Sole Trader vs Company: Which Business Structure is Right for You?

Choosing between operating as a sole trader or setting up a company is one of the most important decisions you'll make when starting a business in Australia.

Sole Trader: The Simple Option

Advantages - Easy and cheap to set up - Full control - Simple tax - Privacy - Easy to close

Disadvantages - Unlimited liability - Limited growth potential - Higher tax at higher incomes - Less credibility

Company: The Scalable Option

Advantages - Limited liability - Tax benefits (25% company tax rate) - Easier to raise capital - Professional image - Perpetual existence

Disadvantages - More expensive to set up - Complex compliance - Director responsibilities - Harder to extract money

When to Choose Sole Trader

• Testing a business idea
• Low-risk service business
• Expecting income under $80,000
• Want minimal paperwork

When to Choose a Company

• Higher-risk business activities
• Expecting income over $100,000
• Planning to hire employees
• Want to protect personal assets

Need Help Deciding?

We help Australian businesses set up the right structure. Book a free consultation.