Small businesses generally begin as a sole trader. However, as your business and income grows, you may need to consider alternative business structures.

Many businesses are also organized to include a trust. The trust is normally a discretionary, unit or hybrid trust that could either trade on a day to day a basis or purely ‘hold’ property or other investments on behalf of the beneficiaries (normally individuals). This arrangement allows for tax efficient outcomes in terms of profit distribution and should the business be sold. The use of trusts is most suitable for medium-sized businesses.

A trust is normally set-up with a company acting as trustee. This is done so that the advantages of a company are available whilst full control is maintained as the family members become directors of the company and/or beneficiaries of the trust. The main advantage of a trust structure is the ability to minimize taxation, whilst offering some flexibility in terms of privacy and limited liability.

In recent years the Federal Government has sought to remove or limit the tax advantages of trusts. Therefore, you need to consult with us to obtain the latest information. By its nature, a trust structure is a highly involved, legal process and professional advice is necessary.

The issue raised above needs to be considered before deciding on the most appropriate business structure. You need to familiarize yourself with your options and choose the best mix of features that is suitable for your circumstances.