Business and Entity Wind Ups - CapitalQ

Business and Entity Wind Ups

Sometimes, a sale is not possible, and sometimes you just need the business and/or entity is gone.

Be it to –

  • Simplify your affairs
  • Reduce costs or
  • Cut ties with historical risk factors

Usually, a wind up can be achieved fairly easily, but there are definitely tricks and traps (and opportunities) to consider.

Just some of the questions that need to be asked include –

  • Are there Retained Profits that will need to come out first (and if so, how do you manage the tax on them)
  • Are there related party loan accounts that must be address (and again if so, how do you manage the tax on them)
  • Are there losses, maybe Capital Losses, that are held within the structure that you would like to use before they are lost forever
  • If the business is a failure (yes, unfortunately, it does happen) how do you make the most of the losses to help reduce current or future tax liabilities?

That’s not to mention deciding what type of wind-up you undertake –

  • If you have a Trust, a vesting needs to be implemented
  • If you have a Company, do you simply “De-Register” which might be the cheapest option, but can actually leave your Company in a Zombie-like state, able to be brought back to life just when you don’t want it to
  • Alternatively there is a Member’s Voluntary Liquidation, yes it will cost more, but it is a final death sentence for the Company, it will never rear its head again, and such a wind up does open up to some tax planning opportunities that may not otherwise have existed.

As you can see, a rushed, or hap-hazard approach to a business or entity wind-up could end up costing you big time in unforeseen taxes and in lost opportunities. It could also mean what you thoughts were gone never to both you again, wasn’t actually gone at all.

So don’t take the decision or the process too lightly, make sure you have an expert advising you every step.

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What our customers say

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Duncan Melbin’s firm first became the business accountants for Exploration Data Services, and my Family, when he was still a Graduate Accountant some 16 years ago. Myself and my late business partner have followed him ever since!

In the early days Duncan was very proactive in regards to fine tuning our business structure and the benefits of getting the structure right early are still flowing today.

Throughout my time working with Duncan he has played a key role in ensuring our tax affairs have always been in order and our tax obligations have always been minimised and well managed.

Duncan has also played a key role in ensuring my Family and I have adequate wealth protection in place and that we have maximised our wealth creation including through a regular superannuation contribution strategy and the use of a self-managed super fund that keeps us engaged, in control and to a large extent free from the perils of the GFC.

More recently we took the opportunity to outsource our entire back office accounting function to CapitalQ including switching our accounting and invoicing to Xero. I now spend barely any time at all on my monthly accounting and Activity Statement lodgements, as CapitalQ have it all in hand. This allows me to focus on running my business better, and frankly to have more time to enjoy the spoils of a life in business.

I work closely with Kapil Bhasin, our Client Manager, and Peter Melbin, our outsourced Bookkeeper, and they are clearly very valuable assets for CapitalQ.

Working with Duncan, Kapil and Peter is very easy, they respond promptly to any queries I have and most importantly I have complete trust in the advice they give me and that my business affairs are being well looked after. I would recommend CapitalQ to any potential client without reservation.

So if you own a small business or are looking to grow your wealth I highly recommend you speak to the CapitalQ Team. They will give you good advice, and ensure you are on track for a sound business and financial future (and outsourcing your back office accounting process to them, and switching to Xero, will be two of the best business decisions you will make).

Michael Gray

Director - Exploration Data Services (Perth)

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