Sole trader:

A sole tradership is but one of the many different ways in which to operate a business. Depending on your circumstances or situation, there may be benefits of operating as a sole trader rather than as a company. However, whether a sole trader is right for you will depend on your business objectives, purpose and unique character. A Sydney Tax Accountant or Sydney accountant can help you determine which structure is suitable for you. Specifically, Navado’s Sydney Tax Accountants and Sydney accountants are highly experienced in helping individuals, families and partners set up new businesses.

A sole trader conducts business as an individual and without the benefit of a separate legal entity that is unconnected with the individual. Accordingly, all assets and liabilities of the business are essentially the assets and liabilities of the individual. The nature of the business of the sole trader, having no separate legal identity, exposes the individual to unlimited liability for the debts and liabilities of the business, meaning that in circumstances where the business fails, the sole trader will become directly accountable to creditors and the personal assets of the sole trader (which may not necessarily be involved with the business) may also become the subject of claims. From a tax perspective, sole traders are unable to reduce tax through income splitting and in their ability to claim business deductions (which must be substantiated as fringe benefits). On the other hand, the sole trader structure is often more simplistic in nature. As well as CGT advantages, the profits raised by the business forms part of the assessable income of the individual which can mean tax is paid at a lower marginal rate, but also quite possibly at a higher marginal rate. Accordingly, in many circumstances, operating a business under a sole trader structure is not only suitable but the most appropriate.

This webpage (and any material or wording appearing on this webpage) is provided for general information purposes only and does not constitute any Tax or Accounting Advice. It does not take into account your objectives, financial situation or needs or your instructions or all of the relevant facts and/or circumstances. Navado accepts no responsibility to any person who relies on the information provided on this website. We further refer you to our Disclaimer.