There are a number of structures that you can choose from when starting or expanding your business.
Four main business structures
The four main business structures commonly used by small businesses in Australia are:
- Sole trader: An individual operating as the sole person legally responsible for all aspects of the business. Like other structures, as a sole trader, you can employ people to help you run your business.
- Company: A legal entity separate from its shareholders.
- 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.
Choosing a structure
When deciding on a structure for your business, choose the one that best suits your business needs, keeping in mind that there are advantages and disadvantages for each structure.
It’s important to investigate each option carefully, as choosing your business structure is an important decision.
Your business structure can determine:
- The licenses you require
- How much tax you pay
- Whether you’re considered an employee, or the owner of the business
- Your potential personal liability
- How much control you have over the business
- Ongoing costs and volume of paper work for your business.
It is important to note that you can change your business structure throughout the life of your business. As your business grows and expands, you may decide to change your business structure or to restructure your business.
Obtaining legal or other professional advice can help you understand your own particular circumstances. Speak to your accountant, or search Advisory Services to find a business adviser, when deciding on your business’s structure and type. It is important to determine your business structure and business type before you register a business or company as the steps may differ.
Types of businesses
As well as deciding on the structure of your business, you’ll also need to consider your business type.
There are many different types of businesses. The business type you choose to may depend on your personal circumstances, interests, finances and business objectives.
We’ve covered some of the common business types that you may choose:
- Franchise
- Online business
- Family business
- Home-based business
- Independent contractor
- Importer or exporter
Buying or franchising
You may also consider buying an established business or franchise. An existing business or franchise has the advantage of having operations and processes already in place. For example, the premises and stock, customer base, suppliers, WHS processes and income stream may already be established and save you time when starting your business.
Other considerations and assistance
Before you make a decision it’s also important to consider the different legal, operational and business requirements for each industry you are considering.
To ensure you choose the right structure and type of business, consider talking to a professional business advisor, accountant or solicitor for advice. Search Advisory Services for your nearest government-funded business advisor.
State governments can also help you with information and guidance on assessing business opportunities.
What to do…
- Understand the main types of business structures.
- Get some tips on managing your finances.
- Read the Australian Taxation Office’s guide to find out whether you should incorporate your business.
- Explore our industry fact sheets to find out more about the specific requirements of your industry.
- Go to the Australian Securities and Investments Commission’s (ASIC) website for help on how to decide on your company structure.
- Read more info about changing business structures and things to consider.
Source: ttps://www.business.gov.au/
