When should your NSW business use a trust structure?

Choosing the right structure is one of the most important decisions when starting or growing a business. While companies and partnerships are common in NSW, many businesses benefit from operating through a trust structure. But when does it make sense to use one?

What is a trust structure?

A trust is a legal relationship where a trustee holds and manages property or income on behalf of beneficiaries. In a business context, this means the trustee operates the business and distributes profits to beneficiaries under the terms of a trust deed.

Asset protection

One of the main reasons businesses in NSW use a trust is asset protection. A properly set up trust can help protect business and personal assets from creditors and claims, provided it is structured and operated correctly.

Tax planning advantages

Trusts can provide flexibility in distributing income to beneficiaries in a way that may reduce overall tax liabilities. For example, profits can be allocated to family members in lower tax brackets, or to a corporate beneficiary.

Business succession and estate planning

A trust can provide a smooth transition of business control across generations. Instead of directly transferring ownership of assets, control of the trust can pass to new trustees without disrupting operations.

When a trust may not be suitable

Trusts come with setup and ongoing compliance costs. They also have restrictions, such as the inability to retain profits in the same way a company can. For some businesses, especially startups or sole traders, a simpler structure may be more practical.

Call 1800 000 566 to discuss your upcoming business structure. You can also book a free consultation using our online calendar, or fill in the form below.