A sole trader business structure is generally an individual operating on their own. This is the simplest business structure you can chose when starting a business. As a sole trader, you’ll make all the decisions about the starting and running of your business.

Unlike a company business structure, a sole trader is legally responsible for all aspects of the business, including debts and losses, which cannot be shared.

Key aspects

• Simple to set up and operate
• Fewer reporting requirements and is generally a low cost structure
• Allows you to use your individual TFN to lodge tax returns
• Has unlimited liability. You are legally liable for all debts and losses incurred by the business. All your personal assets are at risk should something go wrong. Your assets can be seized to recover any debts
• Any losses incurred by your business may be offset against other income earned, such as wages, or investment income. Subject to conditions
• Unlike a company structure, you are not required to operate a separate business bank  account. You can use your personal bank account, but must keep records for at least 5 years.
• You are not considered an employee of your own business and are free of any obligation to pay payroll tax, superannuation contributions or workers compensation on income from the business
• Its relatively easy to change the business structure if your business grows, or if you wish to wind things up and close your business
• You can not split business profits or losses made with family members and you are personally liable to pay tax on all the income derived