When To Consider Corporate Restructuring

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Corporate restructuring is a great opportunity to examine your business models and create a plan that will facilitate growth and optimize your business for the long term.

Corporate restructuring is a process that significantly modifies the financial and operational aspects of a company.

While this action is typically taken when a company is facing financial hardships, a company doesn’t have to be in distress to benefit from a restructuring plan.

A corporate restructure even when your business is successful can have major benefits!

Overall, corporate restructuring is done to modify a company’s operation, structure, or debt to limit financial harm or facilitate growth.

What Does Corporate Restructuring Involve?

During a corporate restructuring, the operations, departments, processes, or even ownership may change. However, this can enable a business to become more integrated and profitable.

The results of a corporate restructuring vary according to how the business operates and the reasons for making a change.

It could result in changes to procedures, networks, locations, and computer systems. It’s possible that jobs may be eliminated or employees laid off.

Corporate restructuring is a long and detailed process as both the internal and external structures of a business are altered and adjusted.

Once completed, however, business operations will become smoother and more economically sound putting the company in a better position to attain its goals.

4 Reasons Why You Should Consider Corporate Restructuring For Your Business:

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Corporate structuring should not be undertaken lighting. To give you an idea of when it is necessary, here are some situations in which you should consider corporate restructuring:

1. Your Business is Expanding or Refocusing

The business world is dynamic and there’s no predicting when external factors can negatively impact a business or inspire it to change.

Changing the way a business operates through a corporate restructuring can help the business adapt to change.

For instance, the COVID-19 pandemic enforced the need for better telecommunication, improved working systems, revised employee policies, and the accommodation of remote working.

Many companies sought corporate restructuring to ensure that their business continued to thrive during this time.

Likewise, an expansion of a business requires a certain degree of reorganization. As a business grows, it may require setting up new departments, appointing new management, and developing different leadership styles – all of which can be achieved through corporate restructuring.

2. New Shareholders Are Being Brought In

When new shareholders are brought into your business, a company restructuring is necessary to ensure you retain total control of your business.

Restructuring can help you manage the way that dividends are allocated as well as protect your capital contribution to the company.

During the restructuring, you may want to consider issuing different classes to new investors so that voting rights are tailored in a way so that important decisions remain with you.

3. The Company is Becoming Publicly Traded

Companies can become publicly traded through two channels: IPO and Direct Listings.

During the IPO process, new shares of the company are brought to market by an investment bank. Direct listings involve employees selling their shares directly to the general public with no involvement from an investment bank.

Becoming a publicly-traded company is exciting but you don’t want to get too caught up in that excitement. 

Instead, it’s important to consider how a corporate restructuring in this situation can help you optimize your stock decisions as you make a successful entrance into the public market.

4. Your Business is Under Corporate Financial Distress

Corporate restructuring can also be beneficial when your company is experiencing financial distress.

Seeking expert advice can help save your company when faced with the following challenges:

  • Poor Competitiveness
  • Stagnated Growth
  • Significant Revenue Drop
  • Shortage of Cash-Flow
  • Poor Management
  • Untethered Expenses
  • Dependence on Debt
  • Inefficient Business Structure
  • Diminishing Customer Base
  • Decline in Sales

When you can recognize the signs that your business is heading toward financial hardship, you can act quickly and implement a business restructuring that will allow you to restrategize and regain profitability.

Professional Corporate Restructuring Services

Restructuring an entire company is no easy task. However, our experts at Liu & Associates can help you create a customized path to help your business evolve and succeed.

By going over your current financial structure, our team can help you determine the best course of action, whether you are looking to downsize or expand.

Our corporate restructuring service includes changing legal ownership of a company, switching corporate tax structures, strengthening capital structures, and more!

Let us take care of planning and implementing your corporate restructuring plan. 

Get in touch with our experienced and knowledgeable team for more information or book an appointment to get started today.

Top Three Things to Ask your Accountant When Setting Up a Business

If you are starting your own company, an accountant is an invaluable resource. Depending on how you set up and run your business, it can save you money and time when tax season rolls around. Read on for three important questions to bring up with your accountant to ensure you are setting your company up for success!  

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1. what Structure is Best for my Company?

Depending on your start-ups circumstances and projected profitability, your accountant can recommend the best business structure. Whether you go with a sole trader, partnership or limited company, your accountant can advise you of any potential benefits or drawbacks to each structure.

Common Types of Business Structures

2. What Records do I Need to Keep?

Keeping up to date business records is sure to make your life easier when it comes to tax time or even worse – an audit. Some of the most common things you’ll need to keep track of include:

  • Business expenses
  • Bank & credit card statements
  • Tax filings
  • Payroll
  • Income
  • Invoices
  • Purchase orders
  • Inventory

Other common questions surrounding this topic usually include where should you store these records, and how long do you have to keep them for. Your accountant can give you answers to all these questions are more, as well as offer some tips on how to streamline your record keeping. Here at Liu & Associates, we offer bookkeeping services that can keep this kind of stuff off your plate entirely!

3. Do I Need to Register for a GST/HST Number?

If you provide a taxable property or service in Canada and you no longer qualify as a small supplier, you will need to register for a GST/HST number.

What Qualifies as a Small Supplier?

If you have sales under $30,000 in the current calendar quarter, as well as the last four calendar quarters, your business has small supplier status. This means that you do not have to collect and pay GST/HST. Once you exceed $30,000 in a single quarter, you lose small supplier status and must begin to collect and pay GST/HST.

Regardless of your business’ income, you can voluntarily register for a GST/HST number. A GST number will allow you to claim input tax credits. Your accountant can explain when the best time to register for a GST/HST number is depending on your business’ situation.

Contact an Accountant Today!

Regardless of what stage of business planning you are in, the expert team at Liu & Associates can help! Give us a call to book a consultation with one of our accountants today.