What business structure suits your business?
An important decision to make before you start a business is what structure your business will run under.
This will reflect into all facets of your business, so you should spend time understanding the implications of each structure.
- You have complete control of your business
- Your business assets and liabilities are not separate from your personal assets and liabilities
- Personally liable for debts and obligations of the business
- Low-cost structure
- Share control and management of business
- Each partner pays tax on the share of net partnership income each receives
- Minimal reporting requirements + Inexpensive to set up
- Requires more documentation
- Separate legal entity from its owners – all profit, tax, and legal liability is directly to the corporation
- Members not liable for company’s debt (only liable if you breach legal obligations)
- Complex business structure plus Extensive documentation and record-keeping
- Wider access to capital
- Expensive set-up and operation
- Formal trust deed outlining operation required
- Trustee responsible for yearly administrative tasks
Reasons to change business structure
Changing your business structure might be the appropriate next step following COVID-19 and the impact it has had. Click to read more.