Business Structures And Risk Management (Generic)

BUSINESS STRUCTURES & RISK MANAGEMENT

When you own and operate a business, whether buying an existing business or starting up a new business, you should be aware of the different business structures that are available to you. CHOICE OF BUSINESS STRUCTURE There are several forms of business structures available such as: Sole trader Partnership Joint Venture Trust Company Or a combination of the above. The hardest thing about deciding on what type of business structure to adopt is not only trying to understand the different structures available, but also understanding what type of structure is most suitable for you. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

SOLE TRADER Contracts with third parties Liabilities Business Name Income Tax As a sole trader, you are trading as an individual. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

PARTNERSHIP Generally, a partnership is defined as a relationship which exists between persons carrying on a business in common with a view to profit. ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

DISCRETIONARY TRUST Settlor Trustee (Usually a company) Discretionary Trust Beneficiary 1 Beneficiary 3 Beneficiary 2 Beneficiary 4 The person who settles the trust, usually for a nominal sum The trustee has legal ownership of trust assets for the beneficiaries As Trustee of Appointor The person who controls the appointment & removal of the trustee, and thereby indirectly controls decisions concerning the trust Beneficiaries have an “expectant interest” only in the income and assets of the trust.

TRUSTS Conceptually, a Trust is an obligation on one person to hold property for the benefit of another. The property is dually owned. The trustee has legal ownership and the beneficiary has equitable ownership. Predominant types of trusts used in business structures are: Discretionary Trusts The entitlement of beneficiaries to both income and capital is generally at the discretion of the trustee. Unit trusts In a unit trust, each unit holder has a fixed entitlement in the trust estate and any income flowing through the trust is distributed to each unit holder in proportion to their entitlement. The Discretionary Trust Deed A discretionary trust deed creates the trust and it should set out the rights and obligations of the trustee, the appointer and the beneficiaries. Please note that not every trust deed is standard and it is recommended that you seek legal advice before signing a trust instrument.

Main Features of a Discretionary Trust are: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

ADVANTAGES & DISADVANTAGES OF DISCRETIONARY TRUSTS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

UNIT TRUST CORPORATE TRUSTEE Trading Company THE BUSINESS UNIT TRUST Corporate Trustee Corporate Trustee as trustee for as trustee for ARAGON FAMILY TRUST LEGOLAS FAMILY TRUST Director – Aragon Director – Legolas ,[object Object],[object Object],50 50

COMPANY ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],COMPANY ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

RISK MANAGEMENT ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

INSURANCES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

TYPICAL STRUCTURE ASSET HOLDING ENTITY RISK ENTITY THIRD PARTIES Asset/IP Licence Contracts with Mortgage Debenture Charge Trust Holding Company Pty Ltd as trustee for Trading Company Pty Ltd Customers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Landlord Suppliers and third parties

Contact Details: PO Box 185, Maroochydore QLD 4558 T: 5458 9999 F: 5458 9988 [email_address] www.sajenlegal.com.au

Business Structures And Risk Management (Generic)

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