Should you change business structure?

Trust, company, partnership or sole trader?  Choosing the right structure to run your business is not an easy task.

You have to take into account such things as:-

  • Asset protection
  • Family succession
  • Tax
  • Admitting or removing unrelated business partners.

Each structure has their own advantages and disadvantages depending on your personal circumstances.

But even with the right choice made at day one, personal circumstance often change over time to the extent that the original entity that once served its purpose no longer does.  Or becomes a hindrance.

There are two main obstacles to changing structure:-

  • Cost – both monetary and time (as in notifying customers etc as well as getting insurance and telecommunication contracts re-set in your new entity)
  • Transaction costs – in particular Capital Gains Tax, but also there can also be considerations such as Stamp Duty

But there are forms of relief under the Tax Act which either defer, reduce or eliminate and capital gain.

Too many accountants are focused on processing the past, whether that be a Tax Return or a BAS.  At MRS, we are focused on our clients’ long term success and security.  We are currently re-structing two clients structure – one to allow the admission of business partners and the other to obtain greater protection, greater tax efficiency and eventual exit of the business founder at a much reduced capital gain.

Are you concerned that you are not in the best structure?  Or may this is not something your accountant has not discussed with you.  Either way, we welcome a free 45 minute exploratory discussion.

At MRS, we will spend today planning for your success.