Business structures for Australian companies, trusts and family businesses.
The structure you trade through decides who pays tax on the profit, who carries the risk and what must be lodged with the ATO and ASIC each year. We help owners choose a structure at the start and change it when the business outgrows it.
Four common ways to run an Australian business.
Each structure treats tax, liability and reporting differently. The right one depends on your income, your exposure to risk, your family and what you plan to do with the business. Co-operatives, owned by at least five members, are a fifth option.
Sole Trader
You are legally responsible for all aspects of the business. Business income goes in your individual tax return and is taxed at your individual rates. There is no separate business tax return, which keeps set-up and running costs low.
Partnership
Two or more people share the income or losses. The partnership has its own TFN and ABN and lodges an annual return, but it does not pay income tax itself. Each partner reports their share of the net income or loss in their own return.
Company
A separate legal entity that pays tax at its own rate: 25% for a base rate entity and 30% otherwise in 2025-26. A proprietary company needs at least one director who normally lives in Australia, and every director needs a director ID.
Trust
A trustee runs the business for the beneficiaries. The trust lodges a return showing how its income was distributed. Beneficiaries generally pay tax on the income distributed to them, and the trustee pays tax on any income left undistributed.
A company is a base rate entity when its aggregated turnover is under $50 million. No more than 80% of its assessable income can be base rate entity passive income. Sole traders, partnerships, companies and trusts must register for GST once annual GST turnover reaches $75,000.
Four questions that decide which structure suits you.
We test each option against these questions using your own figures, your family situation and your plans for the business.
Risk & Asset Protection
Who is exposed if the business is sued or cannot pay its debts, and which assets sit outside the trading entity.
Tax on Profit
The rate profit is taxed at, who it can be distributed to, and what happens when it is retained or paid out to owners.
Cost & Compliance
Set-up costs, annual ASIC fees, separate tax returns, trustee resolutions and the bookkeeping each structure needs.
Control & Succession
Who makes decisions, how new owners or investors come in, and how the business passes to family or a buyer.
Changing structure once the business has grown.
Your structure can change as the business grows. Incorporating, adding a partner or grouping several entities together has tax and registration consequences. These are the points we work through with you.
Tax on the Transfer
Moving assets into a new entity can trigger tax. Eligible businesses with aggregated turnover under $10 million may be able to use the small business restructure roll-over, which transfers active assets without an income tax liability. The move must be a genuine restructure that doesn’t change ultimate economic ownership. Stamp duty and GST can still apply.
New Registrations
A new structure generally needs a new ABN, and a partnership, company or trust needs its own TFN. A registered business name can be transferred to the new entity rather than starting again.
Setting Up a Company
Every director must have a director ID before the company is registered. Registration also needs a registered office, a principal place of business and the written consent of each director and shareholder.
Trustee Resolutions
A trustee generally needs to resolve who is entitled to the trust’s income by 30 June, or earlier if the trust deed requires it. Without an effective resolution, the trustee can be assessed on the trust’s net income.
Division 7A
A loan from a private company to a shareholder or their associate is generally treated as an unfranked dividend. That doesn’t happen if the loan is repaid, or put under a complying loan agreement, by the company’s lodgment day.
ASIC Obligations
Companies must keep their details current on the companies register and pay an annual review fee. From 1 July 2027, companies must also give their directors’ IDs to ASIC.
Structuring advice connected to your tax and accounts.
Business Structuring sits alongside our accounting, tax planning and ATO and ASIC services. The structure we recommend is the one we then report on, lodge for and plan around each year. We advise on companies, trusts, groups and ownership structures, and coordinate restructures with your other advisers.
Sources: ATO, Business structures: key tax obligations; ATO, Tax rates 2025-26 and Changes to company tax rates; ATO, Small business restructure roll-over; ATO, Trustee resolutions; ATO, Loans by private companies; ASIC, Register a company, Company officeholders and Director identification numbers; business.gov.au, Choose your business structure and Change your business structure.