There is an almost limitless number of possibilities when considering how to structure a new business venture.
These can range from a sole trader or simple general partnership to complex structures involving groups of companies or Limited Liability Partnerships, with corporate members, where a company is also a partner in the LLP.
The wide choice of possible structures can be narrowed however, by answering a few straightforward questions:
- How many individuals will be “running the business”?
- Will the business employ staff – in how many locations or jurisdictions around the world?
- Is there one business or could there be several separate “profit centres” and how are these to be managed?
- What is the risk profile of the business and is it important to protect the owners by limiting their liability?
- Will there be major capital expenditure on property acquisitions or plant and machinery?
- Will it be necessary to attract outside investors by offering attractive tax breaks for investment?
- What plans are there for expansion and growth and is an exit or sale likely in the short-term?
- Will profits be extracted or re-invested in the business?
- Are losses anticipated when the business first starts trading?
- Will the business generate valuable goodwill?
- Will the business incur expenditure on Research and Development?
Often the structure of an existing business will have developed over time through growth and acquisition. What is left can often be unwieldy and inefficient and you could be paying significantly more tax each year on your profits and income than you need to.
Whether you have an existing business or are setting up a new one, our team is able to provide advice on the most appropriate structure or restructure to suit your immediate and future needs.
With proper consideration it is usually possible to restructure and reduce the tax burden, whilst continuing to protect the liability of the principals and thereby provide a more competitive advantage for the future.