Areas of Law » Business and Commercial Law » How to start a small business in NSW

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Want to start up a small business in NSW but need some sound advice to get you started? Setting up a business requires careful consideration. You need to be sure that the structure that you choose for your new business is going to provide you the most long term benefits, while ensuring that you are complying with the law.

At Perry Legal we are highly informed on the many different options available to the new entrepreneur, and are able to offer you expert advice as to which structure might be best for you. An overview of the different structural options is below:

Sole Trader

Being a Sole Trader means that you are not a separate legal entity to your business. You are responsible for everything that happens within your business and all profits go to you. Because the registration process is much quicker and easier than for many other business structures, many small businesses choose to become sole traders when they start out.

It is very often the best option; issues regarding tax and legal compliance are generally simpler and fees for services such as accounting and auditing are also much cheaper.  As the name suggests, this type of business structure is suited to small businesses with a single proprietor, though you are still able to employ people.

The disadvantages of being a sole trader lie in the possibilities for large tax bills, the potential Capital Gains Tax expenses if you want to switch to a different type of business structure due to expansion, and the fact that all legal responsibility for your business lies with you (ie: it is you, not the business, that can be sued in the event that you dishonor a contract.)

Perry Legal have helped many small businesses get underway as sole traders. Call us today for expert advice on whether becoming a sole trader is the right option for you.

Partnerships

The option of a Partnership structure is similar to that of Sole Trader, in that the business is still not a separate legal entity from you. The only difference now is that ‘you’ includes your business partners, however many this may be. Like the Sole Trader structure, a partnership is relatively easy to set up and incurs less initial costs than a company.

While it is possible to found a partnership with no formal agreement in place, in many cases it is advisable to draw one up. A partnership agreement has the advantage of being able to regulate matters such as holidays, sale of shares, termination issues and notice, as well as protecting all partners from any unseen future events. A formal partnership agreement can help give you and your partners peace of mind as you set out on your new business venture.

Perry Legal are highly experienced in drawing up formal partnership agreements, and are able to assist you and your partners in finding the right agreement for your new business.

Limited Liability Companies

This common type of business structure is often the most sensible approach for a new business to take. Unlike with the Sole Trader and Partnership structures, a Limited Company is a separate legal body from the owners. The profits belong to the company rather than the owners, who are paid from the company’s funds. The company can sue, be sued and trade in its own name.

While the initial set up costs are higher, and the tax compliance issues more complex, a limited company has the advantage of tax and asset protection features that Sole Traders and Partnerships do not. Setting up a limited company is often the best long term solution for a business.

Perry Legal have considerable experience working with new limited liability companies and are happy to offer our expert advice should this be the structure that you feel your new business should adopt.

Trusts

Trusts can be an extremely beneficial business model. When used correctly a trust structure can ensure the protection of your assets, as well as offering greater flexibility regarding income and asset distribution. However, trusts are an extremely complex legal area and it is essential that you seek advice before establishing a trust structure for your business.

Doing it the wrong way can have serious consequences!
At Perry Legal we have an in depth knowledge of the many different types of trust structures and will be happy to find the most beneficial one for you.

Joint Ventures

A Joint Venture is simply an agreement between two or more separate business entities to work together on a common project. This can be a one off enterprise, or a long term agreement. Possibly the most famous modern example of a joint venture is Sony Ericsson. Neither company has ceased to exist and both still trade under their own separate names, except in their joint venture of producing mobile phones.

When companies decide to embark on a joint venture it is essential that the agreements between the parties are carefully constructed and that all actions performed by the parties in relation to the joint venture are recorded.

Perry Legal have experience working with a vast number of joint ventures and we guarantee to help you put together an agreement that suits all parties.

We are committed to working with you at every stage of your joint venture to help you achieve the best possible outcomes.

Whichever structure you feel may be right for your new business, our expert advice will help you make the very best decision for your specific business.

See here for Legal Advice for Buying and Selling a Business.

Take the first step towards running your own NSW business today and call Perry Legal on 02 4940 4602 or email info@perrylegal.com.au