The Finance Algorithm

Business Structure Comparison

Compare sole trader, partnership, company and trust structures on tax, liability and paperwork for your revenue and goals.

Updated October 2026Built and checked by MaverickHow it's calculatedReport an error

Your numbers

Updates as you type

Your business type changes which structures score well

The calculator uses the middle of the range ($130,000 for $75,000 - $200,000). GST registration is required at $75,000 or more.

%
35%

Profit as a share of revenue, before paying yourself. An assumption you set; it drives the tax comparison.

$
$80k

For the company scenario: profit above this salary stays in the company and is taxed at 25%.

Partnerships and companies are built for more than one owner

A company or trust separates business debts from personal assets

Staff numbers change how each structure scores

Your goals change how each structure scores

The button asks our AI to explain these figures in words.

Business structure comparison

Highest score on your answers

Sole trader

for ~$130,000 revenue

Sole trader tax

$4,763

on $45,500 profit, incl. Medicare levy

Company tax this year

$4,763

25% on retained profit + tax on your salary

Difference this year

$0

sole trader pays less

Sole traderscore 5
Simple and cheap to run, no separation from your personal assets, taxed at your personal rates
Partnershipscore 0
Each partner is taxed on their share and liable for the partnership's debts; a written agreement sets the terms
Pty Ltd companyscore 5
Separate legal entity, 25% tax for base rate entities, ASIC registration and annual review fees
Family trust + corporate trusteescore 3
Trustee decides who receives income each year; losses stay in the trust; more paperwork

Tax this year by structure

2026-27 resident rates plus the 2% Medicare levy, on your revenue × profit margin. The company figure keeps profit above your salary in the company at 25%; tax on dividends paid out later is extra, offset by franking credits.

$4,763Sole trader$0Partnership (2 equal partners)$4,763Company$0Trust (2 adult beneficiaries)
Why this structure scores highest: A small, single-owner operation with few assets at risk scores highest on simplicity. If most of your income is a reward for your own skills or effort, the personal services income rules can tax it as yours even when it is earned through a company or trust. At this revenue you must register for GST ($75,000 GST turnover or more). A registered tax agent can check how these rules apply to you.

How it works

Your business structure decides how profit is taxed, whether your personal assets are exposed to business debts, and how easily you can bring in partners or sell. In Australia the main structures are sole trader, partnership, company (Pty Ltd) and trust. This tool scores each one against your answers and compares this year's tax on your expected profit under each, using 2026-27 resident tax rates, the Medicare levy and the 25% base rate entity company rate. Changing structure later can trigger capital gains tax and stamp duty, so it's worth comparing early.

  1. 1Select your type of business activity.
  2. 2Choose your expected annual revenue range.
  3. 3Set the profit margin you expect and the salary you would take from a company.
  4. 4Indicate how many owners/partners are involved.
  5. 5Note whether you have significant personal assets to protect.
  6. 6Select whether you'll have employees and choose your long-term goal.

Worked examples

Freelance Developer

Sam is a solo freelance developer expecting $75,000 - $200,000 in revenue (the calculator uses $130,000) at a 90% profit margin, with no staff and few assets. In a company Sam would take an $80,000 salary.

Profit is $117,000. As a sole trader, tax including the Medicare levy is $27,960. Through a company, this year's tax is $25,370 ($9,250 company tax on the $37,000 kept in the company plus $16,120 on the salary), $2,590 less, but more tax is due when that $37,000 is paid out as dividends. Sole trader still scores highest on Sam's answers, and because the income comes from Sam's own skills, the personal services income rules may tax it as Sam's even through a company.

Property Investment Couple

Lisa and Tom want to build a property portfolio together. They expect $75,000 - $200,000 a year in rent (the calculator uses $130,000) at a 35% margin, already own property and investments, and have no staff.

A family trust with a corporate trustee scores highest (14) ahead of a company (8). On $45,500 of profit, tax for one person or a company is $5,080; split equally between two adult beneficiaries with no other income it's $1,366. In practice each beneficiary's other income sets their rate, any rental loss stays inside the trust instead of reducing Lisa's or Tom's own tax, and residential rent doesn't count towards GST registration.

Questions people ask

Can I change my business structure later?
Yes, but moving assets to a new entity can trigger capital gains tax (small business restructure rollover relief may apply) and stamp duty on property. Starting as a sole trader is common for low-risk, low-revenue businesses.
Who pays the 25% company tax rate?
Base rate entities: companies with aggregated turnover under $50 million and no more than 80% of assessable income from passive sources such as rent and interest. Other companies pay 30%. To use the money personally you pay yourself a salary (taxed at your rates) or dividends (taxed at your rates, with a credit for the company tax paid).
Do I need an ABN?
You need an ABN if you're carrying on a business in Australia, and it's free to apply through the Australian Business Register. Without an ABN, businesses paying you generally must withhold 47%. An ABN is separate from GST registration, which is required once your GST turnover is $75,000 or more.

The terms, in plain English

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 shareholders, taxed at 25% if it's a base rate entity and 30% otherwise.
Discretionary Trust (Family Trust)
A trust where the trustee decides each year how income and capital are distributed among beneficiaries. Beneficiaries pay tax on what they receive.
Personal Services Income (PSI)
Income mainly earned from your personal skills or efforts. Unless you're a personal services business, it's taxed as your income even if it's paid to your company or trust.

Official sources

GST Calculator

Calculate GST, which you must register for at $75,000 GST turnover.

Income Tax Calculator

Compare personal tax rates to the 25% company rate.

Break Even Calculator

Calculate when your business will become profitable.