Different business structures in Australia (Updated 2020)

When choosing your business structure it is recommended that you seek the advice of a professional accountant to ensure the saving of both time and money (during setup and afterward). Your accountant should understand Australian business economics and legal regulations deeply and can provide solutions/advice in selecting the best business structure.

Below are the main business structures you will come across in Australia.

It is considered as one of the easiest forms of business structures in Australia. In sole trader structure, a person, alone is responsible for all business operations. Setting up this plan of business is also easier because it involves very limited legal and tax regulations. The income tax you receive on sole trader business structure is measured based on your personal tax rates. Although your personal liabilities will be unlimited but since you will not be considered as an employee under this structure, you are devoid of paying payroll tax or superannuation. This helps you immensely and as your business grows you can alter your business structure later on. However, you will need the assistance of accountant to help you out in the changing of your structure and income tax deductions.

Unlike sole trader, trust business structure is a complex thing to set up and requires rigorous workout and regulation. In this setup, a person or company will become a trustee for the assets of a beneficiary. They will conduct and do business on the behalf of the beneficiary. There is a chance of maximising savings by proper distribution of profits, a process in which both parties can obtain several tax benefits. An accountant will be able to define the proper strategy to obtain maximum tax benefits, this is a crucial service for the better management of your economical taxation and accounting matters.

Like the name suggests, the partnership involves two or more people in managing and operating a single business together. For those eager entrepreneurs who specifically wants to raise their finances, this business structure is the best option. However, when a business is done in partnership, written agreements should also be done. Disagreements can happen when two or more people operating a business in making decisions. To avoid such hassles, a written agreement can benefit and constitute all within the partnership.

A company is considered as a legal entity under Australian business laws. When a person forms a company, it should be registered with ASIC (Australian Securities & Investments Commission) and this same government authority also regulates them. It is the costliest business structure to set up. The company must have shareholders or directors that are responsible for the operations of the company. The income tax that the owners receive is at per the tax rate of the company itself. The company owners can be eligible for tax deductions but it is important to get professional advice or assistance to help you set up and manage your business structure properly.

With this overview explore the business structure you think would fit best with your circumstances.  If you would like advice on what structure is best suited to your business, ND Accounting offer a 30 minute free consultation.  Book online here.