Structure… get it right from the start

Starting out with the right organisational structure can save a lot of time, money and heartache in the future. A simple company structure may be suitable in the early days but as the business grows more complex, the wrong structure can limit growth.

Most businesses realise they are operating within an inappropriate structure only when it is too late, and generally as the business owner wants to exit an established business. An inappropriate structure can limit access to capital gains tax concessions, expose the entire business to risk of litigation, fail to protect its intellectual property and provide a less than optimum income tax result.

Structures have become more complex over time. The standard company or sole proprietor models (company share capital owned in an individual’s name) are often replaced with more complex structures, such as a partnership of discretionary trusts or hybrid trusts with all units held by discretionary trusts. These structures all have benefits but equally each has it pitfalls and one size definitely does not fit all. Your business structure needs to be tailored to your situation.

The key to avoiding structuring issues is to get it right from the outset by investing in the right structuring advice. This will likely represent a significant cost for a business in its infancy, but the potential savings in the future will justify the investment many times over. Business structures don’t need to be.

 

Nick Prohasky

Nick Prohasky is a Consultant at DC Strategy.

DC Strategy is the region’s leading specialist consulting and legal firm. Our specialist teams in Strategy, Franchising, International and Legal have developed the networks and brands of many of the region’s most successful businesses. Contact Nick Prohasky at nick.prohasky@dcstrategy.com