Listen to episode 207 now
Today we just wanted to go through some of the benefits of setting up a company for your business.
Separate legal entity
This is a concept that a lot of people struggle to get their heads around. But once understood it, it’s really a game changer A company is a separate legal entity from the people behind it. That means that if you get sued it protects the person people behind that company. It also means that the separate legal entity has a different tax regime. And it has a separate credit with credit reporting agencies.
A company has directors. You can have a number of directors depending on how your business is structured. The company is a separate legal entity, and directors are not personally liable in my instance, unless they sign a personal guarantee. This allows the directors to have asset protection for them personally.
The directors have control over the company but the shareholders actually own the company. So the benefit here is that people who own the company don’t necessarily have to have any exposure to the outside world. Shareholders very rarely have any liability. So that’s probably the main benefit. People who own the company are separated from the risk. If you’re a sole trader, if something goes wrong, then liability rests with you as the owner of the business. So Greg, there are benefits of our 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.