Entiy Set Ups
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Choose the right structure for your business’ future success.
Asking the right questions at the start of your business journey is crucial, as it shapes the direction you’ll take. Your business plan should outline your vision for the next 5-10 years and establish the structure to support that vision.
Remember, your business plan isn’t a one-time exercise—it should be revisited and refined as your business evolves to ensure it continues to serve its intended purpose.
Whether you’re planning for multiple locations, equitable partnerships, or Research & Development (R&D) initiatives, setting up the right structure from the beginning is essential. Making structural changes later can lead to complications, unexpected taxes, and a lot of extra administrative work.
These challenges can distract you from focusing on growing your business. Let our team of accountants handle the complex thinking, analysis, and strategy development to ensure your business is structured correctly from the start.
How Ark Accounting
can help you.
We can provide advice on the best business plan and structure for your business, both where you are now and how you plan to grow.
- Minimise income tax
- Maximise asset protection
- Allow for the addition of new business partners or investors.
- Ensure compliance with all legal requirements for your industry.
How ark accounting & Tax can help you
This is a low-cost option for starting your business. It’s controlled by you as an individual, and you as an individual are responsible for the income, expenses and debts of the business. It’s not the ideal structure for sustained growth in your business, as new owners will lead to a change in the business.
A partnership is controlled by two or more people, who share profits based on set percentages.
This type of model is a low-cost option for a start-up business. Every year a separate tax return will need to be completed.
This structure offers set ownership entitlements. Its control is dictated by rules set by the owners and ownership percentages. This is a good option for growth since ownership can be changed without changing the business registrations allowing owners to separate their personal assets. Tax is paid on profits, based on company tax rates.
This type of model is a low-cost option for a start-up business. Every year a separate tax return will need to be completed.
A discretionary trust offers a lot of flexibility in a family-owned business. Family members can enter and leave the business without changing the trust itself. Profit allocations can be adjusted annually, as entitlements are not set, increasing cash flow in your business. A trust can be used for 80 years, allowing the business to be passed down generations without substantial tax implications.
This type of model is a low-cost option for a start-up business. Every year a separate tax return will need to be completed.
SMSFs are designed to give owners of these funds control over the investments that will fund retirement. Superannuation is a low taxation option for investments if managed appropriately. Once in retirement, tax can be minimised to zero, increasing funds for your retirement.
It’s important to review your structure
on a regular basis
Selecting the right business structure is a critical decision, but it’s equally important to regularly review that structure as your business evolves. The structure that was ideal at the outset may not continue to serve your needs as your business grows or as your goals change.
Regularly reviewing your business structure with an accountant ensures that it remains aligned with your current objectives and future plans. An accountant can assess whether your current structure is still the most advantageous and recommend adjustments if necessary.
Sometimes, a combination of multiple structures might be the best approach to maximize your benefits and meet your evolving needs. By staying proactive and revisiting your structure regularly, you can avoid complications down the line and ensure your business is always positioned for success.
Consider factors such as liability, taxation, control, funding needs and future growth plans. Consulting with a tax accountant can help you make an informed decision.
A few questions you should be asking are:
- What’s your business purpose?
- What’s your personal “why” for launching your business?
- How big are you planning on growing?
- Who are your target clients?
- Will you have staff?
- Will you ever have business partners?
- What’s your exit strategy?
Changing your business structure down the track can have significant complications, cause you to be required to pay extra tax, and therefore create a load of additional administration. All of this, however, can be avoided by planning ahead by working with Carbon.
Your business plan isn’t something you should ‘set and forget’. You should revisit your plan as your business grows, and your needs change to evolve your business plan as you go. If you haven’t looked at your business plan since you created it, don’t stress – it’s not too late. Get in touch with us today and let’s get started.
You will have worked with your accountant to create tax strategies for your business, and it’s important to align these strategies with your business structure. You can do this by communicating with your accountant often, and chatting with them about your business structure as you create it.
The main types are sole trader, partnership, company and trust, each with distinct legal, tax and operational implications.
Yes, you can change your business structure as your business grows or your needs change but this can have legal and tax implications.
Tax obligations vary by structure; companies are taxed separately from their owners while sole traders and partnerships report income on personal tax returns.
Incorporation offers limited liability, potential tax benefits and greater ability to raise capital but also involves more regulatory requirements.
A trust is a legal arrangement where a trustee holds and manages assets for the benefit of beneficiaries, often used for asset protection and tax planning.
Partnerships involve two or more people sharing profits, losses and decision-making, while sole traders operate independently.
A business plan helps guide your business strategy, secure funding, manage growth and track progress.
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