Ensuring that you choose the most appropriate business structure for your business is of vital importance. There are generally two situations when a business owner will be faced with the necessity of choosing a business structure: when founding a business or during a significant period of growth. The business structure you choose will affect your legal risk, tax obligations, level of asset protection and legal costs.
There are four main business structures available to Australian businesses: sole trader, partnership, company and trust. Each structure has advantages and disadvantages and understanding these is important for business owners.
When reflecting on the appropriateness of a business structure, either when setting up your business or at an inflexion point in your business’s growth, you should ask yourself the following questions:
- What are your business’s short, medium and long term goals?
- Are you looking to generate an income stream through the payment of dividends or salaries, or are you looking to generate a capital return through the eventual sale of your business?
- How will the structure in question affect your tax obligations?
- What is the cost of setting up and maintaining the structure?
- Will the structure help protect your assets and limit your personal liability?
We provide a huge range of resources to assist you with choosing the right business structure, but if you’ve got any questions and would like to speak to one of our structuring lawyers please get in touch.