In order to properly determine the taxation requirements of a business, it is essential that the legal structure on acquisition or establishment is the result of vigorous and thorough decision making. As there are a range of structures for a business (including sole proprietor; partnership; company; and unit or discretionary trust), it is fundamental that any business structures itself according to its characteristics so that the desired outcomes are achieved. A combination of these entities is used in the structure of many small to medium businesses. A poorly structured business, on the other hand, faces the risk of losses, negative impacts and regular corrective actions which are expensive and time consuming.

To ensure that the ideal result is achieved, there are a number of taxation factors that need to be considered when acquiring or starting a business:

• taxation and flexibility of profit allocations;
• minimising the legal threats including asset protection;
• employment and superannuation arrangements for the principals;
• ease of entry and exit of equity participants; and
• outcomes on sale of the business, critically, access to the small business capital gains tax concessions.