One of the first questions we get from new clients across Epping, Mernda, South Morang and the wider region is: “Do I need a company, or can I just get an ABN?” There’s no single right answer — it depends on your income, your risk, and your plans for growth.
Sole trader (ABN only)
The simplest and cheapest way to start. You trade under your own name (or a registered business name), and business income is taxed at your individual marginal tax rate. The trade-off is unlimited personal liability — if the business runs into debt or is sued, your personal assets are exposed. It suits low-risk businesses, side hustles, and people testing an idea before committing further.
Company
A company is a separate legal entity, taxed at the flat company tax rate rather than your personal marginal rate. This generally becomes attractive once your business profit is comfortably above the level where your personal marginal rate would exceed the company rate. A company also gives you limited liability as a general rule, and can make it easier to bring on business partners or investors later. The trade-offs are higher setup and ongoing compliance costs, plus separate company tax returns and financial statements.
Trust
Discretionary (family) trusts are popular for their flexibility in distributing income to beneficiaries in a tax-effective way, and for asset protection. They come with more complex administration and are usually recommended once you have professional advice tailored to your family and business circumstances.
What actually drives the decision
- Liability exposure — how much risk does the business carry (contracts, clients, physical premises, employees)?
- Profit level — is the business earning enough that the tax rate difference matters?
- Growth plans — are you planning to bring in partners, investors, or sell the business down the track?
- Compliance appetite — are you ready for the extra reporting a company or trust requires?
We’ll set it up properly, the first time
Getting the structure right from day one avoids expensive restructuring later. We handle ABN and company registration for clients across northern Melbourne, and we’ll talk you through which structure actually suits your situation — not just the most common one. Contact us to get started.