Build a business built to last. Cash Rich Business tip #2 - Get your structure right!
Pick any business structure you like to launch your small business, it makes no difference at all in the very, very short term… and then suddenly… the pain. The type of pain that can really hurt you and your family because it will hurt your business right in the coffers.
The Cash Rich Business workshop on June 2 and 15, will guide you away from the pain that will come from setting up your business under the wrong structure.
It’s all on you and yours! But it doesn’t have to be
Often people who are taking up the opportunity to create their own future via small business ownership are baited into sole tradership by the lure of low set up costs and simplicity itself. They don’t realise at the time that the trade-off is that they become the business. Which also means they take on any and all liability associated with the big wins and telling losses that are often part and parcel of running a business.
To be clear, the business’s income is your income and that means the potentially sizeable tax impost is your responsibility too. Instead of paying the tax rate you’ve become accustomed to, brace yourself for a tax bill hovering somewhere around the 49% mark depending on the figures. Ouch!
What’s more, sometimes people make mistakes, things are misinterpreted and clients can feel like they need to be compensated. Not only does this mess fall into your lap but your personal assets can come into play from a compensatory perspective. Not good – in fact it’s bad.
In many cases, the same can be said for partnership structures. With the right safeguards under ideal circumstances, with people you would trust with your very life no matter what – perhaps a partnership structure could work. But again, personal assets can come into play if things go awry.
Running and benefiting from a cash rich business negates much of the downside and protects you from a range of difficult circumstances. Importantly, a cash rich business is most often the business that was built, established and now runs with a structure suited to:
Minimising tax so that those funds (sometimes tens of thousands of dollars) can be reinvested back into the business and/or your family
Protecting your assets so that what’s yours remains yours for you and your family to benefit from – even during times of difficulty within your small business
Maximising cash flow allowing you, your business and your relationships to flourish, thanks to less pressure, more opportunity and freedom to live life.
Operating your small business under the structure that works for you, starts with knowing and understanding your options. At Inspire, we are 100% committed to doing all we can to ensure you derive the best lifestyle for you and yours from your business. That’s why we delight in educating, sharing and working with clients on achieving these goals.
The Cash Rich Business workshop is a big part of this effort and we hope you can join us.