A few years ago we were fortunate to have business consultant and management accountant Richard Cummins share his expertise in our free ebook, How to choose the right structure for your business.
Richard has kindly updated the ebook to reflect changes in tax policy in recent years – simply follow the links to download the updated version.
The ebook examines five topics:
- How to determine if your current business structure is the right one
- Tax and asset protection implications of different business structures
- Compliance, risk and governance implications of different business structures
- Future diversification and wealth development
- Succession and retirement.
As Richard explains in the ebook, business structures should be effective in:
- protecting your assets
- minimising your income tax and capital gains tax
- simplifying your administration
- achieving your retirement objectives
- achieving your estate planning objectives.
How to choose the right structure for your business
The right structure for your business will depend on a number of considerations. The two most important considerations usually are:
- asset protection, and
- tax minimisation including, where possible, the ability to ‘split’ income with family members and reduce the overall tax rate.
The degree to which asset protection is important to you depends on the type of business you are in or going into.
For example, it will be more important to protect your other assets (business and personal) the higher the possibility your trading business could incur liabilities for:
- events not covered by business insurances
- financial failure, or
- occupational health and safety
In such a situation trading as a sole trader or partnership of individuals would not be considered a suitable legal structure, as your assets would be exposed to unsecured business creditors.
The general principle is that trading activities are best carried out by a trust, company or a partnership of trusts, and their assets should be confined to core trading assets only, and other assets held by other legal structures.
Download the ebook to read Richard's full explanation of these issues.
For more information about JPAbusiness’ advisory, valuation and transaction services, visit jpabusiness.com.au or call 02 6360 0360 or 02 9893 1803 for a confidential, obligation-free discussion.
James Price has over 30 years' experience in providing strategic, commercial and financial advice to Australian and international business clients. James' blogs provide business advice for aspiring and current small to mid-sized business owners, operators and managers.