There are many types of legal structures for businesses and each has its strengths and weaknesses. Much depends on particular circumstances.
The common types of legal structures for businesses are:
1 Sole ownership: Also known as sole proprietorship, is a common form of business structure where an individual owns and operates the business in his or her name. The strengths of this include simplicity and ease of set up, complete control, direct taxation, flexibility and privacy. The weaknesses include unlimited liability, limited capital, difficulty in continuing the business, limited expertise and potential lack of credibility.
2 Partnership: A partnership is a business structure where two or more individuals manage and operate the business in accordance with the terms and conditions of the partnership agreement. The strengths include shared responsibility, combined skills and knowledge, increased capital, flexibility and tax benefits. The weaknesses include unlimited liability, potential for conflict, shared profits, limited life and decision making delays.
3 Corporation: A corporation is a separate legal entity from its owners. The strengths include limited liability, access to capital, perpetual existence, transferability of ownership and credibility. Weaknesses include complexity and cost, regulatory requirements, less control for owners and potential for conflicts.
4 Trust: A trust is a fiduciary arrangement where one party, known as the trustee, holds and manages assets for the benefit of another. Strengths include asset protection, estate planning, control and flexibility, tax benefits and privacy. Weaknesses include complexity and cost, loss of control, regulatory compliance, potential for disputes and limited flexibility.
For legal advice about your position please contact us for an obligation free discussion on 1800 180 500 or emailreception@mcauleylawyers.com.au
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