Business Structures

Businesses can be owned and operated through several different entity structures; and there are five commonly used structures in Australia:
- Sole Trader;
- Partnership;
- Company;
- Discretionary Trust; and
- Unit Trust.

Each structure type should be considered when choosing, and the type of structure will have an impact upon and determine the business' responsibilities, tax position, registration, and legal requirements.

Your own personal circumstances may also determine which structure you choose, especially if asset protection is an important consideration.

Yes, your business needs a structure otherwise it cannot operate.

The structure could be as simple as registering for an Australian Business Number (ABN) as an individual or as complex as setting up a company structure with a discretionary trust shareholder.

There are many options available that will be suit how you want to run your business.

The best way to determine the right structure is to talk to a trusted adviser.

They can help you consider various factors that will impact upon the decision.

Before setting a time to chat with them, consider where your business will operate, the nature of it's activities, how it will raise money, its size and complexity, and whether you will have employees or operate on your own.

And if you're concerned you've chosen the wrong structure or if your circumstances chance, don't worry - you can move the business into another structure at a later date.

All structures have their own benefits, but choosing the right one for you and your goals will ensure that you have a clear understanding of your expectations.

The right structure can provide (where important to you) benefits like efficient tax management, a clear definition of ownership and operational roles, limited liability protection and simplified compliance with legal and regulatory requirements.

It depends on the reasons why you want your business structure to change.

For example, if you want to bring in a new business partner but you are currently operating as a sole trader, you could move the business into a company structure and bring your new business partner on as a co-director.

This means that your new business partner will now have decision--making over the business with you, but you will no longer fully control the business.

Another example is if you currently operate as a sole trader, but want more protection over your personal assets, you could move your business into a company structure with you as the sole director.

In this situation, the control and decision-making over your business doesn't change and lies fully with you.

If you have a clear understanding of your obligations and they align with your goals and values, then your structure is working.

Regular check-ins with your adviser and a willingness to explore better ways of operating will ensure that the structure you have chosen is working and will continue to work for you and your business in the future.