Startups + Business Structures
When you first start up a company, it is exciting just to get started and make that first sale!
You might make something or set up a service for a friend and just start selling it straightaway under your own name. Eventually, you might start thinking about getting a business name, a formal business number, and other kinds of company structures.
When you are busy building your business, serving your clients, and perfecting your products, the nitty gritty details of business structures could be the last thing on your mind. Or… perhaps it is on your mind, but you don’t know where to start because it seems confusing.
That’s where we can help!
Why bother looking at business structures?
Without the right structures in place, you could find yourself with lots of issues.
If you just work in your own name under an ABN as a sole trader…
- You could see a large income tax bill as the business’ income is counted as your income and taxed on top of any other income you might make from other jobs.
- You are the bottom line for all risks and responsibilities… this means if a client is injured from your services or at your place of business, they might go after you personally as a sole trader
- If you have employees as a sole trader, you are also responsible for all employee issues that could crop up
Other reasons to think about your business structure
Apart from the potential tax benefits (speak to your financial advisor for details) and potential to reduce your personal risks, there are some other important reasons to think about your business structure.
The right business structure makes your business seem more professional. Not that Pty Ltd companies are always more organised or profitable than sole traders, but that does tend to be the feeling. So it can be a great way to look bigger than you are and give a sense of comfort to your clients and suppliers.
The key list for professional business structures to reduce risks and increase professionalism
- Formalised business structure – some form of ‘pty ltd’ company
- Registered business name
- Registered trademark
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