Choosing the right business structure can benefit new businesses of all sizes. Without the right structure in place, your business could fail before it even begins.
It's not a matter of one size fits all when it comes to business structures. Every business has different needs, goals, and a desired direction to go in. You need a structure in place that will help your business grow and achieve results in the long-term. That's why choosing the right business structure can get you starting out on the right foot.
Here at Liston Newton Advisory, the most common questions we get from our clients are around business structure. Whether you've acquired a new business or you're starting your own, it can be hard to identify what structure to go with.
Create a strong foundation for your new business. Invest in business structure advice from Liston Newton Advisory.
Identifying the right business structure
Before building your business, you need to identify exactly what type of business you want to build. Are you starting out as a sole trader or are you establishing a company? Answering questions like these can help put you on the right track from the beginning.
Choosing the right business structure can have a positive effect on your business's future. A business structure can limit or enable your options for tax minimisation and capital gains. It's important to weigh up advantages and disadvantages of different business structures.
Check out the following business structures to see which one would best suit your business goals:
- Suitable for individuals who have just started their own business
- Commonly used by sub-contractors and freelancers who accept work from multiple sources
- Great for professionals after a quick and cheap business set up
- Easy to shut down in case the owner decides to cease the business
- Suitable for two individuals looking to start a business
- Generally an easy structure to set up and run
- Commonly used by professional services such as lawyers and accountants
- Easy for either partner to dispose of their interest if they choose to
- Suitable for companies looking to achieve high growth
- Most common structure for businesses with multiple employees
- Government incentives and grants available for startups in a company structure
- Gives your business access to a capped tax rate
- Suitable for business owners looking to protect family assets and distribute income in a tax effective manner
- Usually started by an individual or a married couple
- Commonly used by small business owners with annual profit in the $200k to $500k range, such as those in the hospitality sector
- Offers room for flexibility and tax effectiveness for a small business
- Suitable for those looking to start a trust with multiple owners
- Usually started by multiple business owners who are not family members
- Additional unit holders can be added as the business grows and new owners buy in
- Money can be withdrawn without any tax consequences
- A less complicated business structure than a company
Asking the right questions for business structure advice
Here at Liston Newton Advisory, we have several key questions we ask clients to determine the right business structure. These questions also give the clients the opportunity to re-evaluate what they want from their business.
Sometimes it's just a matter of taking a step back to review all of your plans and expectations for your business. You may find your business is better suited to a structure you haven't even considered once you realise the advantages that each one offers.
If you are confident you can answer the following questions about your business, it may be time to speak to an adviser. An advisory service can help you implement a business structure and get your business on the right path towards success.
What type of business will you be running?
It may seem like an easy question to answer, but some prospective business owners may not understand the level of protection they need from a business structure. Every type of business comes with its unique set of risks.
The right business structure can help provide a level of protection for the owner's personal assets in case something goes wrong with the business. In order to understand the potential risks involved you need a clear understanding of what type of business you want to run.
What are your future plans for the business?
Your business may be small now but rapid expansion may require you to rethink the type of business structure you need. Revenue, profit, and employee numbers could grow faster than expected. It's important to recognise that different structures suit different numbers of employees.
We can provide you with valuable business structures advice. With future goals in mind, you'll be matched with a business structure that supports your business goals.
Will the business and assets be sold in the future?
The eventual sale of a business is a long-term goal shared by many business owners. The right business structure can make it easier to sell your business. Certain structures are better suited to adding, removing, or switching ownership when the situation calls for it.
Create a strong foundation for your business
At Liston Newton Advisory, our team can provide business structure advice to help steer your business in the right direction. Our experts understand the value of choosing the right business structure for your business.
Our consultants will take the time to understand your goals for now and well into the future. We'll match your business with a structure that leaves room for growth and innovation. With the right business structure advice, your business will be geared for success.