Business Structure

Discussion in 'Business Accounting, Tax & Legal' started by banzai, 14th Feb, 2008.

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  1. banzai

    banzai New Member

    Joined:
    1st Jul, 2015
    Posts:
    4
    Location:
    Perth
    Hi All

    Long time reader, first time poster.

    We are shortly to aquire a 3rd retail outlet. Outlets 1 and 2 operate under the same company. I figure my options are to continue along this path, adding the 3rd location to the company or establish a seperate entity. Option one provides simplicity (especially when moving stock and supplies) but could potentially increase risk. Option 2 reduces risk (I think) but adds operational complexity.

    Any thoughts? Perhaps there is a 3rd option I am missing? Thanks in advance.

    Paul
     
    banzai, 14th Feb, 2008
    #1
  2. The Stig

    The Stig Well-Known Member

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    Location:
    Central Coast NSW
    What about moving the 3 of them into a trust and keep them all under the same umbrella?

    Simple and reduces the risk I think you are trying to avoid.
     
    The Stig, 14th Feb, 2008
    #2
  3. banzai

    banzai New Member

    Joined:
    1st Jul, 2015
    Posts:
    4
    Location:
    Perth
    Thanks Stig

    The company has 3 shareholders - one of which is my DT. I guess it just seemed odd to end up with a name like XYZ Pty Ltd T/as ABC & DEF & GHI, epsecially when we add further sites to the equation.

    Paul
     
    banzai, 14th Feb, 2008
    #3
  4. MattR

    MattR Well-Known Member

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    1st Jul, 2015
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    Location:
    Sydney
    My 2c worth

    I'd seriously consider putting the new business into another structure. Build and protect is my motto. Even in a Trust they can be attacked if the Trust is operating a business.

    I also like Trusts rather than company's as the CGT provisions favour Trusts. Even with the Small business CGT concessions available, the company may not have to pay any (or at least a reduced amount) of CGT, but there is still difficulty for the shareholders to get their hands on it without incurring additional tax. One concession that can be used is the retirement exemption but then the moneys locked in super. Trusts don't have this much difficulty with CGT.

    Also, if you do build up assets in a trust you can also look into "Mirror Trusts" to transfer some of those assets to another trust without incurring CGT (stamp duty may be another matter). The advantage is if in this instance you had initially had your first two businesses in the one trust, and you could foresee a future time where the actions of oner business may put the the other at risk, then you could transfer it to the Mirror Trust and hey presto, protection.

    Please note that the above is just stream of conciousness thoughts as I am on the fly whilst devouring my lunch....so investigate further.
     
    MattR, 14th Feb, 2008
    #4
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