Figure 1. Benefits and disadvantages of different business structures
Sole Trader
Partnership
Company
Discretionary Trust
Unit Trust
Cost to establish
Lowest
Potentially highest1
Higher
Higher
Higher
Administer
Easiest
Potentially highest
Higher
Higher
Higher
Limited liability
No
Potentially worst
Asset protection
Lowest
Potentially worst
2
Yes
Yes
Yes
Better
Better
Better
Workcover for self
No
Maybe
Yes
Yes
Yes
Split income
No
Better
Better
Best
Potentially best
New partners/investors
No3
Yes4
Yes
Difficult
Yes
CGT discounts
Yes
Yes
No5
Yes
Yes
Salary packaging
Use of losses
Owners’ disputes
Succession
No
No6
Yes
Yes
Yes
Best
Better
Lower
Lower
Lower
Lowest
Higher
Higher
Lower
Higher
Terminates on death
Terminates on
change of partner
Yes
80 years
80 years
1. With recommended partnership agreement and shielding of personal assets
2. Unless partnership of companies/trusts, but company/trust may still be
potentially liable for all the debts and obligations of the partnership
3. New structure would be required
4. But new partnership agreement required
5. But does have small business CGT concessions
6. Unless partnership of companies/trusts
Leon Ponte, Juris Doctor (Law) is a founding principal of Ponte Earle – Business Lawyers
for Business® and is in a select group of approximately only 110 lawyers accredited as
specialists in business law by the Law Institute of Victoria. He has a strong personal
interest in the fitness industry, holding Certificates III and IV, and has provided advice to
fitness facilities, personal trainers and suppliers to the industry. ponteearle.com.au
NETWORK SPRING 2014 | 39