Business structuring advice...

[vlakken]

Hi all, first post here. Happy to be involved.

Now I need some advice, y'all: My wife and mother in law are going into business together as birthing consultants and I'm setting up the business structure. We're going with a Partnership for relatively low initial start up cost as well as ease of use for tax purposes. (Unless you folks recommend something different.) I wondered about legal obligations should something go "awry", but my mum in law doesn't own anything, and our only "asset" is a car the bank is letting us call ours (owing roughly $13k). I actually don't believe there is any real threat of legal action on our part. The ladies are only advising, not instructing. No diagnoses, etc. Anyway...

My main question...what comes first? I want to set up a Partnership...but that Partnership will have a Business Name registered to it... and an ABN... so, how does the order go? Set up Partnership with Name then apply for ABN? I want to do it without having to REdo it if you get my drift.

Thanks all.

[Slade]

Why do you need an 'asset' to start the business? Are you securing a loan against the car to start the business? Why do you need a loan to start a consulting business?

Have you done a plan and worked out what your forecasts will be? With consulting, the start up costs can be pretty much zero, unless you need equipment?

Have you got any clients willing to use their services yet? If so, can't you use the cash flow from that to start the business? Banks love to see clients on the books before lending money, it shows the business has merit and will actually make money!

I don't recommend using a depreciating asset such as a car to secure a business loan.

[vlakken]

Sorry Slade, I don't think I was being very clear. A case of my brain working quicker than my fingers. No, I'm not securing loan with a depreciating asset, I mentioned the "asset" in quotes, as in it's not one, as in if a client of the pregnancy consulting business decided to get litigious, that would be the only thing they could take.

Come to think of it, I don't think the ladies HAVE done a plan and cashflow forecast. I will get them onto that, because at the very least, it's good to know where you're going and be able to set goals.

The ultimate question I was asking was how to set up a partnership and attain for that partnership both an ABN and a Business Name. Maybe this is just a case of calling the QLD business registrar and asking them? I really just wanted the forum's input on how the business was being structured.

[Brendan]

Hey Vlakken,

Welcome to the forums!

I have never entered into a partnership, so I can't give great advice in terms of the legalities, however from a relationship point of view, you need to make sure that the roles and responsibilities are defined from day one, although the relationship your wife and mother in law is probably fantastic now, running a business together can be very stressful on any relationship, even family! So you just need to make sure they both protect themselves in what would be the outcome if someone wants to leave the business, doesn't like the direction its going in, or they fall out.

I have also found a great resource that will help you choose the best structure for your business;

Choosing a business structure

Hope that helps!

[vlakken]

Thanks for that, Brendan. I think the drawing up of a business agreement/contract is extremely wise as well. From my point of view, these two are like peas in a pod, but as you say, things can definitely change. So, I will be insisting there is an agreement of some sort drawn up.

Thanks also for the link. Very useful information there. I believe I'm going to give their help line a call and try to sort all this out. Needs to happen quick though...no money being made yet!

[gerryonline]

Hey Vlakken, welcome to the forum! So what is it a birthing consultant does?

[vlakken]

"Birthing Consultant" is only the loosest term in order to get my point across. They're actually both certified Hypnobirthing practitioners. Through about 4-5 weekends, a number of classes are held in which the pregnant mother learns a very acute form of self-hypnosis. Through fear releases, etc. the mother is re-educated about birthing, because evidently it should not be this painful ordeal that we have in the Western world. Anyway, the proof of the pudding is in the eating. I've been there, done that, seen it, it works. No pain, incredibly short "labours", no drugs, no dopiness. It's great.

[AlbionColt]

Selecting a business structure is one of the most important decisions business owners make, with wide implications for their financial success. Business structure affects safety of personal assets, taxation and smooth continuation of the business upon ownership change. Every business is unique, and each business and business owner will have their own particular needs when it comes to structuring the business.