Many Australians have a lot of misunderstandings about setting up a company, which can be harmful. Firstly we would like to clarify that setting up a business does not have to mean setting up a company, you can in fact run a business without ever having to set up a company.

Setting up a company is known as incorporating and this process can actually be done later down the line if the need for it ever arises, but the key thing that this process achieves is to create a separate entity from yourself that functions independently of you.

There are many benefits of operating as a company instead of alternative business structures, however the biggest advantage that operating a company provides is the liability protection.

Businesses typically carry some element of risk and using a company will help mitigate these risks and minimise any fallout if the business fails. As a company is a separate legal entity it is treated as a distinct body, meaning that it can hold assets, make trades and even take out loans in it’s own name

The primary drawback of starting a company are the increased costs associated with establishing and running the company. Companies are legally required to maintain a high level of compliance certain disclosure requirements. Meeting these disclosure requirements typically involves paying experts to carry out the work, to ensure that you’ve complied correctly.

All of the drawbacks of operating a company can be managed with effective guidance and council, our accountants are well equipped to help you handle and manage any challenges that you might face when operating your business.