Company set up for a new business Question.

[jaimeandrenee]

Hi all,

Scenario is as such

I am going to be setting up a business and want to operate as a company it is my belief that you have a trading name

for eg ie " Proppy Props"(business name)
and a trading name eg Prop.

so is this would look like?

i want to register a business name would i need to do both business name and trading name together?

I am a little confused but i havn't got my location of business yet and havn't secured finance yet and i don't want to lose use of my business name.

 

[Ausprop]

your company name automatically gives you national trading name rights - so just get your company name right

 

[jaimeandrenee]

so can i just register business name and then set up trading name when business is going ahead? any ideas for costs? two fees for setting it up

1 for bus name
1 for trading name?

 

[Piston Broke]

You really should be reading up on this and asking your local fair trading office before you do anything as you seem rather confused.

A company is a legal entity
A business name is the name you use to trade if different.

Neither give any rights or protection to that name.

 

[Welcome]

Would also look at protecting IP with trademarks.

Also no point spending $$$ on getting all setup if you find you are infringing on someone elses trademark.

 

[jaycee]

Yeah what Piston Broke said...

You can register a business in your own name as an individual
Or you can register a business as a company

In the first case, the entity which own the business is you
In the 2nd case, the entity which own the business is the company.

Both legal entities have the right to a trading name

I think cost vary by state, but registering as a sole trader and / or choosing a trading name I dont believe are too expensive in WA

 

[ianvestor]

Also, a company can have more than 1 trading name.

So if I were going to run 2 businesses (trading names) under the one company, I'd name the company something unrelated. A generic 'umbrella' sounding name.

Otherwise, you end up with a situation where "My furniture biz" for example is a trading name of "My Pool Equipment Pty Ltd" which is a bit strange:

My Pool Equipment Pty Ltd
- trading as My Pool Biz
- trading as My Furniture Biz

Better would be:

Awesome Retail Pty Ltd
- trading as My Pool Biz
- trading as My Furniture Biz

 

[jaycee]

Ian, I don't think I've thought of it before, though I should have realised due to previous workplaces...

Just to clarify, I assume a sole trader can only have 1 x trading name ?

 

[ianvestor]

Just to clarify, I assume a sole trader can only have 1 x trading name ?

I could only guess on that one, Jaycee. My first guess would be that a sole trader can have as many as they want, just like a company, but I'll have to look that up...

 

[jaycee]

Ok..but don't wste too much of your time mfor me... If a sole trader can have more than 1 trading name, that's where it loses me, cause I don't have a business and have not needed to look into it.. what's the difference between "sole trader" and "company" then ?

 

[jaimeandrenee]

i thinks it is sole trader isfor
eg (jaime trading as u-tire) sole trader for businesses that turnover less than 90K ? just guessing less taxation benefits in right offs as oposed to

eg u-tire (pty) more tax benefits lesser liability for losses incurred sue etc just a guess open to more clarification on this issue.

 

[Peterw]

Please see you accountant about this, as not only do you want to have the right structure for ownership concerns, but also for taxation, and liability issues as well. Asset protection is also an important consideration.

 

[Terryw]

a sole trader is you trading in your own name - or possibly you trading under a trading name. It is you = you file a tax return, you open a bank account and you are sued etc.

A company is a separate legal person. ie it is not you and is separate to you. It can sue and be sued, it has its own bank accounts and own tax returns. The major reason to use a company is to limit liablity - if something goes wrong the company wears it, not the shareholders - but sometimes the directors.

If you are going to do any sort of business you should use a company. Doing it in your own name is very dangerous.

 

[jaycee]

Terry,

What if you are the 1 and only owner ? Would that auotmatically make you the sole director ?

If so, would you then be as liaible (should something come up) as a sole trader ?

 

[Terryw]

Terry,

What if you are the 1 and only owner ? Would that auotmatically make you the sole director ?

If so, would you then be as liaible (should something come up) as a sole trader ?

A director is the person who runs the company. Shareholders are the persons who own it. They are separate roles, but the one person could the sole director and sole shareholder. The company would still be a separate legal entity, and if something happened it would be the company that is liable and is sued.

Shareholders can't be liable for a company's debt beyond what they owe for the payment of their shares. Directors are also not liable, but there can be exceptions - such as illegal activities such as trading while insolvent, or other criminal acts. Directors are also usually asked to provide guarantees. eg if a company is leasing a premises the landlord will usually want the directors to provide a personal guarantee that they will pay the rent if the company cannot - a good reason to never have more than 1 director.

 

[jaycee]

Terry,

a) Mike Smith sets up a sole trader business, trading as "MS Pest Control"

If something goes wrong, as a sole trader he is liable etc


b) Mike set up a company (he is the only owner) called MS PTY LTD trading as "MS Pest Control"

If something goes wrong, is he just as liable for the same things he would have been if he was a sole trader ?

Thanks, please tell me if I'm barking up the wrong tree etc....

 

[Terryw]

Terry,

a) Mike Smith sets up a sole trader business, trading as "MS Pest Control"

If something goes wrong, as a sole trader he is liable etc


b) Mike set up a company (he is the only owner) called MS PTY LTD trading as "MS Pest Control"

If something goes wrong, is he just as liable for the same things he would have been if he was a sole trader ?

Thanks, please tell me if I'm barking up the wrong tree etc....

Generally no, but it depends on what goes wrong. If the person deliberately poisions someone or lets the company trade while insolvent then he can be held liable. If the company buys something on credit and no personal guarantees are given and the company doesn't pay for the goods then only the company can be sued.

 

[jaycee]

If the company buys something on credit and no personal guarantees are given and the company doesn't pay for the goods then only the company can be sued.

in this scenario, Mike Smith is the sole owner of the company MS PTY LTD

Is he more protected than if he were a sole trader ?

In a one man show, is being a company / sole trader much different I guess is the question ?

 

[Piston Broke]

In "Propriety Limited", the "limited" stands for limited liability.
But it's limited for the shareholder, not the director.
A shareholder who is not a director or employed in any way cannot be held liable for any expenses or negligence of those running the company.
As years go by those running the company (directors) have more personal responsibilities placed on them. If they are negligent, then they will be personally liable.

The director will not be liable for unsecured debts (trade or other).
And in some instances for some tax payable.
But they may be personally liable for unpaid employee benefits.

 

[jaycee]

So in my scenario, where I tried to paint someone in business for themsleves, Mike Smith is both the sole shareholder and the director (?)