Different Business Structures

In this series of articles, we explore the key business structures available to Australian business owners and the pros and cons of each.

There’s no one-size-fits-all approach when it comes to choosing the right business structure. Each business is unique, and the right structure will depend on your goals, risk tolerance, stage of growth and succession plans.

Over the coming days, we’ll examine the following structures:

• Company

• Partnership

• Sole Trader

• Unit Trust

• Discretionary Trust

Each of these structures has its own benefits and drawbacks. The right structure can help you minimise tax, protect assets, and plan for the future.

Key Factors to Consider When Choosing a Business Structure

When weighing up your options, consider the following:

• Asset Protection: Does the structure protect personal assets from business liabilities?

• Ease of Admitting New Partners or Investors: Can you bring in others without triggering tax or legal issues?

• Income Splitting: Is the structure flexible enough to share income among family members or business partners?

• Tax Planning: Can profits be distributed or retained in a tax-effective manner?

• Capital Gains Tax: What are the CGT implications if you sell the business?

• Succession Planning: Is it easy to transfer control or ownership to the next generation?

• Complexity and Costs: What are the legal, accounting, and setup costs?

• Use of Tax Losses: Can losses be carried forward or offset against other income?

If you’re unsure which structure is right for you, professional advice can save you time, money and legal headaches down the track.

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Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.