Taking over family business

We are thinking of taking over the family business.

Are there any special rules we should be aware of/utilise for setting up the accounting structure of the business? Or do the exact same rules apply as if we were buying the business from strangers?

Thanks.

 

Legal structure?
Yes plenty to consider.
You would want to minimise tax on the transfer for parents, maximise tax flexibility for yourselves, consider asset protection, ability to add 'partners' in the future, etc.

An example may be setting up a company to purchase off parents at full market value with shares of company owned by discretionary trust. There may be additional trusts used hold assets used in the business another for intellectual property etc. Company purchasing should consider borrowing 100%.

Seek legal advice well in advance.

 

There are no specific rules that relate to a purchase by associated parties, however from a capital gains tax point of view market value must be used as the basis of the transaction.

This is very important as it will determine the at base cost for the future. As businesses can be valued different ways it would be valuable to involved a specialist to ensure you can prove you are paying market value.

As with the purchase of any business the structure and funding approach is critical to reduce risk, minimise tax and maximise cashflow. As Terry alluded to interest on business loans are tax deductible so you may need to restructure your affairs to ensure funding gives you the best possible outcome.

Regards
Brad Horan
Lucrature

 

Jasper what sort of business is it? Any assets other than. Goodwill?