Determine Your Business Structure
One of the most important decisions when starting or running a business is which operating structure is the most appropriate. There are several structures to choose from. If unsure your lawyer or accountant can advise you on the most appropriate structure for your business and help to establish it.
Common business structures that your legal and accounting professional will advise are:
Sole Trader - a business owned by one person and operated under their own given name or by registering a business name. The sole trader is responsible for all legal and financial liabilities of the business.
Partnership - two or more people in business together under their own names or a registered business name. An agreement or contract exists between the partners, regarding their business relationship. Each partner is responsible fully for the business and all its liabilities. The franchisor requires one party to be a majority shareholder for security purposes. We recommend 49% and 51% share division.
Limited Partnership - if a partner wishes to be 'silent' and not participate in the management of a business they can register this to limit their liability.
Company - (Pty Ltd) a registered legal entity with the right to trade in its own right. A company is owned by its shareholders and run by its directors. Companies must be registered by the Australian Securities & Investments Commission (ASIC). Your lawyer or accountant can help set up a company structure for you and advise you of your legal and financial obligations.
Other than a sole trader, regardless of the business structure you choose, it is advisable that you enter into a Business Partnership Agreement between the parties. Your accountant or legal adviser will be able to assist you. These Agreements set out how the business partnership will operate including profit share arrangements, shareholdings, term of the agreement and involvement in the business and exit strategies.