- Published on
Sole Trader vs Company Business Structure & Tax Guide
- Authors
- Name
- Charlotte Smith
- https://x.com/CharlotteSmithAU
Sole Trader vs Company Business Structure & Tax Guide
Choosing the right business structure is one of the most critical decisions for Australian entrepreneurs, freelancers, and small business owners.
Sole Trader vs Company Comparison
| Feature | Sole Trader | Pty Ltd Company |
|---|---|---|
| Legal Status | You and the business are 1 entity | Separate legal entity |
| Liability | Unlimited personal liability | Limited liability protection |
| Tax Rate | Individual marginal rates (0% – 45%) | 25% Flat Base Rate Entity tax |
| Setup Cost | Low (zsh for ABN) | Higher (+ ASIC registration) |
| Profit Access | Draw funds anytime tax-free | Dividends or PAYG salary |
When to Switch to a Company Structure
As a general rule, once your small business net profit exceeds ,000 per year, operating under a Pty Ltd company structure (taxed at 25%) often provides substantial tax savings compared to individual marginal rates (which reach 37% + Medicare above k).
Compare business tax liabilities using our free Sole Trader vs Company Calculator and Business Structure Calculator.