Legal ownership structures

Question 1

Sole Trader

Answer 1

A business owned and operated by one person
Main features:
- simple to establish, inexpensive and easy to operate
- owner uses personal TFN to lodge returns
- Unlimited liability (not a separate entity)
- Minimal legal regulations and low cost structure
- Owner can employ people

Question 2

Partnership

Answer 2

Business with 2-20 people who operate it. Partnership Act 1891 (QLD)
Main features:
- Simple to establish
- Business & owner has separate TFN
- Unlimited liability
- Shared control and management
- Must register for GST and have a threshold
- Can employ people

Question 3

Private company (1-50):
A registered business not listed on stock exchange

Proprietary (public) company (5-infinite):
Registered business, public can buy shares and is open to investment.

Answer 3

Main features:

• Complex structure, needs TFN
• limited liability
• Owner is a shareholder
• Controlled by board of directors, owned by shareholders
• Must register for GST and ASIC