Types of Business Structures in Australia

LAW513 CORPORATE LAW

TABLE OF CONTENTS
Part A.........................................................................................................................................3
REFERENCES...........................................................................................................................6

Part A
One of the key choices that is required to make when beginning a business is its
structure. The decision of structure will rely upon the size and kind of business and how the
individual needs to run it. Each structure may affect key areas, for example, charge you're
subject to pay, resource insurance and expenses to set up. There are various structures that
one can browse when beginning or extending the business.
There are four most common types business structure in Australia which are
explained below along with their advantages and disadvantages.
Sole trader: The Sole Trader business structure is mainly suitable for small
businesses, especially those dependent on the proprietor's very own abilities (Trad and
Freudenberg, 2018). They can trade under their own name (for example Danny Green), or
can enlist a business name (Danny Green's Bakery). Sole Traders are at risk for tax
assessment on business salary which is incorporated in their yearly personal IT return and
charged at marginal rates.
Advantages: Proprietor has direct command over the business and is qualified for the
entirety of its prosperity Low expenses and less legal requirements is there for starting up the
business. As the business develops and expands, the structure of it can be very easily changed
without any problem. It leads to more noteworthy protection and simple to disband.
Disadvantages: Because of exchanging alone, sole traders bear full obligation
regarding any liabilities emerging out of the business. This can reach out to the proprietor's
personal assets for paying off the business obligations. The Sole Trader needs to make
payment of tax on all the benefits.
Partnerships: The business is ordinarily directed by at least 2 individuals, who have
the authority as the Owners or Principles of the business (Common business structures.
2020). The accomplices share the costs, benefits and misfortunes of the business, and the
organization requires its own Tax File Number. Building up a partnership agreement is
suggested, to set out the terms and states of the Partnership. The Partnership name must be
enlisted under the Business Name Act.
Advantages: It can get some benefits of taxation and the partnership is naturally
disintegrated on the demise of one of the accomplices. The available salary or loss of the