In how to effectively establish a consultancy business in the mining and resources sector – part 1 we set out various important issues for your consideration. Here we expand on three of them: asset protection and tax minimisation, funding, and employment law issues.
Most consultancies are set up as a sole trader, partnership, company or trust (family or unit) business entity (or structure). Each offers combinations in terms of:
In deciding on a structure you will need to take legal and accounting advice to weigh up the costs and benefits of each. This table compares the advantages and disadvantages of the various structures.
Sometimes by mixing the structures the disadvantages of one structure can be minimised. For example, the business can be operated by a unit trust. The units in that trust can be owned by various family trusts. This structure can allow the income of the business owned by the unit trust to be spread widely.
Another example is that a partnership can be a partnership of trusts. This can give some asset protection and better tax-effectiveness. As you can see, it is essential to take good legal and accounting advice when setting up your structure.
Funding can be by way of equity (contribution by stakeholders), loans from stakeholders or related parties, or loans from financial institutions. The appropriate funding mix for your situation will depend on various factors. You will need to take legal and accounting advice to determine this. The basic issues to be aware of are these:
If you have employees, you should have written agreements with those employees. You should take legal advice regarding this. You should also be aware of basic employment law rules, such as:
Craig Hong and Ian Hillhouse are regular contributors for the leading mining and resources publication Resources Unearthed. They regularly provide advice across a spectrum of often complex legal matters within this sector.
Click here to read the original article in full.
The information in this blog is intended only to provide a general overview and has not been prepared with a view to any particular situation or set of circumstances. It is not intended to be comprehensive nor does it constitute legal advice. While we attempt to ensure the information is current and accurate we do not guarantee its currency and accuracy. You should seek legal or other professional advice before acting or relying on any of the information in this blog as it may not be appropriate for your individual circumstances.