Do you want your business to grow? If you’re reading this blog, then the answer is likely yes.
As a business owner, you know your service inside and out and you’ve likely built your business around your skills, abilities and vision. What you may not know, is that how you structure your business, can be the difference between a business that can handle growth and expansion and a business that can’t.
The structure of your business may seem simple, but the way it’s structured impacts on your tax, personal liabilities, asset protection, reporting obligations and more – the right business structure can save you valuable time and money. So, it’s important to get it right.
How do you know if your business is structured correctly? How do you know if your business is structured for growth?
We’re here to provide some tips.
Back to business structure basics
Ideally, you want to structure your business for growth from the outset, so before building your business, you need to identify exactly what type of business you want to build. Are you starting out as a sole trader or are you establishing a company?
If your business is already up and running, a professional can help you with a restructure if need be, so don’t worry, you don’t need to panic or start all over again.
Before you can even think about a structure or restructure though, it’s important to understand the different types of business structures.
- Sole Trader – A sole trader is a person trading as the individual legally responsible for all aspects of the business. This includes any debts and losses, which can’t be shared with others.
- Partnership – A partnership involves two or more people who go into business together.
- Company – A company is a separate legal entity which has the same rights as an independent person and can incur debt, sue and be sued.
- Trust – Trust is a relationship where a person (the Trustee) is under an obligation to hold property for the benefit of other persons (the Beneficiaries).
Why is the structure of a business so important?
Different types of business structures offer different levels of legal protection, administrative simplicity and tax exposure, which is why the structure is so important.
Small business owners generally choose the simplest business structures, such as sole trader, because there is less administration. What they often don’t realise though, is that the simplest business structures provide the least protection and the owners are personally liable if the business gets into any financial or legal difficulty.
As the business grows, so do the risks and having the right business structure in place can help minimise such risks.
How a business accountant can help
For many business owners, the first instinct is to opt for sole proprietorship or partnership. These simple structures will serve them well initially and, for many, it’s all they’ll ever need. However, your particular business type or personal financial situation might mean another entity structure makes more sense and this is where a business accountant comes in.
Here’s just some of the ways a business accountant can help:
- Business Structure and Restructuring
- Asset Protection
- Cash Flow Forecasts
- Business Valuations
- Tax Planning
- Succession and Estate Planning
No matter the size of your business, choosing the right business structure is vital for the growth and sustainability and an accountant can help.
At Crest Accountants on the Gold Coast, we have over 40 years’ experience in working with and advising about the processes, systems, and plans, essential to the overall structure and success of a business. We take the time to get to know our clients so that you feel confident we have your best interest at heart. Crest Accountants, accountants you can trust.
Contact us and book an appointment to discuss your business accounting needs today.