Every business goes through times where they experience much needed growth. This growth can be a positive push to potentially restructure their business. There are however many factors to consider before a business can be restructured. Business owners need to think about why they are changing the structure of their business and what the aim is in restructuring.

There are a few key steps to consider before change the structure of a business:

Reviewing your structure

It is important to first choose the right structure for your business and to consider what suits the needs of the business. What are the issues with your current structure?  Does it:

  • Provide for asset protection
  • Minimise taxation - so you are not paying more than legally required
  • Allow you to get profits out of the business
  • Meet Small Business Capital Gains Tax Exemptions when selling the business
  • Allow you to do business easily

Structure Differences – what to look for and consider

It is advisable to understand the different types of entities and gain a clear understanding your obligations and how they work.   For example, a company and it’s directors are required to meet its obligations under the Corporations Act.  In addition to meeting your obligations under tax law, different legislation covers partnerships, trusts and companies.

The most important step – seek advice from your trusted Advisor

Speaking to your Accountant/Advisor is key to ensure that you are gaining the right advice for your business and for your personal circumstances. Your Advisor will review all the options for your business restructure, formulate a plan and present the advice one on one.

Formulating a plan

It is important that all things are considered and you understand taxation, legal and stamp duty implications of a change in structure.  Once you are comfortable with the advantages and disadvantages of a restructure, you need to ensure you have a plan to implement the change so important details are not missed.  Some things that needs to be addressed are:

 

  • Land Title Transfers
  • ATO Registrations such as ABN/GST/PAYG/Fuel Tax Credits
  • Agreements
  • Leases
  • Business Names & Trademarks
  • Letter heads
  • Establishment of new Accounting Software Files
  • New Employment Declarations/Registrations for Workcover
  • Changes to Insurance
  • Setup bank accounts
  • Deregistration for entities closing down

This list is nowhere near exhaustive and it is important that everything is addressed, or it can be a costly exercise.

Having the correct documentation and lodging the required forms with the relevant government departments are a necessity.  Even the little things such as changing a cattle brand or marketing material can become a headache if not addressed at the time of the restructure.

 

To discuss your business situation or if you require further advice, please contact your PJT Business Advisor on 07 5413 9300 or reception@pjtaccountants.com.au to make an appointment.