While not set in stone, choosing your business structure is one of the most important decisions you’ll make as a business owner. It will depend on many factors, for example, the type of business you have, whether you plan to hire employees, join forces with a partner and how you plan to develop your business in the long term.
As your business experiences growth, you may consider changing your structure.
Common reasons for changing structures
- You may be taking on a business partner, so you decide to change from a sole trader to a partnership, company or unit trust structure
- If you buy an existing business, you may need to change the business structure to meet your goals for the business
- You may be restructuring to meet financial goals and objectives, such as improving cash flow or retaining more funds within your business for working capital or reinvestment
- You may be reorganising your internal functions, separating out different business units, or applying for government grants
- Your business may have expanded overseas or you’re expanding the product functions of the business and you need to change your structure to accommodate this growth
- You may want to downsize or simplify your business structure, e.g. moving from a company to sole trader
THINK before you ACT: Steps to consider before changing your structure
- Understand the differences between each structure
- Seek advice regarding your business and personal circumstances
- Review and update your business goals and objectives
Choosing the right structure can maximise tax opportunities and minimise risk, ultimately contributing to the financial success of your business.
Want to know which structure will best suit your needs?
Love the blog? Subscribe to receive it fortnightly.