Which business structure should I choose?
This is a perennial question indeed and one which should take account of the following factors:
- Risk: Starting and running a business is always risky so your company structure should minimise risk as much as possible. Risk is often ignored until it’s too late, such as when the GST or rent is months in arrears!
- Practicality: Overly complicated structures such as trading trusts are okay in theory but not very practical to use. Try finding a professional trustee these days.
- Cost: Cost is always a factor, and while spending excessively is bad, saving a few measly dollars could cost you tens of thousands or your house.
- Tax flexibility/minimisation: Your business structure should allow you to save tax while staying on the right side of the IRD.
- Asset protection: For most of us, it takes many years to build assets so it makes sense to protect them.