See what business structure is right for you

Building a new business? Set yourself up for success from the start by choosing the best business structure for your needs. Regardless of the industry you’re in, the way you structure your business will impact your operations (we’ll cover this later) in the short and long term. This could be good or bad! If you choose the wrong structure, the impacts can seriously impact the success of your enterprise… 


So, what are the business structure options, and how can you choose the right fit? For most small businesses, there are four basic choices. Familiarise yourself with each of the four structures to determine which structure is best for your business. 


Four business structures for a small business. 


There are more than four business structures, however these are the most-widely used and appropriate options for small business owners. 


1. Sole Trader. 


A sole trader business is where one person owns, operates, and manages the business. This is a structure commonly used by small and microbusinesses, and a sole trader is not considered a separate legal entity. Examples include tradespeople, shop-owners, consultants, freelancers of any industry, and other small businesses with one main person running it. 


As a sole trader, even though you are solely responsible for running the business, you can still hire employees. You do not need to pay superannuation and workers’ compensation to yourself as a sole trader. 


2. Partnership. 


Like the name suggests, a partnership describes at least two people who jointly own and manage the business — but not as a company. Each party contributes funding, labour, and skills to the business, sharing in the income and liabilities according to agreed ratios. This doesn’t necessarily have to be a 50/50 split, and the specifics are detailed in a Partnership Agreement to ensure all parties are on the same page. Like a sole trader, you do not need to pay superannuation and workers’ compensation to yourself in a partnership structure. 


3. Trust. 


Trusts are legal relationships where a person or persons (the ‘trustees’) hold property or income on behalf of a beneficiary or group of beneficiaries. Trusts are a common business structure for family-run businesses. The benefits include tax minimisation strategies, as well as succession planning opportunities to ensure the future of the business. 


Paying superannuation and workers’ compensation to yourself is compulsory with this arrangement. 


4. Company. 


Companies are a legal entity in their own right, separate from their owners. A different tax structure applies, as well as different administrative requirements. Paying superannuation and workers’ compensation to yourself is compulsory with this arrangement. 


How your business structure affects your business. 


There are six main business areas that will be affected by how you structure your business: 


  • Finances including tax liabilities, superannuation, workers’ compensation, and so on. 
  • Legal controls and constraints. 
  • Administrative burden and costs. 
  • Asset protection. 
  • Personal liability for debts. 
  • Your ability to raise funds. 


Now you know the options, but how do you decide? 


To help you select the most suitable structure for your business, we’ve penned some questions for you to consider. 


1. How big is the business you’re creating? 


If it’s just you in the business (for the foreseeable future at least), its sole trader status will be most favourable. Remember, as a sole trader, you can still hire employees, but you’re solely responsible for running and managing the business. If you have rapid growth plans and require help to run and manage the business, forming a company or partnership may be better. 


2. Can you handle a complex set up procedure? 


The simplest and cheapest form of business structure to register is sole trader or partnership. They are generally quick and easy to set up. If it’s just you in charge of operating the business, you may want to avoid the complexities involved in setting up a trust or company. 


3. How flexible do you need your business to be? 


Sole traders enjoy greater flexibility when it comes to management and generally operate with fewer legal controls than companies, partnerships, or trusts. However, they have less flexibility with tax affairs, and there is no income-splitting option like there is with partnership, company and trust setups. 


4. Do you want to keep admin and reporting simple? 


If you’re considering a trust or company, the administrative and reporting requirements are more cumbersome than with a simpler sole trader set up. 


5. How do you feel about accepting full liability? 


Sole traders retain all the profits from the business (unlike with a partnership, trust or company) but they’re also responsible for all debts. This can increase the pressures of running the business, and even threaten your home and other personal assets if the business isn’t doing well financially. 


Companies are more complicated and expensive to set up, but you won’t be solely responsible for debts incurred. Only the assets of the Company will be at risk, however it is possible for a director’s personal assets to be at risk if they are found to have acted negligently. 


6. Will you need to raise capital? 


“Capital raising” is when a company asks for money from investors. This money might be used for funding, expanding, or acquiring something. As a company, trust, or partnership, it’s relatively easy to raise capital. However, this becomes much more difficult as a sole trader (and usually isn’t necessary anyway), so you will generally have to rely on savings, home equity or family loans. 


7. How much control do you want in the business? 


As a sole trader, you have total control over all business decisions. As a partnership, trust, or company, decision-making must be a shared responsibility. It’s not uncommon for business owners to start as a sole trader and then evolve into a more complex structure over time — and the business owner struggles to relinquish control. This causes tension within the company, trust, or partnership. While some business owners want full control, others enjoy knowing that responsibilities are divided and shared. So, what resonates better with you? 


So, what happens if you choose the wrong business structure? 


It’s annoying, but it’s not the end of the world. You can change your business structure if your circumstances change or if you think you’ve made the wrong decision. However, obviously it pays to opt for the most suitable structure from the start, which is why we suggest engaging a third party to help you with your decision. Changing from sole trader to another structure is relatively simple but changing from a partnership, company, or trust is more complicated. 


Get expert advice before you start your business.

Always seek specialist advice before making your final decision. If you want to chat through your options, contact Ascent Accountants today. We specialise in business set up and know the different business structures inside-and-out. We’ll be happy to talk through your options, go over the pros and cons of each, and help you land on the best structure for your business needs. We also do it while considering any business growth plans, so your business is set up for success now and in the future. 

Need help with your accounting?

Find Out What We Do

What Registrations Do I Actually Need When Starting a Business?

February 13, 2026
Starting a business is an exciting milestone, but the paperwork can quickly become overwhelming. At Ascent Accountants, we often see new business owners get caught in the "registration trap"—either registering for everything at once (and creating unnecessary admin) or missing critical deadlines that lead to penalties. Knowing which registrations are mandatory and which are optional depends on your business structure, turnover, and whether you have a team. Here is our high-level guide to the essential registrations you need to consider. 1. The Foundations ABN & TFN. Australian Business Number (ABN): Your ABN is your business’s unique 11-digit identifier. While not strictly compulsory for everyone , you almost certainly need one. Without an ABN, other businesses must withhold 47% of any payments they make to you. Tax File Number (TFN): Sole Traders: You use your personal TFN. Companies, Partnerships, and Trusts: You must apply for a separate business TFN. 2. Tax Registrations (ATO) Goods and Services Tax (GST): You must register for GST if your business has a GST turnover of $75,000 or more ($150,000 for non-profits). If you drive a taxi or provide ride-sourcing services (like Uber), you must register regardless of your turnover. Fuel Tax Credits: If your business uses fuel in heavy vehicles, machinery, or for other eligible activities, you can claim a credit for the excise or customs duty included in the price. Note: You must be registered for GST before you can register for Fuel Tax Credits. 3. Employer obligations when hiring a team. If you’re moving from a "solo-preneur" to an employer, your registration requirements change significantly: PAYG withholding: You must register for Pay As You Go (PAYG) withholding before you make your first payment to employees or certain contractors. This allows you to withhold tax from their wages and send it to the ATO. Superannuation: You don't "register" for super in the traditional sense, but you have a legal obligation to pay the Superannuation Guarantee (currently 12% on July 1, 2025) for eligible employees. We recommend setting up a Superannuation Clearing House to streamline these payments. On 1st July 2026, super will be required to be paid each payday. Workers’ compensation insurance: This is a mandatory insurance policy for almost all employers in Australia. It protects you and your employees in the event of a work-related injury. Each state has different rules; for example, in WA, you must have a policy if you employ anyone defined as a "worker." 4. Business Identity: ASIC If you want to trade under anything other than your own legal name (e.g., "John Smith" vs. "Smith’s Landscaping"), you must register the name with the Australian Securities and Investments Commission (ASIC). Our advice? Don’t over-register too early. We often see clients register for GST before they reach the $75k threshold. While this allows you to claim GST credits on your setup costs, it also means you must lodge regular Business Activity Statements (BAS). Speak with us before you hit "submit" on your registrations. We can help you determine the most tax-effective timing for your specific situation. Contact the team today.

Protecting Your Property Investment With Title Insurance.

February 13, 2026
When you find your dream home, the process often feels like a whirlwind of inspections, mortgage documents, and packing boxes. Most buyers are diligent about checking for termites or structural cracks, but there is one significant risk that a physical inspection can’t uncover: legal defects in the property’s title. When it comes to real estate, one of the most effective ways to safeguard your equity is through Title Insurance. What is title insurance? Unlike standard home and contents insurance—which covers future events like fires, storms, or theft—Title Insurance is a specialised policy that protects you against existing but unknown legal risks that occurred before you bought the property. It is a one-off premium paid at the time of settlement that provides cover for as long as you own the home. Despite its value, statistics suggest only about 50% of buyers currently opt-in. How it works: real-world scenarios. Title insurance steps in when "discrepancies" surface after you’ve already moved in. Here are the most common ways it protects you: Illegal building work & conversions: It’s common to find a garage that was converted into a bedroom or a deck built without council approval. If the local council discovers this later and demands you bring it up to code or demolish it, Title Insurance can cover the legal and construction costs. Boundary & encroachment issues: Imagine discovering your fence, garage, or driveway is actually sitting on your neighbour’s land or Crown land. The cost of surveys, new building plans, and reconstruction can be staggering. Title insurance handles these expenses. Unpaid rates or taxes: If the previous owner left behind land tax or council rate debts that weren't discovered during settlement, the policy can cover these outstanding costs. Planning & zoning violations: Protection against loss if you cannot live in the house because it doesn't comply with local zoning laws. Is it worth It? These problems often stay hidden for years. You might buy a house that looks perfect, only to find out it has issues when you apply for your own renovation permits. For a relatively low, one-time fee, Title Insurance offers "peace of mind for your purchase." However, it is not a substitute for due diligence. Before you sign: Consult your conveyancer: They can help you finalise the policy during the settlement process. Research the provider: Ensure the company has a strong history of payouts and longevity in the market. Review the coverage: Understand what is specific to your property type (e.g., strata vs. green title). The Ascent perspective. From a financial planning standpoint, an unexpected $20,000 council-ordered demolition or a boundary dispute can derail your investment strategy. Title insurance is a small price to pay to ensure your property remains a secure asset rather than a legal liability. Are you planning a property purchase? Talk to the team at Ascent Property Co and Ascent Accountants to ensure your tax and financial structures are as solid as the roof over your head.

Understanding the New Payday Superannuation Requirements (1 July 2026).

February 13, 2026
From 1 July 2026, the way employers make superannuation guarantee (SG) contributions will change. The Australian Taxation Office (ATO) has introduced Payday Super . This reform requires employers to pay super at the same time they pay employees’ wages. This is a significant update to the timing of super payments, and it’s important that your payroll processes and software are prepared well before the new rules commence. For full details, including eligibility and exceptions, see the ATO’s information on Payday Super. Key changes. Current requirements. Under the existing system, employers can make Super Guarantee payments to an employee’s fund up to 28 days after the end of the quarter. SG can be paid quarterly or more frequently (for example, monthly), and the current quarterly due dates are 28 October, 28 January, 28 April, 28 July. From 1 July 2026 Under the new Payday Super regime, Super Guarantee payments must be paid to an employee’s super fund at the same time as paying qualifying earnings (QE) — that is, on the employee’s payday . The payment must be received by the super fund within 7 business days of payday. There are limited exceptions to this 7-day deadline, such as for new employees. What you should do now. To ensure compliance with the new requirements, we recommend the following steps: 1. Review your payroll software and processes Confirm that your current systems can support on-payday super payments. If updates or changes are required, plan for implementation well in advance of July 2026. 2. Adjust internal procedures Update payroll calendars and workflows to align with the new payment timing, and ensure responsibilities and deadlines within your team are clear. 3. Seek advice if needed If you are unsure how the changes affect your business, or if your current setup requires modification, please contact us! We are here to help. 4. Review business cashflow. Ensure that the business cashflow will allow you to pay the superannuation on time, each payday. If not, you’ll need to put plans in place. We’re here to support you. These changes will affect all employers with staff and will require planning and preparation. If you have any questions or need assistance reviewing your systems and processes, please get in touch with the Ascent team.

Setting Business Goals for the Year.

January 14, 2026
Set business goals you’ll actually hit. Track what matters, review often, celebrate wins, and make growth intentional. Read today’s article to learn more.

Major Defect vs Minor Defect (Usual Wear & Tear) in a Building Inspection

January 14, 2026
Understand the difference between major and minor building defects before you buy. Learn what’s serious, what’s wear and tear, and avoid costly surprises.

Your First Steps in Starting a Small Business

January 14, 2026
Thinking of starting a small business? Before you dive in, make sure your foundations are set: structure, ATO registrations, super, and workers comp. We’ve put together a simple guide to help you get started.
More Posts