The question usually arrives as "what is the most tax-effective structure?" It is the wrong first question. Structure is a trade-off across four things at once, and the right answer changes as a business grows.
1. Liability
As a sole trader there is no separation between you and the business. Business debts are your debts, and business claims reach your personal assets. A company creates that separation, subject to director duties and personal guarantees — and lenders often ask for a personal guarantee anyway, which quietly undoes part of the protection.
2. Where the profit needs to go
If every dollar of profit is being drawn out to live on, a company adds administration without much benefit. If profit is being retained to fund growth, or distributed across more than one person, the picture changes. This is the point where the tax question genuinely bites, and it is worth modelling on your actual numbers rather than reasoning from rates.
3. Who else is involved
Partners, investors and family members all change the answer. A trust gives flexibility in how income is distributed year to year; a company gives a clean share register when someone needs to buy in or out. If you expect anyone to join or leave the business, decide before it happens rather than after.
4. What it costs to run
Companies and trusts carry annual compliance, separate returns and, for companies, ASIC obligations. That cost is real and recurring. For a business turning over modest amounts it can outweigh the benefit entirely.
Changing later is possible, but not free
Restructuring is common and there are concessions that can make it work without a large tax bill, particularly for small business. But it takes planning, and moving assets between entities has capital gains and duty consequences that need to be worked through first. It is cheaper to get close to right at the start than to unwind a structure three years in.
The practical approach: tell us what the business looks like now and what you expect it to look like in three years. We will model the options on your figures and show you what each one costs and protects.