In Show 054 – Reassessing Your Business Structure originally broadcast on Facebook Live on Wednesday 24 January 2018 we explore this interesting topic.
All this month we are focusing on Phase 6: Maximizing your business and bringing on investors. Maximizing your business can often mean taking a hard look at your business structure. You might want to look at some alternatives to your current structure.
When you first start out you will have created a structure that worked great at the beginning but may no longer be the best way to operate. Tax regulations or other laws may have changed and you should be routinely reassessing your structure with your account and lawyer.
Too often people think that legal advice is vanilla and is the same for everyone. That’s simply not ture. Everyone needs a legal structure that is tailor-made for their operation. You don’t know what you don’t know. Getting the correct advice will be the best way to ensure that you aren’t surprised when you try and sell your business. Among the structures you could use are:
A company is a separate legal entity apart from the individuals involved. 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.
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.
Similar to a discretionary trust in that it also is controlled by a trustee. The difference is that there is also includes unit holders. Those unit holders are the actual owners of the trusts assets. It gives you the tax flexibility of a trust while maintaining control of the business. Many of the tax advantages of these kinds of trusts are no longer in effect but they are still useful in many contexts – especially in property development.
Partnerships are two entities or two individuals who come together. You shouldn’t just use a partnership straightaway because of liability issues.
More about this Show
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.