The types of business structures you may need to consider include:
- Sole Trader – this structure allows you to conduct your business on your own or with employees. You are responsible for all debts
- Partnership – this structure is formed under the Partnership Act. Liability for all debts falls on the partners jointly and severally
- Limited partnership or Incorporation limited partnership – these business structures allow partners to limit their liability to an amount registered under the Partnership Act
- Limited liability company – the shareholders of this structure have limited liability and have strict responsibilities set out in the Corporations Act
- Trusts – usually appropriate for holding business assets, rather than trading
Franchising is a type of business ownership which allows an individual, partnership or company to operate an independent business under the banner of an already established business. A franchise agreement is a document outlining the rights and obligations of both the franchisor and the franchisee. Before entering into a franchise you should check the reputation, track record and financial stability of the franchisor very carefully. Also, find out what advertising budget and back up services the franchisor offers.
Goodwill is a way of describing a special asset of a business for which a purchaser can be called upon to pay. It arises for a variety of reasons, for example, the location of the premises, the quality of the products sold, the performance of the staff, the absence of competition,etc. It is generally reflected in earning power and should be thoroughly assessed by your accountant.