If you’re in business already, or got a great idea for a business you’ve probably seen that mountain-load of information on there about different business structures. However despite all that free information, who is really advising you on what is the best structure for your individual now, and, upcoming circumstances?
Sure you can make a judgement from reading and choose an online document provider, or have an accountant set up what you tell them to but you may not realise what you’re getting yourself in to. The problem is, you don’t know what you don’t know.
Yes there are four main categories of structures, but do you know what a Hybrid, Fixed or Unit Trust is? Private or Public company? Partnership versus a Joint Venture? The difference between a company and a business name? What about a non-profit organisation or superfund? There are many variations and options within those categories that you’re not going to get advised on by a read and online purchase. The great thing is, there are these other options which may suit your particular requirements much better than a standard 4-choice scenario.
Just to illustrate further, do you understand or will someone explain to you why you would use a corporate instead of an individual trustee of a trust? About how you can remunerate yourself from a company? Do you need a business name, and will that affect you banking cheque payments from customers, fair trading and ABN records? What about a trademark or QBCC (building licence)? What entity do you register that to?
The choice comes down to 5 important elements a professional should explore for you; risk protection, operating costs, compliance level, record keeping and of course tax flexibility. The consideration should be risk of the industry you work in – an online home based business is less risky than building skyscrapers. Operating costs should be considered for cost-benefit, such as a $50k in a superfund wouldn’t generate the income to pay $5000 a year in fees. In relation to compliance, things like a unit trust keeping a unit register and minutes for every change may be too cumbersome. Record keeping isn’t everyone’s favourite thing – if you’re not great at it perhaps a simple structure is more suited so you don’t get yourself into trouble. And finally as a certainty, every business pays tax but how this works and effects your personal tax is very reliant on your structure too.
There is much much more to know and consider about the structure you’re in or choose to start with, and it does take a very worldly professional to not only identify all the elements, but to assess their importance to your circumstances and properly advise and guide you. This is what we uniquely offer at Dean Robin, so get in touch with your ideas or concerns for a consultation.