Buying or starting a business can be overwhelming. There is a lot to consider – the most suitable structure for your business, the financial and taxation implications and ensuring from the start that you are placed in the best position for future growth and profitability.
Despite recent media attention, a franchise remains a popular choice when looking at business opportunities. The good reputation of the product or service has already been established and there are usually several franchise outlets that appear to be doing well, supported by strong marketing campaigns.
Following are some of the things you need to know before committing hard-earned funds and time to your new venture.
Business Structures: Company
When commencing a business venture, it is necessary to consider the most appropriate type of business structure to put in place. Different business structures have different benefits and disadvantages. This article looks at companies - how to set one up and the pros and cons of a company structure.
A company is a separate legal entity capable of holding assets in its own name and liable for its own obligations. A company is owned by shareholders. The liability of shareholders is usually limited to the amount of their shareholding guarantee. This means that shareholders can limit their personal liability and are not generally liable for the debts of the company.
It is important that anyone who is asked to provide a guarantee or indemnity understands precisely what their liabilities are under the arrangements.
In this article, we identify the distinguishing features of both guarantees and indemnities and consider the significant differences between the 2 kinds of arrangements.
Choosing a Business Structure
There are 4 main types of business structures for doing business in Australia, each with their own advantages and disadvantages. A person can carry on business as a sole trader, partnership, trust and company.
The choice of business structure is an important decision to make at the start of a business venture, as the structure can impact on tax implications and reporting requirements during the lifetime of the business. When setting up a business structure, consideration should be given to factors such as how many people will be involved in the business, what the business will do, how much income is likely to be earned from the business and the intended growth of the business.
Terms of Trade are the terms and conditions on which a business sells goods and services to customers and on which they buy goods and services from suppliers.
These terms form the basis for the trading relationships for all businesses.
If a business is the supplier of goods or services then it should have written terms of trade which:
A lot of businesses don’t take the opportunity to set the terms on which they do business which can mean they are left at a commercial disadvantage, or worse, a legal disadvantage if the transaction does not go according to plan.
It is important that the terms of trade are set and understood before any commercial dealings have taken place.