When clients approach you with dreams of starting a business, one of the most critical early steps is selecting the appropriate business structure. The right entity can support growth, reduce tax liability, and protect personal assets. The wrong one can lead to inefficiencies, exposure to unnecessary risk, and missed opportunities.
There are six primary structures available in Australia. Here, we summarise their features and when each might be appropriate.
1. Sole Trader
This is the simplest and most cost effective structure. It’s ideal for proof of concept ventures or side hustles where initial risk is low. Sole traders can claim business expenses and may only need to register for GST once turnover exceeds $75,000. However, there is no legal separation between the individual and the business, meaning personal assets are at risk if the business is sued or fails.
Key considerations:
Easy to set up and run
Full control of profits
High exposure to liability
Subject to marginal tax rates
