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Are you setting up a new business?
Are you looking to change your business structure?
Are you buying a new business?
If the answer is yes, then one of the key considerations for every business owner is to ensure that their structure supports their needs and goals (both short and long term). A preferred structure will depend on the size and type of your business, level of risk and profits generated.
Most importantly, the structure of your business will impact certain key areas, such as:
- the tax you are liable to pay,
- asset protection,
- control over the business, and
- set-up and ongoing compliance costs.
A preferred structure will depend on the size and type of your business, level of risk and profits generated.
The four most common types of business structures in Australia are:
- Sole trader – the simplest, and most cost-effective structure. It has no asset protection benefits, and tax is paid at personal marginal tax rates.
- Partnership – two or more people or entities operating as partners who allocate profits between them and are jointly and severally liable for debts. Taxed at the partners’ applicable tax rate.
- Company – this is more costly to setup and has ongoing complex compliance requirements. It has a flat tax rate of 25% or 30% so can be effective for businesses with significant profit, along with asset protection benefits as it is a separate legal entity.
- Trust – profits are distributed to beneficiaries which provides flexibility in profit allocation it assist with minimising tax. It can provide some asset protection benefits, but a trust is not a separate legal entity and therefore the trustee is responsible for decision making.
For further information on structure types head to our
Entity Structures information page.
If you operate in an effective structure that meets your needs, you can realise the following
benefits:
- risk minimisation and asset protection,
- tax minimisation,
- reinvestment of profits within structures to build wealth,
- succession opportunities for your business; and
- retention of key staff members through equity ownership (with or without control over the business).
We suggest reviewing your structure regularly (we provide this to you annually as part of our ongoing service) to ensure it meets your needs. There is flexibility to change structures throughout the lifecycle of your business and concessions are available to restructure in a tax effective manner if needed.
Discuss Further?
If you would like to discuss, please get in touch.
Disclaimer
The information provided in this article does not constitute advice. The information is of a general nature only and does not take into account your individual financial situation. It should not be used, relied upon, or treated as a substitute for specific professional advice. We recommend that you contact Brentnalls SA before making any decision to discuss your particular requirements or circumstances.
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Our Location
255 Port Road
HINDMARSH SA 5007
PO Box 338
Welland SA 5007
"We feel confident in our financial decisions and can focus on growing our business with peace of mind."
John & Barbara Kalleske
Kalleske Vineyards Pty Ltd
