Business Structure Lawyers Newcastle
Whether you’re looking to start a small business or purchase an established one, the first thing you need to consider is what type of business structure is appropriate for you and your commercial goals. Failure to consider this issue can negatively affect the operation of your business and expose you to unnecessary tax liability.
The main business structure options available to you are:
This is the simplest form of business structure and the easiest and cheapest to establish. The sole trader has total control of the business and is personally liability for its tax and debt liability. The main legal requirement is the registration of a business name.
A partnership is a form of legal agreement whereby two or more people choose to divide control of the business between them. This is usually set up via a Partnership Agreement. They may choose to trade under a separate name. The partners are personally liable for the tax and debt liability of the business and such liability is shared between them.
Franchising is business structure whereby one business operates under another business’ established brand. The franchisee has the advantage of well-known products and a streamlined marketing plan and the franchisor has the advantage of efficiently expanding their business. You can read more about this on our Franchising page.
A company is a separate legal entity. This means that the directors of a company are not personally liable to pay the company’s taxes and are not liable for the company’s debts. This is one of the major advantages of the corporate structure. Another advantage is the flat company tax rate which can be significantly lower than other business entities. There are, however, significant drawbacks. Setting up a company can be complicated as there are strict legal requirements and it is expensive. The process of creating a company is conducted via registration with ASIC.
A trust is a relationship where a trustee (either a person or a company) holds property on behalf of any number of beneficiaries. A trust can be an effective way of protecting assets and reducing tax liability. There are many different types of trusts and we can advise you on the type of trust to suit your business. The disadvantages of the trust structure are similar to those of the company structure; it is expensive and complex to set up and has strict regulatory requirements.
The right structure for you and your business
There are many factors which influence the decision to proceed with one structure over another. We will help to highlight these factors for you as they relate to your commercial needs. The most important factors for most businesses to consider include asset protection, finance availability, tax liability and compliance costs.
We understand that every business is different. We will assist you to set up a structure that is tailored to your situation and suited to achieving your commercial goals. We will also ensure you understand the complexities of each structure so that you can use these to maximise your profits.