There is significant business, taxation, and investment benefits in setting up a legal structure
to protect assets, maximise tax benefits and thereby increasing the value of the asset
portfolio. The following legal structures of an agency offer numerous benefits:
Company/Corporation
This is the most common form of ownership of a small business as it offers the strongest
protection.
o Limited liability
o There are no succession or continuity problems and additional credibility with others.
o A company is seen to be a separate identity and is registered through the Australian
Securities and Investment Commission (ASIC).
Company Directors have authority and influence over the organisational governance of the
companies they manage. Their position as director is one of significant responsibility.
Australian Securities and Investment Commission (ASIC) and the Australian Taxation Office
(ATO) hold the role of director in extremely high esteem and have rules in place of strict
adherence.
Sole traders
o One person may choose to own their own real estate business however, all the debts
and liabilities of the business lay solely with the owner
Partnership
o Two or more people may form a partnership however they are jointly and severally
responsible for all the debts and liabilities of the business – even if one is unaware of
the debt.
o It is advisable that a legal partnership agreement is in place so that all parties involved
understand their responsibilities.
Trust
o Protection of assets
o Maximising taxation benefits
o Legal division of income, and
o Succession and continuity of ownership
Franchise, Network or Go It Alone?
There are pros and cons to all of these. Do you join a franchise (e.g. L J Hooker) and reap the
benefits of group buying power, wide public exposure such as national advertising versus
paying a set % of your income to the franchisor? Often there is little democracy in a franchise.
Whereas a network (e.g. First National) is usually governed by a committee of the network
principals. Again, there is a buying power, however it is limited by the number of offices
actually in the network – and their spending ability. Going it alone offers total freedom to do
as you wish, however you are a single entity and will pay more for signboards, advertising,
website listings and so on.