When should I register a Company ?

Discussion in 'Accounting & Tax' started by MyDarlinghurst, 11th Mar, 2018.

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  1. MyDarlinghurst

    MyDarlinghurst Well-Known Member

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    The last 2 Ip's I have gone 50/50 with a work colleague, we plan to borrow more cash and invest in more investment properties.

    Now he is talking about investing in business's that are run under Management,massage places, Subway stores etc

    My question is when do we form a Company ?

    Say Wong & Cohen Pty Ltd and is it any benefit to form a Company ?

    Does anyone here have a Company for their IP investment? And why
     
  2. 158

    158 Well-Known Member

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    JV partnerships can work or can be fraught with danger. You should probably see a structure lawyer like @Terry_w early in your investment partnerships. They will give you scenarios to work through in case any of the following happen and how to protect youself:

    Death
    Divorce
    Bankruptcy
    Incapacity
    Itchy sausage

    It might be too late for the first 2 properties without incurring financial penalty (like more Stamp Duty), but moving forward, getting advice is crucial.

    pinkboy
     
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  3. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    before you start any business venture you should consider setting up a company.
     
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  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    from a lending point of view, you may run into "joint and several issues" if you then want to borrow with anyone else OR indeed by yourself

    ta
    rolf
     
  5. RPI

    RPI SDA Provider, Town Planner, Former Property Lawyer

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    Maybe discuss how Subway's are run under management with @geoffw.
     
  6. marty998

    marty998 Well-Known Member

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    Condom manufacturer has to be the ultimate business. Never a lack of demand.
     
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  7. datto

    datto Well-Known Member

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    Can you elaborate on massage places?

    I have noticed that a lot of rub down places are popping up around the 'burbs.

    There could be plenty of competition and you might just blow your money in that kind of venture.

    Hmmm, I'd be tugging the money somewhere else.
     
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  8. Redwood

    Redwood Well-Known Member

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    No stats on the ATO website however plenty of brothels in SMSF's - i'd say we have quite a few......doing very very well. An auditor will definitely request a site visit.....

    Cheers Ivan
     
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  9. JDM

    JDM Well-Known Member

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    There's a lot to consider when deciding on the best structure so definitely speak to someone like @Terry_w to get proper advice.
     
  10. MyDarlinghurst

    MyDarlinghurst Well-Known Member

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    I live on Oxford Street Darlo and i can tell you condom buying is going way way down with the new treatment of PrEP

    Many guys around Darlinghurst are using PrEp instead of using condoms which is sad because it doesnt protect from all Sexual diseases

    So dont invest in condoms
     
  11. hobartchic

    hobartchic Well-Known Member

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    Jun Lin which was a massage business, with three prominent locations in Hobart, just went to administration. I would be cautious at the moment with retail spending the way it is.

    As for should you become a Company. I would keep the IPs, or sell them if you want/need to. I guess you could have separate Company for the IPs only. I would not form a company with someone I do not agree with either way who is looking at high risk ventures you are unsure of. Get some legal advice either way.
     
  12. Hamish Blair

    Hamish Blair Well-Known Member

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    Must have a shareholders’ agreement for if / when it all goes south or one wants to part ways, sell up etc.

    From a valuation perspective 50% of a property might be worth less than half the whole as there is the hassle factor of the other party.

    Check out Savoy clauses. This is a good checklist too

    Buy-Sell Agreement Review Checklist
     
  13. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Make sure you own 51% of the shares!!!
     
  14. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Too many p^icks in the industry
     
  15. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Provided it has council approval there is no concern and its business real property. Illegally operated its not. I had to ask that question of the ATO and their view was the business must operate legally on the premises.
     
  16. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    It would be foolish to have more than one business owned by a single company if it also operates the business - All assets are at risk. There may be a better structure if you each propose a fixed entitlement. Could be a company, unit trust, fixed unit trust, class discretionary trust and other ways.

    Property and businesses shouldnt typically be owned by the same company

    Shareholder agreements assist to resolve things like a marital split and the other partners wife wants her hubby's share. Or he dies. Or goes nuts,.wants to sell all or part of the empire. Or bring in his mate. What happens when you find you disagree - How is that resolved ?
     
  17. Mike A

    Mike A Well-Known Member

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    would a related member be able to avail of the services ?
     
  18. Paul@PAS

    Paul@PAS Tax, Accounting + SMSF + All things Property Tax Business Plus Member

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    Yes they could. A business operated in a SMSF property that pays rent is not a SMSF business. The tests apply to the SMSF not their tenant provided there is a lease or a lease type arrangement.