Business Owner Agreements (ie. Shareholder Agreements, etc)

Your new Company or Trust will come with its rules of operation. In the case of a Company, it is referred to as the Constitution. In the case of the Trust, it is referred to as the Trust Deed.

In each case, the document will contain numerous rules about how the entity should function. This includes when meetings are required to be held, when and how income can be paid out, how to deal with changes in ownership, etc.

But these rules are designed primarily with flexibility in mind. They are designed to allow flexibility for tax purposes, and where ever possible to keep things relatively easy to manage for day to day matters.

However, they don’t go anywhere near far enough to deal with real situations that arise between multiple business owners.

Questions to ask include what if …

  • A business partner
    • Isn’t pulling their weight
    • Just stops showing up to work
    • Wants out
    • Becomes ill
    • Becomes totally and permanently disabled
    • Dies
  • There is a dispute between the partners
  • A suitor wants to buy the business but not everyone wants to sell
  • A suitor wants to buy only part of the business, but everyone wants to sell
  • Plus there are many more

It is these types of scenarios that are addressed via a Business Owners Agreement.

Business Owners Agreements broadly come in three forms –

  • Shareholders Agreements
  • Unitholder Agreements
  • Partnership Agreements

All can be thought of like a prenuptial agreement. Now that may not sound particularly sexy, but we can just about guarantee every person who has been part of a business relationship that ended under anything but totally amicable circumstances who didn’t have an agreement in place … wished they did! That way the mechanisms would have existed to deal with the situation in a fair, reasonable and most importantly less costly manner.

Accounting & Tax

What our customers say

Logo for Michael Gray
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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