Business Structure North Lakes

Understanding the benefits and drawbacks of a particular business structure in North Lakes is critical to getting your new venture off to a good start. Each business structure provides a unique opportunity to engage in certain activities, such as raising capital. It also has an impact on directors’ asset and risk protection, tax implications, and other business obligations. It can be difficult to understand the various advantages of each business structure. This is why we chose to provide business structuring in North Lakes to help you get started on the right foot.

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Common types of business structures in Australia:

When we talk about a business structure, we are referring to an organization’s legal structure. In Australia, there are four main types of business structures. They are as follows:

  • Sole trader
  • Company
  • Partnership
  • Trust

We explain each of these business structures in the following section of this page.

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Selecting the right Business Structure

Choosing the right path can be difficult; however, you are not bound by one and can always change your business structure as it expands and grows. Each of these business structures may have an impact on your costs, assets, and tax liability. Let us quickly go over what each of these business structures means.

Sole Trader

As a sole trader, you are legally responsible for everything related to your business. A sole trader usually makes all of the business decisions and can hire others to help them run their business.

Tax liability: As an individual, you must pay tax on any income earned from a sole proprietorship.

If your annual revenue exceeds $75,000, you must also pay GST and file a business activity statement.

Partnership

Similar to a sole proprietor, the owner is personally liable for all aspects of the business; however, in a partnership, two or more people may take joint ownership and split the profits and losses.

Individuals can also pool their assets and skills in a partnership business structure to increase their chances of success. A partnership can also hire employees to assist them in running the business.

Tax liability: Partners pay tax as individuals on business income divided among partners. If your annual revenue exceeds $75,000, you must also pay GST and file a business activity statement.

Company

A company differs from the previous examples of business structure in that when you establish one, you create a legal entity that is distinct from you. This means that the company can own assets and enter into contracts with third parties directly.

Tax liability: Companies are subject to corporate tax rates that differ from individual tax rates. Depending on the criteria you meet, the current company tax rate is either 27.5% or 30%. If your annual revenue exceeds $75,000, you must also pay GST.

Trust

A trust is a legal entity in which certain trustees conduct business on behalf of the trust members. Beneficiaries are another term for trust members. This type of structure can be difficult to set up and costly.

The trustee is responsible for any debts and liabilities and can be either an individual or a corporation. Trusts are frequently used to manage, protect, and transfer family assets such as stock, personal property, and the family business from one generation to the next.

Tax liability: The trustee distributes the business profits to the beneficiaries, who then pay income tax at their marginal individual tax rates on the income received.

Hiring the right advisor for selecting a business structure in North Lakes.

Choosing the right business structure is a crucial decision that can greatly impact the success and longevity of your business. It’s important to have a qualified advisor who can guide you through the process and help you make the best decision for your unique situation. Take a look at the following helpful tips on how to choose the right business structure advisor in North Lakes to ensure your business’s success.

Consider expertise: A skilled business structure advisor understands the complexities of business planning and can provide valuable guidance on financial planning, tax planning, and other aspects of running a successful business.

Professional qualifications: Ensure credentials when finding a business structure advisor in Australia, such as a Certified Practising Accountant (CPA) or Chartered Accountant (CA).

Industry experience: Finding a business structure advisor with industry-specific experience can help ensure tailored and effective advice for your business.

Concise communication: Good communication is key when working with a business structure advisor. Look for someone who can explain complex financial concepts in a clear and understandable way, and who is responsive and available to answer any questions you may have.

Costs: Before engaging a business structure advisor, it’s important to have a clear understanding of their fees and pricing structure to ensure it aligns with your budget and business needs. At Total Business Partners, we understand the importance of upfront pricing to ensure that your business can plan sufficiently.

Tax implications of your business structure in North Lakes.

Choosing the right business structure is a crucial decision for any business owner. One important factor to consider is the tax implications of each structure. In Australia, there are several business structures to choose from, including sole trader, partnership, company, and trust.

The tax implications of each structure can vary significantly. For example, a sole trader is personally liable for all business debts and may pay income tax at a higher rate than a company. On the other hand, a company may have access to more tax deductions and a lower tax rate, but may be subject to additional taxes such as dividend imputation.

Find the right business structure to meet your specific needs.

Another factor to consider is payroll taxes. If you have employees, you will need to withhold and remit payroll taxes, which can be a complex process. The business structure you choose can impact your payroll tax obligations, so it’s important to seek professional advice.

Sales taxes, such as Goods and Services Tax (GST), are also a consideration. Depending on your business structure, you may need to register for GST and charge GST on your products or services.

Choosing the right business structure can also help you minimise your taxes. For example, a trust structure may provide greater flexibility in distributing income and reducing tax liability. A professional accountant can provide advice on the best business structure for your unique circumstances and help you minimise your tax obligations.

Understanding liability for different business structures in North Lakes.

In Australia, the choice of business structure is an important decision that can have significant legal and financial implications for business owners. The most common business structures include sole trader, partnership, company, and trust. Each structure has its advantages and disadvantages, and it is essential to understand the legal and liability implications of each option before making a decision.

For example, a sole trader is a simple and cost-effective structure but exposes the business owner to unlimited personal liability for business debts and legal actions. A partnership also has unlimited liability, but it is shared among the partners.

Sole Trader and Partnership liability laws

While a sole trader and partnership structures have unlimited liability, it’s important to note that there are differences between the two. In a partnership, each partner is only liable for their share of the partnership’s debts and obligations, while in a sole trader structure, the business owner is solely responsible for all debts and obligations. This means that if the business cannot pay its debts, the sole trader’s personal assets can be seized to pay off the debt, potentially resulting in bankruptcy.

In contrast, partnerships may have more resources to draw upon to pay off debts, as they can pool their assets and resources. However, partnerships also come with the added complexity of having to navigate shared decision-making and profit-sharing.

Company and Trust liability laws

A company, on the other hand, is a separate legal entity, which means that the company is responsible for its debts and legal actions, rather than the owners. This structure provides limited liability protection for shareholders, but it also comes with more legal and regulatory requirements.

Trusts are a more complex structure, but they can provide unique tax advantages and asset protection for beneficiaries. However, they also require careful planning and management to ensure compliance with legal and tax obligations.

Choosing the right business structure requires careful consideration of the specific needs and goals of the business owner. Seeking advice from a professional accountant or business advisor with expertise in business structure and liability, such as Total Business Partners, can help ensure that the chosen structure provides the optimal balance of protection and flexibility for the business.

Business Structure FAQs

What are 4 basic business structures?

1) Sole trader business structure.
2) Partnership business structure.
3) Company business structure.
4) Trust business structure.

What is a structure of a business?

A business structure is the legal structure of a company or business that influences how it operates on a daily basis. A sole proprietorship and partnership, for example, are simple to establish because they are not required to meet ongoing requirements such as shareholder meetings and voting. The type of structure your company chooses is ultimately determined by its goals and specific requirements.

How will the business structure I choose affect my business?

Choosing the right business structure is one of the most important decisions a business owner must make.

A business structure is the legal structure and obligations of a company or organisation. Your chosen business structure will have an impact on:

  • how much tax you must pay
  • ongoing reporting requirements
  • business set-up costs
  • the way your business operates
  • legal liability.
What is an example business structure?

A business structure refers to the way a company is legally organised, and it affects how it operates and pays taxes. There are several different types of business structures, each with its own benefits and drawbacks. The most common business structures include sole proprietorship, partnership, limited liability company (LLC), corporation, and non-profit organization.

Sole proprietorship is the easiest and least expensive business structure, while corporations offer more legal protection for their owners. The right business structure for you depends on your company’s size, industry, goals, and financial situation. It is important to consult with a business advisor or accountant to determine the best structure for your business.

What is a good business structure?

Choosing the right business structure is crucial for your success as a business owner. There is no one-size-fits-all answer as the best business structure depends on your unique situation.

However, a good business structure should provide legal protection, tax benefits, and help you achieve your business goals. A common business structure is the limited liability company (LLC) which provides personal asset protection while allowing for flexibility in management and tax treatment.

Another popular option is the S-corporation, which allows for pass-through taxation and limited liability protection. It’s important to seek advice from a qualified professional to determine which structure is best for your business.

How do I choose a business structure?

Choosing the right business structure is critical to the success of your business. There are several factors to consider, including your business goals, the size of your business, tax implications, legal considerations, and personal liability.

A sole trader structure is easy to set up, but you will be personally liable for any business debts. A partnership structure is similar to a sole trader but with two or more people involved. A company structure provides limited liability protection but has more compliance requirements.

A trust structure is suitable for high-income earners looking to manage their tax obligations. Total Business Partners can provide tailored advice to help you choose the right structure for your business.

What is the most common business structure?

The most common business structure in Australia is the sole trader structure, which makes up around 60% of all businesses. This is followed by the company structure, which accounts for around 20% of businesses. The remaining 20% are split between partnerships, trusts and other structures.

The right business structure for you will depend on factors such as your goals, tax obligations, liability, and the size of your business. It’s important to seek advice from a professional to help you choose the best structure for your specific needs and circumstances.

Why is business structure important?

Choosing the right business structure is important for many reasons. The structure can impact your tax obligations, your personal liability, and the ease of running your business.

For example, a sole trader may be the simplest structure to set up, but it also means you have unlimited personal liability for your business debts. A company, on the other hand, provides limited liability for the owners, but has more complex tax and regulatory requirements.

A good business structure can also help you attract investors and raise capital. It’s important to consider your unique situation and consult with a professional to determine the best structure for your business.

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North Lakes Business Structure location

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At Total Business Partners, our motivation comes from seeing our clients succeed. We strive to deliver the highest level of service and are Xero certified accountants with expertise in structural business planning and financial management. Our exceptional services are offered throughout North Lakes and the wider Brisbane region, plus, the beautiful Sunshine Coast.

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