What is a Trust – Leigh Barker MWC Group

Standard

A trust is a business structure whereby the trustee conducts a business on
behalf of the beneficiaries. As a trust is not a separate legal entity, a
trustee must be appointed.

A trustee can be an individual or a company whereas a beneficiary can be a
person, a company or the trustee of another trust. The trustee will manage
investments, maintain records, and manage assets and distributions. The
overriding duty of a trustee is to adhere to the terms of the trust deed and
to act in the best interests of the beneficiaries.

A trust is established by a formal deed that outlines how the trust is to
operate. The trust deed defines the relationships between the trustee and
the beneficiaries and sets out the duties and powers of the trustee.

A trust distributes on an annual basis all profits to the beneficiaries who
pay tax individually and provided that all profits are distributed a trust
does not pay tax.

A trust structure has both advantages and disadvantages and without
identifying any specific type of trust they are generally seen to be

  • Asset Protection
  • The ability to pass wealth from one generation to the next
  • A reduction in liability where a company acts as trustee
  • The expense of establishing and administering
  • The inability to distribute losses
  • The limited life of the trust deed

Prior to deciding on a business structure seek professional advice from an
accountant, solicitor or business advisor to ensure that the structure
selected meets your personal circumstances and business objectives.

Please note: Prepared by Leigh Barker MWC Group, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and Tangible Assets,. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance.

What is a Sole Trader – Leigh Barker MWC Group

Standard

Where an individual operates a business as the sole person they are
generally referred to as a sole trader.

Becoming a sole trader is the simple and relatively inexpensive. A sole
trader has full control of all assets, makes all business decisions, is a
low cost structure and has fewer reporting requirements.

A sole trader has many characteristics, some of which are listed below

  • Unless a business name is required, set up costs are negligible
  • Administration is generally limited to bookkeeping and accounting
  • A sole trader retains all the profits of their business
  • A sole traders financial information is kept private
  • A sole trader is legally responsible for all aspects of the business
  • A sole trader is personally liable with unlimited liability

A sole trader business model is most popular with tradesman and specialist
service providers prior to commencing business as a sole trader

  • determine if any form of authorisation or registrations are required
    from regulators or local authorities
  • consider managing the business separately by operating from a
    separate bank account
  • ascertain if business insurances are required or desirable
  • find suitable premises to operate from within

As a sole trader business grows it is relatively easy to change this form of
business structure or to close a business operating as a sole trader.

Prior to deciding on a business structure seek professional advice from an
accountant, solicitor or business advisor to ensure that the structure
selected meets your personal circumstances and business objectives.

Please note: Prepared by Leigh Barker MWC Group, Accountant, Portfolio
Finance, Gordon, West Pennant Hills and Tangible Assets,. Note that all
content of this blog is general in nature and anyone intending to apply the
information to practical circumstances should seek professional advice to
independently verify their interpretation and the information’s
applicability to their particular circumstance.