How Good Is Your Business Structure? A Survey of Australian SME Advisors

Abstract

There are a variety of business structures that might be recommended to a client, all with different advantages and disadvantages. This article reports the evaluation by Australian advisors about their own recommended business structure for small and medium enterprises (SME). In other related research it was demonstrated across a variety of SME scenarios that there were four main business structures recommended, being a trading company with shares held by a discretionary trust, a trading discretionary trust with a corporate trustee, a tax consolidated group with shares held by a discretionary trust, or a company. After recommending a business structure for their hypothetical clients, advisors were then surveyed to evaluate their recommended structure against a matrix of factors considered important for SMEs. The analysis of this evaluation provides unique insights into the strengths and weaknesses of the structures recommended and advances our understanding as to when such structures might be appropriate.

Keywords: business structure, small and medium enterprises, trading company, trading trust; discretionary trust, tax consolidated group

JEL Classification: K34, I23, M40, I24