Whether you are new to business or have an existing structure in place, it is essential that you ensure that your tax structure is set up correctly from the start. This is important for a number of reasons:
- Asset protection
When planning to go into business, it is seldom the case that you will be planning for the venture to fail. However, not taking into account the consequences of a business failure can mean that in addition to losing the assets of a business, the owner of a business might also put their other assets at risk. Effective planning prior to or during the conduct of a business can limit the risk involved.
- Accessing small business concessions
If you are classified as a small business, there are numerous small business CGT concessions that can apply when the business is sold. They key is to ensure that the business is established correctly from the start to ensure that you can maximise the benefits on sale. Alternatively, when the business is sold it is imperative that certain conditions are satisfied to ensure access to the concessions. To find out more about the small business concessions click here.
- Financial considerations – operating profits
From a tax perspective, the objective of a structure will be to minimise the tax imposed on profits generated by a business and on distribution of those profits to the owners.
- Facilitating a potential acquisition, take over or restructure.
There are certain CGT rollover exemptions, such as scrip for scrip rollover that can apply should the owners of the business sell. We can also assist with tax advice on demerging your business structure or tax consolidating the corporate group.
- Estate planning issues
There may be reasons to structure your business to ensure on death the business can live on with minimal structural and tax issues. Ensuring it is structured correctly from the beginning can reduce complications down the track.
- Succession/exit planning
Succession/exit planning goes well beyond the legal structure of a business, but the structure is critical to the ability to implement the succession plan. Succession/exit planning does not simply mean planning to pass the business to the next generation of the family – it encompasses all the planning that is undertaken for the future management and ownership of the business and the realisation of the value of the investment in the business.
There is no such thing as an “ideal” or “one size fits all” structure for a growing business. What is ideal will vary from business to business based on the specific facts of the business and the objectives of the business and its owners. This means that when determining the structure for a business you should often start with a clean sheet of paper and design a “purpose built” structure. To find out more about particular structures CLICK HERE.
Designing a structure in this way means that you need to have a clear understanding of the purposes that you are trying to achieve with the structure. These purposes usually extend well beyond tax, financial and legal matters.
If you require assistance, please contact us on (02) 8264-0755
All representations and information on this site is general in nature and should not be relied upon as advice. If you require specific advice please contact us.