Sole trader

A sole trader is the simplest business structure and it is inexpensive to set up because there are few legal and tax formalities.

If you operate as a sole trader, you're responsible for all aspects of the business, including any debts the business incurs and there are no limits on this liability.

You do not need to register the business with ASIC unless you are conducting business under a name other than your personal name. 

Partnership

A partnership is two or more people or entities who do business as partners or receive income jointly.

In a partnership, control or management of the business is shared. A partnership is not a separate legal entity so you and your partners are liable for all debts and obligations of the business. A formal partnership agreement is common, but not essential.

The information you need to provide when registering a business name depends on who holds that name. 

Joint venture

A joint venture is two or more people or entities who join to do business together for a particular purpose, usually a single project, rather than as an ongoing business. A joint venture will often have a joint venture agreement. 

Trust

A trust is an obligation imposed on a person, the trustee, to hold property or assets (e.g. business assets) for the benefit of others (known as beneficiaries).

Setting up a trust requires a formal deed, as well as the completion of yearly administrative tasks. If you operate as a trust, the trustee is responsible for its operation. Using a trust structure for your business may have tax advantages.

A trustee can be a company registered with ASIC. If the trust does business under a name other than its own, that name must be registered as a business name.

Company

A company is a separate legal entity. This means it has the same rights as a natural person and can incur debt, sue and be sued. The company's owners (called 'members' or 'shareholders') can limit their personal liability and are generally not liable for company debts (unless they give personal guarantees to borrow money). Companies are taxed at a different rate.

A company is a complex business structure, with higher set-up and administrative costs. Companies must be registered with ASIC and company officeholders have legal obligations under the Corporations Act.

You need to register the company with ASIC. Company officers must comply with other legal obligations under the Corporations Act. 

Finally, many risks apply to doing-it-yourself with business names. Can you really use the name you've registered, for example? Find out more about what's involved and your potential exposure by calling Flor-Hanly Accountants in Mackay on 07 4963 4800 before you take action.

Source ASIC