Are you looking to start your own panel beating business, or expand your own panel beating business? If so, you should carefully consider which business structure is most suited to you. The business structure you choose will have a profound effect of your business, through dictating its structure and your responsibilities for the lifetime of your business. If you choose the wrong business structure for your circumstances, you risk putting your business at a disadvantage and losing ground to the competition. Therefore, the first step in deciding which business structure is best for your business, is by having a thorough understanding of the types of business structures that are available to you.
Should I choose a Partnership business structure?
If you are looking to expand your panel beater business, or ensure that it is financially viable well into the future, you could consider a partnership business structure. In a partnership, two people or more, up to a maximum of 20 people either agree orally or in writing to conduct a joint venture together. This essentially means that you and at least another person agree to take all responsibility for a business. A partnership is a relatively simple business structure to adopt and has a number of tax benefits, with financial protection built into its structure to ensure that you can both maximise profits, and safely grow your business. The downside is that you will be reliant on your partner/s to be as diligent and resilient as you, when it comes to the running of your panel beater business.
Partnerships have been a relatively common business type for expanding panel beater businesses to drop. They generally occur when two or more businesses wish to combine their efforts, in order to maximise profit and minimise competition. In addition, a partnership business structure is favoured over that of a company, due to the minimal cost and relative ease with which a partnership can be formed. In addition, as a partner you will remain personally in possession of your business, and it cannot be taken away from you, except by your agreement. This will protect your financial interests for the duration of the partnership.
However, partnerships require a great deal of trust between partners, as you will be responsible for each other’s business decisions. So, if you enter into a deal that loses money, you partner will have to cover half of the cost, and vice versa. In addition, your personal assets will still be connected to a company, so both you and your partner will need to have the upmost trust in each other at all times during the partnership.
Should I choose a Sole Trader business structure?
If you are looking to start your own panel beater business, a sole trader could be the ideal business structure for you. A sole trader is essentially a person who is intrinsically connected to, and completely responsible for a certain business. This business structure is ideal for those who are starting a fledgling business, as it is the most simple and cost effective way to begin trading.
The risks associated with a sole trader business structure, centre on the fact that your personal finances will be inseparable from your business finances. Despite the fact that it is sound practice to have a separate bank account for your business, all your money and possessions will ultimately be forfeit, were your sole trader business to spectacularly fail. For some people, this is very off-putting, and they choose to adopt a franchise business structure instead. However, by running a fiscally responsible business, it is highly unlikely that you will ever face a doomsday scenario.
These are but some of the many business structures that are available to you as a panel beater. It advisable that, after you become familiar with the range of options at your fingertips, that you seek out legal advice in order to discuss the legal consequences of your decision. A partnership or sole trader business structure could be ideal for your business, depending on your circumstances. However, if you would like to view a list of all the options available to you, please click here. Finally, if you have any further questions relating to which business structure is best for your business, do not hesitate to call LegalVision for a fixed-fee quote.