Choosing the right business structure(s) for your family business is a key business decision. Your business structure is one of the key foundations on which a family business is built. Any decision regarding structure will impact many aspects of your business including risk management, capital funding and bank finance, taxation, distribution of profits, business management, complexity and cost.
The structures you choose may also have significant, and on occasion, unintended impacts on matters outside your business, at a family level, such as personal liability, estate planning, succession and government assistance for families. Structures can impact family relationships. If the foundations for your business are poorly laid, poorly understood or not fit for purpose, then significant negative consequences can occur at both a business and a family level. Further, changes in our society, in terms of law, taxation, financing etc., and changes in a family, whether that be new assets, new family members, family members passing on, or a change in purpose or intention can impact the appropriateness of business structures.
A review and confirmation of the purpose, benefits and disadvantages of your family business structure should be a regular event, preferably on the agenda of your annual general meeting. It is also worth noting that any decisions relating to business structures should involve all your advisers including your solicitor, business adviser, tax adviser, financial planner and even your bankers, as they all look at the structure from different and important perspectives. Click here to read the article.