Sole Trader Or Company – What’s The Right Move For You?

At Charltons, we’ve spent the past 30 years advising businesses of all shapes and sizes. We pride ourselves on having offered the best quality guidance to corporations, technology startups and driven freelancers.

The questions we’re often asked are around how you should structure a business. When you’re starting out, and getting established, it’s quite possible that you’ve set up your project as a sole trader, rather than a company.

If you’re a sole trader, there’s nothing wrong with that. It’s not necessarily a bad move when you’re running a small business, but there will be reasons to change your structure, particularly as you start to achieve more success. And that could mean that becoming recognised and registered as a Company is the right move for you!

  1. You’ll often be able to charge more, as a company.

If you received two estimates, one from a plumber called Joe Average who’s a sole trader, and one from a registered company called National Plumbers Ltd – who are you more likely to trust? For most customers, it’s the registered company. Even if they chose the sole trader, many would expect the fees to be considerably lower than the company.

If you look at it purely for the way other people will perceive your business that could be reason enough to take the plunge and move towards becoming a company. After all, the ability to close bigger and better deals is coveted by any entrepreneur!

  1. As a sole trader, you aren’t protected.

If something were to go wrong for your business or your client, as a sole trader you don’t have a great deal of protection. That means that it’s not just the business that’s on the line – it’s all your other assets. The house where your family live, the car you drive to drop the kids at school. If you’re sued over a job gone bad or an accident, you might lose everything.

As a company, as long as you've been properly advised, that’s no longer the case. Your business becomes a separate entity, not drawing on your own personal liability. That means a lawsuit might be able to hurt the company itself, but it won’t be able to hurt you, your family and your future.

  1. The cost is probably lower than the risk.

Sure, it does cost a little more to get started as a company than a sole trader. That’s true. But the chances are, it will cost you a whole lot less than you’d lose in a bad law suit. It might even cost less than the extra billing you would be able to do when you change your customers’ perceptions.

Our advice is that you keep the company in the back of your mind. Be aware that when you hire new staff and take on new projects, there’s one big matter that you really should be taking care of. You don’t need to rush out and become a company immediately, and it’s not essential to do it before you start your first contract – but as soon as you have traction, getting it done should become a priority.


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261 George Street
Sydney NSW 2000

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 02 8267 6666.

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