Ther are many different business structures to choose from.  These include being a Sole Trader, partnership, Company or trust.

A sole trader is suitable for when you are trading by yourself, this the simplist of the business structures.

A Sole Trader
Basically it means the business decisions are being made by one person.

Of course, it doesn't necessarily mean that the business has only one worker. The sole trader can employ others to do
any or all of the work in the business.

What are the advantages of being a Sole trader?

This type of structure is ideal if the business is not complicated, especially if it does not require a great deal of outside capital.
1. There isn't much paperwork in establishing a sole trader.
2. You may not have to register the business name.
3. There are less stringent reporting obligations compared with other structures.
4. You may be able to deduct tax losses from personal income.
5. You are entitled to profits and the ownership of assets.
6. It is relatively simple to wind up in the event you want to close the business.

What are the disadvantages of being a sole Trader?

1. You are personally liable for all debts that the business accumalates.
2. Personal property will be vulnerable for debts and other business liabilities.
3. Large sums of capital  and business loans are harder to get a as sole trader, and you may have to use overdrafts
and personal savings.
4. There are issues of continuity of business in the event of your death or illness.

5. It can be harder to sell a sole trader business.

Limiting Your liability
It is important to limit your liability. You need to talk to an accountant and lawyer about the legal ownership of your personal assets or the use of trusts to limit your liability.

Eg, the family home may not be exposed if it is in the name of your spouse - Seek legal advice before you do this, because there are other consequences, especially if the spouse dies  or you get a divorce. Also, you may not be able to do this if your sole purpose is to avoid a creditor. Get proffessional advice.

Tax
As a sole trader you pay tax in your own right, as part of your personal income tax return at the personal rate of income
tax. You get very little tax benefits.

A partnership is formed when two or more people (up to 20) go into business together with a view to making profit. Partners are joint owners of a business. They have the same goals and are equally responsible for the decisions made on behalf of the business. Partnerships are more complicated to set up than trusts and can be moer expensive to set up and maintain.

Are all partners in the patnership equal?
Depends on if there is a written agreeemnet in palcae outlining this. For instance, in many law firms there are senior and junior partners. However, the partners remain equal from a legal point of view.

If there is no written agreement that indicates otherwise then all partners:

• share profits equally;

• cover losses equally and debt

• take equal responsibility for the business's activities and trading.

A written agreement allows partners to change these general rules and record them in the agreement.

Partnership agreements
A written partnership agreement is  a good idea, otherwise there is no record of everybodies duties and responsibilities, which can be very bad if there's a dispute later on.

If there is no written agreement, the duties and responsibilities of partners are equal, which may not be what you want so plan ahead.

What does a partnership agreement need to cover?
It should cover the following issues,

• the amount of money each partner brings into the partnership;

• how the profits from the business will be divided;

• the different roles and responsibilities of each partner;

• the requirements to provide financial reports;

• the rights of partners to draw on bank accounts;

• how partners can leave the partnership , the costs and the consequences of this;

• what happens when the business is sold;

• how disputes are handled;

• the salaries;

• the rights of departing partners to start a similar business etc.

It is also mportant to understand your liablilty if your partner does something that incurs costs or accumalates a debt. You can be liable for this so you need to be careful who you go into business with.

Tax
Partners must file a Partnership Return with the Tax Office. It includes a profit and loss statement, and the tax is paid individually by partners on the profits as part of their personal income tax.

Dissolving partnerships
Any partner can dissolve the partnership provided they do it in a way required by the partnership agreement.

Make sure you see a lawyer about this, because there are often certain legal formalities, particularly in relation to the formal notice that is required.