Getting The Right Business Structure
Getting the right business structure in place is one of the most critical business decisions you must make throughout your business lifecycle. However, the wrong business structure can cost you hundreds of thousands of dollars over your business’s life.
That’s why structuring your business correctly is critical. Over time, the structure chosen at the commencement of business may no longer be suitable for your business’s needs. This is because there are advantages and disadvantages to each structure, where one option may suit your business better than another.
Not only can the type of structure you choose impact the amount of tax that you pay or the level of asset protection your business holds, but having the wrong ownership structure could cost your business in time, money and efficiency.
There are four commonly used business structures in Australia. These are:
Sole Trader: the simplest and cheapest structure, as a sole trader, you’re the only owner and you control and manage the business
Company: run by directors and owned by shareholders, a company is a legal entity with higher setup and administration costs and more reporting requirements than a sole trader structure
Partnership: inexpensive to set up and operate, you might choose a partnership if you and a friend or family member run the business together. Each partner shares income, losses and control of the business.
Trust: when operating in a trust structure, a trustee (either an individual or a company) is legally responsible for the operation of the trust, and profits go to a beneficiary.
If your structure doesn’t feel ideal, it might feel too late to change - but that’s not necessarily the case. As your business expands, you may outgrow your current business structure.
Changing a business structure will likely require you to cancel your existing ABN and apply for a new one for the new structure. There may also be tax implications if you have to move assets between entities.
A business structure is your business’ foundation. Ensuring that your business structure aligns with the needs of your business (at any time of is life) is paramount to your success.
Why not start a conversation with TAS Tailored Accounting Solutions today to make sure your business is beneficially structured?
Thank you for reading!
Should you have any queries in regards to the above please contact our office on (03) 9728 1448
The TAS Team
3/653 Mountain Highway, Bayswater VIC 3153
Isabella Farmakis Buckovsky
Client & Practice Manager
Isabella liaises with clients and business owners to create rewarding decisions and develops long-lasting relationships by providing a relaxed and comfortable approach to tax and business queries
Specialisations
Beauty
Automotive
Trades
Fitness
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