Advantages and Disadvantages
Advantages and disadvantages of each business structures
Being in business, it is very important to choose the correct business structure. There are 4 main types of business structures commonly used by small business. Here are the brief outlines of advantages and disadvantages each business structures.
There are many things that must be considered when deciding what is the best tax and investment structure. Reducing tax is one of priority but you also need to consider other factors such as asset protection and flexibilities.
If your current business structure has outgrown your requirements, you will need to consider upgrading to more suitable business structure.
Sole Trader business structure – is an individual who is trading on their own
Advantages
Full control
Low cost and easy to set up
Disadvantages
Personally fully liable
High income earners will pay top marginal rate
Partnership business structure – For tax purpose, association of persons or entities that carry on business as partners or receive income jointly
Advantages
Full control
Low cost and easy to set up
Disadvantages
Partnership dissolves when one of partners exits or dies
Partners fully liable
Trust business structure – is an obligation on a person to hold property for the benefit of others
Advantages
Continuity
Protect assets for beneficiaries
Distribute trust income to beneficiaries
Tax effective
Disadvantages
Complexity
High cost setting up
Company business structure – a legal entity separate from its shareholders
Advantages
Limited liability
Company tax rate is 30%
Disadvantages
High cost setting up and ongoing compliances
Annual fees to ASIC
Disclaimer
Every effort has been made to offer the most current, correct and clearly expressed information possible within this site. Nonetheless, inadvertent errors can occur and applicable laws, rules and regulations may change.
These materials on this website are general in nature. It is made available on the understanding that the JH Business Services & Taxation is not thereby engaged in rendering professional advice. Before relying on the material in any important matter, users should carefully evaluate its accuracy, currency, completeness and relevance for their purposes, and should obtain any appropriate professional advice relevant to their particular circumstances.