Business Structure
Has your business outgrown its structure?
The structure you choose when starting a business is often designed for the business you have at the time. But businesses rarely stand still.
As a business grows, revenue may increase, employees may be engaged, ownership may change and the value of its assets may grow. At some point, it is worth asking a simple question: does the structure you started with still suit the business you have today?
When should you review your business structure?
Growth does not automatically mean a restructure is required. However, certain changes can provide a natural opportunity to review your business structure.
Common triggers include:
• significant growth in revenue or operations;
• employing staff;
• changes in ownership or management;
• bringing family members or additional owners into the business;
• acquiring valuable business assets; or
• increasing complexity in reporting and administration.
The question is not whether the original structure was wrong. It is whether the circumstances on which that decision was based have changed.
It is about more than tax
Tax advice is an important part of any structure review, but it should not be considered in isolation.
Depending on the circumstances, your structure can also affect ownership and control, exposure to business risks, asset protection considerations, succession planning, administration and future growth.
A structure that appears suitable from a tax perspective may produce different outcomes once broader commercial and legal considerations are taken into account.
A useful business health check
A review may be worthwhile if the business has grown materially, ownership has changed, valuable assets are held within the operating business, risk has increased, or further growth, investment or succession is being considered.
For some businesses, the outcome may simply be confirmation that the existing structure remains appropriate.
For others, the review may identify matters worth exploring through further business and tax advice.
Looking ahead
Restructuring can have taxation, legal, commercial and administrative consequences, so any proposed change should be considered carefully and based on the specific circumstances of the business and its owners.
The objective is not to restructure for the sake of restructuring.
It is to make sure the structure supporting the business still makes sense for what comes next.
Contact Us
If your business has changed significantly since it was established, speak with PRATT Partners about whether your current structure continues to support your longer-term objectives.
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