Business Structures

Business Structures

Choosing the correct business structure requires consideration of present and futures needs, with regards to future growth, investment, tax and asset protection strategies. We work closely with your accountant to ensure your business structure is established correctly and safely.
Business_structures

The WYNDHAM METHOD™ will work for you.
Ask your legal question now.
Book Online for your 15 minute FREE CALL.

Summary of common business structures

ENTITY
ADVANTAGES
DISADVANTAGES
INCOME TAX
CGT
LAND TAX
ASSET
PROTECTION
PRINCIPLE
LIABILITY
Sole Trader
Simple Immediate
Immediate and full liability
No income splitting. Must substantiate business deductions. Losses can be offset against profits.
50% discount (on goodwill with the sale of the business) & main residence exemption & small business concessions available.
Threshold available. Principal residence exemption available.
None except by insurance. Business & non-business assets exposed.
100%
Partnership
Simple in theory
Complicated in practice Joint and several liability
No income splitting. Losses not trapped in partnership, distributed to partners & can be offset against other profits. Can vary profits & losses payable to partners year to year.
Not part of partnership income. Divided between partners in accordance with interest in partnership 50% discount (on goodwill with the sale of the business) & main residence exemption & small business concessions available.
Threshold available. Principal residence exemption available.
None except by insurance and may also be exposed to partners debt due to joint and several liability of partners.
100% and joint and sveral
Company
Easy set up The most common form of business vehicle
Compliance
30% flat tax. Dividends taxed. Franked dividends pass on tax paid. Restrictions on internal loans. Losses trapped in company. Limited splitting through classes of shares.
No 50% discount. No main residence exemption. Tax free gains to company are taxed without imputation as dividends if distributed. Small business concessions available. Losses trapped in company.
Threshold available. Principal residence exemption not available. Related corporations may be assessed together. Relief possible if 60% of shareholders would suffer serious hardship.
Shareholders protected but value of their shares available to their creditors on bankruptcy. Directors potentially liable if trading while insolvent.
Liability limited to director’s duties
Unit Trust
Can be a good vehicle for multiple investors
Can become complicated
Taxed at unit holders level so depends on structure of unit holders. Good for joint ventures. Losses trapped in trust.
Depends on unit holders. 50% discount applies. No main residence exemption. Small business concessions available. Losses trapped in trust.
Principal residence exemption not available. Special notifications required. Threshold available to trusts created prior to 31/12/05 if fixed beneficiaries of same family group own 95% and combined taxable value less than $1m.
Unit holders protected but value in their units available to their creditors. Trustee indemnified.
NIL
Family Trust
Good for a family run business
ATO tax compliance
Maximum ability to split income. Biggest range of recipients. Losses trapped in trust.
50% discount. No main residence exemption. Maximum ability to split. Small business concessions available. Losses trapped in trust.
No threshold
Trustee company. Beneficiaries no value in their potential interest for creditors. Trustee indemnified.
NIL
SMSF
Can access superannuation for investment
Compliance
No taxor 15% tax
33% discount meaning 10% tax, or no tax. No gearing & cannot own main residence.
Threshold available to complying fund.
Limited borrowings now available but lender has no recourse against fund. Beneficiary’s account protected. No claim by fund against beneficiaries for indemnity.
NIL

We Will Assist You In Any
Issue And Conflict

45 Reasons You Should Partner With Us

Instruct Us To Serve You