Advice for a newbie

[NFS]

Hey everyone, i've been on these forums for almost two years now and thought I would start my first thread.

Me and a good mate of mine have been running a business together for the last 3 years, we mainly ran it from home but have just outgrown our homes and need a factory. We have found a brand new factory which is just under 200sqm in the outer eastern suburbs of Melbourne and have negotiated the price down to $1600 per sqm. We have factored in GST and Stamp Duty so far, and obviously fit out costs for the equipment we will need, and also the rates.

We are currently in the process of registering a company and have been doing all our own accounting so far, but are also looking for a good accountant. We both have full time jobs, and have been running this as a side business.

Now I understand I haven't given much specific information but I was wondering if anyone can give any advice on anything we should look out for, or can give any type of information on how to set ourselves up for tax purposes, I understand an accountant can answer alot of our questions but though I will ask here first.

Thanks in advance!

 

[Joey1]

Hi NFS.

>I've just sold 2 Factories in the South Eastern Suburbs of Melbourne. Both Industrial Zone 1, under 200 m2, and street corner Properties.
> Both Purchasers set up Family Trusts, but also registered a Private Company to buy the Properties ( I think a Family Trust alone cannot buy ) .

> If the Factory is new you probably have a building report and can give that to your accountant for depreciation of the Building, Office, lights, fixtures and fittings etc. If not, you can pay a Quantity Surveyor about $450 for a report, I used CMR and Associates.

> Also make sure that your Building Insurance includes any Common Property if your Property is Strata title. If there is no " Active " Body Corporate that sits once a year, then the Common Property is often uninsured ( some Conveyancers don't pick this up ), which leaves you at risk of being sued. Ring an Insurance Broker, I use Pollard Insurance Brokers in Frankston.

> One more little thing. Check if you have an individual Water Meter for your Factory. The last thing you want is to pay for the the Take Away food shop next door using all your Water.

I hope that helps, and good luck with your business ! !

 

[NFS]

Hi NFS.

>I've just sold 2 Factories in the South Eastern Suburbs of Melbourne. Both Industrial Zone 1, under 200 m2, and street corner Properties.
> Both Purchasers set up Family Trusts, but also registered a Private Company to buy the Properties ( I think a Family Trust alone cannot buy ) .

> If the Factory is new you probably have a building report and can give that to your accountant for depreciation of the Building, Office, lights, fixtures and fittings etc. If not, you can pay a Quantity Surveyor about $450 for a report, I used CMR and Associates.

> Also make sure that your Building Insurance includes any Common Property if your Property is Strata title. If there is no " Active " Body Corporate that sits once a year, then the Common Property is often uninsured ( some Conveyancers don't pick this up ), which leaves you at risk of being sued. Ring an Insurance Broker, I use Pollard Insurance Brokers in Frankston.

> One more little thing. Check if you have an individual Water Meter for your Factory. The last thing you want is to pay for the the Take Away food shop next door using all your Water.

I hope that helps, and good luck with your business ! !

Appreciate the reply Joey1, and thanks for the advice, the lawyer picked up on the insurance for the common property and it is already covered, and the factory has it's own water meter! We do need to finalise insurance fairly quickly and I will give Pollard a call.

In other news, we settle on Friday, exciting times ahead!

Thanks for the reply.

 

[Aaron Sice]

You can buy 'ATF' - as trustee for - any discretionary trust.

 

[Rolf Latham]

Hiya

Without any further data ....

Id say lease for a while.

Focus on your core business

Build that then look again if owner occ comm is for you

ta
rolf

 

[Terry_w]

Plan ahead a bit. Think of what could go wrong and how this would affect things. Main ones are:

1/ Death of one of you
2 incapacity of one of you
3. bankruptcy of one of you
4. insolvency of the business
5. divorce and its effect

Try to structure the business in one entity and the ownership of the factor in another. If the business fails and creditors come your factory may be safer.

If it is a company then you can leave shares in your will, bring in partners, buy each other out etc. If it is a discretionary trust you cannot do these. So you might consider a discretionary trust own your shares in the company that operates the business.

Same with the ownership. Owning in a company has issues but could be done, but you may want to look at a unit trust with each of you owning your units in a separate entity such as a discretionary trust.

 

[Peterw]

As so often, very good advice Terry W. How often do we see people get advice, after the purchase commitment made, not before. I cannot believe how few people are using trusts. I know the trust world has grown over the years, however it does not take all that much to keep even slightly abreast of it. At first I was bit concerned that financiers would be a bit concerned, however they are right up to speed, and know how to word their documents to protect them selves, yet still allow you to do the same.

 

[Scott No Mates]

It has to be remembered that investment advice has to be tailored to your situation - trusts, smsf etc aren't for everyone so you need to be involving both the legal and accounting fraternities to decide your best direction.

 

[Terry_w]

As so often, very good advice Terry W. How often do we see people get advice, after the purchase commitment made, not before. I cannot believe how few people are using trusts. I know the trust world has grown over the years, however it does not take all that much to keep even slightly abreast of it. At first I was bit concerned that financiers would be a bit concerned, however they are right up to speed, and know how to word their documents to protect them selves, yet still allow you to do the same.

Yes Peterw (who is no relation buy the way!). I often get people approach me saying things like - i've set this trust and up and am now paying $4k in land tax per annuam, what can I do sort of thing.

From my mortgage broking firm's clients I would estimate about 10% buy in trusts. This is more than most probably because I specialise in trusts as a lawyer. All my clients are investors too. But on the business side, i estimate half of the clients running a business do so through a trust or a company with shares owned by a trust.

 

[Adrian Cahill]

That was a good advice Joey1. I also learned from you.