Does the business structure you choose matter?
In a word or two – Absolutely! Without Doubt!
Whether you’re running a business or protecting your assets from risk – your Business Structure Counts.
Your lawyer or trusted advisor will tell you this without equivocation. BUT from a tax perspective, it is also vitally important that you understand business structure.
Business structure, from a tax perspective, will depend on what you do – it should be worked out in a co-ordinated way when you approach planning for your current financial/taxation position and your future requirements.
This is why business and financial plans are necessary.
To develop an effective plan, consult with your Accountant and other business advisors. Working through a clearly defined plan will assist you to establish the primary structure for your enterprise. It will help you set goals and in particular, the transition points along the way.
So – if you’re running a business then you have the choice of:
- a sole trader
- a partnership
- a Trust
- a company
- a combination of the above
Depending on your assets, potential profit and loss, government interactions, risk, family structure and succession planning your optimum business structure could be entirely different from those of other family members or business associates.
So how do you go about working out the best structure for your needs?
Put simply – get professional advice.
Apart from anything else, getting the right advice at the beginning will save you money, time and unnecessary hassles.
So who are these advisors? They are:
- a qualified and experienced accountant who can give you sound business and tax advice.
- an experienced lawyer can ensure that you have a risk protection and succession planning.
- a solid financial planner can assist you with a personal financial plan.
Depending on the nature of your business and you goals, there will be others whom you may wish to consult. These could include business consultants [business plans] and bank managers [an experienced banker with a solid background in business can be vital to a successful outcome particularly in the area of funding].
If you are likely to deal with government entities, then you should find out their requirements for doing business with them. The same issue will arise with major potential customers. Ask the question so that you are in no doubt as to what type of business structure these clients will deal with.
Setting up the right type of structure will help you save tax, protect your assets, ease the business process and set you up for retirement.
Once you have taken advice from your professional advisors, then make sure that you keep them up to date with you circumstances – don’t be afraid to ask questions.
Always remember the importance of business structure – the making of critical and early decisions based on sound advice will give you the best chance of business success.
This blog was written by Adam Vieglais of FAB Solutions.
Disclaimer: Everyone’s situation is different – this article represents general information only and is not intended to be provided for or taken as specific tax or financial advice.