Rcl structuring your startup

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Rcl structuring your startup

  1. 1. Welcome…
  2. 2. Structuring your start-up – Tips & Traps Disclaimer: The information contained in this document represents general comments and is provided for information purposes only. It is intended as a guide only and does not represent advice on any particular matter. No warranty or representation is given in respect to its content. Accordingly no responsibility is taken by Vincents Chartered Accountants or any member, representative or affiliate of the firm, for any loss suffered by any party as a result of actions taken based on this information. To enable fully informed decisions, we recommend parties seek professional advice specific to their particular circumstances.© VINCENTS Chartered Accountants Liability limited by a scheme approved under Professional Standards Legislation other than for acts or omissions of financial services licensees.
  3. 3. Who am I? Steven Roberts Supervisor at Vincents Chartered Accountants 10 years in Business Services R & D Tax Incentive Specialist Innovation and Commercialisation Grantsforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 3
  4. 4. Which Structure - A key decision! Business or a Hobby? One size does not fit all Which legal structure Pro’s and Con’s of each entity Change with growth Flexibleforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 4
  5. 5. Considerations Control Asset Protection & Liability Commercialisation Funding Tax Access to Government Grants Costforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 5
  6. 6. Considerations - Control Who control’s the entity Through growth and adding investors Responsibilitiesforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 6
  7. 7. Considerations – Asset Protection & Liability Personal Assets Family Assets Personal Liability Structure Protection vs. Responsibilities Joint & Several Liabilityforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 7
  8. 8. Considerations – Commercialisation Perpetuity Family Business? Multinational? Dissolution or Exit Changing Structure Short vs. Long Termforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 8
  9. 9. Considerations – Funding Initial investment External investors Passive, Active and Silent investors Grants Balance work needed to prove concept vs. what needs to be done to attract investors Combination of entities to achieve funding outcomeforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 9
  10. 10. Considerations - Tax Tax Rates Losses Distribution of Profits Capital Gains Tax GST Hobbies/Non-Commercial Lossforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 10
  11. 11. Considerations – Access to Government Grants R & D Tax Incentive Local Government Grants State Government Grants Federal Government Grantsforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 11
  12. 12. Considerations - Cost Setup On-going costs Reporting Requirements Registrations Cost of getting it wrongforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 12
  13. 13. Common Entities Sole Trader Partnership Company Trustsforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 13
  14. 14. Sole Traderforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 14
  15. 15. Sole Trader Control 100% Asset Protection Zero asset protection and 100% liability Commercialisation Business ceases with the sole trader Funding Very difficult = interest costs Tax Difficult to tax plan, marginal tax rates, losses, CGT Government No R&D, limited access Government grants Grants Cost Simple and cheap to setup and maintainforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 15
  16. 16. Partnershipforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 16
  17. 17. Partnership Control Shared amongst partners Asset Protection Zero asset protection and % liability – not separate legal entity Commercialisation Partnership ceases with entry or exit of partner Funding Difficult Tax Difficult to tax plan, marginal tax rates, losses, CGT Government No R&D, limited access Government grants Grants Cost Simple and cheap to setup and maintainforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 17
  18. 18. Companyforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 18
  19. 19. Company Control Ultimately shareholders. Day-to-day directors (Fiduciary duties). Same person may be both, make sure you know what hat you have on. 75% vs. 50% decisions. Asset Protection Maximum – separate legal entity Commercialisation Easy with issuing shares and classes of shares, perpetual Funding Simple, need to adhere to corporations act (unsophisticated investors). Tax 30% tax rate, losses, CGT discount, franking credits Government Access to R&D, access to Government grants Grants Cost Reasonably expensiveforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 19
  20. 20. Trustsforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 20
  21. 21. Trusts Control Ultimately appointer. Day-to-day trustee Asset Protection Limited to assets of trustee Commercialisation Family orientated Funding Difficult due to discretionary distribution of profits Be aware of outstanding loans (incl UPE) Tax Split income, tax rates of beneficiaries, losses, CGT, traps to distribute income (flow through vehicle) Government No access to R&D, limited access to Government grants Grants Cost Reasonably expensiveforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 21
  22. 22. Other Entities/Variations Partnership of Trust’s Pty Ltd vs. Ltd Companies Joint Ventures Discretionary Trust Unit Trust or Hybrid Trustsforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 22
  23. 23. Things that can go wrong Appreciating assets in company Family trust with external beneficiaries Timing – expenditure as sole trader IP in separate entity Continuous partnership dissolutions and reformation Individual trusteeforensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 23
  24. 24. Steven Roberts – Supervisor sroberts@vincents.com.au Direct Line: 07 3228 4068forensic accounting | forensic technology | insolvency & reconstruction | audit & corporate advisory | taxation & business solutions | financial advisory | recruitment solutions © VINCENTS 24

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