Business Structures & Restructuring

If you are considering the purchase of assets or starting or operating a business, it is important to understand the different types of business structures that are available. Perhaps more importantly, it is important that you understand the advantages and disadvantages of each type of business structure to ensure that you adopt the business structure which best suits your needs.

Perhaps one of the most common mistakes that people make is purchasing an asset or starting up a business without first thoroughly considering what business structures are available. When it comes to business structures, it is important that you get the right advice the first time as if you purchase an asset or start a business using one structure or entity, there are usually significant costs associated with transferring the asset or the business to another structure or entity, namely because of tax implications such as transfer duty, capital gains tax and GST.

As businesses grow or their ownership changes the previously adopted business structure may no longer be appropriate or effective to meet the needs of the business and the business owners. In those circumstances it is often necessary to restructure the business and this often involves consideration of both taxation and commercial considerations, including the cost of restructuring versus the benefits to be derived.

Types of Structures

As aforementioned, each business structure has both advantages and disadvantages. The most commonly encountered business structures include:

  • Sole trader;
  • Partnership;
  • Company;
  • Fixed Trust;
  • Discretionary Trust;
  • Testamentary Trust;
  • Hybrid trust;
  • Superannuation;
  • Joint venture;
  • Incorporated and unincorporated associations.

Things to Consider

Often the key issues that need to be considered when reviewing business structures include:

  • The cost of establishment and maintenance of the structure;
  • Taxation advantages and disadvantages;
  • The degree of asset protection provided;
  • Your exposure to liability;
  • Business succession;
  • Flexibility and intended use.

How we can help

We can assist by:

  • Identifying what business structures are available to you;
  • Reviewing the advantages and disadvantages of each structure;
  • Setting up your chosen business structure;
  • Drafting and setting up any agreements or contracts that tie into the proposed business structure;
  • Restructuring your business to meet new and future goals and aspirations.

For further information please contact: