Four main structures

The four main business structures commonly used by small businesses in

Australia are:

• Sole trader: an individual operating as the sole person legally responsible for all aspects of the business. Like other structures, as a sole trader you can employ people to help you run your business.
• Company: a legal entity separate from its shareholders.
  Read about the differences between a sole trader and a company to understand the tax differences, your potential personal liability and the legal obligations when employing people.
• Partnership: an association of people or entities running a business together, but not
  as a company.
• Trust: an entity that holds property or income for the benefit of others.

Choosing a structure

When deciding on a structure for your business, choose the one that best suits your business needs, keeping in mind that there are advantages and disadvantages for each structure.

It’s important to investigate each option carefully, as choosing your business structure is an important decision.

Your business structure can determine:

• the licenses you require
• how much tax you pay
• whether you’re considered an employee, or the owner of the business
• your potential personal liability
• how much control you have over the business
• ongoing costs and volume of paper work for your business.

It is important to note that you can change your business structure throughout the life of your business. As your business grows and expands, you may decide to change your business structure, or to restructure your business.

Obtaining legal or other professional advice can help you understand your own particular circumstances. Speak to your accountant, or search Advisory Services to find a business adviser, when deciding on your business’s structure and type. It is
important to determine your business structure and business type before you register a business or company as the steps may differ.