Company, LLP or Trust: How the Right Structure Is Chosen

Why the entity choice happens before, not after

The choice of entity can affect ownership, control, liability, taxation, governance, succession and the ability to bring in future investors. Changing a structure after capital, investors, assets or family arrangements have already been introduced can involve additional professional work and cost — which is why this decision benefits from being addressed early, ideally before those arrangements are locked in.

What factors are typically weighed

• Liability and ownership arrangements — how personal liability is (or isn't) separated from the business
• Control and decision-making — how authority is structured among owners or partners
• Allocation of profits or economic interests
• Tax considerations, which vary meaningfully across structures
• Succession objectives — how the structure handles ownership transition over time
• Asset ownership — how assets sit relative to the operating entity
• Regulatory requirements applicable to the specific activity
• Whether external capital or investors may be introduced later

Why there's no single "best" structure

A company, LLP and trust each have distinct characteristics suited to different combinations of these factors. A structure that works well for a two-founder operating business may be entirely wrong for a family asset-holding arrangement, and vice versa — there's no universal answer, only what fits the specific circumstances.

Where a trust structure specifically fits

Trust structures can be used for a variety of purposes, including certain succession and asset-holding arrangements. Whether a trust is appropriate depends on the family's objectives, assets, beneficiaries, control arrangements, tax considerations and applicable law — a trust shouldn't be assumed to be preferable to a will or another succession arrangement in every situation.

A practical starting point

Starting from the objective — operating a business, raising capital, holding assets, or planning succession — rather than starting from a structure and working backward. A qualified legal, tax or company-secretarial professional should determine the appropriate structure for the particular circumstances.