I have had two conversations this week with existing entities who were wanting to change their company structure. In both cases, they didn’t
know where to start.
Compare the pear (pair): One asked for advice, the other did it themselves and didn’t tell their accountant or business
advisor for 6 months. Have a guess which one had smooth sailing.
Change is always hard but if you are fore-warned and prepared, life becomes easier. This made think that it was high time to hand out some quick tips to help you navigate through this process.
Let's start with a quick rundown of the types of business structures you can choose from in Australia. There are four main types of structures: sole trader, partnership, company, and trust. Each structure has its own unique features and benefits, and the one you choose will depend on your specific circumstances and needs.
Now, let's get into who you need to speak to if you want to change your company structure. Firstly, before you change anything, you should speak to your trusted business advisor or accountant. It falls right into their wheelhouse to help you decide what structure is right for your business. They can help you assess your needs and provide advice on the best structure for your circumstances including your tax situation and liability.
Apart from that, if you're thinking of changing from a sole trader or partnership to a company, or from one type of company to another (e.g., from a proprietary limited company to a public company), you'll need to speak to the Australian Securities and Investments Commission (ASIC). ASIC is the government agency responsible for regulating companies, financial markets, and financial services in Australia.
ASIC has an online portal called ASIC Connect where you can apply for changes to your company structure. You'll need to create an account and then follow the prompts to lodge your application. You'll also need to pay a fee, which will vary depending on the type of change you're making.
If you're thinking of changing from a trust to a company, you'll need to speak to both ASIC and the Australian Taxation Office (ATO). To change from a trust to a company, you'll first need to set up the company with ASIC. Then, you'll need to transfer the assets and liabilities of the trust to the company. This is where the ATO comes in. You'll need to apply for a tax exemption for the transfer of assets and liabilities, which will be subject to certain conditions. But again, pay a visit to your trusty accountant for more detailed assistance to manage this big change.
So, there you have it, dudes! A quick rundown of who to speak to if you want to change your company structure in Australia. Remember, it's important to do your research and seek professional advice before making any changes.
Good luck and please be the prepared pear!
