There are a range of business structures from sole trader, company, partnership and trust. The question that lawyers are often asked is what business structure is the best to go with and what gives you the best protection?
There are a range of considerations when deciding on what is the best business structure for your business including asset protection, professional obligations, taxation considerations, compliance costs, and insurance requirements.
From an asset protection point of view, if you trade as a sole trader or via a partnership you are trading in your own personal capacity and this carries personal risk – i.e. a claim could be made against you personally if, for instance, you breach a contract or are negligent.
What this means is that your own personal assets are on the line.
Setting up a company or a trust carries benefits in that you are not trading through your own name and there is a legal concept of the ‘corporate veil’. However it is wrong to think that because you trade through a company or a trust that you as the business owner carry no personal liability for the business.
There are a range of claims that can be made against directors of companies even when there is a company or trust that is carrying on the business. Such claims can include, for instance, trading whilst insolvent, breaches of work, health and safe legislation, and failure to pay tax or super.
Insurance claims can also be made in some circumstances against the directors of companies as well as the company itself.
For an obligation free discussion regarding your business requirements, please contact us on 1800 180 500 or emailreception@mcauleylawyers.com.au
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