When many people think of tax structures, they are reminded of the dairy aisle at Woolies.
In regards to milk, they can choose between full fat, half fat, skim, light, 90% fat free, with hormones, without hormones, with A2, extra calcium, extra protein.
That’s just cow’s milk. Do they want cow’s milk? Perhaps they want soy milk, rice milk, almond milk, oat milk or coconut milk.
They inch a few steps away and it’s the same issue with cheese. Same again with yoghurt. Except they also get a choice of ethnicity too. Greek yoghurt or Icelandic yoghurt?
When they attempt to escape the dairy aisle altogether, they are still finding powered versions of milk in the confectionary aisle. By the time they reached the checkout, all the dairy in the trolley has gone off anyway.
What are the best structures?
Looking at structures doesn’t need to be this frightening. Trust us.
We can help to advise you on which structure might be the best for your small business.
I’ll discuss the advantages and disadvantages of the following four business/tax structures:
- Discretionary Trusts
- Partnership of Family Trusts
- Unit Trust
- Private Company
| Advantages | Disadvantages | |
| Discretionary Trust | Great if there’s one partner.
Less costly to establish and run. |
Requires restructure to bring in new partners. |
| Partnership of Family Trusts | Business can be sold tax free.
Good asset protection. |
Shouldn’t be used for purchasing investment assets.
Joint liability.
Slightly higher setup costs. |
| Unit Trust | Simple structure.
Few adjustments required when partners exit or join.
Good asset protection. |
Not as tax effective in regards to CGT. |
| Private Company | Easy to understand taxation.
Good asset protection. |
Difficult to get CGT exemptions.
Hard to get the money out. |
The best structure for you will depend largely on your unique circumstances. At Paris Financial, we are generally far more likely to recommend Trust structures as opposed to Private Companies. We understand that there are many benefits when you place your business in a trust.
If you want more detailed information about each different type of structure, you can download our essential guide to choosing a structure for your small business. This book includes all the information that you need to know before you make the decision of which structure is ideal for you. No matter what circumstance you find yourself in, this short book has you covered.
