Choosing your business structure isn’t just ticking a box on an ABN form. It decides how you’re taxed, how protected your assets are, and how much admin you’ll be doing on a Sunday night.
Get it wrong, and you’ll be stuck wondering why your “simple setup” now requires a small army of lawyers and a stiff drink.
So let’s break it down, plain and simple.
The me, myself and I setup.
You are the business. Every dollar you earn (or owe) is yours personally.
Pros:
• Cheap and quick to set up. ABN, done.
• Minimal paperwork.
• You pocket all the profit.
• Easy to change later when things take off.
Cons:
• No separation between business and personal assets. If the business goes down, your house might go with it.
• Taxed at individual rates (ouch if you’re earning big).
• Hard to bring in partners or investors without a restructure.
👍 Best for: Freelancers, tradies, or side hustlers testing the waters
The ‘we’re in this together… right?’ structure.
Two or more people running a business together, sharing income, control and (unfortunately) responsibility.
Pros:
• Cheap and easy to set up.
• Shared workload and costs.
• Some flexibility to split income for tax purposes.
Cons:
• You’re on the hook for your partner’s mistakes. If they forget to pay the supplier, you’re still liable.
• Can get messy if relationships sour.
• Not built for scaling or adding investors.
👍 Best for: Mates or family members who actually get along and have a decent Partnership Agreement in writing.
The grown-up option.
A company is its own legal person (minus the bad coffee habits). It can own stuff, make money, and get sued, all separate from you.
Pros:
• Limited liability means less chance of losing the house if things go south.
• Flat 25% small business tax rate.
• Looks professional when chasing contracts or investors.
• Easier to scale and sell down the track.
Cons:
• More setup cost and paperwork.
• You can’t just dip into the company bank account when you fancy a new jet ski. Everything’s got to go through proper channels (wages, dividends, director loans).
• Directors can still be liable if they do dodgy stuff.
👍 Best for: Growing businesses, hiring teams, or anyone who wants serious asset protection and long-term planning.
The chess player’s move.
A trust is an entity that holds assets or income on behalf of others (the beneficiaries). It’s often used to protect assets and manage tax more flexibly. Think of it like the family vault with rules attached.
Pros:
• Strong asset protection.
• Flexible income distribution, handy for minimising tax.
• Great for family-run businesses or long-term wealth planning.
• Can own shares in a company (common combo).
Cons:
• More setup cost and admin.
• Trustees are legally responsible for the trust.
• Can’t retain profits, income must be distributed each year.
• Not ideal if you want to reinvest all your earnings back into the business.
👍 Best for: Family businesses, investors, or anyone wanting to protect assets and optimise tax outcomes over time.
A lot of established businesses use a mix, for example a trust owning the shares in a company that runs the day-to-day operations.
That way you get flexibility, protection, and a bit of tax magic all working together.
That depends on what you’ve got now and what you’re building towards.
Starting small? Keep it simple. Planning to grow, hire or protect assets? Time to get strategic.
The key is to get advice before you just “pick one” because someone on Facebook said it worked for them. (It probably didn’t.)
We help business owners set up, review and restructure all the time.
If you want your setup to actually fit your goals, not just your ABN form, get in touch. We’ll help you figure out the best structure and make sure it’s done properly from the start.
– The team at PAL (making accounting slightly less boring since way back when)
Disclaimer: This article is here to give you general info only, not professional advice specific to your unique situation. While efforts are made to ensure accuracy, the content may change over time. We can’t take responsibility for any decisions based on the contents of this article, so be sure to chat with your accountant or advisor first!
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