Ownership structures

Many business owners assume that ownership and management of their companies are irrevocably tied together. But that need not be the case, or the best option. A company should not be your alter ego. As an owner/manager you need to wear two hats. The trick is to always know which one you’re wearing.

All businesses move through life cycles. In the early stages it’s common for the owner or owners to assume that a limited liability company structure is all that’s required to protect their assets. But even in the start-up phase there are other ownership structures that should be considered both from an asset protection point of view and a tax efficiency perspective. Shifting ownership from an individual to a trust for example can offer long-term protection of assets and maybe give some tax advantages.

As your company moves through its life cycle there may be other good reasons to change the way you structure ownership. For example there may be times when you may want to secure key staff by offering them shares in the company. This could be a start up or the more mature phase of a company. Should you acquire other companies, or wish to sell off parts of your business, alternative ownership structures may be required to facilitate this. As you approach retirement age your exit strategy may change ownership priorities again.