Company or Sole Trader? Choosing the Right Structure

One of the first decisions a new business owner faces is how to structure things. The choice between sole trader, company, trust or LTC is not just about tax. It affects your personal risk, your ability to raise capital and how complex your compliance will be.

Sole trader is the simplest and cheapest to set up. You and the business are the same legal entity, which means you are personally liable for business debts. For low-risk, low-turnover businesses, this can be fine to start with.

A company is a separate legal entity, which means your personal assets are generally protected from business liabilities. Companies pay company tax, which can be lower than personal tax rates at higher incomes. The trade-off is more compliance: annual returns, director duties and separate accounting.

A look-through company (LTC) is a hybrid. It files as a company but the profits are taxed in the hands of the shareholders. This can work well for small businesses where the owners want the flexibility of a partnership with the legal structure of a company.

Trusts offer strong asset protection but come with their own set of rules. They are often used alongside a company for property investment or asset protection planning.

The right choice depends on your income, your risk, your plans for growth and your personal situation. We help you weigh up the options so you can make an informed decision. And the first chat is free.