Business Structuring & Asset Protection
Different Business Structures
Choosing a business structure that best suits your current and future business needs is a key factor in setting up a new business or re-structuring your existing business. The right business structure can also lay the foundation for appropriate asset protection for the business.
Here at Ivy Law Group, it is important to us to provide our clients with sound legal advice to ensure their businesses have a solid legal foundation. Our trusted Sydney business lawyers can provide advice on how to protect your personal assets from business creditors, how to structure ownership of your business and the tax implications related to different business structures, as well as a variety of general commercial and corporate law advice related to your business’ day-to-day operations.
Business Restructuring and Asset Protection
Your business may inevitably reach a phase where it is required to restructure for various reasons, ranging from keeping up with the current market trends or to evolve appropriately and promptly in the business cycle.
The ability to identify when your business may need to restructure is key to avoiding any unnecessary tax or success-hindering costs. Our commercial lawyers understand that protecting your assets will be primary consideration if and when you chose to restructure your business.
Whether you have thought about debt refinancing or restructuring, equity restructuring, statutory procedures or asset disposal, our commercial lawyers can help you identify the adequate restructuring tools best equipped for your business and navigate the necessary steps and information required to implement those changes. Call us today for a confidential discussion on 02 9262 4003 or submit an online enquiry to get started.
Types of Business Structures
Understanding the types of business structures available before starting a new business is crucial. At Ivy Law Group, we can help you understand the different structures that may be available and appropriate for your business, and how each one is reflective on your business model and eligibility.
The four most common business structures in Australia are:
- Sole trader
As a sole trader, you operate the business as an individual and are solely legally responsible for the business, inclusive of all debts and liabilities. Whilst it is possibly the most cost effective and easiest structure to set up and especially appealing to a single person business, it does not easily accommodate for future growth or allow for flexibility within this structure.
A partnership consists of two or more individuals or entities that agree, usually by way of a partnership agreement, to conduct a business together. The partnership agreement between parties governs how the partnership operates, but usually partners distribute income or losses between themselves. Notwithstanding, there are different types of partnership that can be considered to determine the most suitable partnership for you. These include:
- General Partnership – where all partners are equally liable, and their liability is unlimited in respect of their debts and obligations;
- Limited Partnership – where the liability of the general partners is be limited to the amount of their contribution to the partnership; and
- Incorporated Limited Partnership – where partners can have limited liability provided there is at least one general partner with unlimited liability.
As a separate legal entity, a company structure is ideal for individuals or entities considering the prosperity and growth of their business. This is especially because a company in its own legal capacity has the same rights as a natural person and therefore, the members of company are not personally liable for the company’s debts and obligations. A company is regulated by the Corporations Act 2001 as well as a constitution or replaceable rules (if any), while the relationship of its members or shareholders is governed by a shareholders agreement.
A Trust is a business structure where the trustee holds property or income for the benefit of its beneficiaries. Trust structures can sometimes be simple to set up, but mostly it is a complicated structure to establish. However, Trusts prove to be an appealing structure for the purposes of asset protection and minimisation of individual risks. The trustee of a Trust, an individual or entity, is the one responsible for managing the Trust on a regular basis for the life of the Trust, as well as distributing income and/or capital of the Trust to a variety of beneficiaries, sometimes in their discretion depending on the way the Trust is set up.
How Ivy Law Can Help
In addition to advising on business structuring, our experienced commercial lawyers can also help with:
- Establishment of new companies, advising and drafting all relevant legal documents and compliance checks, including assisting with developing a business plan;
- Business succession planning which is a tool or strategy for effective transition out of and transferring your business at the right time and to the appropriate successor; and
- General commercial and corporate advice, including negotiations and documentations, tenders, procurement processes and many more.
If you are thinking of developing a new business or perhaps re-structuring an existing business, it is important to seek expert legal advice from the outset to ensure you have the right foundation for success.
Common questions about business structures
Understanding the types of business structures available before starting a new business is crucial. The four most common business structures in Australia are:
- Sole trader: you operate the business as an individual and are solely legally responsible for the business, inclusive of all debts and liabilities.
- Partnership: two or more individuals or entities that agree, usually by way of a partnership agreement, to conduct a business together.
- Company: as a separate legal entity, a company structure is ideal for individuals or entities considering the prosperity and growth of their business.
- Trust: the trustee holds property or income for the benefit of its beneficiaries.
Our experienced commercial lawyers can help you understand the different structures that may be available and appropriate for your business.
If you choose to restructure your business, it is important to take the correct measures to protect your assets and identify the right time to restructure in order to avoid any unnecessary tax costs.
There are many different options for a restructure, including: debt refinancing or restructuring, equity restructuring, statutory procedures or asset disposal.
Our commercial lawyers can work with you on a restructure to ensure your business is protected.