Here we go again, our business structure series is back! Last month I touched on partnerships and today I’m going to walk through another business structure known as a trust.
A trust is known as one of the more expensive and complicated businesses to set up. They operate under a trustee, who carries out the business on behalf of other trust members or beneficiaries. Trustees can be a person or company and hold many responsibilities, including incomes and losses, and oversee distributing business profits.
With many parties and assets involved, this type of structure often recommends involving a professional to help with all registrations and setups.
Now that you know a bit about a trust, let’s go through the pros and cons…
• Assets are protected
• Flexible for tax reasons
• Beneficiaries are not liable for debts
• Beneficiaries pay tax on own trust income at own rates
• Complex legal structure
• Difficult to make changes once established
• Expensive and time-consuming to set up
• Formal administrative tasks required for the trustee
• A formal trust deed is needed
As always, it is best to consider your own personal situation and contact myself or another business professional before making any permanent decisions regarding your business structure.
Want to learn more about the trust business structure? Contact IM Business Solutions in Perth today!