When starting a new business selecting the right structure is a significant step. It is important to recognise that business structures can change based the growth and expansion of your business. Below are six potential structures that are available in NSW.
Common Business Structures in NSW
A sole trader is where an individual is responsible for all aspects of the business including all liabilities such as debt. This is a simple and inexpensive business structure for Australian companies, however, it also increases your personal risk.
A partnership business structure is where there are a number of people who are responsible for a business together. You can jointly run a business with a number of people of up to 20. In New South Wales, partnerships are governed by the Partnership Act 1892 (NSW).
A joint venture business structure involves an agreement between two or more people/organisations/businesses coming together for a specific project. A joint venture agreement is a legally binding agreement or contract and once the contract is carried out, the joint venture ceases to exist.
Limited Liability Company
A limited liability company is where the owners are usually shareholders and their liability is limited to the nominal value of their shares (if fully paid). If you were to buy or own a share in a company, and the company is either wound up or declared insolvent, the shareholder does not owe more capital to aid in keeping the company afloat and will only lose the amount paid to acquire the share.
A public company is a business structure with strictly imposed requirements as governed by the Corporations Act 2001 Cth. Public companies can be listed on the stock exchange and their shares traded.
A trust is a form of relationship which creates an obligation (used for investment or business purposes) that is put on a person or entity (trustee) which requires them to hold property for the benefit of a beneficiary. Read more about trusts.
Contact us for more information or for advice on which business structure is suitable for your business.