On our previous article, we discussed about the types of business structures and the importance of it if you are planning to start a business as it may affect:
- the tax you are liable to pay;
- your potential personal liability;
- how much control you have over the business;
- the licenses you require;
- asset protection; and/or
Choosing a Business Structure
When choosing a business structure, you should consider is which structure is going to have the best long-term benefits and reflects your future goals. The things that you need to consider includes:
- the type of business you are planning to run;
- its risk profile;
- plans for growth;
- the involvement of others; and
- how to come to decisions.
Each type of structure has different upfront and ongoing costs. A sole trader is the cheapest to establish, whereas more complicated structures, such as a trust with corporate trustee incur a higher legal set up costs along with government fees.
The way that tax affects the different business structures will also need to be factored into your decision. The profits made by sole trader businesses are considered personal income and are taxed as such. Companies pay 30% tax on their income but are required to keep financial records up to date and lodge annual tax returns and reports to ASIC. Using a trust structure may allow you to plan your tax, by streaming distributions to beneficiaries on lower tax rates.
If you would like to start a business and find out more about your rights and options, Straits Lawyers are here to help. Simply send us an email at email@example.com or give us a call on 8410 9069 to arrange an appointment for an interview.
Alternatively, you can book an online consultation with us via this link: https://straits-lawyers.square.site/product/online-consultation-/11?cs=true
Please note that this article does not constitute legal advice and Straits Lawyers will not be legally responsible for any actions you take based on this article.