Home – New Forums Starting your journey Partnership or sole trader?

  • This topic is empty.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • #990879
    vastau
    Member
    • Total posts: 9
    Up
    0
    ::

    Hi everyone,

    My girlfriend and I have started an ebay business and thought it was about time to register for an ABN.

    We went to fill out the form today, but we were not sure which one to pick from, sole trader or partnership.

    We understand that sole traders only require 1 TFN so that would mean only one of us has to use their TFN. Should we choose this option and create a new TFN for this business? Or, should we go for the partnership route?

    If we choose the partnership route, is it similar to being a sole trader, just with partners?

    Thanks.

    #1178927
    ThexArm
    Member
    • Total posts: 253
    Up
    0
    ::

    If there are more than 1 owner in the business then you can’t be a sole trader

    Sole trader is only when one person starts a business. That person’s TFN is used to register for ABN. This ABN is attached to the person irrespective of what business that person starts as a sole trader….

    You will need to choose different structure either partnership or pty company or a trust. Best person to assist you is an accountant.

    Or else you can start the sole trader and employ your partner or vice versa. Probably not the best structure.

    #1178929
    My Guy
    Member
    • Total posts: 47
    Up
    0
    ::

    I would start a company, Pty Ltd and just have both of you as partners with 1 share each.

    or even better, one of you start a company and the other be a full time employee of the company…

    These are things to talk about with lawyers and accountants but having being married to one for 8 years and I have started multiple businesses I kinda start looking into legal situations more and more as time goes on.

    #1178930
    Alex (LegalVision)
    Member
    • Total posts: 52
    Up
    0
    ::

    Choosing the right business structure is a crucial first step in ensuring future success. Even though you can change your business structure as your company grows, it’s probably in your best interests to chose the most appropriate structure from the outset, so that you are in a position to grow you business without having to deal with the distractions of a change in legal structure. Generally, an individual firm should look to their goals for growth, and their outreach and resources in deciding the most suitable path.

    If you’re looking between sole trader and partnership, then here are the basics on those two structures.

    A sole trader structure is simple, cost-effective and easy to set up. If you run a one person service business then setting up as a sole trader makes a lot of sense. Two key issues with a sole trader structure are that the business revenue is personal income, and your personal liability is not limited.

    A partnership structure can make sense if you’re going into business with a trusted friend or family member. It’s simple to set up, but generally each partner has unlimited personal liability for any debts or obligations incurred by the partnership. IF you are going into a partnership, make sure you consult a small business lawyer to draft up a PARTNERSHIP AGREEMENT.

    The Partnership Agreement should set out:

    the establishment of the partnership;
    the name of the partnership;
    where the partnership will conduct its business;
    how partners retire;
    how new partners are appointed;
    financial contributions;
    partnership drawings and the distribution of profits and assets;
    the role of each of the partners;
    insurance requirements;
    whether the partners are prohibited from borrowing from the business;
    whether the partners are to indemnify the other partners for any negligent act or omission;
    who is to manage the partnership;
    what types of matters require unanimous decisions and what types of matters can be decided on partners acting alone (for example, the limit of money each partner can draw upon);
    how partnership disputes are to be resolved;
    how the partnership can be dissolved; and
    what happens in the event of a deadlock between partners?

    (sorry this is long winded, but its from our website if you want to check it out for some more detailed info on business structures)

    Let me know if you’ve got any other questions :)

Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.