When starting a business, choosing its structure is a crucial decision as it will shape how your business operates. It's essential to consider the various options for your business structure before making an informed choice. Familiarize yourself with the pros/cons of different business structures and choose the one that best aligns with your vision.
When starting a business, you have to decide on its structure. Your business structure helps you identify how you operate as a business. Know more about the different business structures and choose the right one.
One of the critical decisions you'll make when starting a business is its structure. Your structure choice depends on the size, type of business, and how to run it. Each structure may impact key areas such as taxes you're liable to pay, asset protection, and costs to set up.
You can choose several structures when starting or expanding your business, including:
- sole trader – this is the simplest structure and gives you complete control
- company – more complex and limits your liability since it's a separate and different legal entity
- partnership – 2 or more people who share their income or losses among them
- trust – where a trustee is held responsible for business operations
How to choose a business structure
When deciding on a structure for your business, choose what best suits your business needs. Consider each option carefully, as there are vital factors and rules to consider for each structure.
The business structure you choose can determine the following:
- the licences you may need
- how much tax to pay
- whether you're considered an employee or owner of the business
- potential personal liability
- how much control you have
- ongoing costs and volume of paperwork
