Home – New › Forums › Starting your journey › Family Trust for startup selling product, seeking investment etc. › Reply To: Family Trust for startup selling product, seeking investment etc.
- Total posts: 4
Thanks for your replies Nick and Wayne, and thank you Dave for the welcome message.
Is my understanding correct that with a trading Discretionary Trust (having a non-trading company trustee) the trustee has to distribute ALL profits to the beneficiaries, so basically the business cannot save part of the profits to reinvest in the business or use those funds at a later stage for growth/expansion? If that’s the case, then how do such structures even grow/reinvest in their business, or do they just pay for necessary business expenses & salaries during the year and pass along all remaining profits to the beneficiaries at the end of the year, without saving any profits to build capital for the business itself (because any unpaid profit will otherwise be taxed at the highest tax rate)? Restarting with a zero balance each financial year seems daunting as/for a business.
I’m starting to feel that having a company with a trust as a majority or minority shareholder is a better option if one want’s to preserve some of the profits to gradually grow the business and also seek investment down the line.