How to structure your tech company to get the most from your people
Often, tech companies get started on a wish and a prayer.
The founders have a great idea, apply for an Australian Business Number (ABN), or set up a company, and don’t give the structure of this new business a second thought as they barrel forward with hours upon hours of development activities.
While setting up a company might provide some sense of security in the short term, the longer that founders go without properly evaluating their structure, the more difficult and expensive it is to change in the future.
This may not mean much in the early days, but when the value of intellectual property begins to increase so too do founder’s concerns about protecting it.
Start with the end in mind
Every business needs a structure that is fit for purpose.
This means it aligns with the founder’s vision and goals for the business, such as whether they wish to:
– grow the business
– run and hold the business
– publicly list the business
– sell the business
Even if the ideal structure or end state is not yet known, most (if not all) possibilities can be accessed if the structure provides enough flexibility from the onset.
A company is not always the best structure, and the same applies with a trust. The right structure considers a wide variety of elements – from who is involved in the company to the types of products and services you offer, to how and where you operate.
The disbursement of profits, application of capital gains tax, implications of tax across multiple jurisdictions and so on, can have a big effect on your ability to reach a cash flow positive state sooner rather than later.