Four common business structures that will give your start-up a solid foundation.
Yes, it’s a tricky decision. But choosing the right structure will be one of the most critical moments of building your business. The decisions you make today, impact tomorrow.
So let’s get down to business. Here are the four most common structures in Australia:
Will Your Business Be A Sole Trader?
A sole trader is an individual who uses their skills to run a business. These people work as a one-man band. They have complete control over the management, creative direction, profit and loss.
Examples of sole traders include freelancers, artists, independent contractors, self-employed business owners and tradespeople.
Did you know many sole traders begin by running a small side hustle while working a 9 to 5? Learn the art of starting a side hustle with a full-time job.
Will Your Business Be A Company?
A company is a commercial business powered by a team of internal directors that drive business decisions. A company’s profit, loss and taxes exist separately from its owners and shareholders. A company can also start onboarding new employees.
Check out our article about the best time to start hiring.
Examples of companies include real estate agencies, production houses, coffee shops, swimming schools and massage studios.
Will Your Business Be A Partnership?
A partnership is when 2-20 people run a business together but not as a company. In a partnership structure, each partner is personally liable for the business’s profit, loss and taxes. It’s common for partnerships to pool their expertise, money and creative leadership to grow.
Speaking of money. If the combined income of the partnership reaches $75,000, you may want to think about GST. Here’s a great beginners’ guide to GST. Common partnerships include builders, legal and music businesses.
Will Your Business Be A Trust?
A trust (trustee) is an entity that holds assets for the benefit of another, known as a beneficiary. A trust can be set up for anyone who wants to manage their assets after they pass away. Individuals may wish to set up a trust to provide their family with property, income, stocks, royalties and patents.
Down the track, you can change structures to accommodate for business growth and the economic climate. But for now, simply choose a business structure you are comfortable and confident in running. We know you’ll thrive in no time.
Honcho Hint: If you're unsure about starting a unique business, have you considered franchising?
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