Gisborne AccountantsBallarat Bookkeepers

We are often approached by people seeking to establish new businesses who want advice on the best structure available. Unfortunately, there is no clear winner. The nature of the business and the circumstances of the business owners must be considered in order to determine which structure will produce the best results.

The following is a brief explanation of the common business structures that seeks to assist business owners in assessing which is right fort hem.

There are a myriad of issues not considered in this paper and we urge you to seek specific advice that takes into account your unique circumstances and a much wider range of commercial, legal and taxation issues.

Goods & Services Tax (GST) is not discussed as the consequences are largely the same no matter what structure is selected.

Sole Trader

A person may set up and operate a business intheir own name. This is known as being a soletrader.

This is effectively choosing not to put a businessstructure in place.

Tax efficiency is lost where the person’s taxableincome exceeds $120,000 as the marginal taxrate exceeds the company tax rate of 26%.

he profits from the business are simplyincluded in the person’s taxable income andthey will pay tax on those profits at theirmarginal tax rate.


An individual will qualify for the generaldiscount whereby only half of a capital gain willbe taxable where the asset disposed of hasbeen held for greater than 12 months.

Further, an individual may qualify for the smallbusiness Capital Gains Tax (CGT) concessionsthat can significantly reduce tax payable on thedisposal of “active” assets (e.g. sale of businessor business assets).

R i s k P r o t e c t i o n

In carrying on a business as a sole trader, all liabilities and risk exposures (eg risk of being

sued) rests with the individual.

As such, personal wealth/assets will be exposed to the liabilities and risks of the business.

Conversely, the business will be subject to the personal liabilities and risks of the owner.

In essence, there is no separation between the business and the owner and this results in a

lower level of risk protection than is offered by alternative structures.


F i n a n c i a l R e p o r t i n g a n d A u d i t O b l i g a t i o n s

A sole trader has no financial reporting or audit obligations.

C o s t s

A sole trader will incur minimal costs in setting up business. They must simply obtain an

Australian Business Number and activate the relevant tax registrations (e.g. GST). This can be

done at no cost online.

If a sole trader wants to operate under a business name, then that business name must be

registered and a small fee will be incurred.

Contact UsContact Us

As you look for different ways to grow and improve your business, seeking professional advice could prove to be an important and helpful decision.

You can click here to speak to a businessaccounting and bookkeeping firm. We also offer hospitality business consultation and mortgage services. We will give you a call to know more about your needs. We will explain to you how we can improve your business.

We would love to help you formulate investment strategies and streamline your processes to take your business to the next level.  Our goal is to help you grow your business, find ways to invest more and increase your productivity.

Sky Accountants Ballarat

Phone: 1300 328 855

Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia

Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Sky Accountants Gisborne & Macedon Ranges

Phone: 03 97444522

Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia

Postal Address: PO Box 270 Gisborne Victoria 3437