This is the most common question we get from people in their first two years. There's no universal right answer, but there is a right answer for you — and it usually comes down to three things.
1. How much profit are you making?
As a sole trader, business profit is added to your personal income and taxed at your marginal rate, which climbs as you earn more. A company pays a flat rate on its profit. Once you're consistently making more than you need to live on, and leaving money in the business, the company structure starts to look better.
2. How much risk is in what you do?
A sole trader is personally liable. If something goes wrong, your house is in scope. A company is a separate legal entity, which puts a layer between the business and your personal assets. For higher-risk trades and anything with staff or big contracts, that matters.
3. What does it cost to run?
- Sole trader: ABN is free, tax return is one lodgement, minimal compliance.
- Company: ASIC registration and annual review fee, a separate company tax return, director obligations, and a bookkeeping standard you can't wing.
The honest rule of thumb
If you're under about $80–90k profit, low risk, and spending everything you earn, sole trader is usually fine. Above that, or with real liability exposure, get the numbers run properly. Restructuring later is normal and not a failure — plenty of our clients did exactly that.
Want this handled for you?
Fees quoted before we start, registered agents, and no judgement about how far behind you are.
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