Before you enter into a contract to purchase
a business or investment asset, one of the
first things you need to consider is the legal
structure of the entity that is to purchase
and own the asset.
That key decision has many implications for
the operation of your business or investment
asset. This includes implications in respect
of taxation, liability to creditors and distribution
of profits.
I’m John Gallagher from Argon Law, and I
would like to tell you a little more about
the options available for the structuring
of ownership vehicles.
The four most common structures used are:
acting as a sole proprietor,
a partnership,
a company or
a trust.
As a sole proprietor, you own and run the
business in your own name with direct responsibility
to creditors.
A partnership is an arrangement of 2 or more
people who cooperate, but not as a separate
legal entity. All partners are jointly and
severally responsible for the debts of the business.
A company is a separate legal entity from
its shareholders. If you use this structure,
it is the generally the company, not the shareholders,
that is responsible for the business debts.
Individuals or companies can own assets as
trustees for a trust. The trustees are responsible
for the business debts and operate the business
for the benefit of persons know as beneficiaries.
At Argon Law, we can advise you on the structure
that best suits your interests, taking into
consideration you tax position, appetite for
risk and available capital.
I trust that you found that information useful,
and for more legal tips and knowledge be sure
to subscribe to Argon Law on YouTube and visit
our website.
