• Things To Consider When Choosing A Business Structure

    Business structures have different advantages and disadvantages. So, if you need advice and guidance, seek the services of a business lawyer and ensure you make the right choice. Harbourside Legal Commercial provides comprehensive support for businesses across the Sydney metropolitan area.

    Sydney businesses of all sizes have enjoyed and benefited from the services offered by Harbourside Legal Commercial. Furthermore, our business lawyers are experts in their field and offer fixed fee business law services supported by a fast 48-hour turnaround (depending on the type of matter). Harbourside Legal Commercial business law services can be tailored to any business – large or small.

    When starting a new business, it is important to get the business structure correct from the moment the business is created; this will also protect your enterprise when entering into contracts. A well-organised internal structure is also important to accommodate all interested stakeholders.

    Why is it important to choose a business structure?

    Firstly, the choice of business structure has a significant impact on flexibility, asset protection and the amount of tax you may have to pay during the lifetime of the business. This is also true even if the business is sold or merged with a third-party, as part of a greater strategic choice.

    Therefore, focus and attention must be directed towards getting the business structure correct, right from the start, and to take advantage of benefits (to avoid the costly disputes) that may not always be contemplated at the planning stages.

    The most common business structures are:

    • Sole proprietorship;
    • Partnerships;
    • Companies;
    • Discretionary trusts;
    • Unit trusts;
    • Self-managed superannuation funds.
    • Joint ventures; and
    • Special Purpose Vehicles (‘SPVs’)

    To sum up, each structure is accompanied by its unique set of benefits, advantages and disadvantages.

    Key Considerations – choosing a business structure

    Below are some basic items that you should consider. Ensure that these are researched and negotiated before starting up your business.

    Set-up and ongoing administration costs;

    • Protection of the assets of the entity and the owners;
    • Flexibility in the structure and in distribution of the profits of the business;
    • Investors, interested parties and decisionmakers that will be involved in business operations;
    • Minimisation of tax; and
    • Suitability for desired exit strategy (succession plan).

    Let’s explore business structures a little more and consider the important factors.

    • Is there an existing structure through which you have traded for many years?
    • Are there losses in your existing entity. Will they be offset in the new enterprise?
    • What are the short and long-term plans? Will you sell the new enterprise without taking profit from the new business for example?
    • Do you have any immediate family with whom to split income?
    • Is the business high-risk with little prospect of capital gain? If so, will you require the protection of incorporation without complexities of a trust?
    • Is there a plan for rapid expansion. If so, will you be able to give others equity in the business in the future?
    • Will you include your family but need greater asset protection? or
    • Will you need to safeguard the business, for the future benefit of your life partner?

    Why Choose Us?

    Harbourside Commercial expert business lawyers know that the level of risk and commitment involved with starting a new business is daunting. Above all, having quality advice from the outset is key to future success.

    Our process and services are superior in the marketplace. Our client onboarding process means your matter will commence within 24-hours of engagement and the minimum service level for initial call-back is less than four hours (and always on the same day of enquiry).  

    Furthermore, a quick response rate means we add value to your business, giving you experience-backed advice and support to ensure you’re making the smartest, most profitable decisions for your company. We do this quickly and professionally!

    Whether you are starting a new business, or changing the structure of your existing business, the services of an experienced business lawyer will enable you to access the support needed. In short, expert professional advice; every time!

    So, don’t be in the dark again about the options available to you. Start a conversation with expert business lawyers today, to learn how we can help you make the next decision. After all, with certainty, you can take informed action!

    Contact Harbourside Legal Commercial today through our enquiry form or via email at admin@hslegal.com.au. You can also reach us at our office on 02 9955 6692 and speak directly to an expert business lawyer.

    FAQs

    I run my own business and do not employ anyone, do I still need to consider my business structure?

    There are many self-employed entrepreneurs who have a simple start-up business structure. However, there are numerous benefits in taking the time to consider options that mitigate risks and protect assets. For example, click here for a list of the benefits and disadvantages that you stand to gain (or lose) as a sole trader.

    I want to start up a company and I understand registration can be simple, do I still require legal assistance?

    At every level of business, legal assistance is essential! There are factors that can influence the appropriate shape and nature of your corporate structure. Click here for a brief description of these factors by the Department of Industry, Innovation and Science.

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