The Benefits of Running Your Business Through a Trust

When choosing the right structure for your long-term goals, you might weigh up the benefits of a Company versus a Trust. Each has its merits and disadvantages and should be carefully considered.

Depending on your business journey – setting up a discretionary trust could save you thousands. For real. So, we wrote a blog about them.

Here’s why we think Trusts are awesome.

Why Choose a Trust Structure?

Trusts. What the heck are they and why does your business need one?

A Trust is a structure that allows a person or company to hold assets for the benefit of others. The person or company holding the trust is the ‘trustee,’ and those who benefit are ‘beneficiaries.’

We prefer Trusts over Company structures for their tax concessions, flexibility and ability to protect business and personal assets from business risks.

Who doesn’t like saving money and securing their wealth?

Check out our Trust diagram:

The Benefits of Operating Your Business Through a Trust

We love our trusts here. We really could go on forever, but here are the top benefits of running your business through a Trust:

Limits personal liability / Asset protection

Trust structures allow you to separate your wealth and assets from your business risks. They effectively protect your assets, like your house, super, cars, and investments from attacks by creditors for bad debts, losses, or legal disputes. Win, right?

There are less regulatory requirements than a company

Paperwork – who needs more of it? Trusts have less regulatory requirements than Companies. This is especially true when it comes to #payingyourself. Less regulatory requirements = less headache = more flexibility to focus on running your business.

You only pay the required amount of tax (and nothing more)

A Family Trust isn’t a taxpayer, but a Company is.

The difference:

Any profits earned by a company are taxed at .30c for every dollar.

However, any income generated by a Trust can be distributed to its beneficiaries in lower tax brackets (usually spouse and children). With a Discretionary Trust, it’s up to the Trustee how they wish to distribute the income to beneficiaries. You can essentially ‘stream’ the income each year in the most tax effective way.

Intelligent distributions = less tax = more cash. Talk to a great Accountant to learn how you could #savetax by using a trust.

It’s easier to pay yourself

While you can draw money out either a Company or a Trust the way that money is treated for tax purposes is very different depending on which structure you are using. Trusts offer more flexibility with fewer requirements than companies – so paying yourself becomes much easier and less costly. Learn more by talking to our Accountants.

 You can implement effective strategies to free up more cash!

Trusts allow you to be more strategic with your tax planning and cash flow strategies to help you meet your #bigpicture goals. In the long term, this could mean, a bigger house, the new car lease or – more money to invest in business growth. Talk to your Accountant and explore the best trust strategies for your needs.

Is a Trust the Right Business Structure for You?

Although we think Trusts are pretty awesome – they’re not for everyone. Trusts can be limiting in some situations, so before you jump in, make sure you understand how you’ll be affected personally.

Have a chat with our awesome Accountants if you’d like to learn more about Trusts and whether it’s the right structure for your personal and business needs.

A GREAT Accountant Makes This Seem a Lot Less Complex

Already got a trust? Look at you, smarty pants!

It’s important you talk to an Accountant to make sure you’re getting the most out of the tax planning strategies available to help you protect your assets and boost your cash flow.

Get in touch for an obligation-free chat today.