If you're thinking of starting a business, you’ll need to look at the advantages and disadvantages of each different business structure and work out which structure best suits your needs.
The four most common types of business structures in Australia are:
- Sole trader: an individual operating as the sole person legally responsible for all aspects of the business. Like other structures, as a sole trader you can employ people to help you run your business.
- Company: a legal entity separate from its shareholders. Read about the differences between a sole trader and a company to understand the tax differences, your potential personal liability and the legal obligations when employing people.
- Partnership: an association of people or entities running a business together but not as a company.
- Trust: an entity that holds property or income for the benefit of others.
If you're unsure about starting a unique business, you may like to consider franchising.
Before deciding which business structure to use, it’s important you seek advice from a professional business adviser, a lawyer or an accountant. You can also search our Advisory Services to find a low-cost business adviser near you.
Not sure which business structure to use?
Read more about choosing a business structure or use our Help me decide tool to help you work out the business structure that best suits your needs. All you need to do is answer a few questions about your business.
Once you’ve decided on your business structure, the tool can also help you work out which business and tax registrations you’ll need.
We need your help! If you use this tool, please give us your feedback so we can make it even better!
Changing business structures
It is important to know that you're not locked into one business structure for the life of your business. As your business grows and changes, you may decide to move to a different type of business structure.
Before changing structures, you need to be aware of the differences and obligations for each.
Find out the common reasons for changing structures and what to consider when changing your business structure.
What to do...
- Watch the Australian Taxation Office's (ATO's) Starting your business - Choose your business structure: tax basics for small business video to find out the tax differences between each structure.
- Watch the Essential Tips and Tools for Small Businessess webinar - a joint-agency webinar with general information about small business ownership.
- Check out the Australian Securities and Investments Commission's (ASIC's) Starting a company page on their Small Business Hub.
- Download ASIC's Business Checks app to help you verify information about a business you're dealing with.