Listen to episode 206 now
What is the best structure for your business? Today we talk about three main structures that you’ll come across when setting up a business.
This is by far and away the most common structure that people use, it’s also the most dangerous as a couple of reasons for that. When you’re a sole trader the money generated by the business all comes to you. In any business that you run you’re going to be liable. The buck stops with you. Every single bit of liability is yours
A company is its own legal entity. If you’re in a risky sort of business then creating a company would be ideal in that situation. However, you’ve also got to be wary of signing what’s called a personal or direct guarantee. Whenever you’re in a company, entering into the lease or getting into an agreement with a supplier will require you to sign a personal guarantee. And on that basis, you may become personally liable for those things. There are also increased costs associated with creating a company.
A trust is like a company. It’s a separate legal entity. And there’s a few different parties that are part of a trust ..You’ve got the trustee who manages the trust. There are beneficiaries who are entitled to the income and the distribution of any capital in the trust. And the trust is really set up as a separate entity that is great for tax planning purposes. So there are different tax advantages of using a trust as opposed to a company.
More about this Show
We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.