NSW Business Structure for Professional Services - Sole Trader, Partnership or Corporation?

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WarrenTo

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23 April 2019
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Which one is the best business structure for professional services firms, sole trader, partnership or corporation? The traditional way is a partnership, but is it no longer viable due to unlimited liability and no separation of legal entity? What are the pros and cons of these 3 types of business structure and which one would you recommend?

Thank you.
 

Rob Legat - SBPL

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For business structuring advice you’re going to want to see a solicitor and an accountant (for effective tax structuring), who will take into account your specific situation.
 

Tim W

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What kind of professional services?
There are many models already in existence that serve certain fields well,
but are less suited to others.
For example, how you set up a medical practice might be
different to how you set up a firm of solicitors, or a firm of architects.
 

WarrenTo

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23 April 2019
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I mean professional services firms in general like accountants, lawyers and medical practitioners. Thanks.
 

Rob Legat - SBPL

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I mean professional services firms in general like accountants, lawyers and medical practitioners. Thanks.
As Tim W noted, the ideal set up differs for different profession fields.
 

Rob Legat - SBPL

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Then I’d suggest a Pty Ltd company, with a trustee shareholder arrangement (preferably also corporate). You may also want a service company holding firm assets under a lease/licence arrangement.
 

Tim W

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What if I'm setting up an accounting firm?
If you're an accountant, then you already know
that you need proper case-specific professional advice here.
 

Rod

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And best getting the right advice at the start because changing later can be hard if the 'partners' do not agree on a new structure.

I note the accounting/holding costs of a complex structure are lower for accountants :)

I like Rob's suggestion.
 

WarrenTo

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23 April 2019
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it seems that professionals are abandoning partnership and opt for other structure, what are the reasons behind it?