Insights · Structure ·
Company vs trust: choosing a structure
Your business structure affects tax, liability, how you take money out and how easily you can sell. There is no single best answer, but there are common patterns.
The main options
- Sole trader: simple and cheap, but profit is taxed at your personal rates and you are personally liable.
- Partnership: shared control and liability; each partner pays tax on their share.
- Company: a separate legal entity, taxed at the company rate (25% for base rate entities), with directors’ duties and Division 7A to manage.
- Trust: flexibility to distribute income among beneficiaries; often used with a corporate trustee.
Why trades often end up with both
A common pattern is a trading company or trust for the operating business, with assets held separately. The aim is to keep risk away from valuable assets. Whether that suits you depends on your goals, family and licence requirements (QBCC looks at the licensed entity’s finances).
When to review
- Profit consistently above what you need to live on.
- Taking on staff, bigger contracts or a partner.
- Planning to sell or bring in family.
Restructuring has tax and stamp duty costs. Get advice first.
Want this looked at for your business?
Book a free 15-minute Financial Health Check with Tereza, our practice manager. We look at income, tax, the business, mortgage, insurance and super in one go. Short on time? Grab a 5-minute quick chat.
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General information only. This doesn’t take your circumstances into account and isn’t tax, financial or legal advice. Talk to your accountant or registered tax agent before acting. PRM is not a registered tax agent; tax agent services are provided by Australian Tax & Super Pty Ltd (TPB 25291395).