One of the first decisions when starting a business is its structure. It shapes who is legally responsible, how tax works and what paperwork you need. business.gov.au, the Australian Government's business portal, sets out the main options.
Sole trader
A sole trader is legally responsible for all aspects of the business. It is often the simplest way to start, which is why many small businesses begin this way.
Company
A company is a legal entity that is separate from you. Companies have their own tax and legal obligations, and they involve more set-up and ongoing requirements.
Partnership
A partnership is made up of two or more people who share income or losses. A written partnership agreement helps set expectations from the start.
Other structures
business.gov.au also covers trusts, co-operatives, Indigenous corporations and joint ventures. A joint venture is two or more parties working together on a specific task or project.
It is not permanent
Structures can change as a business grows. business.gov.au has guidance on changing structure, including moving from a sole trader to a company, and on the differences in tax between the two.
Questions to think through
How much personal risk am I comfortable carrying?
Will I be working alone or with others?
How much administration can I manage?
What are my plans for growth?
This is general information, not legal or tax advice. An accountant or registered tax agent can help you choose the right structure for your circumstances.
About the author
RullikClear, sourced explainers on Australia and the world
Rullik is the pen name of the founder of Australia Illuminate (Auslume). Rullik writes plain-language explainers on life in Australia, from immigration, study and work to money, sport and screen culture, always linking to the official sources behind each story. Every story is reviewed before publication.
More from Rullik ↗This article was prepared with AI assistance.
