Business Structures

There are three ways to begin a business.

You can:

  • Buy an existing business;
  • Buy a franchise; or
  • Start a business from scratch.

Irrespective of whether you are buying an existing business or starting a new one, getting the structure right is critical.

What are the most common forms of business ownership?

Sole Trader

This is when as an individual you trade in your own name or as a business name with personally you as the owner of that name.

Partnership

This is when two or more people own the business as individuals. Together, the partners share in the profits and the liabilities of the business.

Company (Pty Ltd)

This is when a company is incorporated and is comprised of the following:

  • at least one director (there can be more)
  • a secretary (who can also be one of the directors)
  • the shareholders

Trust

A trust is an entity that is set up by a person called the “settlor” and is otherwise comprised of a trustee and beneficiaries. The trustee is the person or company (the latter being known as a corporate trustee) that has the responsibility of the day-to-day running of the trust. The trustee is the conduit that allows the trust to trade with the world. The trustee does not receive profits (dividends) from the business. The beneficiaries receive the dividends. There are also different types of trusts used for different scenarios. Provided the trustee discharges, his, her or its duties responsibly, the trustee cannot be liable for any losses either.

How Can We Help?

We genuinely recommend that you seek professional legal advice before deciding on a business structure as everyone’s circumstances are different. When considering business structures, it is not a case of “one size fits all”.

Getting this right can you protect you from liability if there are unforeseen events and it may otherwise provide a more effective tax structure. Sometimes businesses start off in one structure and then move to another. Care should nevertheless be taken to get the structure right from the start so as not to trigger otherwise unnecessary capital gains tax events.

Getting the right setup at the beginning of a business will ensure that you have the following areas covered:

  • Asset protection
  • Limited liability
  • Tax-effective structuring
  • Minimize CGT

We can provide you with specific advice to assist you in choosing the right business structure. We will provide you with sound, down to earth legal advice, having regard to your circumstances.

Call us now on 1300 907 335 or simply fill out the contact form on this page and we will contact you promptly.

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