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Choose the right business structure

Save money and protect yourself.

On this page

  • The impact of different structures
  • Step by step selection tool
  • Ready reckoner for popular structures

The impact

Business structures impact on who can make important decisions, tax advantages and disadvantages, how profits and losses are shared, legal obligations and costs. Use our step-by-step guide to help you decide. You can change your structure as your business changes so pick what's best for you now.

Step-By-Step: Choose the best business structure for you

Three most popular business structures

For new businesses, the three most popular business structures are sole trader, partnership and company. The structure identifies your operation as a trading business.

Knowing the differences between these structures and choosing what's best for your business can put you in the most favorable tax and legal position. 

Sole trader

A sole trader is a simple business structure that gives you, the owner, all the decision making power. You can also hire staff if you want to. Business losses can be written off your PAYG tax from another job

Partnership

A partnership is formed when two or more people (up to 20) go into business together. Partnerships can either be general or limited.

Company

A company has members (shareholders) who own the company, and directors who run it. However, if you're an independent contractor you can set up a 'one person company' with a sole director and member. Companies can also be listed as public companies, meaning the public can buy shares to invest in the company.

The differences at a glance


Sole Trader

Partnership
Company

Simple business structure

Yes
No
No
Can be owned & run by one person?
Yes
No
Yes
High initial set-up fees?

No

($33)

Yes

($359.90)

Yes

(Limited share capital - $444)


Can hire staff?
Yes
Yes
Yes
Tax benefits?

Only when profits are low.

Enjoys tax-free threshold

Yes, especially if partners are in the same family

Yes, but does not enjoy tax-free threshold
Relatively easy to attract capital?
No
No
Yes, because of limited liability
Relatively easy to operate globally?
No
No
Yes
Pay your own super?
Yes
Yes
Yes

Collective or personal responsibility for debts/losses
Personal Collective Personal if personal guarantee undertaken

Relatively easy to close down?
Yes
No
No