Corporate Structures

SMEs that benefit most from corporate restructuring are typically small, incorporated businesses with liabilities of less than $1 million. In Australia, these specifically refer to companies (Pty Ltd) with fewer than 20 employees, or more broadly, firms with a turnover under $2 million to $5 million.

Key Details on Targeted SME Sizes:

Liabilities: The most critical criteria for specialised Small Business Restructuring (SBR) in Australia is that total liabilities must not exceed $1 million (excluding employee entitlements).
Revenue & Employees: While SBR is targeted at micro and small businesses (often with 0-19 employees), companies in the $1 million to $5 million revenue bracket have reported the strongest, survival-saving impacts from restructuring.
Industry Focus: Construction, accommodation, food services, and retail businesses are prime candidates, representing the majority of insolvency appointments and, consequently, those in need of restructuring.

Why These Sizes Benefit Most:

Survival Rates: One in three SMEs in the $1M–$5M range reported that restructuring helped them avoid insolvency.
Cost-Effectiveness: The SBR process is designed to be affordable for smaller firms, with a median cost significantly lower than standard insolvency procedures.
Debtor-in-Possession Model: This structure allows directors to keep control of the company and continue trading while settling debt, rather than immediately losing control to a liquidator.
ATO Cooperation: The Australian Taxation Office (ATO) is often willing to work with these smaller entities on restructured payment plans.

Common Characteristics of Beneficiaries:

Cash Flow Issues: 78.2% of SMEs that benefited from restructuring reported needing to address cash flow issues.
High Debt Levels: Companies with unmanageable, but not insurmountable, legacy debts.

What are the best corporate structures for your business?

Selecting the appropriate corporate structure is one of the most important choices you’ll make for your business. It goes beyond mere legal formalities — it establishes the foundation for smooth operations, optimizes your tax situation, and helps protect both business and personal assets from potential exposure. The right structure can fuel growth; the wrong one can slow progress and restrict access to capital. Treating this as an investment in your future and getting it right from the outset is essential.

Thoughtfully chosen corporate structures help your business run efficiently for tax purposes, reduce your tax burden, and maximize after-tax profits. They also create layers of protection that guard your personal assets from creditors and limit personal liability for business debts or legal claims. We can also advise whether tax consolidation is appropriate for your group. For qualifying groups, a tax-consolidated arrangement can streamline compliance and often produce better overall tax outcomes for the group.

Conversely, an unsuitable structure can introduce needless complexity, raise tax obligations, and impede your business’s growth. It may restrict access to funding by making loans or investment harder to secure and can expose your personal assets to greater risk, potentially threatening your financial stability.

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