There are a range of reasons that business owners may need to consider re-structuring their business. If:
- Your business is experiencing cash flow problems;
- Your creditors are demanding payment of outstanding accounts and threatening legal action;
- You’re finding it hard to remain within your overdraft limit;
- Your bank is making demands;
- You have inherited company liabilities as a result of personal guarantees provided;
- You are unable to make payments to the ATO on time
then you may need to look at restructuring your business as a method of getting it back on its feet and heading in the right direction.
Taking action to get a distressed business back on track is generally the best option for all involved. Following a comprehensive independent review of the business, if it is deemed that restructuring is a viable option the next step is to determine which particular restructuring components best suit the individual situation. Some possible options include restructuring the business, the disposal of some divisions/assets that are not performing well or possible refinancing.
The range of areas that a business restructure can affect reach far and wide. Such areas can include control of the business, asset protection planning, capital gains tax, stamp duty, income tax, GST, land tax, payroll tax, estate planning and succession issues. Depending on the individual situation this can have either be a positive or a negative effect.
Specific examples include that if a sole trader or partnership decides to incorporate, under certain conditions, they may be eligible to deduct, over five years, costs incurred by them in relation to the incorporation such as legal, search or lodgement fees. On the flip side, another entity may be liable for stamp duty on the transfer of assets, capital gains tax and possible loss of tax benefits that the current business structure is eligible for.
It is said there are two types of expertise that are required in order to implement a successful restructure, traditional and contemporary. A knowledge of traditional legal and accounting practices is necessary in order to address areas such as taxation, the rights and shares of owners and the ownership of various types of assets.
Additionally, an up-to-date, working knowledge of the modern business arena is needed to aid the development of modern business models, as well as to improve workflow management and online business and leverage with third parties. This contemporary expertise assists many businesses to operate cheaper, faster and better than their competitors.
As has been demonstrated, there are many issues to be aware of when looking to restructure a business, which is why it is extremely important to enlist the help of professional lawyers and accountants.
At The Quinn Group the highly qualified team of both accountants and lawyers are well equipped to assist you with your business restructuring needs. Having all your needs met by one firm ensures timely and cost effective solutions for you business. Contact us on 1300 QUINNS or click here to email your enquiry.