Re: Partnership or company -- Cox Business Accountants

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Date Posted: Friday, July 12, 09:32:41am
Author: Jason Ginns
Subject: Re: Partnership or company
In reply to: Small Businessman 's message, "Partnership or company" on Thursday, July 11, 03:53:32pm

Thankyou for your question.

Deciding on the best structure for your business is one of the most important areas in starting a new business.

In your question you have asked whether or not you should operate as a Partnership or a as a Company. However there is a third business structure that you have not mentioned that should also be considered, a Trust.

There are a number of factors that need to be considered when making the decision between the three structures. Among other matters these include the following -

- the ages and personal tax rates of the principals and their family.

- whether or not the personal assets of the principals(i.e. family home) require protection from the activities of the business.

- the level of funds that the principal wishes to take out of the business as wages/distributions/drawings.

- whether or not discretionary distributions of income or capital are required.

- the level of understanding of tax structures, and tax generally of the principals. As well as the discipline to run a more complex structure.

- the short and long term ambitions for the business of the principals. There are a number of Capital Gains Tax issues that need to be considered in this area.

These are just some of the matters that you need to take into consideration.

As you can see from the above it is a very complex area. It would not be advisable for me to point you one way or the other working only on the facts in your email.

The best thing for you to do is to sit down with an accountant and discuss the above matters, plus other related matters, to come to a decision that is best for your particular circumstances.

Good luck with your business.

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