|Structure||Advantages||Disadvantages||Business issues to consider|
||Operating as a sole trader means you are exposed to many risks, including putting your assets on the line. It is important that you obtain advice on an appropriate structure to minimise your risk exposure.
To avoid exhaustion it is necessary to be able to put in place systems that allow tasks to be delegated to employed staff and to ensure staff are accountable for performance of delegated tasks.
||The Partnership Act 1891 covers various aspects of a partnership, including:
Whilst the Partnership Act contains the safety-net provisions, you should consider a partnership agreement that clearly sets out the intentions, understandings and requirements of the partnership:
The end of the partnership should be considered before it is formed whether that is by retirement, dissolution, admission of a new partner, death of a partner or bankruptcy of a partner.
||Greater regulatory compliance
||A company is a legal entity, separate from directors and shareholders.
Generally, directors of a company are not responsible for debts and liabilities incurred by the company. However, directors can be liable for company debts under certain circumstances. Some issues directors should consider include:
If you, as a director, advance funds to the company, it is important that you properly register, and in time, a security interest to preserve the status of your priority and protect your interests to secure the monies you have advanced to the company. To find out more, or to register a security interest, go to www.ppsr.gov.au.
|Trust||Income and profits sharing
||Greater compliance and administrative burden||At law, a trust is comprised of a trustee (either an individual or corporate trustee), trust asset and beneficiaries.
There are various types of trusts, for example:
The laws (taxation and legal) applying to trusts are complex and you should seek professional advice on an appropriate trust structure for your circumstances.
This publication is only intended as a general overview of issues relevant to the topic and is not legal advice. You should not rely on it in place of legal advice. If you need legal advice, you should obtain legal advice from your lawyer. If you have any questions, please contact us firstname.lastname@example.org.