
Different Business Structures
Different Business Structures
When setting up a new enterprise there are a number of factors to consider and choices to make. One decision that is to be made when building a business is the Structure of that business. To choose a business structure can depend on a lot of things such as, the kind of business you are planning to set up, the number of people you would have working with you, whether you would be working with a partner or as a sole businessman etc. However choosing a structure doesn’t bind a business to carry on with the same structure throughout their business existence. As the business grows or expands, the business owner is allowed to change the business structure as per his/her business needs.
There are four types of Business Structures:
Sole Trader is one of the simplest and inexpensive forms of business structure, where the business owner works independently. In this kind of business structure traders can work under their own name or can choose a suitable name for their business.
This business structure is a partnership between two or more people to run the business together as partners.
This type of business structure is a legal entity with shareholders investing and holding partial ownership while the company is run by directors.
This business structure is set up for the benefit of others. Often family businesses go for this structure so other family members are made beneficiaries without any direct involvement with the business.
A business owner needs to be very careful when choosing a business structure as each business structures may affect the business in different ways. Such as:
Your value in the market as some clients prefers dealing with companies and whereas some deal with sole traders depending on the area and type of business
Whether you need to register for an ABN (Australian Business Number), ACN (Australian Company Number) or both
Now let’s look at some pros and cons of each business structure:
Pros and Cons of a Sole Trader Business Structure
Pros
Cons
Pros and Cons of Partnership Business Structure
Pros
Cons
Pros and Cons of Company Business Structure
Pros
Cons
Pros and Cons of Trust Business Structure
Pros
Cons
Consider the pros and cons of all types of business structures before you make a final decision. It is also advised to consult an expert adviser to get more information on what structure would best suit your business needs.
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