Business Structures Lawyers North Sydney
At Leigh Adams Business and Commercial Lawyers, we advise our clients on current and potential business structures which might suit them. There are a variety of business structures available to businesses and we outline them below.
Whether you should trade with one or another or use several, will depend on not only the nature of your business, but also on issues such as stamp duty, GST, asset protection, capital gains tax, loan arrangements, your current and possible future business partners and shareholders and trust beneficiaries (when using a trust), your family arrangements, your ongoing future financial needs, your future plans for retirement and your estate planning requirements. Minimizing workers compensation premiums is also an issue – the list is not exhaustive!
We assist by reviewing these matters with you, your accountant and your financial planner where necessary. We suggest the ‘best fit’ for your business moving forward. If the business structure suits your needs and is good to go, then the likelihood of unanticipated taxes and other adverse issues arising down the track is minimised.
As a sole trader, there is no difference between you and your business. If you trade using your own name, you usually do not have to register a separate business name. A sole proprietorship (as it is also known) has very low start up costs and minimum regulations governing it, and generally allows you to take maximum advantage of the tax concessions (particularly capital gains tax concessions) available to small business, which is very attractive. However, you are personally liable for all the business liabilities, and this can be a reason to consider other business structures if you have any doubts about the likely success of the venture.
A partnership does not have to be between individuals. The partners can be companies or trusts.
Many partnerships are formed using verbal agreements. This is popular with friends and relatives. However in such circumstances, it may not be easy to maintain the business if complications arise and disputes cannot be resolved. We can assist by preparing a written document to govern the relationship between the partners. It sets out the rights and responsibilities of each partner. We recommend that amongst many other issues, it govern how someone can become a partner and how a partner can leave the partnership.
A company is a separate legal entity to yourself and therefore has its own assets and its own liabilities. However failure to comply with the law can cause the company’s directors and employees and sometime its shareholders, to become liable for wrongdoings. We can advise all stakeholders of their legal obligations.
Whilst they can be complicated, trusts are generally very flexible and remain very popular within the SME business community. With a properly drafted trust deed, a trust can combine the best elements of a sole trader with the best elements of a company. We can draft all types of trust deeds and de-mystify their benefits and shortcomings for you.
Many trusts are old and their trust deeds need to be updated to reflect current needs or new legislation. If tax or stamp duty can be saved when the amendments are made, we can tell you what the savings are when we amend them.
If you would like further information, or want a lawyer to discuss the issues with you in more detail, then call us on 02 99640022.