I have been running my current business for the past 8 years, but unfortunately it has not been going too well lately. If I decide to restructure the business to something else, can I just do this under the same company name or do I have to close the current business down and open with new business number etc. I am changing the business from office supplies to a food outlet.
In Australia there are a number of business structures that can be used to operate a business including:
This is when you operate a business on your own under a Registered Business Name and an Australian Business Number (most commonly referred to as an A.B.N.). The advantage of operating as a sole trader is that it is a simple and cost effective business structure in which to start a new business. One of the main disadvantages of operating as a sole trade is that any of your assets, such as your house, can be at risk to creditors of the business in the event that the business is not successful.
A partnership is generally an association of people running a business together. The rights and responsibilities of the partnership are usually set out in a Partnership Agreement. As with a sole trader the main advantage of a partnership is that it is usually a simple and cost effective way in which to operate a business. However, depending on the terms of the Partnership Agreement, you may also be placing your personal assets at risk to creditors of the Partnership.
A Company is regarded at law as a separate legal entity and needs to be set-up and governed in accordance with the requirements of the Corporations Act. Setting up a Company is more costly then setting up a business as a sole trader or a partnership. However operating a business through a company has the major advantage of limiting your liability in the event that the business is not successful. This means that any assets you have in your name such as the family home are protected from creditors.
If you decide to restructure your business to something else you need to consider the above business structures to determine what will be best for your new business. This will not necessarily be the business structure you currently operate under.
As the business you are currently operating is not going very well you may wish to look at winding up this business and finalising any outstanding debts associated with this business so that they do not impact on your new business. In addition, as the business you are considering changing to is completely different a change of business structure including business name and A.B.N would be appropriate.
Where do I get advice on the best business structure for my new business?
When considering a new business structure or a total change to your current business it is a good idea to seek expert legal advice on the business structures available and what will suit you best.
If you want to start a new business or change your current business you need to speak to Frank Boitano, an expert in commercial law. Call Barwick Boitano today on (02) 9630 0444 or email firstname.lastname@example.org for an appointment.
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