‘How future proof is our family business structure?'
One common issue we see facing family businesses is balancing control, tax effectiveness and legacy. Often family business structures evolve over time and become unfit for purpose or unnecessarily complex, which can cause a number of concerns including:
- Succession planning: Ensuring that business structure, ownership and control align with long-term family goals and is critical for maintaining harmony and continuity. A well-structured plan can help mitigate potential conflicts and ensure tax effectiveness, resulting in a smooth transition of leadership and ownership across generations.
- Tax efficiency: Structuring the business to maximise available concessions, such as small business relief, preserving pre-CGT status, or leveraging trust streaming and FTEs, can significantly enhance financial outcomes. Regular reviews of tax strategies ensure the business remains compliant, while optimising its tax position.
- Asset protection: A robust structure is essential to safeguard the business and family wealth against risks such as litigation, marital breakdown, or unforeseen liabilities. Proactively addressing these vulnerabilities can help ensure the long-term resilience and security of the family’s assets.
- Regulatory change: Staying ahead of changes in tax laws and compliance obligations is vital to avoid disruptions. Proactive planning and governance frameworks can help the business adapt to evolving regulations, avoid personal financial implications for Directors, while maintaining operational efficiency.
- Avoiding obsolescence: Regular reviews of the business structure and strategies are crucial to identify opportunities for simplification, protection, and optimisation. Being proactive ensures the business remains agile and well-positioned to address emerging challenges and seize new opportunities.
Reach out to a family business tax and accounting adviser to check if your structure is aligned and future proofed for success over multiple generations.
By WA-based Family Business Accredited Advisors
