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Trusts: The main disadvantage of establishing a trust to run a business is that, compared with other business organisations, setting up a trust is relatively complicated, and trusts may have relatively high legal and reporting requirements. Trusts can also be difficult to terminate, because all the beneficiaries must consent to a winding up.
Sole traders, partners, trustees or joint venturers: When businesses are operated by sole traders, partners, trustees or joint venturers, it is the persons who create and operate the business who exercise the necessary legal powers and who acquire the legal rights and duties in the course of running their business.
Companies: In some situations, a company may be the most suitable kind of business organisation. Of course, there are various formalities that must be complied with to register a company, and, depending on the size of the company, there are certain reporting and disclosure responsibilities. But a company has the advantage of existing separately from its members, of being taxed separately and of owning its assets separately. In addition, the liability of its members may be limited by shares or guarantee. These are major advantages, and explain why companies, especially relatively small proprietary companies, are a popular choice of business organisation.
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