When commencing a business, one of the most important decisions to be made concerns choice of organisational structure. It is suggested that you consult your accountant or other professional adviser for advice regarding the choice of an appropriate structure.
The options are:

 

Sole Trader
this is easiest to start.
The owner is liable for debts.

 

Partnership
See the Partnership Act available from State Law Publisher (10 William Street).
A Partnership Agreement is strongly recommended. The Partnership Act imposes joint and individual liability on all partners for the firm's debts and obligations which have been incurred while they are a partner.

 

Proprietary Ltd Company
This involves one, two or multiple shareholders, but is more expensive to set up and maintain.
There is protection from personal liability with this structure.
Accountancy or Legal advice is needed here.
The most common procedure is to acquire a Shelf Company  (see Shelf Company Services in Yellow Pages) at an approximate cost of $1,100.

 

Trusts
Trusts are a useful tool in business and estate planning.
Costs are usually in the vicinity of $550 to set up.

 

There are costs associated with the formation of partnerships, trusts and Proprietary Limited Companies.

 

Your choice will need to take into account the following:

the anticipated profit of the business.
the involvement of family in the business.
the financial status of the individuals who will be part of the business.
the tax liability of the business owners and their dependents.
exposure to financial risk.
the cost/benefit associated with the establishment of the chosen structure.

More detailed information can be obtained from various Australian law books available at public libraries.

 

Linked to the business structure process is the requirement to comply with various Australian Taxation Office procedures. For example, it is necessary to have a separate tax file number for partnerships and companies, and all employers must register for PAYG group employer status.

 

Check with the Australian Taxation Office to identify the range of publications and brochures designed to assist the small business proprietor.

 

An Australian Taxation information officer may be consulted by appointment at the Small Business Development Corporation Information and Licence Centre at 553 Hay Street, Perth: Telephone No: 9220 0249