At Banyan Consulting, we advise that when selecting the business structure for your business that your choice is where you would like your business to end out. Swapping and changing this structure at a later stage can not only be costly but also incur a capital gain and therefore incur taxation costs. There are a number of elements that need to be considered in the choice of structure – likely profitability of the business, the stakeholder taxation position and the industry risk of the business (the type of industry may also define the best structure in which to operate your business). Getting this structure right is key and our team at Banyan Consulting can help you to best make that decision. Business Planning and Structures.
- Sole Trader
Sole traders are individuals operating a business trading either under their own personal name or registered business name. For taxation purposes the sole trader is responsible to pay any taxation on profits as if it their own income. Some of the benefits of acting as a sole trader is you make all the decisions and directions of your business and it is quick and easy to set up.
When two or more people operate a business with the intention to create a profit, a partnership can be formed. Partnerships are governed by state laws and any partnership agreement that has devised to specify any partnership arrangements. A partnership is considered as a separate entity and therefore must have a Tax Fie Number and submit an annual tax return.
Being a legal separate entity from any shareholder and is governed by Company Law administered by the Australian Securities and Investments Commission (ASIC). Benefits of companies include a form of asset protection – separating personal assets from the debts of the company.
Not being a separate legal entity, a trust refers to an obligation between persons and property for the benefit of beneficiaries. Trusts can provide a benefit of splitting income to achieve tax benefits and can assist in protecting family assets from various liabilities.
Business structures can be a mine field, getting the right advice is imperative for your future success. Contact our team at Banyan Consulting today to get the right advice in your business structure. Business Planning and Structures.