Business Structure Advice

Business Structure Advice

The structure of your business significantly influences your overall tax position, and therefore, it is in your best interest to choose a structure that effeciently minimises your tax burden, whilst maximising your business value and growth potential.

Effective structuring is an important aspect of both business and personal wealth creation.

Your initial decision, on the legal structure under which you would operate, may have been weighted by factors such as costs, size, and possible longetivity of the business.  But as your business changes and grows, the question must be asked, is it still the most appropriate legal structure for my business?

Types of Business Structures

There are four main types of business structures commonly used by small to medium size businesses:

• Sole Trader:  an individual trading on their own
• Partnership:  an association of people or entities carrying on a business together
• Trust:  an entity that holds property or income for the benefit of others – this is not a legal entity
• Company:  a legal entity seperate from its’ Shareholders, capable of holding assets in its’ own name, and Shareholders own the Company while Directors run it.

Sometimes, a combination of the above is used very effectively to minimise the potential risks and liabilities to you and your business, and help improve your income tax position.

Changing Your Business Structure

There are a variety of reasons for moving a business from one structure to another.  However, changing your business structure can be a complex matter.  There are a myriad of legal, tax and commercial implications.

Choosing the right business structure is an important decision, so you need to investigate each option carefully to decide which best suits your needs and which structure is best for the long term benefit of your business.

Factors to Consider

Each business structure has advantages, disadvantages and responsibilities which need to be considered before making a decision.  Therefore, when choosing a business structure, some of the key factors to consider include:

• taxation requirements and liabilities
• legal liability
• costs
• capital requirements
• management requirements.

Your business structure should accomodate the potential for changing circumstances with minimal disruption; provide adequate protection, opportunities for legitimate tax reduction and effecient distribution of profits.

At Baggetta & Co, we can help you make the right decision, whether you are starting your business or whether your business has changed.  If your business has changed, a review of your current business structure will help determine which business structure will better meet you and your business needs now and in the future.