Why It is Important to have Proper Corporate or Business Structure
For a New Business Venture, it is very important and critical to understand the difference between different types of Business Structures. As each structure has Pros and Cons based on your specific requirements and corresponding Legal & Tax implications.
Before starting a business, you’ll need to look at the advantages and disadvantages of each different business structure and work out which structure best suits your needs and requirements.
The four most common types of business structures in Australia are:
- Sole trader: An individual operating as the sole person legally responsible for all aspects of the Like other structures, as a sole trader you can employ people to help you run your business.
- Company: A legal entity separates from its shareholders. It is important to understand about the differences between a sole trader and a company to understand the tax differences as well, your potential personal liability and the legal obligations when employing people.
- Partnership: An association of people or entities running a business together but not as a company.
- Trust: An entity that holds property or income for the benefit of others.
Before deciding which business structure to use, it’s important you seek advice from a professional business adviser, a lawyer or an accountant.