26 February 2019

Choosing the Right Business Structure for Your Start Up

Top 10 Considerations for Start Ups Nadia Sabaini
Nadia Sabaini Commercial Lawyer

So you have decided to start a new business? You have a novel idea or a better way of doing things? What’s next?

Starting a new business can be daunting, but with good planning and the help of experienced advisors, success is just around the corner. In this guide, our business advisory director, Nadia Sabaini, gives her top 10 actions to consider for Start Ups embarking on a new business journey to maximise their chances of success and avoid legal hardships.

Nadia Sabaini is a director in our business law team. Nadia routinely acts for clients in start-ups, mergers and acquisitions. Nadia also advises in the areas of finance and general contract law.


#3: Choosing the right business structure to suit the future

One of the very first considerations to be made and discussed with your lawyer or accountant is the type of structure the new business will have.

The common business structures available which include:

Sole Trader

This arises where a person obtains an ABN in their own name. It is the simplest structure. The money earned will directly add to your taxable income and you will be personally liable for any debts you incur. Although simple to manage, it doesn’t afford much asset protection or flexibility of income and capital distribution.


This is where two or more persons elect to conduct a business in partnership. All partners have an equal share in the profits of the partnership and all are equally responsible for its liabilities. Be careful when working with a business partner without an agreement in place, as a partnership can arise in certain cases by operation of law, with unintended consequences


This is where one or more persons hold shares in a company which carries on the business as an independent legal entity.  The shareholdings can differ in percentage.  The shareholders are not ordinarily liable for the debts of the company, which means that, if the business fails, investors usually can’t lose more than their initial capital unless they are also a director and breached their directors duties or have provided a personal guarantee.  Companies are taxed at a fixed rate of 30% irrespective of how much the company earns.


€In this structure a trustee, usually a company, operates the business for the benefit of the beneficiaries of the trust, which may be family (in the case of a discretionary trust) or investors with fixed percentages (in the case of a unit trust).  Trusts provide a good degree of asset protection and flexibility of income classification and distribution for tax purposes.

It is important that the decision of which structure to use is made after proper consideration of the current and future requirements of the business and that it is made as soon as possible, as there can be transfer duty and other adverse consequences to changing a structure once it’s in place.

A lawyer or accountant trained in corporate structuring can help you make the right decision and correctly establish the structure for you.

For more information regarding your start-up journey, download the full guide below or contact us today.


What’s next? #4: Signing a Shareholders Agreement


Read from the beginning: #1: How to Make a Real Business Plan for Your Start Up


This guide is provided by way of general assistance only and for marketing purposes. Please contact us to discuss your personal situation and further information you may need.


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

Download the full guide

Learn more about your start-up journey today


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