Corporate restructuring is the process of changing an organization’s business structure for the purpose of expanding or downsizing the organization. It is often driven by a need for change within a business model or to make necessary adjustments to assets and other financial liabilities. At Diener & Associates, we understand the need to change the nature of your business as your company grows and circumstances change. Our team of certified public accountants (CPAs) can help you restructure your business in a way that supports your goals and protects your company from legal risk.
What Is Corporate Restructuring?
Businesses generally face both internal and external pressures to change in size and scalability over time. These pressures can make it beneficial for a business to restructure into a different business type. There are multiple ways that a company can restructure to avoid significant financial loss while maintaining organizational compliance. Typical business structures include the following:
- Sole Proprietor
- Partnership
- Limited Liability Partnership (LLP)
- Limited Liability Company (LLC)
- Corporation
- S Corporation
Choosing the right business entity is critical as your decision will impact the success of your business operations. Your business type affects many areas, such as taxes, financing, asset protection, and equity arrangements. Since every business structure is different, you must consider the reasons and the advantages of restructuring into a specific type.
Why Do Businesses Choose To Restructure?
A business may choose to restructure for a variety of reasons. Oftentimes, a company will find that restructuring can reduce the costs incurred due to regulations surrounding their current business structure. For example, if a company decides to restructure and downsize, they may eliminate redundancies and lower their payroll expenses. Additionally, restructuring an entity can help businesses make better use of their talent by allowing for more executive positions within their organization.
Companies may restructure for other reasons, such as to concentrate on key accounts or products, merge with another company, or incorporate new technology. In some cases, corporate restructuring can also help a business decrease or consolidate debt. Experienced CPAs can help businesses identify the reasons for negative performance and suggest possible restructuring solutions. They can also help optimize costs during and after the corporate restructuring process to improve organizational spending.
Benefits of Corporate Restructuring
The benefits of corporate restructuring can be substantial depending on the reasons for the change. Restructuring often brings financial benefits, such as when a company is attempting to revive its declining business or enhance the value of its organization. In many cases, bankruptcy can be avoided simply by downsizing the company to cut down on tax and other expenses.
Companies may also restructure to stay competitive. A company may opt for corporate restructuring to gain a competitive advantage or put their business in a position for increased growth. Maintaining a business structure that no longer meets your company’s needs can result in a variety of problems. Restructuring can lead to reduced tax liability and a smoother expansion or reduction.
Strengthen Your Business With Expert Corporate Restructuring Guidance
When you contact Diener & Associates for corporate restructuring services, you can expect premier services from outsourced CPAs. Our team of experts will perform an analysis of your current business structure and assist in determining the best possible legal entity for your organization’s unique goals and needs. We will also walk you through the tax implications and potential liabilities you may face, ensuring that you understand every aspect of a specific business structure before making your final decision. For more information about restructuring consulting or to get started, contact Diener & Associates by phone at 703.386.7864 or schedule a consultation online today.