Structuring a Small Business to Maximise Profit and Achieve Personal Goals
Background: Meet Christina & Mitch
Christina and Mitch are a couple in their early 40s with two young children, who have built a successful small eCommerce business specialising in high-end designer bags. The business has grown rapidly and become a key source of income and pride for the family.
As their income increased, so did the complexity of their financial situation. The business was operating under a sole trader structure, resulting in a significant portion of profits being taxed at Christina’s marginal tax rate.
With growing earnings and new ambitions, including investing in property and retiring by age 60, they wanted to ensure their business and personal finances were structured in a way that maximised their wealth and protected their future.
Key Results at a Glance
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Business Structure:Structure business to operate via a Family Trust with a Bucket Company. This saves approx. $16,740 a year in tax
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Retirement on Track:Able to retire at age 60 with a comfortable lifestyle
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Strong Financial Position:Overall asset position improved by $4,012,000 at age of 60
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Property Goals :Positioned to purchase two $1M+ investment properties
Why Did They Seek Advice?
- To structure their business in a more tax-effective way.
- To ensure more of their earnings were retained within the family.
- To assess their ability to purchase investment properties.
- To plan for a comfortable retirement by age 60.
- To protect their family’s financial future through appropriate insurance cover.
Strategies Implemented
Business Structuring & Tax Strategy:
- Identified inefficiencies in the sole trader structure, where profits were taxed at high marginal rates.
- Recommended transitioning to a family trust structure.
- Implemented a bucket company strategy, allowing profits above the family’s personal cashflow needs to be distributed to a company within the trust and taxed at the corporate rate of 30%.
- This approach enabled surplus income to be retained more tax-effectively and reinvested for long-term wealth creation.
Property Investment Strategy:
- Modelled their ability to purchase two investment properties, targeting acquisitions across consecutive financial years.
- Confirmed that their surplus cash flow placed them in a strong position to afford both purchases while still remaining on track to retire at age 60
- Structured the plan around acquiring the first property at the beginning of the 2021/22 financial year (valued at $1M+), followed by a second purchase in the 2022/23 financial year.
- Assessed ownership options, including holding properties within the family trust for tax efficiency or in Mitch’s name for asset protection.
- Identified that, if they prioritised debt repayment and offset strategies, they could potentially be debt-free by the 2034/35 financial year.
Retirement & Superannuation Strategy:
- Confirmed they could achieve their goal of retiring at age 60 based on current projections.
- Recommended maximising concessional super contributions to improve tax efficiency and retirement outcomes.
- Identified estimated tax savings of $12,498 initially, increasing to approximately $16,740 per annum in future years.
- Positioned super as a key component of their long-term wealth strategy.
Investment Strategy:
- Recommended diversifying beyond property through a Managed Discretionary Account (MDA) for more proactive investment management.
- The following graph illustrates how our recommended strategies compare to their current approach, demonstrating a clear improvement in their net financial position over time.
- Advised consolidating and transitioning super to a more suitable platform to support long-term growth.
- Highlighted how the bucket company could hold investments and provide tax-effective income in retirement through franked dividends.
Insurance Strategy:
- Implemented a comprehensive insurance strategy including Life, TPD, Trauma, and Income Protection cover.
- Ensured the family would remain financially secure in the event of illness, injury, or loss of income.
Outcomes and Benefits
- Improved tax efficiency by restructuring the business and reducing reliance on high marginal tax rates.
- Positioned the couple to purchase two investment properties while maintaining strong cash flow.
- Confirmed their ability to retire at age 60 with a comfortable lifestyle.
- Achieved ongoing tax savings of up to $16,740 per year through super strategies.
- Created a more diversified and actively managed investment portfolio.
- Built a clear, scalable financial plan aligned with both business success and personal goals.
Key Takeaway
As a business grows, so does the importance of having the right structure in place. Christina and Mitch’s case shows how strategic planning can turn business success into long-term wealth, reducing tax, improving flexibility, and creating a clear path toward financial independence. With the right structure and advice, it’s possible to not only grow a business, but also build a future that supports your family’s goals and lifestyle.
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Produced with our client’s permission. Names within this case study have been changed to protect the client’s right to privacy. The content of this case study has been based on a real-life client. Any information provided here is general advice only and does not consider your objectives, financial situation or needs. This information should not be taken as comprehensive and does not constitute legal or financial advice. You should seek legal, financial or other professional advice before relying on any content. Yield Financial Planning is not responsible to you or anyone else for any loss suffered in connection with the use of this information. Information is only current at the date initially published.
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