Understanding the Tax Implications of Trading as a Company vs Sole Trader
29 October 2026 · 6 min read · By Heaney Accounting
Understanding Your Business Structure
For many tradies, starting out as a sole trader is the simplest path. It is easy to set up and you have full control over the business finances. However, as your business grows, you might find that a company structure offers better protection and potential tax advantages.
Key Differences in Tax
- Sole traders pay tax on business income at individual marginal tax rates.
- Companies are taxed at a flat rate on their net profits.
- Sole traders are personally liable for all business debts.
- Companies provide a layer of legal separation between you and the business.
Pro Tip: If you are earning a high income, the lower corporate tax rate might allow you to reinvest more money into tools and equipment for your business compared to paying higher individual income tax rates.
- Assess your current annual net profit level.
- Consult with your accountant about personal liability risks.
- Compare the administrative compliance costs of managing a company.
- Review your long-term goals for scaling your trade team.
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