Company structuring is something one usually doesn't give much thought to until one has already been through the life cycle of a couple of business endeavours (and been burned a few times).

 

Many business owners start off as a sole practitioner, viewing incorporation and other company secretarial tasks as nothing more than formalities that get in the way of doing the actual business. To some extent, they're not wrong, but the company structure is actually one of the most important early decisions a business owner can make. It's the strategy you prepare before you play the game, and can make or break your business.

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For example, smart structuring can help you:

• protect assets from seizure;

• minimise your financial and other liabilities;

• find the most favourable tax arrangement (28% vs. 45%);

• separate your intellectual property from your business;

• create a legacy for your heirs; and

• get easier access to funding by banks and investors.

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Private Companies

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If you have started off as a sole proprietor, sure, there may be less of an administrative burden than operating as a PTY LTD - but you could be paying more tax than you should, and risking personal liability for the debts of your business. Conversely, a private company is viewed as a separate legal entity, and affords protection from your creditors.

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Operating as a private company is also viewed as more professional than sole proprietorship. If your business intends to obtain a bank loan or funding from investors, it is often essential to incorporate as a private company.

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Trusts

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A Trust is the classic asset protection entity. Though not unassailable, Trusts can help you manage your property and assets, ensure they are distributed after your death according to your wishes, and save your family money, time and paperwork. A Trust can be used to protect property and other assets from liquidation - but it is important that the Trust be managed as a genuine vehicle for its beneficiaries - not just as an extension of yourself.

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Contact us for advice on structuring your business in the most effective way to protect your assets and pay less tax.

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