Most businesses in New Zealand are made up of small to medium enterprises, which are predominately owned or controlled by the persons working within them.
Monday, November 21st 2005, 5:52AM
by The Landlord
Asset protection for the owners of such businesses is an essential consideration.
In this article we look at how trusts (often referred to as family trusts) can be used in conjunction with the three most common business structures – sole traders, partnerships and limited liability companies.
The primary purpose for establishing a trust in most business-related circumstances is to protect the personal wealth and assets held outside the business by the persons owning and operating the business.
Sole Traders
A sole trader, someone who operates a business in his or her own name, is personally liable for all obligations incurred in the course of the business. This personal liability also extends to any claims that other people may have against the business. If such claims cannot be satisfied from the business' assets, the person with the claim will look at what other assets the sole trader has, including any family home, investments or other assets such as motor vehicles.
