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Restructuring

by | Jul 9, 2020

Restructuring your Business post Covid-19

It is always appropriate to consider restructuring your business, but now more than ever!

As a business grow and or legislation change it may be advantageous to consider restructuring. Your starting point should be your accountant and lawyer. Your accountant with knowledge of the financial position of your business is in a good position to advise you on managing or minimising  your business taxation effectively in this restructuring process.

Tax and legislation changes is however not the only reasons to consider restructuring, but your personal situation may have changed over years and or your structure does not fit or may not be optimal to your family estate planning and eventual business succession. Your structure may not be providing the best asset protection and it may not limit your personal liability. It may limit be limiting the capacity of the business to grow, and or to retain and benefit staff through staff incentive schemes. It may not be conducive to the sale of your business, merging your business with another business or to diversify your business through subsidiaries and it may generally limit wealth extraction.

Covid-19 is an opportune time to consider and or reconsider you structuring needs and to future-proof your business by getting the appropriate advice. It may be a good time to consider recapitalisation, refinancing or obtaining a safe haven to give you time to ride out the current uncertainty. When considering these options, restructuring should be used as an integral part of the process. You may now have the time to consider the way forward, assess your needs as a business owner and build a platform to relaunch your business from. Your business structure may be the starting point to manage you tax effectively. If your business is eligible, you may be surprised at the available taxation relief to restructure and manage income tax, capital gains tax and GST. Even where relief is not available, the pandemic may have influenced your business’s valuation negatively which may make it an opportune time to restructure and manage tax efficiently.

Remember that the payment holidays and relief from personal liability for insolvent trading will end. The current relief is temporary. The debts you incur will be repayable by your business and in cases of dishonesty and fraud, directors will still be held accountable.

You need to map out your business plan to recovery now, and in doing so, restructuring may be one of the best weapons in your business’s arsenal. 

At Edge Legal Group we are equipped and we stand ready to assist you through restructuring to find a practical solution for the continuation of your business.

Roelof Stols (BCom LLB) Consultant

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