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Multiple Trading Companies

Discussion in 'Accounting, Tax & Legal' started by philsom, 16th Mar, 2010.

  1. philsom

    philsom New Member

    Joined:
    16th Mar, 2010
    Posts:
    4
    Location:
    Brisbane, QLD
    We have just purchased an existing retail business. We have the ACN and Trust setup with no drama's. What are the specifics of running the daily business in the trading name. Do we need a seperate bank account (GST and ABN) for the Trading Name or do we just operate it as ACN PTY LTD ATF FAMILY TRUST under the Trust ABN's and bank account.

    The thing is we want to purchase additonal businesses and if/when we sell the business/es if the future we want potential purchasers to easily see the P&L for that particular shop. I am afraid if we operate all shops under the trust numbers will become muddled. So, what is the best way to account for each shop?
     
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    9th Jun, 2005
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    Location:
    Sydney, Australia
    I was always told it is a good idea to set up a separate bank account for each trading name, and do your accounts separately for each one. You then consolidate the accounts when generating an overall report for the parent company/trust.

    I'm not sure about ABNs etc, that's an accountant question.

    One thing I would ask - are there potential legal issues with any of the businesses you own or are likely to own?

    Would you be better off with each company in its own Pty Ltd structure to keep them separate?

    The trust could be the shareholder of each company, thus profits get streamed through the company and distributed to beneficiaries.

    Just a thought.
     
  3. Superman

    Superman Well-Known Member

    Joined:
    6th Nov, 2007
    Posts:
    343
    Location:
    Gold Coast, QLD
    Yeah - Sim raised a very important issue regarding asset protection and legal exposure.

    You want to keep each entity legally separate if possible.

    With your accounting, you can simply set up 'classes' in your software - so each time there is an expense / income you can decide what trading business is relates to.

    You need to have a pretty good system for your record keeping in retail as you NEED TO BE LOOKING AT YOUR SALES AND STOCK LEVELS FREQUENTLY.

    This will enable you to make more informed and profitable decisions.

    Cheers
    SM
     
  4. philsom

    philsom New Member

    Joined:
    16th Mar, 2010
    Posts:
    4
    Location:
    Brisbane, QLD
    Thanks Sim/Sman,

    I guess at the end of the day we are trying to make a prospective purchasers due diligence simple. We looked at many businesses when looking to buy, and ther numbers presented were not good.

    In an ideal world we would want the p&l to marry up to the BAS for the particular business/shop. I can not see this happening though if run through a trust as the trust will be a consolidation of the seperate businesses.

    Meeting with the accountant tomorrow - will post the result.