Sole Trader vs Company in Australia: Which Structure Is Right for Your NDIS and Aged Care Business?

Choosing the right business structure for your Aged Care or NDIS business is one of the most critical decisions you’ll make when starting or growing your business in Australia. Should you operate as a sole trader or register a company? Each option comes with its own set of responsibilities, benefits, and limitations — especially when it comes to tax, liability, and compliance.

This guide will break down everything you need to know to make an informed decision. From setup and legal obligations to tax rates and growth potential, here’s how sole traders and companies compare in Australia and how you can apply these insights to your aged care business.

Sole Trader vs Company: An Overview

Before diving into the details, here’s a snapshot of the key differences:

What Is a Sole Trader?

A sole trader is the simplest and most common business structure in Australia. As a sole trader, you are the business—meaning you’re responsible for all aspects, including profits, losses, and legal obligations.

Advantages:

• Easy and inexpensive to set up
• Full control over operations and decisions
• Fewer reporting and compliance requirements

Disadvantages:

• Personally liable for business debts
• May face higher personal tax rates as income increases
• Limited access to funding and growth opportunities

What Is a Company?

A company (typically registered as a proprietary limited, or Pty Ltd) is a separate legal entity. This means the company can own assets, enter contracts, and is liable for its own debts.

Advantages:

• Limited liability protection for shareholders
• Access to lower corporate tax rates
• Greater credibility with investors and stakeholders

Disadvantages:

• Higher setup and running costs
• More complex compliance and reporting obligations
• Directors have legal responsibilities that must be followed

Adrien Barthel — Co-founder, Sleek

Tax Comparison: Sole Trader vs Company

Sole Trader Tax

As a sole trader, your business income is treated as personal income. You’ll pay tax at the individual marginal tax rates, which can be up to 45% for high earners.
There are fewer opportunities for tax minimisation, and you’re not eligible for some company tax concessions.

Company Tax

Companies pay a flat corporate tax rate:

• 25% for base rate entities (small businesses)
• 30% for larger companies

Companies can also retain earnings and reinvest them, offering potential tax efficiency over time

GST and Record Keeping

Regardless of structure:

• If your business earns $75,000 or more annually, you must register for GST.
• Companies must maintain detailed records and file separate company tax returns.
• Sole traders face simpler record-keeping obligations, often handled through a personal tax return.

Pros and Cons at a Glance

Sole Trader

Pros:

• Simple setup and management
• Lower costs
• Full control

Cons:

• Personal liability for business debts
• Fewer tax planning opportunities
• Can be harder to scale or secure investment

Company

Pros:

• Limited liability protection
• Better access to funding and investors
• Potential tax advantages

Cons:

• Higher setup and admin costs
• Increased legal and reporting obligations
• Director responsibilities and personal liability for breaches

When to Choose Sole Trader vs Company

Here are some practical guidelines to help you decide:

How to Set Up Each Business Structure

Starting as a Sole Trader

1. Apply for an ABN via the Australian Business Register.
2. Register a business name (optional, unless trading under your personal name).
3. Obtain licenses or permits, if required.
4. Consider insurance like public liability or professional indemnity.
5. Open a separate bank account to manage business finances.

Setting Up a Company

1. Register with ASIC to obtain an Australian Company Number (ACN).
2. Choose your company structure, constitution, and shareholding.
3. Appoint directors and shareholders (minimum one director required).
4. Ensure compliance with ongoing legal and financial obligations.
5. Submit annual reports and maintain detailed financial records.

Sleek supports hundreds of business owners to register Sole Trader and Company structures each month — book a free consultation with their team to ensure you get things set up in the right way from Day 1.

Employing Staff: What You Need to Know

Whether you’re a sole trader or a company, you have similar responsibilities when hiring:

• Register for PAYG withholding
• Pay superannuation (12% from July 2025)
• Comply with the Fair Work Act and provide entitlements under the National Employment Standards

Note: Company directors can be held personally liable for unpaid employee super and PAYG withholding under the Director Penalty Regime.