top of page

Business Structures

Your business structure can affect how your business grows and how easily you can sell your business. Each structure has different legal and financial obligations. Below we summarise some of the common advantages and disadvantages. Always seek specialist advice that is tailored to your situation and risks.



  • Limits your personal exposure to commercial risk, i.e. as a shareholder, your liability is limited to the amount you paid for your shares. In an insolvency situation, your shareholder advance account may be foregone too.

  • Currently, the company tax rate is lower than the top personal rates.

  • When it comes to selling the business, you have two options, not one, you can sell the business or sell the company with the business.

  • The business can grow indefinitely – it’s not tied to one person.

  • Often seen as more credible than sole traders and partnerships and provides the opportunity to continue beyond the initial creator.

  • Allows you to raise funds from investors by issuing or selling shares to them.


  • Directors need to understand their legislated responsibilities.

  • In practice, a company's limited liability is often compromised as a result of shareholders personally guaranteeing the company’s loans and debts, including property leases.

  • The powers of directors and shareholders are restricted by the shareholders’ agreement, constitution, and legislation.



  • Protect selected assets against claims and creditors, but only to the extent that there is no advance within the trust which is owed back to you – for example, to protect a family home from the potential failure of a business venture.

  • Customising and controlling how your wealth is distributed.

  • Ensure your children, not their partners, keep their inheritances, and address family dynamics; for example, divorce or blended families.

  • Helping a parent or other relative manage their financial affairs.

  • Manage the risk of unwanted claims on our estate when we die – such as from a former partner.

  • Provides more privacy than a company.

  • There can be flexibility in distributions among beneficiaries and whether they are taxable or not.


  • The ongoing disclosure and maintenance responsibilities are now legislated.

  • If assets are held in your personal name, there’s no obligation to tell your children or family anything about them, but when assets are in a trust, the trustees have disclosure obligations to the beneficiaries.

  • When placing assets into a trust, those assets become trust assets. Hence, you lose control of those assets.

  • There is no guarantee that a trust structure will result in tax savings.

  • Research indicates problems can be encountered when borrowing due to additional complexities of loan structures (talk to your bank to understand if this is a reality for you).

  • The powers of trustees are restricted by the trust deed and recent legislation.


bottom of page