206 - The Best Structure For Your Business

Business Legal Lifecycle Podcast

What is the best structure for your business? Today we talk about three main structures that you'll come across when setting up a business. Sole Trader This is by far and away the most common structure that people use, it's also the most dangerous as a couple of reasons for that. When you're a sole trader the money generated by the business all comes to you. In any business that you run you're going to be liable. The buck stops with you. Every single bit of liability is yours Company A company is its own legal entity. If you're in a risky sort of business then creating a company would be ideal in that situation. However, you've also got to be wary of signing what's called a personal or direct guarantee. Whenever you're in a company, entering into the lease or getting into an agreement with a supplier will require you to sign a personal guarantee. And on that basis, you may become personally liable for those things. There are also increased costs associated with creating a company. Trust A trust is like a company. It's a separate legal entity. And there's a few different parties that are part of a trust ..You've got the trustee who manages the trust. There are beneficiaries who are entitled to the income and the distribution of any capital in the trust. And the trust is really set up as a separate entity that is great for tax planning purposes. So there are different tax advantages of using a trust as opposed to a company. #business #smallbusiness #compnany #trust #soletrader #taxadvice #australia #law #legaladvice