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Advice is good except any of it the refers to talking to an accountant about legal structures, legal issues and anything else of a legal nature that isnt purely of a tax or financial nature. Accountants are not legally allowed to advice about such things, their insurance will not cover it, if they do provide information such information they are breaking the law. Legal practice is highly regulated and there are stiff penalties.

CindyK, post: 146957 wrote:
Hi Jeffery,

I would strongly suggest (and by this I mean around 1 million %) that you find a qualified Tax Agent Accountant to discuss the situation with. Here are the reasons:

    The different company and business structures are complex and varied. Setting up the wrong structure does damage not only to the business but to the Directors personally.
    If your friend is currently a sole-trader, you are completely changing the structure of his operation. That is not always a good thing for a business, it is very much suited to the person, their way of life etc. It will impact his earnings, accounting around that. It will also impact the legal status of the business and it will then have legal responsibilities it did not before.
    The Building and Construction Industry, in the eyes of the ATO, is being heavily re-vamped at the moment. We are in the beginning phase of a much stricter set of compliance rules looking at weeding out contractors who don’t declare earnings (ie. cash economy). These began on 1 July 2012 and will affect your friend’s business from this year. Before getting involved you need to find out the level of compliance now required and your own liability.
    Lastly, going into business with friends and family can be a minefield. It can work beautifully or turn true friendship into a burnt dinner. And generally their isn’t alot to predict the outcome. You haven’t indicated if he is willing or what type of written agreement will cover all the bits and pieces. If he began building it, is he ready to see someone else take it over? Are you willing to take a back seat to his decisions if it’s his business?

The last is a personal issue, but the legal liability in regard to the business and its taxation compliance (which at this point sounds non-compliant) should only be assessed by a qualified professional and in this case, with the super new legislation, will only be a Tax Agent Accountant.

Ideally if you could get all those ducks in a row, it sounds like it might be the perfect partnership.