Sole Trader vs Company

What is the difference between being a sole trader and trading as a company?
That is a great question!
Running a business as a Sole Trader is great for individual trading on their own and is fairly simple to set up. You can set up an ABN through the ABR website.
When you trade as a sole trader the profits you generate from income you earn are reported as your personal income. The down side it that you are personally liable if the business gets sued or can not pay its debt.

Running a business as Pty Ltd means the business is its own legal entity separate from the owners, giving the owners an added layer of protection. The business must pay company taxes on any profits it makes. Setting up a Pty Ltd is more complex than applying for an ABN, so you should contact your accountant to do this for you.

So which should you choose?
The answer is always different. If you are running a high turn over business or a business with a lot of trade debtors and creditors , a company may be best. However if you are planning to start a small business, subcontracting your services to businesses or individuals directly trading as a sole trader may be the best option.

If you would like free advice on which option would be best for you please contact us here and we will point you in the right direction!