Structure is a decision with a long tail
The structure you choose determines your personal exposure, your tax position, how easily you can bring in a partner, and what happens when you sell. It is cheap to decide well at the start and expensive to change later, because restructuring can trigger transfer duty and capital gains tax.
There is no universally correct answer. The right structure depends on your risk profile, your income, who else is involved, and what you intend to do with the business eventually.
The realistic options
| Sole trader | Company | Discretionary trust | Partnership | |
|---|---|---|---|---|
| Personal liability | Unlimited | Limited, subject to guarantees | Limited with a corporate trustee | Joint and several — unlimited |
| Set-up cost | Minimal | Moderate | Higher | Low |
| Ongoing compliance | Light | ASIC obligations | Trust accounting | Light |
| Income flexibility | None | Dividends, franked | Discretionary | Fixed by agreement |
| CGT discount | Available | Not available | Flows through | Available to partners |
| Adding partners | Difficult | Issue or transfer shares | Awkward | New agreement |
Partnerships deserve a specific warning. Partners are jointly and severally liable for the partnership's debts, which means you can be liable for the whole of a debt incurred by your partner without your knowledge. Most people who describe themselves as "in partnership" would be better served by a company or a trust.
Asset protection, realistically
Structure provides real protection, but less than people assume. A company limits liability in theory; in practice landlords, banks and major suppliers routinely require directors' personal guarantees, which puts personal assets back in play.
- Hold business risk separately from personal assets
- Keep the family home out of the trading entity
- Read every personal guarantee before signing
- Consider who holds what, between spouses
- Keep entities genuinely separate in practice
- Insure — structure is not a substitute for cover
Asset protection also has to be done before there is a problem. Moving assets once a claim is foreseeable can be unwound, and can make the position considerably worse.
Director duties are personal
Incorporating does not make you anonymous. Directors owe personal duties under the Corporations Act 2001 (Cth): to act in good faith in the company's best interests, for a proper purpose, with care and diligence, and not to misuse position or information.
The exposure that matters most in practice is insolvent trading under section 588G: a director who allows the company to incur debts while it is insolvent can be personally liable for those debts. Safe harbour protection exists where a director is developing a course of action reasonably likely to lead to a better outcome, but it has conditions — including keeping employee entitlements and tax lodgements up to date.
Every director also needs a director identification number. It is a personal, lifetime number, and applying for it is the director's own obligation rather than the accountant's.
Restructuring an existing business
Moving a business from one structure to another is a transaction, with the tax and duty consequences of one. Transferring assets can trigger transfer duty and capital gains tax, and the amounts are often larger than the cost of having chosen correctly at the outset.
Concessions and rollovers exist — the small business restructure rollover among them — but they have conditions, and they need to be identified before the restructure rather than after. This is squarely a matter to work through with your accountant and lawyer together, not sequentially.
What it costs
- Fixed fee for company incorporation
- Fixed fee for a discretionary trust deed
- Shareholders' agreements quoted separately
- ASIC and registration fees at cost
- Restructuring quoted per matter
- We coordinate with your accountant
Frequently asked questions
It depends on your risk, income and plans. A sole trader has unlimited personal liability and no income flexibility but minimal cost. A company limits liability, subject to personal guarantees and director duties, but carries ASIC compliance and cannot access the CGT discount. The decision should be made with your accountant as well as your lawyer.
Partly. A company limits liability in theory, but landlords, banks and major suppliers routinely require directors' personal guarantees, which puts personal assets back at risk. Directors also owe personal duties under the Corporations Act, including the duty to prevent insolvent trading under section 588G.
A director who allows a company to incur debts while it is insolvent can be personally liable for those debts under section 588G of the Corporations Act 2001 (Cth). Safe harbour protection is available where a director is developing a course of action reasonably likely to lead to a better outcome, but it has conditions including keeping employee entitlements and tax lodgements current.
Rarely, without careful thought. Partners are jointly and severally liable for partnership debts, meaning you can be liable for the whole of a debt incurred by your partner without your knowledge. Most people describing themselves as in partnership would be better served by a company or trust structure.
Yes, but it is a transaction with tax and duty consequences. Transferring assets can trigger transfer duty and capital gains tax. Concessions and rollovers exist, including the small business restructure rollover, but they have conditions that must be identified before the restructure rather than after.
More information
One of the most fundamentally important things in positioning your business for now and the future is how it’s structured. Get the right advice today!
Business structuring advice Rockhampton
Whilst it generally goes without saying, one of the most fundamentally important things in establishing your business is getting the structure right.
Whilst once it was the standard recommendation that starting a business with the most simple structure was the best way to dip your toe in the water. That can prove to be a mistake, to determine which structure you should use, we consider a range of criteria.
It may be the case that your business structure has stood the test of time, but now things have changed and you need to restructure- for example, you want to bring people into part ownership of the business.
Whatever the circumstance, whether you’re considering starting as a sole-trader, transitioning to a company or wish to discuss a partnership or a number of other ways to successfully position your business in a way that both suits your circumstances and is tax-effective, we can help.
We can also assist with:
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Our professional team has extensive experience in a wide range of legal areas. Our approach is one of planning and involvement. We will continue to be there to support you with accurate and timely advice.
This page is general information about the law as it applies in Queensland, current as at 2026. It is not legal advice and does not take your circumstances into account. Figures set by regulation are indexed and change. Speak to one of our lawyers before acting.