Other Services

Support asset protection and future growth with the right business structure.

Our business structure lawyers in Perth can help you identify and implement the most suitable solution for your operations, including company formations, discretionary and family trusts, unit trusts and partnerships.

We collaborate with financial professionals and taxation agents to determine the most tax-efficient and cost-effective way of conducting your business. Strengthen asset protection with tailored legal support from Affinitas Legal.

The different types of business structures we support

Companies

When you operate as a company, the business is recognised as a separate legal entity from its owners. This is indicated by the Pty Ltd designation and registration with the Australian Securities and Investments Commission, along with the allocation of an Australian Company Number.

While a company is the most complex structure to establish and maintain, the right legal support can make compliance far more manageable. At Affinitas Legal, we can assist with company formation, ongoing reporting, and ensuring your business meets its legal duties with confidence.

Pros

  • Limited liability, meaning shareholders are generally not personally responsible for the company's debts
  • Income is earned by the company and taxed at the company tax rate rather than individual marginal rates
  • Can be more tax-effective as business profits increase
 

Cons

  • Strict compliance obligations under the Corporations Act
  • Higher administrative and ongoing compliance costs
  • Complex reporting requirements, including lodging annual financial statements with ASIC

Discretionary and unit trusts

A trust structure offers greater asset protection and control over how business income is distributed. A trustee is legally responsible for holding and managing the trust’s assets and running the business for the benefit of its beneficiaries. This trust must be established under a formal trust deed, which sets out how the trust operates, how income and capital are distributed, and how assets are managed.

Discretionary trusts allow the trustee to decide how income is distributed among beneficiaries each year, while unit trusts divide ownership into fixed units with income distributed proportionately. These trusts are most suitable where income streaming, succession planning, or risk management are key considerations.

Our business structure law firm can help you determine whether a discretionary, family, or unit trust is the right fit for your circumstances. We prepare and review trust deeds, advise on trustee structures, and ensure your trust is set up and managed to balance risk, tax planning, and ongoing compliance.

Pros

  • Greater flexibility in how income is distributed
  • Ability to stream income to beneficiaries on lower marginal tax rates when structured correctly
  • Potential asset protection through the separation of business assets from personal ownership
  • Useful for succession planning and long-term wealth management

Cons

  • Higher setup costs compared to simpler business structures
  • Increased legal, tax, and compliance obligations
  • More complex tax reporting, particularly with multiple beneficiaries or unit holders
  • Ongoing administrative responsibilities for trustees

Sole traders

Typically used by individuals and startups, sole tradership is the most straightforward and cost-effective way to operate a business in Australia. Under this structure, one person carries on the business in their own name or under a registered business name.

While setup and compliance are relatively simple, the business is not a separate legal entity. All income earned is treated as personal income and taxed at individual marginal tax rates. The owner is legally responsible for all aspects of the business, including debts and obligations.

At Affinitas Legal, we help sole traders to set up correctly, manage personal liability, and meet legal obligations. As your business evolves, we can also provide clear guidance on whether and when a different structure may support future growth more effectively.

Pros

  • Simple and inexpensive to set up
  • Minimal legal and compliance requirements
  • Full control over business decisions
  • Suitable for small or one-person businesses
 

Cons

  • Unlimited personal liability for business debts and obligations
  • Business income is taxed at individual marginal tax rates
  • Limited options for income splitting or asset protection

General and limited partnerships

Partnerships involve two or more people running a business together and sharing its profits and losses. This structure is typically used by friends, family members, or trusted associates striving to reduce setup costs while operating jointly.

Importantly, a partnership is not a separate legal entity from its owners, who face personal liability for any of its debts. Income earned by the partnership is distributed to the partners, who each pay tax on their share at their individual marginal tax rates. Most partnerships are governed by a partnership agreement, which outlines how profits, responsibilities, and decision-making are shared.

Our lawyers can help you understand and navigate the risks associated with partnership structures to protect your rights, obligations, and commercial interests. Establish a clear partnership or limited partnership agreement, manage exposure to partner actions, and reduce the risk of disputes.

Pros

  • Low cost and simple to set up
  • Shared responsibilities, profits, and losses
  • Opportunity for income splitting
  • Relatively limited external regulation
  • Generally easier to change the legal structure in the future
 

Cons

  • Unlimited personal liability for partnership debts
  • Partners are jointly and severally liable for each other’s actions
  • Risk of disputes or loss of trust between partners
  • Transfer of ownership requires agreement from all partners
  • Income is taxed at individual marginal rates, which may be high

Perth’s trusted business structure lawyers

Practical guidance

Choosing the right business structure can feel daunting, especially when you’re weighing risk, tax outcomes, and long-term expansion. We provide clear, measured guidance to help you move forward with confidence.

Clear commercial legal advice

Business structures don’t need to be confusing. We explain your options in plain English, outlining the legal, financial, and risk implications of each structure so you can make an informed choice that supports your business goals.

Tailored structuring solutions

No two businesses are the same. We take the time to understand how your organisation operates now and what you want to achieve in the future, recommending a structure that aligns with your current needs, risk profile, and growth plans.

Efficient setup and restructuring

Whether you’re setting up a new business or changing its structure after decades, timing matters. Our lawyers handle the entire process efficiently and accurately, minimising disruption while helping to ensure compliance at every stage.

GET TO KNOW US

Meet our business structure lawyers in Perth

Our business structure lawyers are ready to help you navigate complex corporate matters. Make more strategic business decisions with tailored legal support.

Frequently asked questions

What is a legal structure for a business ?

A legal structure for a business is the formal way your business is set up in law. It determines how the business operates, who is responsible for its debts, how decisions are made, and how profits are distributed and taxed.

In Australia, the most common business structures are sole trader, partnership, company, and trust. Each structure comes with different legal, financial, and tax implications. It affects your personal liability, your ability to grow or bring in investors, and how easily the business can adapt as circumstances change.

Therefore, choosing the right legal structure from the start is critical. Getting the structure right early can save you significant time, cost, and stress later, allowing you to focus on building and scaling your business with confidence.

What factors should I consider when selecting a business structure?

When choosing a business structure, it’s important to consider how the structure will affect your operations, risk exposure, tax position, and long-term plans.

Key factors to think about include:

Income and growth expectations: Your current income and how you expect it to grow over the next 12 to 24 months can influence which structure is most suitable and tax-effective.
Ownership and partnerships: Whether you plan to operate on your own, bring in a business partner, or involve family members or investors will affect the structure you choose.
How the business operates: Consider whether the business is bricks and mortar, online, product-based, service-based, or a combination, as different models suit different structures.
Level of business risk: Some businesses carry higher financial or legal risk. You should consider whether you are comfortable being personally liable for those risks or would prefer a structure that limits personal exposure.
Asset protection: Your structure determines how well your personal assets are protected if the business incurs debts or legal claims.
Tax planning and flexibility: Tax treatment varies significantly between structures. The most effective option depends on your personal circumstances and should be assessed with a tax accountant or business adviser.
Administration and compliance requirements: Different structures come with different reporting, record-keeping, and ongoing compliance obligations.
Succession and exit planning: Think about what happens if you sell, retire, or pass the business on. Companies and some trusts offer greater continuity, while sole traders and partnerships can be more limited.

Taking the time to assess these factors early can help you choose a structure that supports both your immediate needs and your long-term business goals.

Can I change my business structure ?

Yes, you can change your business structure, and in many cases, it makes sense to do so as your business evolves.

As revenue grows or business operations become more complex, a different structure may offer better tax outcomes, stronger asset protection, or greater flexibility to bring in partners or investors.

However, it’s important to understand that changing your business structure can have legal and tax consequences. These may include new registrations, changes to contracts, capital gains tax considerations, and different compliance obligations. Personal liability can also change depending on the new structure.

With the right legal and tax guidance, you can transition to a structure that better supports your next stage of growth while minimising risk and disruption.

How do I know if I should change the legal structure of my business?

Your business structure may evolve as your operations, needs and goals change. If the structure that worked when you started no longer supports your objectives, it’s time to review it.

Common signs that a restructure could be beneficial include:

Financial performance and tax outcomes: As income increases, a different structure may improve cash flow or profitability at certain stages of growth.
Managing personal risk: If your business activities carry a higher risk, changing to a company structure may help limit personal liability.
Business growth and expansion: Expanding operations, entering overseas markets, or attracting investors often requires a more flexible structure that supports growth and external funding.
Changes in ownership: Bringing in a partner, buying an existing business, or changing ownership arrangements can make a new structure more suitable for how the business will operate.
Succession and exit planning: If you are planning to retire or pass the business on, restructuring can simplify the transfer process and clearly define roles and responsibilities.
Simplifying operations: In some cases, downsizing or reducing complexity may justify moving to a simpler structure with fewer compliance requirements.

If any of these situations apply, it’s a good idea to seek legal and tax advice to ensure a change in structure supports your business goals and avoids unintended consequences.

Why is having the right legal structure for my business important?

Having the right legal structure for your business is important because it affects almost every part of how your business operates, both now and in the future.

Your structure determines how much tax you pay, what registrations and setup costs apply, and how well your personal assets are protected if something goes wrong.

Your business structure also influences ongoing compliance obligations. Different structures come with different reporting, record-keeping, and regulatory requirements, which can impact your time, costs, and administrative workload.

Just as importantly, your legal structure defines your role within the business. It determines whether you are treated as an employee, how profits can be paid to you, and how much control you have over decision-making.

Getting the structure right from the outset gives you clarity, flexibility, and a stronger foundation to grow your business with confidence.

How do business structures in Australia impact tax?

In Australia, your business structure has a direct impact on how your income is taxed and the level of personal risk you take on. Each structure is taxed differently, which can significantly affect your overall tax position:

Sole trader: Income is taxed at individual marginal tax rates, and the owner is personally responsible for all tax and business debts.
Partnership: The partnership itself does not pay tax. Instead, profits are distributed to each partner, who pays tax at their individual marginal rates. Partners are generally personally liable for partnership debts.
Company: Companies pay tax at a fixed rate. Personal liability is usually limited.
Trust: Trusts do not usually pay tax if income is distributed. Instead, beneficiaries are taxed on their share of the trust income, often allowing for greater tax planning flexibility. Trusts can also offer asset protection, but they come with more complex legal and compliance requirements.

At Affinitas Legal, our lawyers can help you choose a structure that balances tax efficiency, cash flow, compliance obligations, and personal asset protection.

How can a lawyer help with business structures?

A lawyer can help you choose, set up and change to the right business structure as your organisation grows. This includes identifying legal and financial risks and advising on structures such as companies, trusts, or holding entities to limit personal liability.

A business lawyer also ensures your structure is legally compliant, with the correct agreements, registrations, and governance in place under Western Australian law.

For tailored advice, please contact our team today.

Do you provide legal advice to new businesses in Perth?

Yes, we provide legal advice to new businesses across Perth and Western Australia. Our lawyers can assist you with selecting the right business structure, setting up companies or trusts, and putting clear agreements in place between founders, shareholders, or partners.

By getting the legal foundations right from the start, your business can launch with confidence, improve cost-efficiency, and become a sustainable and scalable operation.

TESTIMONIALS

What our clients say

STAY UP TO DATE

Learn more about legal business structures