All personal training business owners should consider the benefits of a trust company. This is a particular business structure that holds many advantages for your business.
What is a trust?
A trust is a legal relationship between a trustee (an individual or company) and the members (beneficiaries) of the trust. A trust is not a legal entity and nor is it you, the individual. A trust holds property and/or income for the benefit of others (the beneficiaries). A trustee holds the assets and runs the business on behalf of the beneficiaries of the trust, distributing income to the them. It is important to note that the trustee can be one of the beneficiaries. The trustee will have to follow all conditions and provisions as laid out in the trust deed.
When should you consider registering your PT business as a trust?
A trust company is always a good idea when there is more that one person responsible for running your business. Additionally, you might be advised to set up a trust in order to take advantage of the benefits associated with this type of business structure.
What are the benefits of a trust company?
- This legal structure provides more privacy than a company.
- The trustee retains control of management and assets.
- In the event of a corporate trustee being appointed, there is limited liability.
- There is better asset protection, especially if the trustee is a company.
- Asset and income distributions among beneficiaries can be flexible.
- Generally, trust income is taxed as an individual’s income.
- Greater tax planning flexibility.
- The trust deed clearly defines the limits of trustees’ powers.
A note of caution…
Remember that it’s always important to contact both your attorney and accountant when you are making important decisions about the structure of your business. There are many complex legal, financial and tax issues that need to be taken into account and professional advice is always best.