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Company Business Structure

If you’re involved in the world of business, you may have asked ‘what is a company business structure?’. A company business structure is a legally-recognised format of a business that features a rigid set of requirements. It is different from a sole trader, partnership, or family trust arrangement.

The characteristics of a company business structure include:

  • More rigidity and regulation
  • All money taken out of business is a wage, dividend, or loan
  • Flat rate of tax

There are opportunities within the company business structure to pay less tax while still meeting your financial obligations. Clear Tax works with individuals to help them restructure their enterprises into companies to achieve this.

Lower liability

A company is its own legal entity, so the liability of owners or members is limited to that entity. This means that you and other business owners will not be personally liable for the debts of the company, in certain circumstances.

Better governance

When restructuring to a company structure, you can decide on internal company governance yourself. This allows you greater control over the company’s replaceable rules, its constitution, or a combination of both. This enables flexible business expansion.

Concession and incentives

Where sole traders and partnerships often pay more, companies can benefit from paying a flat tax rate of 25%. There are a range of government grants and incentives available to companies that aren’t available to other structures.

Clear Tax

Business Plans For Company Structure

Restructuring from a sole trader or partnership business structure does not happen overnight. It requires meticulous planning to ensure that all setup, systemising, and growth is actioned in the most effective and efficient way. 

At Clear Tax, our tax planning experts work with businesses and individuals to create an effective company business structure that helps them pay less tax while remaining compliant with tax regulations.

Our goal is to help you meet your business goals without putting you in any risk. That’s why we always promise to act ethically, and advise you on the best course of action within the boundaries of the law.

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Example Of A Company Business Structure

Entities are usually restructured to companies in the event of growth. For example, Carla is a florist working for herself out of a small flower farm and shop front. Business is booming for Carla, and she is hoping to expand by buying a new farm and hiring new staff.

Expansion requires risk. By restructuring to a company, Carla limits her liability and protects her own assets when purchasing a new farm. She can also add shareholders, investors, and co-owners, if she chooses to. She can also sell her company with little hassle, when the time comes.

Carla can also access government support. There are dozens of grants available for sustainable companies, and there is even an R&D incentive with a refundable tax offset of 48.5%. With all of these elements, Carla can grow her business with stability and confidence.

Frequently Asked Questions

About Companies
Below are answers to some of the most common company business structure questions our accountants get asked.
  • How can I change my business structure from a partnership to a company?

    Under federal Australian law, partnerships cannot be transferred directly to a company. The partnership must first be dissolved then set up and registered as a new company.

  • What are the advantages and disadvantages of a company business structure?

    There are many advantages to a company business structure. A company structure enables expansion while decreasing liability over an unlimited lifespan. There are well-defined incentives, including a 25% tax rate that is capped.

    There are also some disadvantages. Companies incur higher set-up and ongoing costs, with more limited tax concessions. Their management also requires a higher level of engagement and understanding, plus greater regulatory compliance.

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