Below is a brief overview of the main business structures.

 Sole trader

- A business run by one person

- Owner entitled to all profits

- Responsible for all tax/debt

- Not a separate legal entity from business and owner

 Partnership

- Partners are jointly liable for debts of the partnership regardless of which partner incurred the obligation

- Two or more people

- Share of profits and losses between partners based on their share

- Partners responsible for their own income tax

- There is no legal requirement to have a formal partnership agreement, however it is recommended to have an official document outlining the expectation of each partner

 Equity partnership

- Individuals pool their capital with others in order to gain an ownership interest in a larger property

- Quite often there will also be a component of bank debt as the partners borrow funds to purchase the farm

- Company structure is the most common way equity partnerships are structured

- The managing equity partner benefits from ownership with a reduced level of capital input

- Managers and sharemilkers benefit from an opportunity to progress to full farm ownership

- Retiring farmers benefit from an opportunity to remain involved in the industry

 Limited liability company

- The company exists as its own entity – separate from its owners and shareholders

- The company must be formally registered

- The company owns all assets and is responsible for any liabilities/debt

- Profits are distributed to owners by way of dividends

 Trust

A trust is an entity whereby selected individuals (trustees) hold and administer assets on behalf of the selected beneficiaries.

- Trustees are liable for the debts of the trust

- Profit is distributed to beneficiaries at the trustees’ discretion

- Losses cannot be passed to beneficiaries

- Trust must be set up formally with a trust deed

 Look through company

- Treated as a partnership for tax purposes but a company for accounting purposes