How business structure advice usually works
Effective advice follows a clear path so you understand the trade‑offs before you commit:
- Discovery: clarify goals, expected revenue, risks, owners, and whether you’ll employ staff or raise capital.
- Compare options: weigh tax outcomes, asset protection, admin costs, investor readiness and flexibility for profit distribution.
- Documentation and registrations: ABN/TFN, business name, GST, PAYG withholding, STP payroll, superannuation, and for companies ASIC, constitution, shareholder agreements and director IDs. Trusts require a deed and may use a corporate trustee.
- Systems setup: bank accounts, bookkeeping software, receipt capture, chart of accounts and BAS cycle.
- First 90 days: confirm BAS settings, payroll, super, and implement a simple month‑end checklist.
- Review: revisit structure as profit, team size and risk profile change, and plan for year‑end tax.
Structure at a glance: sole trader, company, trust, partnership
Sole trader
Fast and low-cost to start. Income taxed at individual rates. Simple reporting. No legal separation between you and the business.
Company
Separate legal entity with ASIC obligations. Flat company tax rate applies. Suitable for retaining profits, bringing in investors and managing risk.
Trust
Flexible distributions to beneficiaries. Useful for asset protection when set up correctly. Requires a trust deed and ongoing administration.
Partnership
Two or more individuals or entities run a business together. The partnership itself doesn’t pay tax; partners are taxed on their share. Shared liability.
If you are unsure where to start, read the New Business Accounting Checklist or speak with a Small Business Accountant about the pros and cons for your situation.
Australian context to keep in view
- GST: register when turnover is or is likely to be $75,000+ in 12 months. Choose monthly or quarterly BAS based on cash flow and complexity.
- Payroll: Single Touch Payroll (STP) is mandatory for employees and most directors. Superannuation must be paid at current mandated rates on time.
- Personal Services Income (PSI): if income is mainly from your personal efforts, PSI rules may limit deductions and affect how you pay yourself.
- Director obligations: companies require ASIC compliance and director IDs. Keep minutes, registers and resolutions up to date.
- WorkCover and payroll tax: state-based rules apply. Thresholds and rates vary by state or territory.
- Banking and audit trail: separate accounts per entity. Keep clean documentation to support BAS and year‑end positions.
For registrations, see ABN Registration Help and Business Name and Tax Set Up.
What to compare before you commit
Outcomes
Tax impact now and later, asset protection, ability to admit investors, and how profits can be retained or distributed.
Compliance load
ASIC and deed requirements, BAS frequency, payroll/STP complexity, and year‑end reporting effort.
Software and workflow
Fit with your bookkeeping system, banking feeds, receipt capture, payroll, and reporting cadence.
Adviser fit
Clear advice in writing, predictable fees, turnaround times, and a roadmap that covers setup and ongoing reviews.
Common scenarios we see
- Testing a side project as a sole trader, then moving to a company once revenue and risk justify the change.
- Setting up a company with a discretionary trust shareholder for flexibility and asset protection.
- Freelancers navigating PSI while choosing between sole trader and company for branding and contract requirements.
- Partnerships formalising agreements to cover profit splits, decision rights and dispute resolution.
- Established businesses restructuring to access small business CGT concessions or bring in investors.
When you’re ready to act, our Company Set Up Accountant and New Business Accountant pages outline next steps.
Best next steps
- Define your goal: lowest admin, risk separation, investor‑ready, or tax flexibility.
- Sketch a 12–24 month view: expected revenue, hiring, and major contracts.
- Shortlist two structures that fit and note the trade‑offs.
- Get written advice that maps setup tasks, registrations, payroll/BAS cycle, and review points.
If you need help clarifying the brief, start with the New Business Accounting Checklist or speak to a Tax Accountant about tax impacts and timing.
Frequently asked questions
Which structure is best for a new Australian business?
The best choice depends on your goals for tax, risk, speed and growth. Sole trader is simple and low‑cost. Companies offer a flat tax rate, continuity and credibility, but add ASIC compliance. Trusts can help with asset protection and flexible distributions. Partnerships are common for co‑founders but share liability. A short advice session can map this to your numbers and plans.
When should I register for GST?
Register when your GST turnover is or is likely to be $75,000+ in a 12‑month period. Some businesses register earlier to claim credits on setup costs or to meet client expectations. Choose monthly or quarterly BAS based on cash flow and accuracy needs. See BAS agent services for support.
How do tax rates differ by structure?
Sole traders pay at individual marginal rates. Companies pay a flat company rate (smaller trading companies may access a lower base rate if eligible). Trusts generally distribute income to beneficiaries who then pay at their marginal rates. Partnerships distribute income to partners. The “best” outcome changes with profit levels and distribution plans.
Do PSI rules affect me as a contractor or consultant?
They might. PSI applies when income is mainly from your personal efforts. If PSI applies, some deductions can be limited and income may be attributed to the individual. Correct contracts, multiple clients and business assets or staff can change the analysis. Get advice before committing to a structure purely for tax reasons.
What setup steps should I expect?
Choose structure, obtain ABN/TFN, register business name if needed, register for GST and PAYG withholding if applicable, set up STP payroll, confirm super obligations, open bank accounts and implement bookkeeping software. Companies require ASIC registration and director IDs. Trusts require a deed and may use a corporate trustee. See Business Name and Tax Set Up for more detail.
Can I switch structures later?
Yes, but switching can trigger tax and legal steps. There are rollovers and concessions that can help, but timing and documentation matter. Plan the change when contracts, finance and systems can be updated cleanly—often at year‑end.
How should I pay myself?
Sole traders and partners usually take drawings and pay tax via their personal returns and PAYG instalments. Company directors typically use salary (with PAYG and super) and/or dividends. Trust distributions are resolved at year‑end per the deed. Consider cash flow, compliance and PSI.
What should I read next?
Start with New Business Accountant, then see Company Set Up Accountant, ABN Registration Help, and New Business Cash Flow Set Up. If you are comparing services, use the comparison pages or head to the Help Centre for quick answers.