Why change from Sole Trader to Company? Here’s Why It Might Be the Best Move for Your Business.
- johnry8
- Sep 2
- 2 min read
Starting out as a sole trader makes perfect sense. It is simple, affordable and gets your business off the ground quickly. But as your business grows, you might start to feel the limits of that setup.
Many business owners reach a point where they wonder, “Is it time to take the next step?”
Some common triggers for starting to think about changing from a sole-trader structure:
Having employees
Increase in income
Great volume of work and risk
Larger jobs and projects
Purchasing assets
Here are the most common reasons why changing from sole-trader to company may benefit you:
1. Your Personal Assets Stay Protected
One of the biggest concerns for any business owner is risk. As a sole trader you and your business are seen as one and the same. So if your business gets into debt or faces a legal issues your personal belongings like your house or car could be at stake.
When you register as a company, the business becomes a separate legal entity. That means your personal assets are generally protected, giving you peace of mind.
Tip: It is still important to meet your responsibilities as a company director to keep that protection in place.
2. Pay Less Tax as You Grow
As a sole trader, your business income is added to your personal income and taxed at your personal individual tax rates. That can mean paying up to 47 percent once your earnings increase.
A company structure is taxed at a lower flat rate, currently 25 percent for many small businesses. This can make a big difference as your revenue grows.
What we recommend: Talk to us at Rise Accountants about the best way to pay yourself and manage profits once you shift to a company. You might be able to save more and reinvest in your business.
3. Build Trust and Attract Bigger Opportunities
Let’s be real. Having “Pty Ltd” at the end of your business name can create a stronger impression. It signals to clients, customers, investors and suppliers that you are serious and established.
Clients may feel more confident working with a company. You may also find it easier to pitch for larger contracts, government work or even secure funding.
Often government tenders and grants require or a more favourable with a company structure.
Friendly tip: Once you register your company, update your business details everywhere like your website, invoices and email signature to reflect the change.
4. Keep Your Business Finances Clean and Clear
When you are a sole trader it is common for business and personal money to get mixed together. But this can make tax time stressful and limit your ability to make smart business decisions.
Running a company means opening separate bank accounts, setting up proper bookkeeping and having a clear view of your business performance.
Do this: As soon as your company is registered, set up a separate bank account and accounting system. It makes life easier and helps you grow with confidence.
Thinking about switching to a company structure but not sure if it’s the right move for your business?