Business Structure: Chapter 11 - Frequently Asked Questions

Future Accounting
1 day ago
5 min read

The questions I hear most often from business owners

"There are no silly questions when it comes to business structures. In fact, the questions people don't ask are often the ones that create the biggest problems."

Over the years I've been fortunate to work with hundreds of Australian business owners. Regardless of their industry or experience, many ask exactly the same questions. This chapter answers some of the most common ones.

Remember, these are general answers.

Every business is different, and your circumstances should always be considered before making significant structural decisions.

"What's the best business structure?"

It's probably the question I'm asked most often. And my answer is always the same.

It depends.

I know that's probably not the answer you were hoping for. But it's the honest one. The right structure depends on many factors, including:

the type of business you're operating;
your family circumstances;
your appetite for risk;
whether you're building long-term assets;
succession plans;
expected growth;
your commercial objectives.

A sole trader may be perfect for one person. A company may be ideal for another. A trust or business group may be appropriate for someone else.

The best structure is the one that supports your objectives—not somebody else's.

"Should I change structures as soon as my business becomes profitable?"

Not necessarily. Profit alone shouldn't drive structural decisions. Instead, ask yourself:

Has my risk profile changed?
Have I employed staff?
Am I buying commercial property?
Have my long-term goals changed?
Am I building significant wealth?

Growth is often a trigger for review—not an automatic trigger for change.

"Can I change my structure later?"

In many cases, yes. However, restructuring isn't always simple. Changing ownership of assets or businesses can sometimes have taxation, legal or financing implications.

That's why I always encourage clients to ask the question before making major decisions rather than afterwards.

Planning creates options. Reacting often creates costs.

From Melissa's Desk

One of the biggest myths I hear is: "We'll fix the structure later."

Sometimes you can. Sometimes you can't.

Or perhaps more accurately...

Sometimes you can—but at a much greater cost than if the planning had occurred before the transaction.

"Do I need a family trust?"

Maybe.

Maybe not.

A family trust can be an excellent structure. It can also create unnecessary complexity if it doesn't have a clear purpose.

Rather than asking: "Should I have a trust?"

Ask: "What role would the trust perform?"

If the answer isn't clear, it's worth having a conversation before establishing one.

"Is a company always better than a sole trader?"

No.

Companies have many advantages. So do sole traders.

The right structure depends on the stage of your business and your long-term objectives. Many successful businesses begin as sole traders before evolving into more sophisticated structures as they grow. There is nothing wrong with starting simple.

"How often should I review my structure?"

At a minimum, I recommend reviewing your structure every year as part of your broader business planning process.

In addition, you should consider a review whenever you:

purchase major assets;
employ significant numbers of staff;
bring family members into the business;
experience substantial growth;
consider succession;
are affected by legislative change.

Reviews don't always lead to change. Sometimes they simply provide reassurance that everything is still appropriate. That's a valuable outcome too.

"If my accountant hasn't suggested changing my structure, does that mean everything is fine?"

Not necessarily.

Your accountant may not have had all the information. Perhaps they haven't been told about your future plans. Maybe you haven't discussed succession. Maybe you've recently purchased investments. Maybe legislation has changed.

Business Structure Reviews work best when they're proactive conversations. Not assumptions.

"Can I own different assets in different entities?"

Yes.

In many circumstances, business owners choose to separate different activities or assets into different entities.

For example:

one entity may operate the business;
another may own commercial property;
another may hold investments.

The appropriate structure depends entirely on your individual circumstances and objectives. The important thing is ensuring each entity has a clear purpose.

"Should I operate my business through a trust or a company?"

This is becoming an increasingly common question.

Historically, many businesses have operated successfully through discretionary family trusts.

However, proposed legislative changes affecting trusts reinforce the importance of reviewing whether the current structure continues to support the business's objectives.

In some situations, the trust may remain an excellent long-term owner of family wealth while a company becomes the trading entity. In other situations, no change may be required.

This is exactly why every recommendation should be based on your circumstances—not on headlines or general commentary.

"What if I've had the same structure for twenty years?"

That doesn't automatically mean anything is wrong. Some structures remain appropriate for decades.

The important question isn't: "How old is my structure?"

It's: "Is it still appropriate today?"

Time alone doesn't determine whether change is needed. Circumstances do.

"What's the biggest mistake business owners make?"

Without hesitation...

Leaving planning until after a major decision has already been made. Buying a property. Signing a contract. Selling shares. Introducing family members. Retiring.

Once those decisions occur, opportunities can become much more limited. The earlier the conversation happens, the more options generally exist.

Future Prosperity Insight

The most valuable advice isn't always about what you're buying. Sometimes it's about who should own it.

One final question

Perhaps the most important question isn't one that clients ask me. It's one I ask them.

"Where do you want your business to be ten years from now?"

The answer to that question usually tells us far more about the appropriate structure than any tax calculation ever could. Because business structures should always support the future you're trying to build.

Preserve • Protect • Prosper

Preserve

Review your structure regularly. Preserve flexibility by staying ahead of change.

Protect

Ask questions before making major decisions. The right conversation today can protect years of hard work.

Prosper

Never stop asking good questions. Curiosity is one of the most valuable assets a business owner can have.

Key Takeaways

There is rarely one correct answer for every business.
Structures should reflect your goals, not someone else's.
Regular reviews create confidence and flexibility.
Most expensive mistakes occur before advice is sought.
Good questions usually lead to good decisions.

Ask Yourself

What question have I been avoiding because I assumed I already knew the answer?
Is there a major decision coming up that deserves professional advice?
Am I planning for the business I have today—or the one I want tomorrow?

Common Mistake

Assuming that because your structure has worked in the past, it will automatically continue working into the future.

Business structures should evolve alongside your business, your family and the legislative environment.

Planning Opportunity

Write down the three biggest questions you currently have about your business. Don't try to answer them alone. Take them to your next Business Structure Review and use them to start the conversation.

Sometimes the right question is far more valuable than the immediate answer.

3P's Action Step

Before closing this guide, ask yourself: "If I had one hour with my adviser tomorrow, what would I want to ask?"

Write those questions down. Bring them to your next meeting. They may become the most valuable agenda you've ever prepared.

Book a meeting with us today and gain clarity, confidence, and a plan for the future.

Disclaimer  

This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.  

Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder 

Liability limited by a scheme approved under professional standards legislation.