Both start-ups and growing businesses in the process of restructuring need to know that different types of businesses have different legal and tax rights and obligations. Make sure you do your homework as to which laws apply to yours. The most common types of businesses in Australia are:
- Sole trader: wholly liable, pays tax as an individual from business profit;
- Partnership: jointly liable, individual partners pay tax on their share of net partnership income;
- Trust (discretionary): personal assets protected from business creditors, each beneficiary pays individual income tax on trust earnings; and
- Companies: limited liability for shareholders, must file annual company tax return.