Family businesses have a way of evolving quietly in the background. What starts as a simple operation can grow into something much bigger, while the business structure stays exactly the same, and that’s where things can get tricky.
A structure that worked perfectly five years ago might not be doing your business (or your family) any favours today. The good news? Early in the year is a smart time to review it, because structural changes often take effect from 1 July, which gives you plenty of time to plan and prepare.
If you’re running a family business, here are four things worth checking to make sure your structure is still working for you.
1. Your business has outgrown its original structure
When you first set up your business, a simple sole trader or partnership structure might have been perfect, but as revenue grows, staff come on board, and assets accumulate, those same structures can start to feel constraining – or worse, risky.
Why this matters: Companies and trusts offer better asset protection and tax planning opportunities. Outgrowing your structure without updating it can mean paying more tax than necessary and leaving your personal assets exposed.
2. Your profit distribution strategy isn’t as tax-efficient as it could be
Tax rules change and family circumstances change. If you haven’t reviewed how profits are distributed in a while, there’s a good chance you’re missing opportunities to minimise tax across the family group.
Why this matters: A well-planned distribution strategy can make a significant difference to your family’s after-tax income. If your current setup isn’t flexible enough to adapt to changing circumstances, it might be costing you.
3. Asset protection isn’t keeping up with your family’s needs
As a business grows, so do the risks. When it comes to legal claims, creditor issues, or relationship breakdowns, the right structure can help protect what you’ve built – not just for you, but for the next generation too.
Why this matters: Without proper asset protection in place, your family’s wealth could be at risk. Trusts and companies can create a buffer between business liabilities and personal assets, but only if they’re set up correctly.
4. The next generation is ready to step in
Bringing kids or other family members into the business is exciting, but it needs to be done thoughtfully. If they’re taking on a working role, becoming beneficiaries, or eventually taking over, your structure needs to reflect these changes.
Why this matters: Getting succession planning right from a structural perspective can save your family from tax headaches, disputes, and complications down the track. It’s about setting everyone up for success!
Ready to take a closer look?
It’s time to make sure your family buiness structure is still fit for purpose. Sometimes it’s just a matter of fine-tuning, and other times, a bigger change makes more sense.
Focus on these four areas – making sure your structure matches your growth, maximising tax efficiency, protecting your assets, and planning for the next generation, so you know you’re setting yourself and your family up for success.
If you need help reviewing your numbers or putting this plan into motion, we’re here to help and make sure your family business structure is right for you.
rebecca@kaleidoscopeaccounting.com.au | 0417 859 700
