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Here is a quick comparison of the 4 common business structures.
Complexity refers to ongoing record keeping, reporting, tax obligations, paying yourself or taking money or assets from your business.
Select the options to compare business structures:
Sole trader
Partnership
Company
Trust
| Sole trader | Partnership | Company | Trust | |
|---|---|---|---|---|
| Setup costs | Low | Medium | High | High |
| Ownership/Control | Owner | Joint between partners |
Controlled and managed by Directors
Owned by shareholders
|
Managed by a Trustee for the benefit of the beneficiaries |
| Separate legal entity | No | No | Yes | Yes |
| Money earned belongs to | Business owner / Sole trader | Each partner | The company | Beneficiaries |
| Debt liability | Business owner / Sole trader | Each partner |
Generally, the company
Directors may be personally liable in some circumstances
|
The trustee |
| Ongoing professional support required | Low | Low | High | High |
| Complexity | Low | Low-Medium | High | High |
| Complexity – if you have personal services income (PSI) | Low | Medium | High | High |
| Time commitment for record keeping and reporting | Medium | Medium | High | High |
| Able to employ workers | Yes | Yes | Yes | Yes |
| Entitled to |
Tax File Number
Australian Business Number
Business name
myID
|
Tax File Number
Australian Business Number
Business name
myID
|
Tax File Number
Australian Business Number
Australian Company Number
Director Identification Number
myID
|
Tax File Number
Australian Business Number
myID
Australian Company Number (If using a company as trustee)
Director Identification Number (If using a company as trustee)
|
| Lodgments |
Instalment activity statements
Individual income tax return
|
Instalment activity statements
Partnership tax return
|
Instalment activity statements
Company tax return
Annual review
Yearly declaration of solvency
|
Instalment activity statements
Trust tax return
|
| Tax rates | Individual income tax rate | Individual income tax rate | Company tax rate |
If income is kept in the trust, it is usually taxed at the highest rate of individual income tax.
If the income is distributed to the trust beneficiaries, the beneficiaries pay the tax at their individual tax rates.
|
Last modified: 11 Nov 2024
Starting a small business
| Steps | Progress | |||||
|---|---|---|---|---|---|---|
Is my hobby a business? |
9 mins | |||||
Business structures overview |
5 mins | |||||
Business registrations |
5 mins | |||||
Sole trader structure |
7 mins | |||||
Partnership structure |
10 mins | |||||
Company structure |
13 mins | |||||
Trust structure |
7 mins | |||||
Small business support |
10 mins | |||||
Related courses |
1 mins | |||||
Course Feedback |
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