a sole trader and company.
Sole Trader Advantages
A sole trader is the simplest business structure available and is one person conducting a business in their name. Consequently, she or he has all control and responsibility for the business. It is the preferred business structure for small businesses whose owner wishes to maintain complete control over every aspect.
Sole Trader Disadvantages
Although running your business as a sole trader provides you with complete control over the business, you also assume all of the risks. What this means is that you will be personally liable for any debts the business incurs. Before setting up your jewellery business, it is first a good idea to better understand your personal finances by speaking with your accountant.
You may decide that you want to limit your personal liability, and choose instead to operate your jewellery store through a company structure. A company is considered an separate legal entity, and as such, directors are not personally liable for any debts it incurs, except in limited circumstances.
A company business structure can be costly to set up and to run, especially when compared to a sole trader. As a result, if you choose to operate your jewellery business in this way, statutory regulations will prevent you from directly accessing profits.
If you are looking to start your own, or expand your already existing jewellery business, you should take think about your business goals and what business structure will best help you achieve them. We have briefly gone through two available options, namely a sole trader and company. However, it is important that you have a thorough understanding of the options to make an informed decision.
Questions? Get in touch with LegalVision’s Business Structuring experts on 1300 544 755.