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When cementing the foundations of your business, those initial decisions can set it on a course to flounder or flourish. Should you trade in your own name, bring in partners, or set up a trust? As accounting experts, we can answer these questions and more, giving you the strong, relevant business structure you need to grow.
There are essentially four basic business structures: Sole trader, partnership, company, and trust. From there, you can also have more sophisticated accounting structures, but they are all generally hybrids of these main four.
Expectedly, sole trader is the simplest both in operation and for accounting purposes, where the individual takes responsibility for all business aspects. All you really need to set one up is an ABN. Partnership businesses split the responsibilities, the profits and the losses. They’re not expensive to set up, but they do ensure every member is now liable for the business. That means your private assets could be at stake if things start to go south.
Incorporated companies involve turning your business into its own legal entity. It’s more complex, and puts the business under the gaze of the Australian Securities and Investments Commission, but offers the broadest access to capital. Finally, one of the most complicated but powerful accounting structures is that of a trust. A trust structure is one where a trustee conducts business as a representative of the trust members. This trustee might be a person or a company, but they’re the ones solely responsible for trust income and losses.
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