Article by Eamonn Lanagan Byfields Director
The early months of the year are a key time for planning, not just for the coming season but to set your business up for long term success. Hopefully you have got away from the farm, had a good break, cleared your head and are ready to have another great year. We often see clients at this time of year considering how best to invest for the future of their business and their family.
The quality of advice on these investments varies wildly, from holiday destination real estate agents who love to see country number plates at a home open to stock tips shared over a few too many drinks or preferably a visit with a financial planner. However, ensuring you get the structuring of your investment right for your circumstances can potentially have a greater effect on cash received than the percentage of annual return and capital growth.
The correct structure will depend on your trading entity, how you are funding the investment, the expected returns/growth and your long term plans. Furthermore, it is integral to have your business structured in the most effective manner, you already have the risk of the investment, why add in the risk of the investment being taken in a claim because you are poorly structured. This is why it is fundamental to discuss your plans with your accountant, well before you are signing up any investment.
Each structure has its pros and cons depending on your personal and business circumstances. For example, buying a house in individual names is good if it is going to be your main residence or it is going to be a negatively geared rental but is likely to have a large tax and duty burden if it will be transferred as part of succession. Alternatively purchasing high dividend yield shares in company can allow the dividends to net off any company tax, reinvest and keep growing without adding to individual tax burdens.
We must also watch and consider the suggested changes to the Capital Gains Tax discounts, which will have significant impact in some entities and none in others.
At Byfields we are so much more than just tax compliance, we care for our clients and want to help them achieve the best long-term results personally, for their family and in business. We would love to discuss your circumstances, plans and structures. Please contact your local Byfields Accountant today. Contact Us - Byfields