Business and Legal structures in Australia
Posted by Luke Jones in Sep, 2014
What are business/legal structures in Australia?
Business/legal structures in Australia are a way of classifying how the business is structured and operated. Each structure shows how the business is operated whether it is a sole trader, partnership, trust or a company. Each individual structure has its own unique structure and advantages and disadvantages of choosing that structure.
What are business/legal structures in Australia like?
Business/legal structures are like homes, without the structure, a family would not be able to live in the home. The home is the structure that the business would need to be able to conform to government regulations and the family is what the business provides.
What is the purpose of business/legal structures in Australia?
The purpose of business/legal structures is to ensure all businesses comply with government regulations and have a business/legal structure that functions and can be classified for different purposes such as taxation and government initiatives.
What are the different types of business/legal structures in Australia?
There are a number of structures that you can choose from when creating your business. The four main types of business structures commonly used by small businesses are:
• Sole trader: an individual trading on their own.
• Partnership: an association of people or entities running a business together, but not as a company.
• Trust: an entity that holds property or income for the benefit of others.
• Company: a legal entity separate from its shareholders.
When deciding upon a structure for your business, choose the one that best suits your business needs and remember that there are advantages and disadvantages for each. Choosing your business structure is an important decision that can determine the licenses you will need to operate, so you need to investigate each option carefully.
What’s involved with choosing business/legal structures in Australia?
Initial business plan includes:
• Startup agreement
• Goals on start up.
• Which structure is the best to suit the startup agreement.
Where does the determination of a Business/legal structure fit into the process of starting a business?
Each structure has advantages, disadvantages and responsibilities, which need to be considered before making a decision.
Some of the factors to consider include:
• Taxation requirements and liabilities.
• Legal liability.
• Costs.
• Capital.
• Management requirements.
Your structure should accommodate the potential for changing circumstances with minimal disruption; provide adequate asset protection, opportunities for legitimate tax reduction and efficient distribution of profits.
How do Business/legal structures impact on different areas of a business?
The legal structure of a business chooses is fundamental to the way it operates. This legal framework determines who shares in the profits and losses, how tax is paid, where legal liabilities rests. It also determines the nature of a business’ relationships with business associates, investors, creditors and employees.
What terms are used in Business/legal structures in Australia?
• Sole trader: an individual trading on their own.
• Partnership: an association of people or entities running a business together, but not as a company.
• Trust: an entity that holds property or income for the benefit of others.
• Incorporated (Inc.): restricted to non-profit associations
• Limited (Ltd.): The suffix Ltd. may also be used by a private company limited by guarantee, such as a charity or university (these may obtain dispensation from the Registrar of Companies to operate without the suffix).
• Proprietary Limited Company (Pty. Ltd.): ATF Trust. In Australia companies can act as a trustee for a trust.
• Unlimited Proprietary (Pty.): company with a share capital: A company, similar to its limited company (Ltd., or Pty. Ltd.) counterpart, but where the liability of the members or shareholders is not limited.
Where can I find more information about Business/Legal structures in Australia?
http://www.business.qld.gov.au/business/starting/business-startup-options/business-legal-structures
http://en.wikipedia.org/wiki/Types_of_business_entity
Who would most benefit from this knowledge?
• A person with no experience in this area or person who is considering changing business structure.
• A person who is thinking of starting up a business or a business who has expanded to a point that the structure needs to change to another structure.
• Australian Commonwealth Government Laws.
• No cultural influence
• No.
• Startups, Small to Medium Enterprises, Corporations, Non-profit organisation’s, Government departments/Government owned entities.
• Relevant to all industries.
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