Are you looking to start your own painting business, or expand your already existing painting business? If so, it is important that you consider which business structure will work best for you. The business structure you choose now for your business will impact upon your business for the rest of its existence. Whether this is a good or bad thing depends on whether or not you can correctly choose which structure will work best for you as a result of your situation. Understandably, many business owners find this to be a daunting and exceptionally stressful task, however, this need not be the case for you. With a thorough knowledge of the implications associated with each business structure, and an understanding of the manner in which you wish to conduct your business, choosing a business structure for your painting business can be a relatively straightforward process.
Should I choose a Company business structure?
One business structure you could choose for your painting business is a company structure. A company business structure is the most attractive business structure for several key reasons. The predominant reason for choosing a company for your painting business is that it separates your financial liability as a person, from the financial liability of the company. However, this comes at a price, as there are stringent legal conditions and comparatively large costs associated with incorporating a business.
Through separating your financial liability from that of your company, you will be allowed to take calculated risks with your business without having to worry if it all goes pear-shaped. Therefore, with a company business structure, you be able to avoid the stress sole traders or partners experience knowing that each business decision could result in them losing their house and their livelihood. Furthermore, such a financial separation between your business and your person can allow for rapid expansion and more aggressive moves to fight off the competition.
However, as with all things in the business world, this benefit comes at a price. In Australia, there are very stringent statutory requirements that your business must adhere to when creating a company. These requirements will mean that your business will have to have a certain structure, with certain officers of the company, annual meetings, annual reporting of finances and so on. Also, the cost of creating a company far exceeds the cost of establishing any other business structure available to you for your painting business. Consequently, it will be up to you to decide whether the cost is worth the reward for your business.
Should I choose a Sole Trader business structure?
In essence, a sole trader is a person conducting a business. It is basically the complete reverse of the company business structure discussed above. If you are looking to run a relatively small and efficient painting business, then this may well be the business structure for you. A sole trader business structure gives you complete control over how your business is operated, both structurally and financially. Also, the cost of setting up a sole trader business is negligible when compared with that of a company. The cost of this freedom, however, comes in the fact that financially speaking, there is no separation between you and your business.
The result of creating a sole trader business is that everything you do either in your personal life, or your business life will be financially related. Many people find this too much for them while others thrive in this environment. The primary benefit of running a sole trader business structure is total freedom. So long as your funds are in order, you can stop the business at any time, or grow your business as you see fit. Also, you can immediately access the profits of your business to be used in your personal life, as there are no statutory restrictions governing how you should assess your finances.
Once again, in determining whether or not a sole trader business structure is right for your painting business, you will have to take your personal situation into account. If neither of these structures is appropriate for you, you can find a list and explanation of possible business structures here.
If you are looking to start your own painting business or expand your already existing painting business, it is important to consider which business structure will work best for you. If you choose a company business structure, you will have financial security, but be restricted in terms of how you can run your business. If you want a sole trader business structure, you will have structural freedom, but be liable financially for business dealings. Before deciding on a business structure, it is important that you seek the advice of a legal professional to ensure that your business is set up correctly. If you have any further questions relating to which business structure is best for your painting business, or how to create a business structure, feel free to call LegalVision for a fixed-fee quote.