Deciding on a business structure

Some of the issues to consider when choosing an appropriate business structure include:

purpose, nature and objectives of the business
Credit and capital requirements for the business
limiting your liability for business debts;
ease of operating the business;
management and control on the business (i.e.flexibility to review your business operation should your objectives change in future;
simplicity and cost reduction;
minimising your taxation liability and
ease with which the interest in the business may be transferred to others in case you want to bind up your business

Whether your business needs the simplicity of the sole proprietor or partnership, or the more complex, more public but - for the members - more secure company structure will usually be a matter for you to decide in conjunction with your professional advisors. Whatever you do, it is important to get professional advice from your lawyer and accountant before you make the choice - it may save you a lot of heartache in the long run.

In certain circumstances you may decide that none of the available structures alone fits the bill for your particular business. A combination of structures may be necessary to cover all eventualities. It is common to find a rural property structured this way. For example, the land could be owned by the family company while the stock is owned by a partnership comprising the husband and wife. To avoid tax they may have created a trust with various members of the family - including the children - as beneficiaries, and with the family company appointed trustee.

Does life have to be this complex? Very often the simpler structures have the greater benefits.

To view a web page containing further information on this topic, including details of the steps required to start a business for all states and territories, go to the Commonwealth Government's Business Entry Point website - www.business.gov.au/.