Your Personalized Checklist for Choosing the Best Business Structure
As you embark on the exciting journey of choosing the ideal structure for your business, it’s crucial to consider various factors that align with your unique needs and aspirations. Here’s a personalized checklist to guide you through this important decision-making process:
Primary Considerations for Day-to-Day Operations:
- Familiarity and Understanding:
- Choose a structure that aligns with your team’s understanding and expertise for smoother day-to-day operations.
- Protection Against Liabilities:
- Does the structure offer protection against both foreseen and unforeseen liabilities, safeguarding participants and assets?
- Control Over Assets and Income:
- Will the chosen structure grant you the necessary control over assets and income, both now and in the future?
- Wealth Creation:
- Is the structure conducive to building long-term wealth for your business?
- Finance Accessibility:
- Will financial institutions be comfortable dealing with the chosen structure, facilitating easier access to finance?
- Disclosure Requirements:
- Are there any obligations to disclose business progress to the public or competitors?
- Compliance Costs:
- What are the ongoing costs associated with maintaining the chosen structure?
- Family Harmony:
- Will the chosen structure minimize the risk of internal conflicts within a family business?
- Employee vs. Proprietor Considerations:
- Will individuals be treated as principals or employees within the business?
- Succession and Estate Planning:
- How does the structure accommodate succession planning and the orderly passing of the business to subsequent generations?
- Future Restructuring:
- Is the structure flexible enough to accommodate future changes, both for tax and non-tax reasons?
Tax Related Considerations:
- Effective Tax Rates:
- What are the immediate and ultimate effective tax rates on investment returns and business profits?
- Tax Base and Deductions:
- What items will be included in income and gains, and what items will be allowed as deductions and losses?
- Access to Tax Concessions:
- Does the chosen structure facilitate access to available tax concessions and benefits?
- Responsibility for Tax Liabilities:
- Who will be responsible for the tax liability associated with business activities?
- Utilization of Tax Losses:
- How and at what level within the structure can tax losses be utilized?
- Financing Costs and Deductions:
- Who will bear the costs of obtaining capital, and are those costs deductible against income?
- Cash Flow Implications:
- Does the structure ensure immediate access to cash, supporting obligations without additional layers of taxation?
- Expenditure Prioritization:
- Will the chosen structure maximize business-related expenditure over non-business related expenses?
- Impact on Social Security:
- Will the structure impact eligibility for social security support and entitlements?
- Business Categorization and Superannuation Concessions:
- Does the structure promote categorization of the activity as a business and maximize superannuation concessions?
- Anti-Avoidance Provisions:
- Does the chosen structure comply with specific or general anti-avoidance provisions?
Remember, this checklist is designed to guide you, and for a more tailored approach to your specific circumstances, feel free to reach out. Your unique goals and vision are at the heart of the decision-making process.
