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  • #988596
    SMelbourne
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    Hello everyone

    I do business consulting and will be looking to formalize a business structure. So far I have only spoken to one accountant and one lawyer.

    My annual net income could be in excess of $150K. My wife does not work and we have several kids under 6. I would like to grow the business by putting on staff.

    BUSINESS STRUCTURE OBJECTIVE:
    – minimize tax legally and/or
    – better use of net income
    – property (asset/income) protection

    ACCOUNTANT (setup 2k approx)
    – Setup trading company ABC Consulting Pty Ltd
    – Setup Discretionary Trust with ABC Consulting as Corporate Trustee
    – Beneficiaries – my family
    – Setup if need be Bucket Company

    LAWYER (setup 2.5-3k approx)
    – Setup trust first
    – Setup company for corporate trustee (Company 1)
    – Setup ABC Consulting Pty Ltd (Company 2)
    – Company 1 (Appointer is myself)
    – Company 2 (Director is myself)
    – Company 2 Shareholders = Company 1
    – Beneficiaries – My Family

    1) Which setup would work better in my case? Is there an alternative that may be more appropriate?

    2) Setup cost could be $2-3K. What would I expect as an ongoing annual cost roughly to maintain the setup?

    3) Would like to hear any thoughts, ideas, suggestions or experiences.

    4) Happy to hear alternative Accountant / Lawyer advise as I still need to formalize the structure.

    Many thanks to all and look forward to reading your input.

    #1168009
    Peter – FS Administrator
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    Hi there and welcome to Flying Solo – thanks for joining!

    Sorry your post got caught up in moderation overnight.

    Congrat on the progress, quite a lot to think about! I’m sure a few of the experts around here might have some input.

    Cheers
    Peter

    #1168010
    SMelbourne
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    .. guess I am flying solo =/

    #1168011
    Peter – FS Administrator
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    SMelbourne, post: 194688 wrote:
    .. guess I am flying solo =/

    Ha! Weekends can be a little quieter around the place so may be some ideas to come. Possibly it’s tricky to advise without knowing the specifics.

    Stay tuned :)

    #1168012
    SMelbourne
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    ..hmm must be public Monday holiday today too or something

    Not a single Kamikaze in the sky ^^

    Not a single message in a bottle either below..

    “Lonely.. I feel so lonely.. I have nobody da da da da”

    #1168013
    PRO
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    Lawyer structure looks good. Price is a bit high though. You should be able to get something like that for around the $1500 inc GST and ASIC fees

    #1168014
    SMelbourne
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    PRO, post: 194838 wrote:
    Lawyer structure looks good. Price is a bit high though. You should be able to get something like that for around the $1500 inc GST and ASIC fees

    Could you expand the lawyer side please as you may hit some notes I have not considered that will assist me? Thanks!

    #1168015
    PRO
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    I made the assumption with your constulting that you create some level of intellectual property that is not the company’s that you are consulting to.

    I would actually go one further and have another trust again, as your wife doesn’t work you don’t want to be paying 30c in the dollar tax from the 1st dollar.

    If you don’t create IP then the accountant’s structure is better.

    #1168016
    SMelbourne
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    PRO, post: 194868 wrote:
    I made the assumption with your constulting that you create some level of intellectual property that is not the company’s that you are consulting to.

    I would actually go one further and have another trust again, as your wife doesn’t work you don’t want to be paying 30c in the dollar tax from the 1st dollar.

    If you don’t create IP then the accountant’s structure is better.

    To assist so that i can better understand..

    What are the main benefits for Lawyer Option?

    #1168017
    PRO
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    If you create Intellectual Property, you assign the IP to the IP entity. This then licenses it to the trading entity. This separates the risk of trading from the asset of IP. Very prudent way to operate.

    #1168018
    SMelbourne
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    PRO, post: 194872 wrote:
    If you create Intellectual Property, you assign the IP to the IP entity. This then licenses it to the trading entity. This separates the risk of trading from the asset of IP. Very prudent way to operate.

    IP.. not sure if I can or will in the process, but out of curiosity, what is an IP entity and by Trading Company is this the same as the operating company that will be forming?

    #1168019
    PRO
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    The actual structures are the same.

    THE IP entity owns all the intellectual property created.

    The trading entity licenses the IP from the IP entity.

    In an ideal world, trading entities always have zero assets and the business they run is based on licenses they hold with separate entities that own the IP or other Assets. That way if the trading entity gets into trouble, the Licensor can cancel the licence and assign the license to another entity.

    #1168020
    SMelbourne
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    PRO, post: 194965 wrote:
    The actual structures are the same.

    THE IP entity owns all the intellectual property created.

    The trading entity licenses the IP from the IP entity.

    In an ideal world, trading entities always have zero assets and the business they run is based on licenses they hold with separate entities that own the IP or other Assets. That way if the trading entity gets into trouble, the Licensor can cancel the licence and assign the license to another entity.

    Thank you Pro for the insight

    So my normal sales business will be incorporated ie IP Company

    I would then form a Corporate Trustee which has 100% share in the IP Company?

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