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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CapitalQ helped me get off the 9 to 5 treadmill and effectively retire from real work in my late twenties.

I am a property person through and through. I believe there is no better way to build genuine wealth than via property. I have undertaken residential property investing and residential property developments (large and small) and as a result effectively retired from real work in my late 20s. Throughout that time Duncan and the Team at CapitalQ have been my partners (both as advisers and at times literally by taking interests in my projects). I would recommend to anyone thinking about venturing into property investing to ensure CapitalQ are part of the process and watching your back. You need sound personal budgeting, investment analysis, project costing, appropriate structuring, short term and long-term tax planning and ongoing tax advice (and not just covering Income Tax but also GST, Land Tax, Stamp Duty, the list goes on). CapitalQ know all aspects of the property game, and have the hands-on experience as well. Many think property investing is easy, but I can assure you, without the right partner providing the right advice, you will come undone.
Ray Ellis Ray Ellis

Ray Ellis

Property Investor and now owner of Xceed Real Estate

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