Specialised Tax Accountant helping a sole trader with setting up the business

Everything You Need to Know About Sole Trader Business Structure

Starting a business of your own can be the most terrifying decision you’ll ever make. However, it could also be the one that gives you financial freedom. That said, it is always a good idea to take a calculated risk and build a legacy for yourself.

When starting a business, you will have to make numerous choices. One of them is which structure your venture will adopt. There are many business structures to choose from, but for today, let’s look at the sole trader business structure.

Is Sole Trader The Right Business Structure For Me?

To know for sure if this structure suits your business, you will need a professional like Griffith Advisory to guide you. However, it is basic knowledge that sole trader structures are suitable for small businesses such as small retail shops. In other words, if your business has an annual turnover of below $50,000 a sole trader business structure is perfect.

Remember, a sole trader business structure comes with unlimited liability. This means that you will be personally liable for any debts incurred by your business. Therefore, if you’re running a business with huge liabilities it is best to consider other business structures.

You might also like: How to Choose the Best Business Structure?

5 Advantages of Sole Trader Business Structure

1. Very Easy to Set Up

Opening a sole trader business is a simple and quick process. More importantly, the business does not have to pay any annual registration fees.

2. Minimal Reporting Requirements

Sole traders, unlike corporates and other firms, are not required to publish their financial statements. This means that they enjoy more privacy and less stress.

3. Lower Tax Rates

When running a sole proprietorship, you’ll be paying taxes just like any other employee in a company. The tax rates are relatively lower than those of other business structures like corporates. However, this tax rate benefit only applies if you have an annual turnover of below $100,000.

4. The Business Owner Has More Power

When it comes to sole trader businesses, the owner has the right to make all the business decisions as they wish. This is unlike the case of partnerships and public companies where shareholders and partners have to be consulted.

5. Easy to Switch to another Business Structure

Once your business has grown and the turnover starts exceeding $100,000, you might need to adopt a different structure. Luckily, it is easy to switch to another structure when you’re operating as a sole trader.

How Can Griffiths Advisory Help You?

Are you still confused about which structure best suits your business? Worry not. At Griffiths Advisory, we offer excellent consultancy services to all our clients. More importantly, we will help you handle your taxes at a very affordable price.

Phil Griffiths

Phil Griffiths

Bachelor of Commerce
Certified Practising Accountant
Diploma in Financial Planning
Professional Certificate in SMSF
Approved SMSF Auditor

Phil has been the Managing Director of Griffiths Advisory for 29 years, combining his expertise in taxation, business advisory, superannuation, negative gearing, and wealth creation. He also loves an active lifestyle, indulging in surfing, cycling, snowboarding, and spending quality time with his wife and two children.