The Finance AlgorithmTFA

Business Structure Advisor

AI + Live Data

Get AI-powered advice on the best business structure for your situation — sole trader, partnership, company, or trust. Compare tax, liability, and setup costs.

Free to useNo data storedReal-time dataAI insightsUpdated: February 2026

Choosing the right business structure is one of the most important decisions you'll make — it affects your tax, personal liability, ability to raise capital, and exit options. In Australia, the main structures are sole trader, partnership, company (Pty Ltd), and trust. Each has different setup costs, ongoing obligations, and tax implications. Many people start as a sole trader and restructure as they grow, but changing later can trigger capital gains tax and stamp duty. Getting it right from the start saves money and hassle.

Enter Your Details

Enter Your Details

Your business type affects the ideal structure

Revenue affects tax strategy and GST obligations

Multiple owners may benefit from a partnership or company structure

More personal assets = more reason for asset protection (company/trust)

Companies are better for employer obligations

Your goals affect the optimal structure

Real-World Examples

Freelance Developer

Sam is a solo freelance developer earning $130,000/year with no employees and minimal assets.

As a sole trader, Sam pays ~$33,000 in tax. As a company paying $80,000 salary + retaining $50,000: company tax $12,500 + personal tax $18,000 = $30,500. The company saves ~$2,500/year PLUS provides liability protection. Recommended: Pty Ltd company.

Property Investment Couple

Lisa and Tom want to build a property portfolio. Lisa earns $180,000, Tom earns $60,000.

A discretionary (family) trust with a corporate trustee allows rental income to be distributed to the lower-income spouse (Tom), saving significant tax. The corporate trustee provides liability protection. Setup cost: ~$2,000. Annual compliance: ~$1,500. Tax saving in year one: $5,000+.

Frequently Asked Questions

Glossary

Sole Trader
The simplest business structure where you operate as an individual. No separation between personal and business assets. Profits are taxed at your personal marginal rate.
Pty Ltd (Proprietary Limited)
A private company limited by shares. A separate legal entity from its owners (shareholders). Provides limited liability protection and pays the 25% company tax rate.
Discretionary Trust (Family Trust)
A trust structure where the trustee has discretion over how income and capital are distributed among beneficiaries. Popular for tax planning and asset protection.
ABN (Australian Business Number)
A unique 11-digit identifier for businesses operating in Australia. Required for invoicing, GST registration, and interacting with other businesses and the ATO.

Disclaimer: This calculator provides estimates only and should not be relied upon for financial decisions. Interest rates, fees, and policies change frequently. Always verify information with lenders directly. This is general information, not personal financial advice. Consider seeking advice from a licensed mortgage broker or financial advisor.

Last updated: February 2026

How to Use
  1. Select your type of business activity.
  2. Choose your expected annual revenue range.
  3. Indicate how many owners/partners are involved.
  4. Note whether you have significant personal assets to protect.
  5. Select whether you'll have employees.
  6. Choose your long-term business goal.
Key Information
  • Sole trader: simplest, cheapest ($0 to set up), but no liability protection and profits taxed at personal rates (up to 45%).
  • Company (Pty Ltd): $538 ASIC registration, 25% company tax rate, limited liability, but more compliance and can't easily access profits.
  • Trust: $500-$2,000 to set up, great for income distribution and asset protection, but complex and not suitable for all businesses.
  • Partnership: easy to set up, shared income, but each partner is jointly liable for all debts.
Pro Tips
  • If your profit exceeds ~$90,000, a company structure (25% tax) starts saving you tax compared to a sole trader (marginal rate 37%+).
  • A family trust with a corporate trustee gives you BOTH flexibility (distribute income) AND liability protection (company structure).
  • Register for GST immediately if you expect to exceed $75,000 turnover — it's mandatory, and backdating is messy.
  • Always get professional advice before setting up a trust or company — the upfront cost ($1,000-$2,000) saves far more in the long run.
Avoid These Mistakes
  • Staying as a sole trader too long when profits are high — paying 37-45% personal tax instead of 25% company tax.
  • Setting up a company when a sole trader is fine — unnecessary compliance costs for a small side business.
  • Not understanding that company profits belong to the company — you can't just take money out; it must be salary, dividends, or a loan (with strict rules).
  • Choosing a partnership without a written partnership agreement — disputes are inevitable without clear rules.
Ask AI anything