It’s often being difficult to decide what business structures to undertake for your business venture. Our accountants put together a brief summary of each, Sole traders, Partnership, Company and Trusts. For more details please call our accountants on 07 38916626 to discuss tax regulations and advantages and disadvantages of the business structures. We can help with establishing a sole Trader, Partnership, Company and Trusts. So why wait? Fill a Registration form at our website and start business in same day.

Sole trader
Sole trader is the simplest form of business structure. Sole traders usually trade under their own names, e.g. Wally Smith and use a business name of their choice. As a sole trader:

• You are in complete control of your business.
• No real difference between business assets or personal assets,
• Total liabilities which means that personal assets can be used to pay business debts.

Partnership
A partnership involves two or more people but less than 20, going into businesses together with common view of making a profit from the business. At partnership is required to have:

• Tax file number TFN and Australian Business number ABN
• Lodge separate Tax Returns
• Partners share all business assets and liabilities

Company

A company is a separate legal entity capable of holding assets in its own name, conduct a business in its own right and it can sue and be sued.
Shareholders own the company while directors run the company. In many cases company directors are also shareholders, along with company employees.

• Required to have Australian Company Number (ACN)
• Also ABN required if any businesses gross income is over $80,000

The tax requirements for a company are quite different to the other business structures. It has its own income tax liability which is totally separate to individual income tax. A company pays income tax at a flat rate of 30% on taxable income. Company’s debt and liabilities generally does not effect to it’s owner personal assents.
Learn more about the tax requirements of an Australian company by speaking to our accountants and they can help you register a company.

Trust

Unlike a company, a trust is not a separate legal entity. Trusts are often used in connection with running a business for the benefit of others.

A trust is a structure where a trustee (an individual or company) carries out the business on behalf of the members (or beneficiaries) of the trust.

Family businesses are often set up as trusts so that each family member can be made a beneficiary without having any involvement in how the business is run.

Discretionary and unit trusts

A trust is set up through a trust deed and there are two main types:
Discretionary Trusts
The trustee has discretion in the distribution of funds to each beneficiary. The most common example is the family trust.

Unit Trusts

Unit trusts are recommended when more than one family is involved. The interest in the trust is divided into units, similar to shares. Each unit holder may have a number of units in the trust. Distribution from the trust is determined according to the number of units held.

Importantly, trustees are legally liable for the debts of the trust. They can use the assets of the trust to meet those debts. However, if there’s a shortfall, they are responsible for covering the difference from their own resources.

A trustee must apply for a Tax File Number (TFN) and lodge an annual trust return. The trust is not liable to pay tax, tax is assessed to the trustee or to the beneficiaries that are entitled to receive the trust net income.