Accountants for firms that sell expertise.
Law firms, engineers, architects, consultants, agencies and recruiters. Your product is professional judgement - and the tax system treats businesses like yours differently, from how profit reaches principals to what counts as your income at all. This is most of who we act for, and it's the work we know best.
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What professional firms actually need reviewed.
Six issues come up in almost every professional practice we take on - and the expensive ones are structural, which means the earlier they're looked at, the cheaper they are.
Profit allocation - PCG 2021/4
The ATO now risk-scores how firm profit reaches individual practitioners, in published green, amber and red zones. Every principal has a zone. We calculate yours, document the basis, and restructure the flow if you're sitting somewhere the ATO has said it looks first.
Structure for a professional practice
Company, trust, partnership of entities - within your profession's rules and the ATO's guidelines. Structured well before new principals are admitted, because restructuring around an admission costs ten times what starting right does.
PSI, answered honestly
For solo consultants and contractors, the personal services income rules decide whether your structure does anything at all. The tests are mechanical. We run them and tell you the truth, because a structure the rules ignore is worse than none.
Admissions, exits and equity
Buying in a principal, retiring one out, valuing goodwill in a business whose assets walk out the door each evening. Modelled and papered before the conversation gets emotional.
Payroll tax on contractors
The relevant contract provisions catch professional firms that never thought of themselves as employers of their consultants and counsel. Reviewed against the exemptions before an assessment arrives, not after.
The principals, personally
Division 293, super caps, family trusts, the firm and the household seen together. In a professional practice, the entity and the person are one financial picture - we advise it that way.
Who this page is for.
If your business bills for judgement, time or advice, you're in the room. The professions we act for most:
Law firms and barristers
Engineering practices
Architects and design studios
Management and IT consultants
Marketing and creative agencies
Recruiters and labour hire
Surveyors and town planners
Financial services professionals
Training and education providers
Doctors, dentists and allied health run on different rules - payroll tax on practitioner arrangements chief among them - so they have their own page.
What this looks like in practice.
A consulting firm, eleven staff, three owner-directors on unequal contributions.
Case study · Professional servicesThree partners, one company, and a profit share nobody could agree on.The structure separated from the reward, and a buy-in that stopped being a stalemate. See what changed
The background
Fifteen years old and genuinely successful. The three owners had started as equals, and the shareholding still said so - a third each - long after the working reality had stopped matching it. One was full-time and bringing in most of the work, one was part-time by choice, and the third had moved into a delivery role.
The challenge
The structure could only express one thing, and it was the wrong one. Everything - dividends, decisions, and any future sale - flowed from the equal shareholding, so the owner generating most of the revenue was rewarded identically to the one working two days a week. That had been absorbed for years as a fairness question between friends, and it was on its way to becoming a dispute. Meanwhile a senior manager the firm could not afford to lose had asked about buying in, and there was no mechanism to let them: no valuation method, no funding path, and nothing in the constitution or a shareholders agreement that said how it would work. Underneath both problems, retained profit sat in the trading company alongside the operating risk, and the owners were drawing on loan accounts nobody was tracking against Division 7A.
The approach
Separate the questions that had been tangled together: what each owner earns for the work they do, what each owns, and where the accumulated profit sits. Once those are three decisions instead of one, most of the heat comes out.
How the work ran
Stage 1
Split reward from ownership
Remuneration was rebuilt to pay each owner for their actual role - salary for work done, plus an agreed profit share tied to contribution - leaving the shareholding to do the one job it is good at, which is ownership. The equal split survived where it belonged and stopped governing what people took home.
Stage 2
Get the profit out of the risk
A holding company was introduced above the trading entity so accumulated profit could sit apart from the business carrying the client work and the professional risk. Existing loan accounts were brought onto complying Division 7A terms rather than left to be discovered at year end.
Stage 3
Write the buy-in down before it is needed
A shareholders agreement with an agreed valuation method, a vesting schedule and a funding path, so the senior manager's buy-in became a process rather than a negotiation. The same document covers what happens when an owner leaves, retires or dies - the three events that end firms like this.
What changed
- Owner remuneration
- equal, regardless of rolesalary plus contribution-based share
- Retained profit
- in the trading entityheld above the operating risk
- Loan accounts
- untrackedcomplying Div 7A terms
- Buy-in path
- nonevaluation method, vesting, funding
- Exit and death provisions
- unwrittendocumented and agreed
Professional firms rarely come apart over money. They come apart because a structure set up between three equals on day one is still being asked, a decade later, to describe a relationship that has changed - and nobody wants to be the one who raises it.
A worked example, built from the pattern these engagements follow in professional services. The business is composite and unnamed; the mechanics, the sequence and the order of work are the ones we use. Talk to us about your own numbers.
Frequently asked questions.
What is PCG 2021/4 and does it apply to my firm?
It's the ATO's compliance guideline on profit allocation in professional firms. If you're an individual practitioner - lawyer, engineer, consultant, architect - practising through a firm, the ATO risk-scores how the firm's profit reaches you: how much is returned in your own hands, and at what average tax rate. The scoring places you in a green, amber or red zone, and the zone decides how interested the ATO is in you. Most principals we review have never had their zone calculated. That calculation is where we start.
Can a law firm or professional practice run through a company or trust?
Usually yes, subject to your profession's rules - Queensland legal practices can incorporate, and most engineering, consulting and architecture practices are free to choose their structure. Whether you should is a different question: professional standards, asset protection, profit allocation guidelines and admission of future principals all pull on the answer. Structure is the decision every other one hangs off, which is why it's reviewed first.
I'm a solo consultant with one main client. Do the PSI rules catch me?
Possibly, and it's worth knowing honestly. The personal services income rules decide whether income from your skills can be taxed in a company or trust, or is attributed straight back to you regardless of structure. The tests - unrelated clients, results, employees, business premises - are mechanical, and we'll tell you plainly which side you're on. A structure the PSI rules ignore is a cost, not a plan.
Are our contractors caught by payroll tax?
Queensland's relevant contract provisions catch many arrangements professional firms assume are safe - regular subcontracted consultants, career counsel arrangements, long-running contractor relationships. The exemptions are specific and the assessments are retrospective. If nobody has reviewed your contractor arrangements against the payroll tax rules recently, that review is worth having before the OSR asks.
Do you act for the principals personally as well as the firm?
Almost always. Firm, principals' personal returns, family trusts and often the SMSF - one team seeing the whole picture. In a professional firm the entity and the individual are financially inseparable (that's precisely why the ATO wrote a guideline about it), so advising one without the other is half a job.
What about our trust account?
If you hold client money - legal trust accounts especially - the statutory record-keeping and external examination sit under your profession's rules and your practice management software. We keep the office side clean and reconciled against it, work alongside your external examiner, and LINK Books handles the day-to-day bookkeeping. What we don't do is pretend the trust ledger is ours to run - that stays where your regulator put it.
Find out what zone your firm sits in.
Most principals have never had their PCG 2021/4 position calculated. The first conversation is free, and the calculation usually pays for the relationship.
Or call 07 3899 8311.