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  • #987194
    airzone
    Member
    • Total posts: 2
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    Hi Guys,

    A partner and I are going to have a crack at setting up an independent software company.. The product will be something we have designed and written ourselves and the target market are other businesses both in Australia and internationally. It’s along the lines of business productivity enhancements.

    My background is in IT and the partner is in business operations, so that gives us a good IT vs business knowledge split and combined with the circumstances around the market, we will be at least modestly successful and cover our initial investment.

    However we are trying to organise a suitable business structure. We are intending to incorporate a trust into the structure so that we can disburse profit according to our unit split and manage the taxation of that in a smart way. We are also looking to have a corporate trustee for which we are both directors and that way provide some personal protection while splitting accountability.

    However from the customer facing side, we have heard advice for and against having a trading company, or just trading as a trust. And to be honest, we are a little confused on this.

    i.e.

    Company ABC pty ltd would trade on behalf of trust XYZ (with the trust owning the IP, licenses, and very little physical assets). Company XYZ Pty Ltd would be trustee.

    vs

    Trust XYZ will trade directly on it’s assets with Company XYZ being the trustee.

    What’s the general consensus on these different business structures?

    edit: We have also heard conflicting information on who should set it up… Accountant vs lawyer. Any thoughts? I’m sure both base the documents on their existing templates.

    Regards Mick

    #1161547
    Dave Gillen – Former FS Concierge
    Keymaster
    • Total posts: 2,566
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    Hi Mick,

    Hopefully some of our local experts can shed some light on this issue for you.

    In the meantime, a big welcome to the forums and best of luck with your new venture. We’d love to stay updated with how it goes. :)

    Dave

    #1161548
    airzone
    Member
    • Total posts: 2
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    FS Forum Support, post: 186706 wrote:
    Hi Mick,

    Hopefully some of our local experts can shed some light on this issue for you.

    In the meantime, a big welcome to the forums and best of luck with your new venture. We’d love to stay updated with how it goes. :)

    Dave

    Thanks… I’ve been trolling this forum for a little while and have just now plucked up the nerve to ask :) Hopefully in the future I can be in a position to contribute to other members, but at the moment I’m a total newbie.

    #1161549
    James Millar
    Participant
    • Total posts: 1,739
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    airzone, post: 186697 wrote:
    Hi Guys,

    A partner and I are going to have a crack at setting up an independent software company.. The product will be something we have designed and written ourselves and the target market are other businesses both in Australia and internationally. It’s along the lines of business productivity enhancements.

    My background is in IT and the partner is in business operations, so that gives us a good IT vs business knowledge split and combined with the circumstances around the market, we will be at least modestly successful and cover our initial investment.

    However we are trying to organise a suitable business structure. We are intending to incorporate a trust into the structure so that we can disburse profit according to our unit split and manage the taxation of that in a smart way. We are also looking to have a corporate trustee for which we are both directors and that way provide some personal protection while splitting accountability.

    However from the customer facing side, we have heard advice for and against having a trading company, or just trading as a trust. And to be honest, we are a little confused on this.

    i.e.

    Company ABC pty ltd would trade on behalf of trust XYZ (with the trust owning the IP, licenses, and very little physical assets). Company XYZ Pty Ltd would be trustee.

    vs

    Trust XYZ will trade directly on it’s assets with Company XYZ being the trustee.

    What’s the general consensus on these different business structures?

    edit: We have also heard conflicting information on who should set it up… Accountant vs lawyer. Any thoughts? I’m sure both base the documents on their existing templates.

    Regards Mick

    Hi Mick

    Given the nature of the tech industry I suspect having a company as the trading entity would provide some benefits. They are better suited to ownership groups that included unrelated third parties (and they are goverened by the Corporations Act which gives comfort to those you will transact with).

    The majority of the structural decision issues will come down to tax planning and associated tax benefits and these are not typically the domain of commercial lawyers (If you find a law firm with specialist tax partners that’s a different story).

    So your first stop is probably your accountant (provided they are proficient in complex tax planning matters). Don’t go the DIY route. There is a very high probability it will cost you a lot more in the long run. Spend some money and get it right.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1161550
    MissSassy
    Member
    • Total posts: 1,255
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    Speak to an accountant that can take all your financial circumstances into account, this will be the best way forward.

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