Things to consider when restructuring
Here are some key questions to ask yourself before changing your business structure:
Why are you changing your business structure?
Having a good understanding of why you are restructuring is important to ensure the new structure meets your business needs.
What kind of structure are you changing to?
Consider the pros and cons of each structure, and decide on a business structure that best suits your business and situation.
Do you have a business plan for your new structure?
For example, you may have purchased an existing business or are expanding your current one. You need to ensure your business plan reflects the new or proposed structure, and outlines the goals and objectives of your business.
Do you need to apply for a new ABN?
Most changes to your business structure will require a new Australian Business Number (ABN). Visit the Australian Business Register website to find out more.
Do you need a new business name or trademark?
Have you looked over your partnership agreement or corporate governance structure, or do you need to create one?
If you are adding stakeholders to your business, for example going from a sole trader to a partnership or company, it needs to be clear to everyone what the terms and conditions are, such as percentage of ownership, decision making, liability, responsibilities etc.
What other agreements do you need to have in place?
There may be other agreements you will need to look over in preparation for your business structure change. This is particularly important in the case of companies and trusts. Contact your accountant or visit Advisory Services if you are unsure.
Are there any changes to your tax obligations?
A change of business structure may affect the tax you have to pay or how you report your tax. Visit the Australian Taxation Office (ATO)'s Choosing your business structure page to learn more about how business structure affects your tax.
Do you know what you need to transfer?
For example, it's important to note that when you are part of a partnership, the partnership is not a legal entity in itself. If you wish to change structures and keep running the business as a sole trader, you will need to transfer the business name to yourself and apply for a new ABN for your business.
Notify the relevant agencies
You need to ensure that your registration details are up to date, as certain changes may affect your tax and other regulatory obligations. If you wish to change your business structure, your legal or trading name or your contact details, you will need to inform the relevant agencies in your state or territory.
What to do…
- Visit our Registrations topic for information on which agencies to contact with your changes.
- Visit the Choosing your business structure page on the ATO website for more information on how a change in business structure can affect your tax obligations.
- Read about Applying the small business restructure rollover on the ATO website for more information for small businesses about transferring assets when you change your business structure.
- Contact the Australian Securities and Investments Commission if you wish to form a company.
- Contact IP Australia before you change your logo or update your registered trade marks. Phone IP Australia on 1300 651 010 for further information.
- Review your corporate governance structure when making changes to your business structure.
- Consult a business adviser, accountant or solicitor for advice.