In Show 119 – Advantage and Disadvantages of Structures originally broadcast on Facebook Live on Monday 13 August 2018 we explore this interesting topic.
We continue to talk about structures all this months. There are several different ways for you to set-up your business.
A sole trader allows you to operate without having to setup a costly structure. But it’s key disadvantage is that you are liable for everything including the tax. If you’re running a company with little to no risk this is the best option for you. Changing this structure could cost you a lot of money.
The idea of a company has been around for hundreds of years. It allows you to seperate the risk from the directors of the company from the company itself. The company is made up of the director who has the day to day control of the company and the shareholders own the company and are entitled to the profits. The best reason for creating this structure is to ensure that you are not personally liable for the debts and liabilities the business incurs. One of the disadvantages is that there are ways for governments and creditors to go after the directors of a company.
The key advantage of a discretionary trust is it’s flexible. This kind of trust is probably the most popular asset protection strategy you can use. The trust is controlled by the trustee who has legal ownership. The appointer decides who will be the trustee. The beneficiaries have beneficial ownership of the trust. The whole point of this structure is to protect individuals and the trusts assets. There are great tax advantages to this structure as well. There are some disadvantages, however. The first is that they have to be set-up correctly as it’s really difficult to change later. There is some trustee liability issues as well. The trustee is responsible for all debt
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We started Business Legal Lifecycle to create a simple way for you to understand complex legal terms. Most importantly we want to help you to develop a plan to take your business successfully into the future. There’s a startling statistic the underscores the importance of developing a solid plan. The majority of business owners are just seven months away from losing everything. A single aspect of your business that is not set-up correctly can shut down your whole operation very quickly. Legal advice is not cheap and even when you can afford it there is often a divide between lawyers and their clients. We want to close that gap once and for all. We want to put legal knowledge and tools into your hand to prevent the worst from happening to you.
Twice a week we are going to deliver those tools right to your home or office with Business Legal Lifecycle TV. We’ll start the week with Fast Fix Monday, a short 5-10 minute video that will tackle a single issue that businesses have to deal with. Then on Wednesday’s our main show will feature with more fulsome discussions and interviews all delivered in a straightforward and easy to understand format.