Sole trader
A sole trader is the simplest form of business structure and is relatively easy and inexpensive to set up.
As a sole trader you’re legally responsible for all aspects of your business including any debts and losses and day-to-day business decisions.
Key elements of a sole trader
If you’re looking at starting your business as a sole trader, consider the following key elements. A sole trader business structure:
- is simple to set up and operate
- gives you full control of your assets and business decisions
- requires fewer reporting requirements and is generally a low-cost structure
- allows you to use your individual tax file number (TFN) to lodge tax returns
- doesn't require a separate business bank account, although this is recommended to make it easier to keep track of your business income and expenses
- requires you to keep financial records for at least 5 years
- has unlimited liability and all your personal assets are at risk if things go wrong
- doesn’t allow you to split business profits or losses made with family members
- makes you personally liable to pay tax on all the income derived
Hiring people
You can employ people to help run your business under the sole trader business structure.
If you do decide to take on any employees there are obligations you must comply with such as workers' compensation insurance and superannuation contributions.
Superannuation
You can choose whether you pay super to yourself. You don’t have to make super contributions to a super fund for yourself, however it is a good idea. You may want to consider super as a way of saving for your retirement.
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