1. Types of business entities -
1.1 Types of entities available through which to conduct business -
The following entities are recognized as business structures to conduct business under Australian law:
Sole trader -
A sole trader is the simplest form available as a business structure where an individual trades under their own name or under a registered business name. It is easy to set up as there are few legal and tax formalities required. The business name is easily registered for a minimal fee. A sole trader does not need a separate Tax File Number (TFN) or business bank account, unlike a public or private company. An individual operating as a sole trader has full control over all assets and business decisions and can hire employees as required. Business losses can be written off to other personal income. However, a sole trader is personally responsible for the entire business including any debts incurred. Because of this unlimited liability the sole trader’s personal assets can be seized to recover a debt. Hence, this structure is only suitable for micro to very small businesses.
Please see full Chapter below for more information.