Ideal Business Structure

Whether there are any optimal tax and business structures is a million dollar question. Getting the business structure right probably is not easy as it perceived. A tax structure which produces optimal tax outcome might not be commercially viable or cost-effective. Different structures produce different tax and commercial outcomes. For example, commercially speaking a company limits your exposure to business risks but there is no flexibility in the distribution of its income which means its shareholder might end up paying tax at the maximum marginal rate of forty-seven percent. On the other hand, you have Trust Structure which provides the flexibility of distribution but no flexibility for future developments like expansions or bringing new partners on board. Further, a Trust might be hard to present to client s and stakeholders, its image is not as sound as the company.

Finding and setting up an optimal business structure is an art where an advisor skilfully balances the competing objectives. Some of these objectives are

• Cost to set up and maintain business structure
• Minimising Tax
• Exposure to business and market risks
• Level of legal complexity and regulatory requirements
• Introduction of new investor or partners

We often approached by clients who say they want to set up a company and our first question is why company? In ninety percent of the cases, we end up setting up an alternative business structure. At Tax Knights we consider at least twenty four business, tax and commercial objectives prior to setting up a structure that suits your individual requirements.