Why Getting the Corporate Structure Right Can Be a Game Changer for Your Business

Let’s be honest: your corporate structure isn’t just a stack of paperwork. It’s a critical element of your business strategy, shaping everything from protecting your assets to maximising tax benefits. Nailing it can truly transform your business’s prospects. Let’s take a closer look at why having the right corporate structure is so important and how to ensure yours is working in your favour.

The Major Benefits of a Well-Designed Corporate Structure

Asset Protection

A solid corporate structure is crucial for protecting your personal assets. The right corporate structure ensures your assets aren’t at risk if legal or financial challenges arise within the business.

Risk Management

Every business faces a degree of risk and always will – whether financial, operational, legal or other. With a well-planned corporate structure, you can separate these risks from one another. By establishing the right legal (and operational) structures, you can minimise the potential for damage and maximise your ability to keep your business running smoothly, even in tough times.

Attracting and Retaining Capital

A business with a clear, robust corporate structure is far more appealing to investors and lenders. It shows you’re serious, organised, and have a solid plan to protect your business and so, the value of their investment or loan. This makes it much easier to secure the funding needed to grow and thrive.

Tax Efficiency

The right corporate structure can also legitimately improve your tax position. By taking advantage of tax deductions and available concessions, you can significantly reduce and/or defer your tax burden.

Tax Benefits When Exiting the Business

When it comes time to sell or wind down your business, the structure you’ve chosen can have a very big impact on your tax outcomes, particularly whether you qualify for various tax concessions and have any flexibility regarding the distribution of gains. A smart structure can make the exit process more financially favourable, saving you money in the long term.

Case Study: Has your corporate structure become an ill-fitting suit?

Why You Should Regularly Review Your Corporate Structure

So, why bother revisiting your corporate structure? Here’s why it matters:

• Asset Risk: Have you acquired new assets since your structure was set up? If so, those assets might be vulnerable. It’s wise to reassess your structure and ensure your assets are still protected.
• Growth and Costs: As your business grows in value, restructuring can become more expensive. By reviewing your structure now, you can avoid hefty costs down the road.
• Tax Opportunities: You could be nearing thresholds for certain tax concessions. A review of your structure might uncover opportunities to take advantage of these benefits before it’s too late.
• Timing for Changes: If adjustments are necessary, reviewing your structure now gives you the flexibility to decide whether to make changes this financial year or wait until the next. The timing could significantly affect your tax outcomes.
• Things Change: You may acquire new assets, inherit money or experience divorce. These are all personal circumstances that may warrant a reconsideration of your corporate structure and the presumptions that underpin it.
• Peace of Mind: If your structure is still working well, you’ll have the peace of mind knowing that your assets are protected and your business is set up for success.

Learn how BridgePoint Group can help your business get the right corporate structure

Simplifying Your Corporate Structure: Pros and Cons

While keeping things simple is often the best approach, there are times when a more complex structure may be necessary. Here’s what to keep in mind:

• Personal Guarantees: No matter how good your corporate structure is, personal guarantees can still expose your assets to risk. It’s important to ensure that any guarantees are revoked as soon as they’re no longer required.
• Restructuring Costs: Changing your corporate structure can lead to expenses like stamp duty and capital gains tax. Proper planning and thorough documentation can help reduce these costs, but it’s something to be aware of before making changes.

Final Thoughts

Your corporate structure isn’t something you can just “set and forget.” It’s a vital part of your business that should evolve as your needs change. Regular reviews ensure that your structure continues to provide the asset protection, risk management, tax efficiency, and investment appeal that your business requires.

By staying on top of your corporate structure, you’re doing more than ticking a box – you’re setting your business up for long-term success. If it’s been a while since you reviewed your setup, now’s the perfect time to take a fresh look and make any necessary adjustments. Your future self (and your business) will thank you.