What is the best way to structure my medical business?
We are regularly asked this question by our clients, and our standard response is that it depends on a range of personal and business circumstances and objectives.
Whilst several different legal entities are familiar to our clients, such as partnerships or companies – others involving hybrid trusts, self-managed superannuation funds are less familiar, but can be highly effective in minimising the exposure of personal assets (e.g. the family home) or business assets (e.g. trade marks) to the risks associated with operating a medical business.
We can setup a variety of business structures for clients. In some cases, this involves utilising a combination of legal entities (e.g. hybrid trusts, family trusts and companies) together with tailored contractual arrangements (e.g. service agreements, equity holders agreements and shareholders agreements) to achieve the objectives of the medical business.
One of the principal aims when designing any business structure is to minimise the exposure of the client and the medical business to unnecessary risk. Other important considerations include:
- the cost of establishing and administering the business structure
- how business income will be distributed and taxed
- the application of tax concessions (for example, tax deductions, CGT discounts, tax losses)
- the capacity to borrow and attract capital investment
- the level of exposure to debts and liabilities
- the ability to transfer ownership
- protection against insolvency
Each business structure will have several advantages and disadvantages. We carefully consider the various options with our clients in close consultation with their accountants and business advisors. We review the implications, both in terms of the medical business, but more importantly, the personal circumstances of our clients, their families and their existing financial plans and strategies.
As part of this review, it may be necessary to restructure how certain assets are held by our clients (e.g. the family home, investment properties, or shares), or to review the arrangements that are in place in the event of a marriage breakdown (e.g. a prenuptial agreement), or the death or disability of a client or family member (e.g. income protection insurance or testamentary trust will).
If you are considering establishing a medical business, it is important that you determine the right structure from the beginning. If you are currently operating a medical business, we can review your current business structure and advise you on how to minimise your legal exposure. Finally, we recommend to all our clients that they seek our advice from the start of negotiations when buying into, merging or exiting a medical business to avoid unnecessary costs and delay.
We’re here to help.
Level 3, 1 Palmerston Crescent
South Melbourne, VIC 3205, Australia