Business Structures

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Business Structures

• Applied Management for Engineers
• ELE 41EMT/EIB

George Alexander G.Alexander_at_latrobe.edu.au www.ee
.latrobe.edu.au/eemanage
8 March 2005
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Business Structures

• Sole Trader
• Partnership
• Trust
• Company

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Sole Trader

• Desire to operate alone
• Have all the necessary funds
• Have all the necessary knowledge
• Have all the necessary experience
• Low or no real risk involved
• Willingness of other business entities to trade
  with a sole trader

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Partnership

• Partnership is a legal term to describe people
  running a business together with a view to making
  profit.
• Partnership is just a business relationship and
  is not a legal person like a company.

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Trust

• A trust can also be a business relationship but
  it is a little more complicated than a
  partnership.
• Someone entrusts a pile of money to someone else
  to look after it and make sure it is safe and
  hopefully earns a lot more money.
• Person giving the money is called Settler of the
  trust.
• Person looking after the trust fund is called
  Trustee.
• The profits go to lucky people called
  Beneficiaries.
• Sometimes the settler can also be a beneficiary.

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Just what is a Company?
A company is a figment of the laws
imagination. Companies are regarded by the law as
persons and, having their own separate legal
identities, they can do anything a human can
(legally) do they are taxed separately, they own
things, and owe money in their own names. But in
essence, the word company is just a way of
describing a group of people who either work
towards, or invest in the pursuit of, a common
goal. That goal is usually a business goal
(making money), but it could be some other goal
like helping the community.
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The Company Environment
Company People
Shareholders Bosses Employees
Lenders Suppliers
Customers
Outsiders
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The Pty Ltd behind the name
Company
Limited Liability
Public
Private
Company Pty Ltd
Company Ltd
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Limited Liability

• The choice between conducting a business as a
  company or some other structure depends mainly on
  the consequence of failure.
• When a company runs out of money, it usually
  cant look to anyone to bail it out.
• Shareholders can only lose as much as they have
  agreed to put in - no matter what happens to
  their company.
• Directors personal guarantees.

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References
Nichololas Brash, Timothy Lindsey, How Companies
Work
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Thanks for your attention