Business structures: company

by | Apr 27, 2022 | 0 comments

Is the company structure right for your business?

Over the past few months, we’ve gone through three types of business structures you have to select from when setting up a business. And now we’re going through the final one…a company!

Company business structures are one of the most well-known, and is a separate legal entity, unlike a sole trader or a partnership structure.

A company has the same rights as a natural person and can incur debt, sue, and be sued. However, companies are expensive and complicated to set up. This structure generally suits those who expect the business income to be highly variable and want the option to use losses to offset future profits.

There are two main types of companies:

  1. Proprietary limited companies: a structure that cannot raise money from the general public through share issues.
  2. Public companies: usually formed to raise or borrow public money by listing the company’s shares for trading on a stock exchange.

So now we know a bit more about this structure, let’s go through some pros and cons…

Pros
• Enables flexible business expansion
• Well-defined government agreements
• A range of government grants and incentives are available
• Tax rates can be more favourable
• The company can trade anywhere in Australia

Cons
• Your finances are public
• Reporting requirements can be complex
• A company may be expensive to establish and maintain

So, there you go, our final business structure. As always, we recommend contacting a professional or seeking legal advice before deciding on your business structure.

Want to know more about the company business structure? Contact IM Business Solutions in Perth today.

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