Sole Trader vs Company: Which Structure Should You Choose?

Choosing between operating as a sole trader or registering a Pty Ltd company is the first structural decision most Australian founders make.

Sole trader

• Cheapest to set up — you just need an ABN (free via the Australian Business Register).
• Business income is taxed at your personal marginal rate.
• You are personally liable for business debts.
• You can trade under your own name, or register a business name with ASIC.

Pty Ltd company

• Setup costs apply (ASIC registration fee) plus annual review fees.
• Company profits are taxed at the company rate (25% for base rate entities).
• Limited liability: the company is a separate legal entity.
• More admin: directors' duties, a director ID, separate company tax return.

Rules of thumb

1. Starting small, low risk, testing an idea → sole trader is usually fine.
2. Taking on staff, contracts with liability exposure, or reinvesting profits → a company starts to make sense.
3. You can start as a sole trader and restructure later — rollover relief may apply.

Always confirm the choice with a registered tax agent before committing; the right answer depends on your income, risk and growth plans.