Business Structuring

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In our video above, Partner Sanil Raje talks to business structuring and what to consider when setting up or changing your business structure.

A transcript of the video is below: 

What type of business structures are there?

There are four commonly used business structures in Australia:

  • Sole trader
  • Partnership
  • Company
  • Trust

Considerations for setting up or changing a business structure:

  • Asset protection – your personal assets should be protected from business risk and your business assets should be protected from any personal or external risks.
  • Income Tax – You need to consider how to maximise your tax efficiencies in the short and long term. The Australian taxation system has different tax rates for individuals and companies and changing your business structure could reduce the overall amount of tax you pay.
  • Finance/Working Capital – your ability to obtain finance could be impacted by your business structure. You need to ensure that you set your business up correctly for securing funding – debt or equity
  • Growth – The right structure can help establish operational efficiencies which are vital in assisting your business grow. The Business structure should make it easy to add new investors/owners to your business
  • Succession Planning/Exit – The Business Structure should ensure ideal conditions for future ownership transition to allow for the entry and exit of business owners. If it is a family business, one of the important considerations is to ensure the business can be passed down to the next generation without any significant tax consequences. An ideal structure should position your business for an efficient sale and minimise your Capital Gains Tax liability on the sale of your business or business assets

How do I know which is right for me?

Your business structure is determined by:

  • The type of business you are going to run
  • Its risk profile
  • How much you will earn, profit projections 5-10 years
  • Plans for growth
  • The involvement of others and do you want to employ staff
  • Regulatory considerations

How often should structures be reviewed? 

  • Annually

If your business has any questions regarding structuring, please contact our team

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