business structures in australia

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BUSINESS STRUCTURESBASIC INFORMATION ON

WHAT YOU NEED TO KNOW

This is a brief overview and solely for informational purposes only.

Contact your accountant, solicitor or business advisor for advice on the best structure for your business

A “business structure” refers to the way your

business is structured legally.

There are four main businesses structures:

Sole TraderPartnership

TrustCompany

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You are the business and are responsible for all business operations

SOLE TRADERWHAT YOU NEED TO KNOW

The simplest and cheapest business structureThe income tax you receive on sole trader business structure

is measured based on your personal tax rates.YOU are personally liable for any

debts or negligent actsthat you commit while running your business.


HOW TO SET UP A BUSINESS AS ASOLE TRADER

If you are not wanting to trade under your own name register a business name

Register for is an Australian Business Number (ABN)You must have or obtain a tax file number

Once you have obtained an ABN, TFN and registered your business (if applicable), you need to ensure that your ABN is actually linked to your

business name.

You need to register for GST if your expectedor current turnover is $75,000 or over


PARTNERSHIPUSEFUL INFORMATION

TWO or more people TOGETHER are the business, (up to 20)

You can still employ people (NOT partners though – partners CANNOT be employees of

the business), engage other contractors, apply for financing

Partnerships can either be general or limited

Consider a Partnership Agreement, it is advisable to seek the services of a professional to assist with drafting

such an important document


PARTNERSHIPUSEFUL INFORMATION

General Partnership - YOU ALL are directly in control of everything, and all money the business makes belongs to ALL OF YOU JOINTLY

Limited Partnerships - the liability of one or more partners for the debts and obligations of the business is limited

Incorporated Limited Partnership is a special type of limited partnership, primarily used by businesses engaged in

high-risk venture capital projects


HOW TO SET UP APARTNERSHIP

Decide if you want to run the Partnership business under the names of all the partners or to register a business name

Obtain an Australian Business Number (ABN) for the Partnership

The Partnership will also need its OWN Business Tax File Number (TFN),

partners will still have their own personal TFN

You need to register for GST if your expectedor current turnover is $75,000 or over


TRUSTWHAT YOU NEED TO KNOW

A Trust is a structure you would be REALLY unwise to try setting up without the assistance of a solicitor,

accountant or other paid advisor.A trust is a LEGAL RELATIONSHIP between

one person and another person (or persons). The first person is called “the Trustee”, while the

second person is called “the Beneficiary” (or “Beneficiaries” if there are more than one).

The Trust is set up by a person called “the Settlor”.A trading trust is usually an entity

that holds property (capital) for certain beneficiaries


WHAT YOU WOULD NEED TO SET UP A BUSINESS AS ATRUST

You will need an ABN, a Business TFN, and a business name for the Trust

You will also need to set up a Trust DeedYou may also need to register your actual

business separately as a Company

Due to the complexity of a trust you should consult a professional advisor

If the trust is carrying on an enterprise, and it's turnover is over $75,000 or more, it must register for GST. For non-profit organisations,

the registration threshold is $150,000


COMPANYUSEFUL FACTS

We recommend that you seek professional advice about

your circumstances and choosing the right business structure

A company has members (shareholders) who own the company and directors who run it

Companies have limited liability, but directors can be personally liable

Here are some useful facts:


COMPANYUSEFUL FACTS

A company is a legal entity with higher set-up and administration costs because of

additional reporting requirements

The money a business earns belongs to the company, not individuals

Companies have no tax-free threshold


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