If you are thinking about starting a business you need to decide on a number of different things, including what business structure you choose to fall under. Your business structure can determine many things and each structure holds its own advantages and disadvantages.
The most common business structures are:
The simplest and least expensive structure. However, the downside here is that any debt will be recoverable directly from your personal assets and there will be no limit to your liability.
A partnership can be easy to establish and simple to administer. The downside is that each partner is jointly and severally liable for debts which means not only are you liable for your portion of debt but also for all the other debts incurred by other partners.
A trust, unit or discretionary- can be useful when it comes to distributing assets and income but can be complex to administer.
A company can be the most burdensome business structure to set up however it is an independent legal entity. This means that the company can incur debt, sue or be sued and the personal liability of shareholders is limited.
Remember research is key when determining the best avenue to take your business. It’s important to understand the in-depth differences in business structures before you commit. We advise you to seek legal or other professional advice before deciding on the best structure for you.
Now that you understand the different structures, start comparing business loans and business credit cards today.
Updated: October 2017