WHAT BUSINESS STRUCTURE
IS BEST FOR YOU?
Getting your business
structure right is one of the
most important decisions you
will need to make as an owner
of a fitness business.
WORDS: LEON PONTE
business goals at the outset (or to consider
changing your structure as soon as your
current structure is deemed unsuitable).
Figure 1, opposite, shows some pros and
cons of the various structures.
Questions to ask when selecting a
structure include: are you going into business
with someone else? Might you bring in a
business partner/investor in the future?
How will your business derive income? Do
you plan on having employees or building a
fitness business to expand, franchise or sell?
Sole trader
n this second instalment of
Network’s ongoing ‘Legally fit’
series, we take a look at the
considerations when deciding what sort of
structure should be used for your fitness
business, for operational, liability, asset
protection, succession, taxation and related
issues. To read previous articles in this
series search ‘Legally fit’ at fitnessnetwork.
com.au/resource-library
There are four main business structures,
each with its own pros and cons. These are:
sole trader, partnership, company and trust.
Just as the best exercise program for one client
won’t be the best for another, your business
structure should also be tailored to your
particular fitness enterprise – although that
doesn’t necessarily mean you can’t change
your structure as your business evolves.
However, unlike the need to regularly
change your exercise program, changing
your structure could potentially have some
very significant adverse issues (e.g. taxation,
costs). As far as is possible, therefore, it is
better to tailor your structure to your specific
I
38 | NETWORK SPRING 2014
A sole trader structure is used when an
individual trades under his or her own name,
or under a business name.
(The next article in this series will address
how to protect your business name and
also ensure you do not breach someone
else’s rights in a name, as registering a
business name (or company) alone gives
you absolutely no rights to that name.)
A sole trader is possibly the best structure
for a personal trainer who has appropriate
insurance, doesn’t go outside the scope of his
or her fitness qualifications and doesn’t intend
to hire employees or expand the business
beyond his or her own training sessions. The
biggest disadvantages of this structure are
unlimited personal liability and its lack of some
of the benefits of the other structures if the
business or income sources expand.
Partnership
A partnership is when two or more persons
(or entities) carry on business together with
a view to profit.
It can be great to share the load and
reap the benefits with another person,
but this is potentially the riskiest structure
as you could ultimately be liable for all
the debts and obligations of the business