You're an individual and the sole owner of the business

You can employ staff to help you out but as the business owner you’re responsible for all decisions and losses in your business, and you report the business income in your personal tax return. A sole trader structure is the easiest and cheapest business structure to set up.

If you’re a sole trader, you’re an individual and the sole owner of the business.

The income your business makes belongs to you. You report the income on your individual tax return and pay tax on your business income at your individual marginal income tax rate. Click here to learn more about tax rates for this structure.

You’re responsible for all decisions and losses in your business. This means you have complete control over your business, but it also means your personal assets are at risk if things go wrong.

Key facts for sole traders

  • Cost – cheapest structure to set up and run
  • Setting up process – easy
  • Owner – you
  • Responsibility for business decisions – you
  • Responsibility for losses – you
  • Report business income – on your individual tax return
  • Tax rate – you pay your individual tax rate on any business profit
  • Risk of losing assets – yes
  • Business tax file number (TFN) needed – no
  • Additional administration – no
  • Additional reporting – no
  • Separate business bank account needed – no
  • Your super – you’re not considered an employee, so you’re responsible for organising your own superannuation