Can you afford not to have separate entities for multiple businesses?

A common mistake we see with business owners is that they decide to operate multiple businesses under one ABN.  It is true that it will increase costs to set up separate entities for multiple businesses.  It is also true that not setting up separate entities can be a very costly exercise.  

A couple of very important reasons why not having the correct setup can cost you more in the long run:

  1. If you are running multiple businesses under one ABN you are putting your group of businesses at risk.  If one business fails and you are operating all under one ABN, the whole group will be at risk.  For asset protection purposes, it is prudent to keep your businesses separate. 
  2. It should be more tax effective running your businesses separately.
  3. You can manage your businesses more accurately, measuring income and expenses closely for each individual business.
  4. When it comes time to sell, you can sell off each business separately.  Determining the value in each business is simple when they are separate.  Buyers are also less likely to question the figures when they relate only to the entity being sold.