Making the first key decisions in a business

We are creating a series of posts on starting your own business. First, you need to make the initial key decisions for your business.

 

Business Structures

Business structures refer to the legal frameworks that define how a business is organized and operated. In Australia, common types of business structures include:

• Sole Trader
• Company
• Partnership
• Trust
• Co-operative
• Indigenous corporation
• Joint Venture

Sole Trader

Sole traders are often the easiest and most inexpensive type of business structure to set up. However, this means you are legally responsible for every aspect of your business.

 

Company

A company business structure stands as a distinct legal entity, setting it apart from sole trader or partnership setups.

Forming companies involves substantial complexity and costs, making them preferable for those anticipating fluctuating business income and seeking the flexibility to offset future profits with losses.

 

Partnership

A partnership is a collaborative business structure comprising two or more individuals who share the distribution of both income and losses among themselves.

There are 3 main types of partnerships, each with different liabilities.

 

Employee or Contractor?

It’s important to identify whether you’re acting as an employee or a contractor.

An employee is engaged under an employment relationship, where the employer controls the work and working conditions, provides entitlements like leave and superannuation, and withholds taxes.

A contractor, on the other hand, operates independently, has greater control over how the work is done, and is responsible for their own taxes and entitlements.

 

Find out more at the source of our information business.gov.au for details on Business Structures and Employees vs Contractors