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Exploring business structure and risk

Many business owners don’t realise that their business has outgrown its structure until something comes up – which begs the question, are your assets at risk?

Here is a compilation of things to consider to check if your business structure is working for or against you.

Exploring risk
Legal action is the primary risk for many business operators. To protect your assets, it is generally preferable to separate as many valuable assets as possible from the trading operations.

Introducing new business partners
If you want to provide key employees or investors with an equity interest in your business, your current business structure may not allow for this. Explore companies and unit trusts as an effective vehicle to facilitate the introduction of new equity partners.

Reinvesting in growth
Reinvesting profits in your business is important if you have or expect a strong growth path. Some business structures however don’t readily facilitate profits being retained by the business.

Taking money out of the business
The structure of your business has a direct impact on how money flows through it to the investors. Before you look to take money out of the business, explore the financial position you are in and ensure you are not risking your business and future profits.

Exploring international expansion
If you are contemplating expanding overseas this can significantly increase the complexity of your operations. Exposure to a new set of Australian tax rules plus legal and regulatory requirements are just one element to consider ahead of international expansion.

Accessing tax incentives and concessions
If you have a significant level of R&D activity that could potentially qualify for the tax incentives, it’s worth exploring your options if you are not already in a company structure.

Exiting your business
The wrong structure will limit your ability to sell your business interests and may have a dramatic impact on the amount of tax you pay on the sale proceeds.

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