Business Structure
What are the Different Business Structures?
Factors to Consider
Calculating the Tax Difference
Business Name
More Information
When tting up a business there are six different business structures to choo from: sole trader, partnership or limite partnership, trust, proprietary limited company, incorporated association and co-operative.
Some of the factors to consider when choosing the structure most suitable for you are:
∙legitimate tax minimisation;
∙establishment fees and maintenance costs;
∙ast protection;
∙type of business.
Remember - you're not locked into any structure. You can change the structure as your business changes or grows. What are the Different Business Structure s?
Sole Traderranth
A sole trader is the simplest business structure and consists of an individual trading on their own. They may operate u own name or with a registered business name. The sole trader controls and manages the business and is responsible debts and liabilities.
Partnership
A partnership is formed when two or more people (up to 20) go into business together with a view to making a profit. T operate under their own names or with a registered busin ess name. Limited partnerships involve passive investors wh involved in managing the business.
Key items to include in a partnership agreement:
∙The commencement date and duration of the partnership.
∙The treatment of partnership property and leas undertaken.
∙Conditions under which partners can assign or change their interest in the partnership.
∙Apportionment method for profit, capital and loss of the partnership.
∙Person(s) of authority to make payments on behalf of the partnership.
gop∙Method of valuation of asts upon dissolving or altering the partnership.
∙Whether majority decisions of partners govern all matters.
∙Agreement to engage an independent accountant.
最后的维加斯
Proprietary Limited Company
A company is an independent legal entity able to do business in its own right. The shareholders own
the company and run the company. The directors of a company, as well as company employees, can be shareholders.
A company's operations are subject to the Corporations Act 2001, overen by the Australian Securities and Investmen Commission (ASIC). This Act simplified regulations to allow a company to have only one director and only one membe
Co-operative
Co-operatives are business that are member-owned, controlled and ud. They are distinguished from other forms incorporation by their participative ownership, democratic structure and u of capital for mutual rather than individual b Co-operatives supply goods and rvices to their members or to the general public in areas as diver as retailing, manufacturing, labour hire, printing and agriculture. There are both trading and non-trading co-operatives.
Incorporated Association
An association is an alternative to forming a company for small non-profit groups. It has similar advantages to a compa is not as expensive to t up or legally maintain. An association can trade, b
ut this cannot be its main objective. Any p the trading is put back into the association and not given to its members.
Trust
A trust is a business structure whereby the trustee holds property and earns and distributes income on behalf of the beneficiaries. One of the most common types of trusts is a discretionary trust.
Factors to Consider
招聘会计Legitimate Tax Minimisation
Sole traders pay income tax at personal tax rates. If their profits are low they may be taxed below 30%. If profits are h tax rate will probably be above the company tax rate of 30% on profits. For associations, profits are not subject to tax. partnerships and trading co-operatives, profits are distributed to the partners or members who then pay tax according t own personal circumstances. For discretionary trusts, profits are distributed to the beneficiaries at the discretion of the and can, therefore, be distributed in such a way to minimi tax, eg to beneficiaries in lower tax brackets.
Establishment Fees and Maintenance Costs
It costs nothing to t up as a sole trader. However, you may have to register a business name, which attracts a fee.
There are costs associated with registering an incorporated association, a company, a trust and a co-operative.
Ast Protection
How do you protect your asts such as your family home from the risk of being sued? If you're running a business as trader the asts that you own are more expod to the risk of being sued becau your liability is unlimited. In a partn liability is also unlimited (unless you are in a Limited Partnership) and extends to debts incurred by a partner without th knowledge or connt of the other partner.
A company offers a greater level of ast protection, as your personal asts are parate from the business. A trust c the same incread level of ast protection when the trustee is a company that owns no asts.
However, no structure is completely safe. Major creditors will often require directors to personally gu
arantee the compa liabilities. Personal liability of directors and employees can also ari if they commit an offence under the Corporations 2001 or are found to have negligently performed their duties.
So, as a business owner you should always ensure that you have the appropriate insurance in pl ace. See Insurance. Type of Busine ss
A non-profit organisation could t up as either an incorporated association or a limited company (e v.au details on limited companies).
情人节为什么送巧克力
光信息科学与技术就业前景An independent contractor could t up as either a sole trader or a company. A group of individuals who wish to share and responsibilities of business together could t up as a partnership or a company.
动物的英语单词Calculating the Tax Differencecpu是什么意思
If you're not sure whether there'll be a tax advantage to having a company instead of being a s ole trader, estimate your expected profit for the coming year before taxes and calculate how much tax you, as an individual, would have to pay (v.au/individuals), then calculate how much the company would have to pay.
Example: $35,000 profit before tax, as at September 2006,
individual tax $6,360
company tax $10,500
blackboardFrom a tax point of view, it would be better to remain a sole trader for this level of profit.
Busine ss Name
Under the Business Names Act 1962 every business name must be registered, except where the name is simply that o owner's. If you alter your name or u a different name, then it must be registe red. You are not required to register a b name with the Office of Fair Trading if you decide to become a company under the Corporation Law, but must register ASIC.
Business are registered for three years through the Office of Fair Trading. There is a registration fee and a renewal business names.新概念英语青少版1a
If you plan to t up your business in more than one State, you need to register your business in each State/Territory. More Information
For tax information for small business visit v.au or phone 13 28 66.
For more information on business structures visit www.v.au or phone 13 32 20. For information on c operatives phone 6333 1400 or 1800 502 042 or visit the NSW Office of Fair Trading site.
For information on regulations and fees involved in establishing and running a company visit v.au.
Talk to your accountant before determining the structure that's right for you.
Your local Business Advisory Service can offer you one-on-one advice on tting up your business. Call 1300 650 058
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