Choosing a Business Structure


Choosing a business structure is one of the key decisions you will make when starting a business. This choice depends on the size and type of business and how you intend to run the business. Each structure has its pro’s and con’s and there are a number to choose from when starting or expanding your business.

The four most common types of business structure in Australia are:

  • Sole trader: The simplest structure, gives you full control
  • Company: More complex, limits your liability because it’s a separate legal entity
  • Partnership: Made up of 2 or more people who distribute income or losses
  • Trust: Where a trustee is responsible for business operations

When choosing a business structure, choose the one that best suits your business needs, and make sure you consider each option carefully.

Business structures can determine:

  • The licenses that you require
  • How much tax you pay
  • Whether you are considered an employee or the business owner
  • Your potential personal liability
  • How much control you have
  • Ongoing costs and volume of paperwork

There is the potential to change your business structure throughout the life of your business as it grows and expands.

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