Structural advice

Get it right from the start

Want your tax minimized and your assets better protected? Getting your business structures right is an important step to take, especially for investors and early growth ventures.

The optimal structure could be made up of one or several entities including companies, trusts, sole trader (individual), partnerships and self managed super funds.

With the right structure, you can relax knowing that you’re set up perfectly for the future.

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Structural Advice Business structure

Choose your business structure wisely

Get your structure right from the start and you’ll reap the rewards earlier and avoid risk. You can of course change your structure contingent on changes in the business (i.e. growth, strategy or if you look to sell)

  1. Sole Trader

    Sole trader

    An individual person is the owner of the business and operates on their own

  2. Partnership

    Sole trader

    Couples or groups running a business together as equals

  3. Company

    Company

    A separate legal entity run by directors and owned by shareholders

  4. Trust

    family of 3

    People or companies running a business for the benefit of beneficiaries

You can relax

Knowing you are set up for the future

Sole trader

Is the best place to start if you don’t plan on earning more than $100k in your first year (otherwise look at an alternative from the start) It’s simple and the least expensive option to set up. But if things go bad (i.e. divorce, lawsuits or even bankruptcy) your personal assets are likely to be more exposed than other options. You are responsible for the lot and you can’t share debts or losses with other parties.

Partnership

Also a good place to start, easy to set up and relatively inexpensive (though you’ll usually have a lawyer draw up a personalised agreement). However, the partners have joint and several liabilities meaning that each partner is liable for all partners debt. You’d better know (and trust) your fellow partners well!

Company

A discretionary trust with trustee company is a structure we recommend often especially for families and related entities. It allows the 50% general capital gains discount and offers asset protection and income splitting. Beneficiaries (often family members) receive at the discretion of the trustees which could vary year on year.

Discretionary trust

A discretionary trust with trustee company is a structure we recommend often especially for families and related entities. It allows the 50% general capital gains discount and offers asset protection and income splitting. Beneficiaries (often family members) receive at the discretion of the trustees which could vary year on year.

Unit trust

A unit trust is similar to a discretionary trust but is more suited to unrelated parties’ or families that don’t get along ☺ . Beneficiaries have fixed entitlement (nondiscretionary) access to incomes year on year. It also allows the 50% general capital gains discount and offers asset protection and income splitting (but less flexibility compared to a discretionary trust ). Also stamp duty is payable on the sale/transfer of units (assets) in most Aussie states though its generally easier to operate from a compliance perspective.

Frequent business structure gaffes ​

Its easy to find yourself in a structure with sub-optimal features. Here’s some of the common mistakes we have encountered.

  • Acquiring growth investments while trading as a company

  • Having little or no planning for your exit or succession

  • Running a sole trader or partnership when other family members earn less than you

  • Owning your assets or running your business in one entity

  • Running a sole trader or partnership when you have assets in your name

  • Holding your company shares in your individual names

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Let’s see if we can save you tax and protect your assets better

There’s many factors to consider when setting up the ideal structure, including your growth outlook, current wealth and income, the industry and regulatory environment and whether you are looking to sell anytime soon.

Each structure has its operational pros and cons. Set up and ongoing compliance costs vary greatly between options. It’s vital however that the optimal structure is set up as early as possible to avoid any unexpected fees such as capital gains or stamp duties.

Of course, we can assist and are happy to set up a free initial chat and longer structuring sessions online.

And being a registered ASIC agent, we can effect all necessary changes ourselves at low cost, quickly and effectively.

Just book in here and we will get things moving.

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Got a burning question? Let us help.

  • What is a tax structure?

    If you earn a high income in Australia, you’ll get taxed accordingly –between 30% to 38% is not uncommon for those on top salaries. It’s one of the highest rates in the world. Quite simply, choosing an optimal legal tax structure could save you a lot in tax – that is you’ll keep a lot of your own money. 

  • Which business structure is best for tax purposes?

    There’s no one answer to this question. It very much depends on your current personal and financial situation, your future goals, your assets and if you own and operate a venture (or wish to). The optimal structure could be made up of several different structures and or entities. See above for further information or contact us today for a free initial chat.