What’s the Best Business Structure for You in 2025?

Choosing the right business structure isn’t just a box to tick when registering your ABN. It’s a decision that can shape your tax obligations, personal liability, compliance requirements, and even the way your business grows.

At Amarose Accounting, we’ve worked alongside businesses across Australia for more than 20 years—helping sole traders grow into companies, guiding family businesses through trust structures, and supporting startups with the right foundations from day one. And one thing we know for sure? There’s no one-size-fits-all.

Whether you’re just starting out or reassessing your setup before EOFY, here’s what you need to know.

Understanding Your Business Structure Options

In Australia, the four most common business structures are:

• Sole Trader
• Partnership
• Company
• Trust

Each one has its own pros, cons, and compliance considerations. Let’s break them down.

Sole Trader: Simple and Low-Cost

A sole trader is the simplest and most affordable structure to set up. You’re the sole owner, and you’re legally responsible for everything—income, losses, and liabilities.

Sole Trader Pros:

• Quick and cheap to set up
• Fewer reporting requirements
• Full control over your business decisions
• You can still hire staff

Sole Trader Cons:

• You’re personally liable for debts and losses
• Limited tax planning options
• Business income is taxed at your individual tax rate
• Harder to raise capital or scale

Best for: Freelancers, side hustles, or those just starting out with minimal risk.

Partnership: When Two (or More) Go Into Business Together

A partnership is a business shared by two or more individuals or entities. It’s relatively easy to set up, but like sole traders, each partner is personally responsible for the business’s obligations.

Partership Pros:

• Simple structure with shared responsibilities
• Combined skills, capital, and resources
• Shared workload

Partership Cons:

• Unlimited personal liability for each partner (yes—even for each other’s actions)
• Disputes can cause complications without a clear agreement
• Limited tax flexibility

Best for: Family businesses or small ventures with clearly defined roles and strong trust.

Company: A Separate Legal Entity

A company is a more complex structure that creates a legal separation between the business and its owners (shareholders). It’s governed by the Corporations Act and comes with additional compliance and reporting responsibilities.

Company Pros:

• Limited liability—your personal assets are generally protected
• Access to the company tax rate (currently 25% for base rate entities)
• Easier to raise funds and attract investors
• More tax planning flexibility

Company Cons:

• Higher setup and ongoing compliance costs
• Annual ASIC reporting and director obligations
• More administrative work

Best for: Growing businesses, businesses with employees, or anyone planning to scale or sell in the future.

Trust: Asset Protection and Tax Flexibility

A trust is a legal relationship where a trustee holds income-producing assets on behalf of beneficiaries. Trusts can be great for families or businesses wanting to protect assets and distribute income tax-effectively.

Trust Pros:

• Potential asset protection from creditors
• Flexibility to distribute income among beneficiaries
• Some tax planning advantages

Trust Cons:

• More expensive to set up and maintain
• Must follow trust deed requirements
• Not always the best option for reinvesting profits into the business

Best for: Family businesses, those looking to protect assets, or businesses with variable income who want tax flexibility.

So… Which Structure Is Right for You?

The best structure depends on where you are in business and where you want to go.

A sole trader setup might be perfect in year one, but as you grow, hire staff, or look to reduce your tax liability, a company or trust might be more appropriate. That’s why we always recommend reviewing your structure regularly, especially as EOFY approaches.

And if you’re still not sure, you’re not alone. Many business owners come to us unsure about the best setup, especially when it comes to tax time, liability, or taking their business to the next level.

Let’s Chat About Your Structure

Your business structure should support your goals, not hold you back.

At Amarose Accounting, we’ll walk you through your options, help you weigh up the costs and benefits, and set you up for long-term success—not just short-term savings.

Book a free discovery session at amarose.com.au and let’s find the right structure for you in 2025 and beyond.

Disclaimer: This article is general in nature and does not constitute personal financial or tax advice. Always seek professional guidance tailored to your situation. We’re here to help—reach out to Amarose Accounting for personalised advice.