Choosing the Right Business Structure
When starting a business, one of the most critical decisions you will make is choosing the right business structure. The structure you select will determine how your business operates, how profits are distributed, how tax is paid, and the extent of your personal liability. It will also impact your ability to attract investment, manage risk, and grow in the future.
Key factors that influence this decision include:
- The number of people involved in the business
- The type of business you will operate
- Your projected income and financial goals
- Tax implications and asset protection needs
- Long-term growth and succession planning
Because this decision can have lasting consequences, obtaining advice from experienced business lawyers is essential. At Parke Lawyers, we help entrepreneurs, family businesses, and established enterprises select the structure that best aligns with their goals.
Business Structures in Australia
In Australia, the main types of business structures are:
Sole Trader
- Owned and operated by one individual.
- The simplest structure, offering full control and entitlement to all profits.
- However, the owner is personally liable for all business debts and obligations.
Partnership
- Owned by two or more people who share profits, losses, and control.
- Partnerships can provide shared resources and skills but also involve shared liability.
- Disputes between partners can arise if agreements are not properly documented.
Trust
- A trust is a legal arrangement where a trustee (an individual or company) operates the business for the benefit of others (beneficiaries).
- Trusts can provide tax advantages and asset protection but are complex to set up and administer.
Company
- A company is a separate legal entity that trades in its own right.
- It provides strong protection for personal assets, with shareholders’ liability generally limited to their investment.
- Companies are subject to more regulation and reporting obligations but can offer advantages in credibility and access to capital.
Each structure has different benefits and drawbacks, and the right choice depends on your unique circumstances.
Why Legal Advice Matters
The wrong structure can lead to:
- Higher tax liabilities
- Exposure of personal assets to business risks
- Difficulty in raising capital or bringing in new partners
- Complications in succession planning or selling the business
At Parke Lawyers, we provide clear, practical advice tailored to your goals. As Accredited Specialist Commercial Lawyers, we:
- Explain the advantages and disadvantages of each structure in plain English
- Help you choose the structure that offers the right balance of flexibility, protection, and efficiency
- Draft the necessary documents to ensure your structure is legally sound
- Assist with restructuring if your business has outgrown its original model
Our Approach
No two businesses are the same. That’s why we provide a personalised approach — considering not only the legal and tax implications but also your broader commercial, personal, and financial goals. Whether you’re a start-up, a growing family business, or an established company looking to restructure, Parke Lawyers provides the strategic legal support you need to succeed.
Your Business Law Team
