Setting up a new business
We are here to advise you to choose the best business structure that suits you need and subsequent formalities like business registration. It is very important to choose the best structure according to business needs. Following are the responsibilities of business structure because the structure may effect on business liabilities includes:-
- Tax liabilities
- Safeguard of business assets
- Business costs related to paperwork
- Personal liability insurance costs
- Responsibilities as a business owner
There are various business structures and they all have different criteria & registration requirement which include:-
Sole Trader
A sole trader is the simplest and cheapest form of business structure, owned and controlled by a single person and it easy to register with ASIC with few legal and tax formalities and setup cost is very low as an owner you will be legally responsible for all aspects of the business, including any debts and losses and payment of liabilities.
You are allowed to trade under your personal legal name, instead of register a separate business name with ASIC unless you are conducting business under the unrelated name.
You need only individual Tax File Number (TFN) when lodging your income tax return for your business.
Partnership
A partnership is not a separate legal entity, easily establish by two or more persons or entities equally and according to pre-decide profit-sharing ratio distribute income or losses between themselves. All partners are equally responsible for the management of the business with unlimited liability for the debts and obligations it may incur.
You need to register a separate business name if you are not operating under your own personal names.
A partnership has its separate Tax File Number (TFN), and usually an Australian Business Number (ABN) and lodges its own, separate tax return with ATO.
Company
A company is a separate legal entity, managed by company officers who are called directors and company secretaries and can incur debt, sue and be sued because the company have its own legal obligations. The company’s shareholders have limited their personal liability to the amount unpaid on their registration and are generally not liable for company debts.
A company is a complex and costly business structure, with high set-up cost and legal formalities to completed with ASIC during the registration process and be incorporated under the Corporations Act.
A company’s Australian Company Number (ACN) is a unique, nine-digit number issued by ASIC that offers unique identification while It’s a legal requirement to display ACN on certain documents. You need to get an indemnity insurance policy to protect your business against risks.
