Have you decided on the best possible structure for your business?

Once you've decided to embrace the challenge of starting a new business, there are a lot of difficult questions left to answer. If you think running a business is all about designing a product and selling it to customers, you're in for a bit of a rude awakening. There's much more to it than that.

Perhaps the most important step is deciding on a business structure. For instance, are you going to run your organisation as a sole trader, with you and only you responsible for the business both financially and legally? That's a lot of risk. It might make more sense to consider another option. Take the time to weigh the pros and cons of each possible choice before making a decision.

Understanding the different business structures

Deciding on a structure for your business is a fundamental first step that will inform all of your future business development decisions. Once you've made that call, everything else should fall into place. According to the Department of Industry, Innovation and Science, the simplest form of business is a sole trader arrangement, but that means courting a great deal of risk all by yourself. You could, alternatively, opt for a business, partnership or trust, thereby distributing the accountability more evenly.

The good news is that once you decide on one structure for your business, you're not necessarily bound to it forever. It is possible to realign operations later on if you decide that's necessary. Ideally, though, you'd get the decision right on the first try.

Considering all the important angles

There are big differences among the varying business structures. For example, a partnership is not at all like a sole tradership – the risk and reward are shared equally among a large group of people. So what should determine your structural decisions?

If a lawsuit comes your way, are you ready to be held accountable?

Entrepreneur Magazine recommends looking at a few key criteria. One is legal liability. If your business is sued, do you want to take all the accountability for yourself, or share it? Tax implications are also worth considering – you get all the write-offs if you control the business yourself, but you also get all the financial risk.

If you're unsure of which way to go, it might be wise to reach out to chartered accountants who can help with making this pivotal decision.

Getting professional help with business development

Arriving at the right business structure is crucial; every future decision you make will stem from that one original choice. Therefore, you want to be sure to get it right. If you don't have the know-how to handle that challenge, it's probably a good idea to count on an experienced business development consultant instead.

At Wilson Porter, we have a team of such experts in house. We're prepared to tackle all sorts of business challenges, ranging from structural questions to problems with financial reporting and cash flow projection. Whatever you need, we're a one-stop shop for key business insights.