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Improve your SME’s cash flow, asset protection, and future sales by restructuring your business model

By 06/09/2022September 4th, 2023No Comments
Improve your SME’s cash flow, asset protection, and future sales by restructuring your business model.

What is “Corporate Restructure”?

Restructuring a corporation is a term for when a small, medium, or larger business takes actions intended to improve their financial situation and/or get them out of financial jeopardy. A corporate restructure can include the modification of a company’s capital structure, the way it manages its business operations, debt, or some combination of all of these business elements.
Types of restructuring include:

  • Separating your SME into different entities. Separating your business from your personal assets and isolating different parts of your company is a common form of company restructuring. Doing so protects you from individuals or corporations receiving your personal assets if they were to take litigation against you in cases of your business performing poorly.
  • Divestment and spin-offs. For companies looking to consolidate, you may consider selling off aspects of your SME to a third-party to cover debts or free up cash flow. You may choose to close aspects of your business entirely to mitigate damage to your reputation or cut your losses. You can also consider restructuring units of your company to be standalone entities which you partially own, known as “spin-offs”.
  • Mergers and acquisitions. For companies that want to grow, merging another existing business with yours and absorbing their assets can increase the profitability of a small business, as well as extending your market reach.
  • Debt restructuring. Debt restructuring for businesses facing financial turmoil involves taking certain actions to avoid bankruptcy, insolvency, or liquidation. This includes actions such as negotiating with creditors for lower interest rates, having due dates extended, consolidating, invoice financing and refinancing solutions, or other debt-for-equity swaps.
  • Relocation. Depending on the nature of your industry, you may decide to relocate your business to find a more appropriate customer-base for your business model. You could also make the choice to relocate your office to cut costs or find bigger premises. Similarly, you may choose to relocate your production process to reduce expenditure and/or improve the quality of your product.

How and why it’s important to set up your business’ structure correctly

As mentioned above, getting your corporation’s structure right is imperative for protecting your assets and your personal liability if creditors or individuals were to take legal action against your business. But it is also important for your tax position. A beneficial business structure can help you to avoid certain unnecessary tax liabilities, as well as enabling you to take advantage of potential tax grants, subsidies, and incentives.

For example, if a business were to set up a corporate beneficiary by funnelling excess profits to a discretionary family trust, it could cut its payable tax by up to 19%. This is in alignment with section 100A of the Income Tax Assessment Act 1936. It’s applicable to what is referred to as a “reimbursement agreement” between a trustee who receives a benefit from a trust, and another person who is entitled to assessable income.

As dividends are passive income, all income received by a corporate beneficiary is taxed at the standard 30% company tax rate, rather than the marginal rate of up to 49% that may otherwise apply.

How do I restructure my business?

It is strongly recommended that you seek professional business and accounting advice from a reputable advisory firm, such as our team at Equil Advisory, or a registered liquidator such as Hogan Sprowles, before attempting business restructuring.

Corporate restructuring is something that should be organised on a case-by-case basis. There is no one-size-fits-all solution. Each unique corporation requires an in-depth analysis of its current corporate structure in order to best understand the unique needs of the directors, employees, investors, and the company as a whole.

6 signs you might need to restructure your business

There are several tell-tale signs that could indicate that your business may need a structuring overhaul:

  1. Stagnating growth. Looking to improve your profit margin and expand your small to medium enterprise’s market reach? Restructuring could help you to grow your business faster and more cohesively.
  2. Competitive underperformance. Whether it’s relocating your production process, a potential merger, or something else – if your business is performing poorly, a restructure could help you to get ahead of the competition.
  3. Shortage of cash flow. As mentioned earlier, you can free up company cash flow via debt restructuring processes, divestment, business restructure restructuring, and more. A lack of cash flow can negatively impact a business in a multitude of ways, and a restructure is often the best and quickest solution.
  4. Loss of revenue. If your revenue is consistently significantly lower than it has been in previous months or years, it’s an obvious indicator that something is no longer working. Altering your business’ structure, such as reducing your production costs, or changing your product offering, can help you to keep abreast of an ever-changing market.
  5. Inefficiency. If your business isn’t being efficient with its time management, restructuring your operations, such as introducing a new fintech, could improve your company’s time spent in certain areas. It could also potentially help you to identify any issues your company is facing that you were previously unaware of.
  6. Poor employee retainment. If you have a high employee turnover, this could be a sign that your business requires a restructure. There are a number of reasons that employees leave their jobs, and equally numerous solutions that you can implement to make their work environment more stable and appealing.

Pros and cons of restructuring your business

Restructuring your business in times of financial strain or economic downturn can often be an effective means of turning things around for the better, but it doesn’t necessarily follow that that is always the case.

Just as a restructure can make your business, it may also in some instances break it. See below for how a restructure can benefit your corporation, and what to watch out for.

Pros

While every business will see its own unique benefits of corporate restructuring, here are some of the most common advantages.

  • Asset protection. As mentioned earlier, protecting your personal assets is a major benefit to corporate restructuring. If you own your business personally, these assets would be at risk if your business were to face legal action. Separating your business into different entities mitigates this risk.
  • Tax implications and business grants. Restructuring your business, such as separating your business into individual entities, can be beneficial when it comes to how much your business is taxed, as well as improving flexibility for the distribution of taxable income. Separate business subsidiaries are also entitled to their own unique tax grants, such as those offered as a result of the COVID-19 pandemic.
  • Accelerate business growth. When looking to accelerate business growth, you first need to assess and audit your current business structure, and identify any pain points that might benefit from the process of restructuring. Once you have identified these points, you can make the structural changes necessary to grow your business.
  • Better communication. Talking with your customers and employees is important for identifying aspects of your SME that would benefit from change. This opens better lines of communication, solidifies customer relationships, and improves workplace morale
  • Increase efficiency. Removing or reconfiguring roadblocks and aspects of your business that are slowing you down helps to increase productivity within your workforce. You can also often increase efficiency within your operations by adding new technologies, such as bookkeeping fintech.
  • Improve cash flow. Decreasing your operational costs, streamlining your accounting, restructuring your debt, taking advantage of tax incentives, etc – can all improve your company’s cash flow exponentially.
  • Increase revenue. Reassessing your product offering, marketing approach or location could see significant those long awaited spikes in your revenue stream.
  • Selling your business. If you’re looking to sell your small business, a restructure can make it ultimately more appealing to buyers. Delivering a fully formed and comprehensive business model will ultimately benefit you in terms of profiting from the sale.

Cons

While corporate restructuring is performed with the intention of improving a business, mistakes and collateral damage are not uncommon.

  • Loss of productivity. Downsizing your company could result in a loss of productivity if you let go of key skilled workers. Retraining new employees also requires time and financial resources. It’s therefore important to make careful assessments before taking action.
  • Damage to morale. If you replace certain employees – such as your accounting team – with technology, you may find that your remaining workers experience a dip in morale. This can lead to poor customer service and a potentially toxic work environment.
  • Expense. Retraining, fintech investment, or moving premises, can all incur short-term costs; even if the outcome is long term capital gain. Not having the immediate cash flow required to cover these expenses could mean taking out further debt on your business, or leave you stuck in a rut with fewer means of restructuring.
  • Non-compliance. Attempting to restructure your debt or approach potential tax concessions without first seeking professional advice may land you in hot water when it comes to compliance. Thankfully, this can generally be easily avoided by seeking help from a reputable source first.

Conclusion

If you’re considering corporate restructuring as a means to save or improve your SME, it is important to weigh up all of your restructuring options carefully, as well as thoroughly auditing your business to identify potential areas of concern, prior to doing so.

As mentioned above, it is also highly recommended that you seek professional business and accounting advice and support from a reputable company. This is true to both existing business owners, and for entrepreneurs that are looking to start their own business.

Seeking professional advice before setting up a new business will enable you to get your business up and running with the best possible structure from the get go, and will likely save you the hassle of having to restructure later on down the line.

Our team at Equil Advisory can provide you with a tailored comprehensive structural outline for your unique business, for a reasonable fee. Get in touch today to find out more.

Clare Connell

Practice Manager

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How did you end up at Equil Advisory?
After I travelled to Europe and ran out of all the Money - I knew it was time to get back to work.

When did you start at Equil Advisory?
Around the time I ran out of money during my Europe trip.

What do you do at Equil Advisory?
I’m the Entertainment Warden.

What do you do when you aren’t at work?
Run, walk, chill, drink at THE BAAAAY live love laugh the BAAAAYY.

What is something not everybody knows about you?
Besides the Bay? Accounting is my second passion.

If you had to apply for a reality TV show what would it be?
Byron Baes.

What would your last meal be?
100% a juice cleanse.

Cats or dogs?
Zara.

Clare Connell

Practice Manager

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How did you end up at Equil Advisory?
I originally started working here in 2020 as an Accountant but left to travel and take a break from Accounting. Now, a year later I’ve come back as the Practice Administrator.

When did you start at Equil Advisory?
January 2023.

What do you do at Equil Advisory?
Anything and everything to do with the office and making sure the team is happy and processes are working efficiently.

What do you do when you aren’t at work?
Catch up with friends, go on trips away, play tennis, go to the beach, shop!

What is something not everybody knows about you?
My childhood revolved around dancing and being in theatre plays and musicals.

If you had to apply for a reality TV show what would it be?
I have always wanted to be on The Block.

What would your last meal be?
Sushi.

Cats or dogs?
100% Dogs.

Eunice Smith

Business Services Accounts

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How did you end up at Equil Advisory?
I wanted a change from larger firms and wanted more client interaction.

When did you start at Equil Advisory?
June 2023.

What do you do at Equil Advisory?
At Equil, we are exposed to both tax compliance and CFO work. My days are usually split preparing tax returns and BASs for our clients, and the other half, helping manage our clients’ day to day finance operations and making it easier to understand. Between all that, I also make life funnier and more interesting for the team.

What do you do when you aren’t at work?
I’d classify myself a hobby junkie, so I'm always trying to do everything I like at the same time or trying something new on the internet. I would say my top favourite activities would be shopping and trying new restaurants.

What is something not everybody knows about you?
Nothing – I'm as transparent as a glass of water. 😊

If you had to apply for a reality TV show what would it be?
I would have to say Below Deck– drama, money, superyachts and travelling? Say no more.

What would your last meal be?
A Smith Steak – its just a steak, but my husband nails it everytime.

Cats or dogs?
Why would anyone pick a cat?

William Yates

Business Services Accountant

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How did you end up at Equil Advisory?
Equil Advisory came highly recommended, and when I was referred via a mutual friend, I jumped at the opportunity.

When did you start at Equil Advisory?
Started in July 2023.

What do you do at Equil Advisory?
The majority of my role here at Equil Advisory is dedicated to tax compliance and supporting clients through strategies and processes to help improve the business.

What do you do when you aren’t at work?
When I’m not at uni, you can usually find me out training or playing golf.

What is something not everybody knows about you?
I love a good bit of Lego in my downtime.

If you had to apply for a reality TV show what would it be?
Jonah from Tonga.

What would your last meal be?
Sushi.

Cats or dogs?
Dogs.

Alex Talia

Assistant Manager

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How did you end up at Equil Advisory?
Having worked in the family business and doing the bookkeeping as a teenager, an accounting degree was the clear next step. My career initially took me to chartered accounting firms and then moving into commercial accounting for more exposure, I knew my move back into an accounting firm had to be the right fit. The supportive team and management at Equil was a clear choice for me.

When did you start at Equil Advisory?
June 2022.

What do you do at Equil Advisory?
A large part of my role is CFO focused, I aim to support our clients through the different stages of the business by implementing strategies and processes to guide them in making the right business decisions.

What do you do when you aren’t at work?
Watch sport and binge tv shows.

What is something not everybody knows about you?
I love fishing and hope to one day in the future be retired and do nothing but fish.

If you had to apply for a reality TV show what would it be?
Big Brother.

What would your last meal be?
A medium rare a5 wagyu tomahawk steak.

Cats or dogs?
Dogs.

Albert Tan

Business Services Accountant

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How did you end up at Equil Advisory?
I was looking for a new place to clear my throat and break the office silence.

When did you start at Equil Advisory?
When I was assured that there would be another Malaysian member of the team.

What do you do at Equil Advisory?
Play hide-and-seek in the bathroom.

What do you do when you aren’t at work?
Go to the gym.

What is something not everybody knows about you?
I don’t know how to pronounce geography properly.

If you had to apply for a reality TV show what would it be?
Survivor.

What would your last meal be?
Macaroni and cheese with milk.

Cats or dogs?
Neither.

Albert Tan

Business Services Accountant

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How did you end up at Equil Advisory?
I have always wanted to be an accountant due to the influence of my family as most of them are accountants. I joined Equil Advisory as it offered me a different opportunity to work on compared to other accounting firms as well as allowing me to develop different skills.

When did you start at Equil Advisory?
28th February 2022.

What do you do at Equil Advisory?
My role at Equil Advisory includes tax compliance work and assisting client in their day-to-day business with EA’s outsourced CFO function.

What do you do when you aren’t at work?
Spending time with my wife, talking to my family or reading light novels.

What is something not everybody knows about you?
Love spicy food even though I can’t handle it at all.

If you had to apply for a reality TV show what would it be?
Voice actor in any cartoon shows.

What would your last meal be?
Roti Telur Bwang.

Cats or dogs?
Love cats and dogs equally.

Sabrina Truong

Business Services Accountant

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How did you end up at Equil Advisory?
I wanted to see how people who eat unhealthy actually live.

When did you start at Equil Advisory?
Just as the second lockdown was about to begin, so I didn’t have to talk to people in person.

What do you do at Equil Advisory?
Eat raw veggies and perfect my American accent.

What do you do when you aren’t at work?
Driving around Sydney for the best fast food places.

What is something not everybody knows about you?
I eat banana bread with chopsticks.

If you had to apply for a reality TV show what would it be?
Man vs Food.

What would your last meal be?
Deep fried chicken and chips with extra chicken salt.

Cats or dogs?
Cats!

Sabrina Truong

Business Services Accountant

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How did you end up at Equil Advisory?
My dad is a bookkeeper, so it was natural for me to choose accounting as a degree. Accounting allows me to help others grow their businesses and achieve their goals, which is something I am passionate about. I joined Equil Advisory because it is not like your typical accounting firm. I also wanted to be part of a team that is supportive and provides the opportunity for me to develop and grow my skills.

When did you start at Equil Advisory?
July 2021.

What do you do at Equil Advisory?
A large part of my role is focused on tax compliance and the other part is dedicated to building client relationships so that I can better help our clients with EA’s outsourced CFO function.

What do you do when you aren’t at work?
You would find me watching Netflix, working out, or hanging out with friends/family.

What is something not everybody knows about you?
I am learning Korean.

If you had to apply for a reality TV show what would it be?
Super Trio Game Master.

What would your last meal be?
Pepperoni Pizza.

Cats or dogs?
Dogs!

Gaurav Shrestha

Senior Business Services Accountant

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How did you end up at Equil Advisory?
Growing up I was exposed to the business environment, so I always wondered about the ins and outs of the business, how it runs and how to be financially sound. This piqued my interest on business studies and further after that into accounting. I wanted to broaden my horizons, knowledge and have a sound work life balance which led me to Equil Advisory.

When did you start at Equil Advisory?
17th December 2021.

What do you do at Equil Advisory?
At Equil Advisory, we are exposed a range of work that include tax compliance, bookkeeping, tax advice, liaising with the clients and outsourced CFO functions. My work is predominately occupied by tax compliance and outsourced CFO function.

What do you do when you aren’t at work?
I’m mostly out with my cousins or friends. Binge watching series or may be hop online to play some games.

What is something not everybody knows about you?
I can speak four different languages and I love gaming.

If you had to apply for a reality TV show what would it be?
The Voice.

What would your last meal be?
Mo Mo.

Cats or dogs?
Dogs.

June Wong

Business Services Senior

Email Me Linkedin

How did you end up at Equil Advisory?
My sister got tired of me working from home and hence decided to join EA.

When did you start at Equil Advisory?
Just as the first lockdown was lifted.

What do you do at Equil Advisory?
Eat Coco Pops and telling people what I am honestly thinking.

What do you do when you aren’t at work?
Planning my next EA Team workout session.

What is something not everybody knows about you?
I am scared to sleep alone.

If you had to apply for a reality TV show what would it be?
Survivor – because I wouldn’t last a day.

What would your last meal be?
I can’t decide between all the YUM-MEE animals of the world.

Cats or dogs?
Porcupine.

June Wong

Business Services Senior

Email Me Linkedin

How did you end up at Equil Advisory?
I realised that a lot of people that work in chartered firms are not the happiest. Thus, I was looking for a place where I am happy to go to work every day. I think I found it at Equil.

When did you start at Equil Advisory?
May 2021.

What do you do at Equil Advisory?
Connecting with clients and providing them with all the support they need so they can be at ease and have confidence that they are well looked after.

What do you do when you aren’t at work?
Watching dramas at home while lying on bed.

What is something not everybody knows about you?
I actually thought of becoming an IT person and did a couple of months of IT degree before realising that I am not tech-savvy at all.

If you had to apply for a reality TV show what would it be?
Amazing Race.

What would your last meal be?
Hotpot with lots of veges, mushrooms and tofu!

Cats or dogs?
Neither.

MAKS KHAN

Director

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How did you end up at Equil Advisory?
Kapil and I were best buddies, so it was a no brainer to start here at EA.

When did you start at Equil Advisory?
Back in the day.

What do you do at Equil Advisory?
Loves to palm off work to Jennifer Harb.

What do you do when you aren’t at work?
Naps on the couch and my nightly sleep walks to bed.

What is something not everybody knows about you?
I love to boogie.

If you had to apply for a reality TV show what would it be?
The Amazing Race.

What would your last meal be?
Pork ribs with a side of bacon.

Cats or dogs?
Can’t choose, won’t choose, Nickelodeon’s CatDog.

MAKS KHAN

Director

Email Me Linkedin

How did you end up at Equil Advisory?
I loved maths and business subjects while in school and thought accounting would help me build on that passion. I joined Equil Advisory to be part of a team that allowed for a hands-on approach with regards to learning and looking after clients. Giving me the right building blocks to a successful career in accounting and business.

When did you start at Equil Advisory?
I have been with Equil Advisory since July 2017.

What do you do at Equil Advisory?
One of my core strengths is, I take my clients’ business personally. Trying to connect with clients and their needs is what helps us service them better whilst putting their minds at ease – whether it be through our Outsourced CFO function, Tax Compliance, Advice & Etc.

What do you do when you aren’t at work?
I love binging on Netflix, but other than that I love my football (soccer), even if it maybe just playing FIFA.

What is something not everybody knows about you?
I really used to be into painting, I could do it for hours. I have now replaced that with photography – I guess this is where all my creativity comes from.

If you had to apply for a reality TV show what would it be?
The Amazing Race.

What would your last meal be?
A decadent chicken parmigiana, with a side of chips and coke.

Cats or dogs?
Dogs.

JENNIFER HARB

Assistant Manager

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How did you end up at Equil Advisory?
I have always been interested in business in general. During the first year of university, I didn’t have a path but as I took more of the core business classes, I came to realise that accounting is the common denominator in all business functions. You can’t tell how well a company is running without understanding the accounting side. Helping people solve their problems and achieve their business goals is a pretty rewarding feeling.

When did you start at Equil Advisory?
I started Equil Advisory in January 2019.

What do you do at Equil Advisory?
Clients want to feel like one that is valued, and timely communication is important to them. I am proactive in replying to emails and returning phone calls. I try to do my work in the most efficient manner, that is helpful to both my colleagues and our clients.

What do you do when you aren’t at work?
Hanging out with my friends, going to the gym and watching my shows.

What is something not everybody knows about you?
I once put electricity on my braces in year 8 thinking nothing would happen.

If you had to apply for a reality TV show what would it be?
I’m a celebrity, get me out of here.

What would your last meal be?
Lemon garlic chicken with a side of spicy chicken wings.

Cats or dogs?
Dogs, even though I have a cat.

CHIMENE GEAITANI

Senior Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
Wanted to get away from Rob.

When did you start at Equil Advisory?
July 2018.

What do you do at Equil Advisory?
Efficiency.

What do you do when you aren’t at work?
Smoking shisha and thinking how to make my workflow more efficient.

What is something not everybody knows about you?
My feet actually touch the floor when i am seated.

If you had to apply for a reality TV show what would it be?
The Real Housewives of Western Sydney.

What would your last meal be?
Dumplings from the dodgy dumpling place, Maks and Rob love.

Cats or dogs?
Neither, they are not efficient.

CHIMENE GEAITANI

Senior Business Services Accountant

Email Me Linkedin

How did you end up at Equil Advisory?
The intricacy of business and numbers have always been of interest to me. Numbers are what we use to measure success with; they create clarity and commitment and, more importantly, create accountability. Accountability is the key to producing results - which is what I strive for here at Equil Advisory.Here at Equil Advisory, I am part of a energetic and committed team who strive for the best possible results for each and every one of our clients. I enjoy assisting numerous businesses in financial matters, as well monitored and controlled many of their day-to-day operations.

When did you start at Equil Advisory?
July 2018.

What do you do at Equil Advisory?
Working at Equil Advisory exposes us to a range of compliance work; from bookkeeping to financial reports, tax returns and advice. We are lucky to be trained in all scopes of work so that we’re able to satisfy our clients’ needs from start to end.

What do you do when you aren’t at work?
I enjoy my time at home with my little bub.

What is something not everybody knows about you?
I have an OCD on time.

If you had to apply for a reality TV show what would it be?
Big Brother.

What would your last meal be?
Pad Keo Mao from Home Thai.

Cats or dogs?
Neither.

KAPIL MAHASHETTYWAR

Managing Director

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How did you end up at Equil Advisory?
Going to the pub wasn’t a legit career.

When did you start at Equil Advisory?
I got kicked out of too many pubs so I had to find my own space to drink so I started Equil Advisory in May 2017.

What do you do at Equil Advisory?
Get in the way.

What do you do when you aren’t at work?
Hide from my kids in my home office eating all the chocolate.

What is something not everybody knows about you?
I actually have a crown.

If you had to apply for a reality TV show what would it be?
Keeping up with the Kardashians.

What would your last meal be?
Salty Steak that I can send back to the kitchen.

Cats or dogs?
Cats (I am a massive Cat person).

KAPIL MAHASHETTYWAR

Managing Director

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How did you end up at Equil Advisory?
I come from a family of businessmen, so it was only natural for myself to gravitate my career towards business. Accounting allowed me to build upon the necessary skills needed to be a successful a partner but also to assist me in starting my own business, Equil Advisory. Through my experiences in business I have learnt many things and now wish to assist my clients and team to reach their full potential.

When did you start at Equil Advisory?
May 2017, was one of the best decisions on my life to start Equil Advisory as it set the tone of implementing strategies from my past learnings. I wanted to ensure every staff member has enough empowerment and freedom to make their own decisions to run the practice in the right direction.

What do you do at Equil Advisory?
Everything! But love the personal relationships aspect of the job, I love to talk so it is easier for me to pick up the phone and have a chat with anyone.

What do you do when you aren’t at work?
Play with my sons, Memphis and Kiaan and entertain them. Lay on the couch and watch TV.

What is something not everybody knows about you?
I went to a hospitality college in manly and have a bachelors in Tourism and hotel management and I was born in India.

If you had to apply for a reality TV show what would it be?
So you think you can dance.

What would your last meal be?
Keerthi’s chicken curry.

Cats or dogs?
Dogs.