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  • #995073
    mitchmenghi
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    Greetings, first post.

    I’m going thru a restructure in business. It’s changing from a partnership to sole trader, the sole trader entity is my name.

    I have a couple trading as names, specifically, I have 3 of them, one that is an enterprise name. One that is the business name I had as a partnership and has now been moved to my sole trader ABN (well call this business name A), and I also opened a new one recently (well call this business name B)

    Business A does Web & IT which I want to separate its services into 2 businesses trading as names. The IT will stay with Business A name, the Web will be moved to business B name.

    I feel I will be able to market myself much better rather than try and do everything with the one business name, one business website as I had in my partnership for over 10 years.

    All 3 business names are now attached to the same ABN as per the ABR

    My dilemma is now a few things I need to get straight.

    1. My enterprise business name should I use that as the MAIN business name in regards to legal documents, business accounts, invoicing etc…. or should I use my sole trader entity name which is basically my name only as per ABR ?

    2. If I end up using my ABR entity name (in this case it’s my name) can I get paid by clients using the entity name, or any of the tradings as names eg via cheque, eft ?

    3. In regards to the bank, they ask what is your business name and I have the option to open a business bank account, what name do I use the entity name or one of the tradings as names ?

    4. Do I even need to open a business bank account, I have checked and saw a great personal account by Citibank that allows me awesome benefits, they have said its not for business use but only for personal banking. Does this mean I can still open it up under my entity name (sole trader name) and use it for businesses expenses, purchases ? Since I’m not opening it up under one of the tradings as names ?

    Thanks for your time…

    #1199862
    JacquiPryor
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    Hi Mitch,

    The first question that comes to my mind when I read your post is whether you’ve sought advice that a sole trader structure is ‘right’ for you and your businesses? This might be worthwhile in the circumstances. This is not my area of expertise, but, can answer a couple of questions for you – and, would recommend a chat with an accountant and/or tax lawyer, as there could be benefits to structuring things a bit differently to running every thing as a sole trader.

    You mention having 3 trading names, one of which is an ‘enterprise’ name. I am not sure I quite follow here, but, it sounds like from the rest of your post that everything is linked to your sole trader ABN (i.e. all three names)? If that’s the case, then you are the legal entity full stop. A business name (whether it’s your “main” name or not) is not a legal entity. A business name is kind of like an alias for whoever is carrying on the business – be that you as a sole trader; a partnership or a company etc.

    Whilst each situation and set of circumstances might be different, you could see it as whoever holds the ABN is the actual entity. This is you based on your post. If, purely as example, you were to register each Business Name A, Business Name B and Enterprise as separate Pty Ltd companies they would each be separate legal entities and able to obtain their own, separate ABNs.

    Noting the following is not advice… I hope it assists.

    1. My enterprise business name should I use that as the MAIN business name in regards to legal documents, business accounts, invoicing etc…. or should I use my sole trader entity name which is basically my name only as per ABR ?

    On legal documents you will likely need to be identified, as you are the entity. A business name could be in your name “trading as” Enterprise Name, and enterprise name (or other business names) could be seen on your invoices. The main element here would be to ensure your ABN is included.

    One of the reasons for registration of business names when you’re trading under names other than your own is to ensure people can locate the ‘entity’ that is operating the business – be that a sole trader, partnership, company etc. So, by ensuring your ABN is prominent this will help people check and locate the business details if ever needed (be it because they’ve seen Enterprise Name or Business name A or B)… ultimately it will all track back to you/your ABN.

    2. If I end up using my ABR entity name (in this case it’s my name) can I get paid by clients using the entity name, or any of the tradings as names eg via cheque, eft ?

    This is probably going to be answered by how your business bank accounts are set up. For example, my legal entity name is Mark My Words Trademark Services Pty Ltd. My company also owns a second business by a different name. I can have clients from both the ‘main’ business, and secondary business name pay to “Mark My Words Trademark Services Pty Ltd” (my “ABR” entity name) and that’s fine. So in opening your accounts you’re name and ABN should be linked as a sole trader so you shouldn’t have problems being paid using your name. If someone was to simply make a cheque out to “Business Name A” without reference to you, I imagine the bank would need reference of any/all names connected to you in order to ‘cash’ those payments.

    I think this also needs to be considered in view of how you want to operate your different business names; if you wish them to be ‘separate’ then ultimately (in the eyes of the Tax Office) they won’t be if all linked to your ABN. But, you could set up a different account for each business (e.g. “my name trading as “business name A”; “my name” trading as business name B” etc) so you could have the relevant customers pay to the relevant accounts, and you’d also be able to set up different accounting codes for tracking different income/expenses within your one ‘entity’ for bookkeeping etc.

    Have a chat to your bank, as they should be able to confirm what you need to provide to them to ensure that monies being paid to you, business A or B etc will be honoured and put in your account.

    3. In regards to the bank, they ask what is your business name and I have the option to open a business bank account, what name do I use the entity name or one of the tradings as names ?

    Trading name. The bank account will be opened with you as the actual ‘entity’ – so, if they’re asking for your business name they will likely be asking for your trading name. Per my comments above at 2 – see if they can accept several business names to ‘link’.

    4. Do I even need to open a business bank account, I have checked and saw a great personal account by Citibank that allows me awesome benefits, they have said its not for business use but only for personal banking. Does this mean I can still open it up under my entity name (sole trader name) and use it for businesses expenses, purchases ? Since I’m not opening it up under one of the tradings as names ?

    Do you ‘need’ to open one, I can’t say whether there are legal obligations that you formally have a ‘business account’ – but likely you’ll find this will be how you proceed. Using Citibank as the example, you already say that it’s not for business use, ony personal. Most banks will have similar conditions I’m sure and different fees/terms etc for ‘business’ account holders.

    If you open it in your name but use it for business purposes this will breach those terms of Citibank. Irrespective of the name on the account, you would be using it for business purposes rather than personal purposes.

    I think a ‘key’ here is to understand you/your ABN is the entity – a business name is not an entity in and of itself. Pretty much what ever your businesses do will link back to you in a sole trader situation; this means combined turnover of 3 ‘business names’ needs to be considered (for example, if you – i.e. on your ABN – turnover or expect to turnover a certain amount in the year you must register for GST and then collect GST and pay it to the ATO); any losses or deductions from all three ‘business names’ will also link to that ABN. Your banking, legal docs and everything else will come back to that ABN – i.e. you.

    Depending on the projected turnover, expenses for your 3 x business names plus looking at your own personal circumstances (e.g. personal assets and the like) it may prove a different structure to sole trader is better for your circumstances; plus, your own personal preferences in terms of operating three separate businesses versus everything linking back to you as the one entity on your ABN. It’s around this area that I truly suggest having a consult with an accountant who can look at your personal circumstances, the plans for each ‘business’ and help determine the best and most effective structure.

    That said, I hope the above assists in answering your questions.
    All the best :)

    #1199863
    Paul – FS Concierge
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    Hi And Welcome to the Forums. It is great to have you Mitch!

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