For most people starting out, a sole trader (just a free ABN, no setup fee) is the right structure: business income goes on your personal tax return at individual rates, but you carry unlimited personal liability for debts.
A company (Pty Ltd) costs about $611 one-off to register plus a $329/year ASIC annual review fee (FY2025-26), is taxed at the 25% base rate entity rate, and gives limited liability — usually worth it once profit is consistently above ~$80,000–$100,000.
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A discretionary (family) trust ($1,500–$3,000+ to set up) distributes income to beneficiaries at their own rates and offers strong asset protection and income splitting, but is more complex; undistributed income is taxed at 45%.
GST registration is independent of structure — it is triggered by turnover ($75,000 for businesses, $150,000 for not-for-profits) or by providing taxi/ride-share services.
Changing structure later (e.g. sole trader to company) has CGT, GST and stamp duty implications, so get professional advice before switching.
For most people starting out in Australia, a sole trader structure (just a free ABN) is the right choice — but once your profit is consistently above roughly $80,000–$100,000, or your personal assets are at risk, a company is usually worth the extra cost. The structure you choose decides how much tax you pay, whether your home and savings are exposed to business debts, and how easily you can grow or sell later. Here is how the four main Australian structures compare for FY2025-26, and how to register.
No legal separation between you and your business. You are the business.
Report all business income on your personal tax return
Personally liable for all debts
Tax at individual rates (0–45%)
2025–26 Individual Tax Rates:
Taxable Income
Tax Rate
$0 – $18,200
0%
$18,201 – $45,000
16%
$45,001 – $135,000
30%
$135,001 – $190,000
37%
$190,001+
45%
(Plus the 2% Medicare levy on most income.) Not sure what you would actually take home? Try the free OneBookPlus income tax calculator to estimate your tax across these brackets.
Best for: Freelancers, solo tradies, side hustles, micro-businesses.
Pros: Free to set up (just an ABN), simplest tax, full control, easy to wind down.
Cons: Unlimited personal liability, higher tax above ~$50K profit, harder to raise capital, no salary/super paid to yourself (you draw profit, and fund your own super at the 12% guarantee rate if you choose).
Two or more people running a business together. The partnership lodges its own return but does not pay tax — each partner reports their share on their personal return.
Critical: Partners are jointly and severally liable — each partner can be held responsible for the full amount of business debts, not just their share. A written partnership agreement is strongly recommended.
Best for: Professional practices, husband-and-wife businesses, shared ventures.
A separate legal entity. The company exists independently from its directors and shareholders.
Company tax rate: 25% for base rate entities (turnover under $50M and ≤80% passive income); otherwise 30%
Profits distributed as dividends with franking credits
Limited liability — personal assets are generally protected (though directors can still be personally liable for unpaid PAYG, super and GST under director penalty notices)
Best for: Businesses earning over ~$80–100K profit, those needing asset protection, businesses planning to grow or take investment.
Costs (FY2025-26): ~$611 one-off ASIC registration fee, plus a $329/year ASIC annual review fee (a special-purpose company is $67/year). Expect higher accounting fees for the company tax return too.
A trustee holds assets for the benefit of beneficiaries. The most common type is a discretionary (family) trust.
Income distributed to beneficiaries at their individual rates
Strong asset protection
Flexible income splitting between family members
Undistributed income is taxed at the top marginal rate (45%)
Best for: Family businesses, high-income earners, businesses with significant assets.
Costs: $1,500–$3,000+ to set up (you need a trust deed), plus ongoing compliance. Many family trusts also have a corporate trustee, which adds the company costs above.
Provide your TFN, identity details, business activity, and structure type
Most applications are processed immediately — you get your 11-digit ABN on screen
It is free to apply for an ABN through the Australian Business Register; you only pay for things like a business name or company registration. Once you have an ABN, you can check it (or a supplier's) any time with the free OneBookPlus ABN lookup tool.
Business name registration (trading under a name other than your own) costs $47/year or $108 for 3 years via asic.gov.au. You do not need a business name if you trade under your own personal name as a sole trader.
GST is independent of your structure — it is triggered by turnover, not entity type.
Mandatory if: your turnover is $75K+ ($150K for not-for-profits), or you provide taxi/ride-sharing services (registration required regardless of turnover).
Voluntary registration can be worthwhile if you buy significant materials or equipment, because you can claim back the GST on those purchases. Once registered, you charge 10% GST and lodge a BAS. The free OneBookPlus GST calculator makes it easy to add or back out GST on a price.
Profit consistently exceeds $80–100K (the flat 25% company rate beats your top marginal rate)
You are taking on significant financial risk and want limited liability
You are hiring employees and want a cleaner structure for PAYG and super
You are seeking investment, or planning to sell the business eventually
Getting professional advice before changing structures is essential — capital gains tax, GST and stamp duty implications vary, and a poorly timed change can trigger an unexpected tax bill. Small business CGT rollovers may help, but only if structured correctly.
OneBookPlus is an all-in-one Australian platform built for ABN-holders — bookings, quotes, invoicing, jobs, CRM and accounting in one place, hosted in AWS Sydney. Whether you are a sole trader or a Pty Ltd, you get:
GST- and ABN-native invoicing — your ABN and GST are shown correctly on every invoice and quote
Expense tracking with categorisation that makes tax time and BAS far simpler
BAS-ready GST reports so you are not reconstructing figures from a shoebox of receipts
Payroll (award rates, PAYG, 12% super and STP) via the optional Rostering & Payroll add-on when you start hiring
Multi-entity support if you run more than one business
It is genuinely free to start — the $0 plan has no credit card and no time limit, with flat, predictable pricing as you grow. If you are going out on your own, the freelancers' guide to OneBookPlus shows how solo operators run their whole business from one app.
Do I need an ABN to be a sole trader?
Yes. If you are running a business (not just a hobby), you need an ABN, and it is free to apply for at abr.gov.au. You only pay extra if you also register a business name ($47/year) or set up a company.
Is a sole trader or a company better for tax in Australia?
It depends on profit. A sole trader pays individual rates (0–45% plus Medicare levy), so low-to-moderate profits are usually taxed less than the flat 25% company rate after accounting and ASIC costs. Once profit is consistently above roughly $80,000–$100,000 — or you want limited liability — a company often comes out ahead. Model both with the income tax calculator before deciding.
When do I have to register for GST?
When your business turnover reaches $75,000 in a 12-month period (or $150,000 for not-for-profits), or as soon as you start providing taxi or ride-share services. Registration is independent of your structure — sole traders, companies and trusts all use the same $75,000 threshold.
