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  • #994921
    d3mad
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    I’ve had a business name registered for some time, it’s a very unique name just for me. I’ve never really done anything with it, it’s one of those “good intention” things, as in I DO intend to do more than the little I have.

    However, my wife and I are now embarking on a whole new venture and the business will be named after her specifically, ie, the business name will include her name.

    I have received varying opinions and advice from concerned friends, accountants and solicitors from forming her business under her own identity solely (which I have no problems with), a (family/normal) partnership between us, and even as a whole company entity unto itself with each of us as directors.

    I do understand the pro’s and con’s of each and am slightly leaning towards a company where we will both be directors/shareholders.

    My question revolves more around the business name vs company name. I have an ABN for my sole trader business name which wouldn’t suit the combined efforts of our joint venture. Could/would/should we register a generic company name and then use a “trading as” each business name (mine registered under my sole trader ABN—but would be happy to transfer it to the company, and her trading as/business name registered as part of the company—ie her registered business name being owned by the company from the outset). We would partially be operating from the same premises although a lot of my work will be from home.

    Is it ok to operate this way where we operate each business under the one company? (eg MY CO PTY LTD trading as Wife’s BUSINESS NAME and MY CO PTY LTD trading as My BUSINESS NAME)

    Her side of things is going to be both of us with her front of shop and me running administration, whereas my business is purely administrative. I/we are not concerned as far as a split is concerned, my question is really more about, should it be one company or two? The two streams are unrelated and completely different, although it is possible for one to use the services of the other in as far as accounting is concerned, although in reality I probably won’t be billing myself for work done by one side on the other—would that even be legal? (more rhetorical than anything, I can let the accountant sort that out at the end of the year)

    Where does protection lie in as far as liability if one of the business names under which the company operates is registered as an ABN under one of the directors? is liability 100% upon the director or is liability limited to the company?

    If one business stream goes belly up, does that take out both as entities of the company?

    I realise this is a detailed and probably complicated question, but I very much play devil’s advocate in all our discussions we have about this. ie we play off each other well. She’s very much the optimist, and whilst I’m positive, I like to plan for all contingencies.

    It’s also a possibility that I don’t merge my business into the company altogether, since I’m really not confident I’ll ever take it anywhere, whereas what we do under her side of things has the potential to be quite successful.

    #1199156
    Paul – FS Concierge
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    Hi d3mad,

    You really have 4 things to think about and depending on your views on each, there may be a different answer here ie, there is no 1 right answer.

    The things are:

    • Legal and may include trademarks etc
    • Risk – what entity and what insurance will you need? This is especially important to consider if you run 2 businesses out of one entity eg a Company or Trust. Will one insurance policy cover 2 seperate businesses.
    • Tax/Accounts – you may have to run multiple sets of accounts and pay accountants fees for each.
    • Brand – how do different business names affect customer awareness of the brand.

    From a Forum perspective, it my be better to ask 1 question at a time.

    Good luck

    #1199157
    bb1
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    d3mad, post: 235601, member: 72747 wrote:
    I have received varying opinions and advice from concerned friends, accountants and solicitors from forming her business under her own identity solely (which I have no problems with), a (family/normal) partnership between us, and even as a whole company entity unto itself with each of us as directors.
    .

    You have had advise from accountants and solicitors, I wouldn’t be coming to a forum if you have already had this advise, from people who have most likely had the opportunity to ask you the finer details of what you are planning.

    Come to a forum and 5 people will give you 9.5 different opinions, and they have no responsibility in the answers they give.

    I suppose my query is why don’t you trust the professionals you have already obtained advise from?

    #1199159
    d3mad
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    Sorry for adding more than I should have, you’re right, new questions for each. I agree…

    [USER=53375]@bb1[/USER] Why I’m puzzled at the advice of “professionals” is mainly because it was really against what I (and everyone else I know) were thinking.

    TBH, these weren’t paid appointments, and they were tacked onto the back of other matters (my personal tax etc) and I felt they were seeing it more as a simple solution (PAYG, Workcover, super, company tax, bas statements, reporting, fees etc) rather than the “protection” I was seeking. One property we’re looking and have a preference for is within a shopping centre and at the moment they’re wanting a 5 year lease, and it’s not cheap!

    I do hate playing devil’s advocate, but “what if…” insert multitude of possibilities… My wife is always telling me I worry too much lol.

    #1199160
    Paul – FS Concierge
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    If you are about to sign a five year lease, worrying too much is a good thing because it will ensure you have weighed every risk within the context of a very long commitment.

    #1199161
    JacquiPryor
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    Hi there… whilst I echo the comments above, I think I can answer a couple of your questions:

    Where does protection lie in as far as liability if one of the business names under which the company operates is registered as an ABN under one of the directors? is liability 100% upon the director or is liability limited to the company?

    I think it is important to understand that a company (e.g. Pty Ltd) is a legal entity; a sole trader (e.g. you/individual) is a legal entity – a business name is not. An ABN will be attached to each legal entity – so, the business names themselves don’t actually obtain ABNs. So, with your question above – if you have both business names under the company then neither will operate under a personal ABN, they would ‘link’ to the company’s ABN. To have one operating still under an ABN of one of directors would mean its still operating under a sole trader and not the company.

    If one business stream goes belly up, does that take out both as entities of the company?

    Possibly. Again, if you had both business names owned by the company it is the company that is the true entity and not the individual business names. So, if someone had cause to take action against one of the businesses that action would be against the company and not the individual business. ‘Belly Up’ could mean a variety of things though… so, if simply one business didn’t get off the ground so effectively stopped trading, then the company could still trade the second business.

    Keeping in mind that there is one ABN per ‘legal entity’ – that ABN can attach to as many trading names (business names) as it likes – be that under a company ABN, a sole trader ABN, a partnership ABN etc.

    As to whether you should register one or two companies… this will probably be best answered by an accountant (where, your consultation is about this very matter). They can take into account personal circumstances (e.g. do you own assets, how would they be best protected? What are your personal tax levels and situations, will they be better off by structuring as a Pty Ltd or two etc or even discussing a variety of options such as family trusts behind a corporate trustee etc).

    My inclination is to suggest two companies could be cleaner than operating two businesses under the one company, but, it really will be better seeking advice specific to your situation where the accountant/solicitor has full information about your circumstances, expected incomes/expenses, risks, assets, liabilities etc.

    Hope this helps (in so far as at least the ABN questions!) All the best :)

    ^information/thoughts only and not advice

    #1199162
    NickKaro
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    It sounds as though you may not have spoken to the “right” advisor.

    After having structure and risk explained, rarely do our clients want to establish a sole trader. That structure is usually reserved for the smallest of “businesses” and generally to test the waters until they are ready to move on to a more effective, efficient and safe structure.

    There are plenty of other advisors (such as myself!) out there, generally with the first meeting free or discounted. Make some calls and you should receive the comfort and answers you seek.

    #1199163
    d3mad
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    Guys, the muddy water is clearing, and yes, I do understand all of this is not legal advice.

    Keeping in mind that there is one ABN per ‘legal entity’ – that ABN can attach to as many trading names (business names) as it likes – be that under a company ABN, a sole trader ABN, a partnership ABN etc.

    [USER=20176]@JacquiPryor[/USER] yes you have cleared it up very well about ABN, thanks. The thing is even though I think I knew that, sometimes reading it a different way does clear it up.

    [USER=12942]@NickKaro[/USER] I would agree, and given all circumstances I have it in mind how best to deal with this now.

    Thanks to everyone, very much appreciated

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