Setting yourself up with the business structure that is right for you is critical for success. You will need to evaluate your circumstances and assess whether you want to be set up as a sole trader, or Pty Ltd (proprietary limited) company. While both of these options are available to work under as a practising dentist, there are some key differences to take note of, which can help inform your decision.
The primary point of different between a sole trader and a Pty Ltd is the level of personal responsibility for the business. Sole traders assume 100% control over their business, are responsible for the day-to-day decisions and track their business activity through their personal ABN. As there is no separation from the individual and their business, they assume full liability for activities.
An individual also has the option of setting up their business as a proprietary limited company (Pty Ltd), a privately held company which acts as its own legal entity. A Pty Ltd is set up using its own ABN (Australian Business Number) and exists independently of its owner. This separation can provide a layer of security, limiting their personal liability in a company.
Understanding your long-term goals, risk profile and business aspirations are key to helping you decipher which of these business structures are right for you. In addition to personal responsibility, there are many other factors to consider here, such as tax implications, owner of profits, ease of setup, setup costs and autonomy in making business decisions.
To fully understand the implications of your business structure, contact the team at The Savvy Grad today.
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