Are you operating under the right business structure for your farming business?
Over the past couple of years, we’ve had farming businesses from across the region come to us with a structure that doesn’t suit their individual circumstances.
Unfortunately, this isn’t an uncommon occurrence. Too many farming businesses are operating under a structure that doesn’t offer them risk protection and future opportunities.
Each structure has its own benefits and downfalls, and the structure which suits your business needs may be different from the farmer next door. Choosing the right structure is never easy, as ultimately the decision you make will impact all areas of your operations and succession planning.
My biggest tip is to try and step back and take a look at the bigger picture. What is your purpose for being in business?
Whether it’s to keep the farm in the family for generations to come, or to grow the farm to support your children and their families in the future, or perhaps you have a different vision altogether, your business structure will ultimately impact your success.
Your business structure should address the following:
- Risk - every business has risk. It’s vital to choose a business structure that eliminates risk to yourself and your family.
- Asset protection - how can you structure your farming business to protect the assets you’ve worked to hard to build up over the years?
- Tax planning and flexibility - does your business structure allow for your children to come into the business with ease, and for you to distribute profits?
When it comes to business structures there are a range of options. The most common structures in Australia include sole trader, partnership, company and family (discretionary) trust. The structure that suits you will depend upon a number of factors, but most importantly, what your end-goal is.
Do you have a niggling feeling you may not be operating under the best structure to suit your needs? Book in a FREE consultation (for businesses who are not currently clients of Smith Shearer), or contact us to discuss your concerns.
