Sole Trader vs Company: Which Structure Is Right for Your Business? Choosing the right business structure affects your liability, taxes and compliance obligations. In Australia, the two most common options are operating as a Sole Trader or forming a Company. Here’s how to decide. 1. Liability & Asset Protection Sole Trader: You and your business are the same legal entity—personal assets are at risk if the business incurs debts. Company: A separate legal entity limited by shares—shareholders’ personal assets are generally protected. 2. Taxation & Reporting Sole Trader: Profits taxed at personal income rates (up to 45%). Simple tax return. Company: Flat 25–30% company tax rate. Requires separate company tax return and financial statements. 3. Setup & Compliance Sole Trader: Easy to register—just ABN registration and the business name. Low ongoing costs. Company: Must register with ASIC, appoint directors, maintain company records and meet annual reporti...