How Do I Restructure To Become A Sole Trader?

There are several things you need to consider before restructuring from a business or company to a sole trader. For example, you may need to cancel and reapply for your ABN. You must also consider how your restructured business will affect your business and clients. At Clear Tax, we want to help you understand what this change means for you.

What’s The Difference Between Sole Trader Tax And Company Tax?

The biggest difference between sole trader and company taxes is the rate. Sole traders pay tax using a sliding scale, which is the same as the personal tax rate. Company taxes are levelled at 25% for companies who turnover under $50 million each year.

Sole Traders

Everything you need to know about sole trader taxation.

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Why you need sole trader accountants?

A sole trader is one of the least expensive and simplest business structures. However, as a sole trader, you are entirely responsible for all aspects of your business, including debts, losses, and business decisions.

This can be a lot to manage in the context of also performing your billable work. A sole trader accountant in Australia can lessen your stress by:

Undertaking reporting requirements
Maintain financial records for 5 years
Help you remain compliant with taxation requirements

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What is a sole trader?

A sole trader is an enterprise owned and operated by one person, for one person. Sole traders are legally responsible for profits, losses, debts, and taxation.In this structure, the person and business are indistinguishable from each other, meaning that sole traders are the business. But as a sole trader, you can still hire people.

Examples of sole traders include tradespeople, freelancers, and other kinds of independent contractors. If you want to restructure your business as a sole trader, get in touch with our team for more information.

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What are the responsibilities of a sole trader?

There are several responsibilities that a sole trader must be aware of before going into business for themselves.

Business name

Sole traders wishing to operate in a name other than their personal name must register their business name with the ATO.

Superannuation

A sole trader must take responsibility for their own superannuation arrangements and payments, including claiming deductions on tax.

Insurance

Sole traders are responsible for the liabilities of their businesses, some of which can be mitigated with insurance.

Tax

Sole partnership tax structures can be both complex and beneficial. Getting it right from the outset can help you find more success as a freelancer.

Licences

You’ll need certain local, state, and federal licences and permits to operate as a sole trader in your chosen field.

Staff

You can still employ staff as a sole trader, but you must pay payroll tax, PAYG, and superannuation for eligible employees.

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Gladys Rodrigues

Ash and the team at Clear Tax have been absolutely spot-on for me and my business. Thorough, informed, approachable and, above-all, affordable, their company provides an incredibly refreshing and forward-thinking alternative to the more ‘old-school’ accountancy firms. Thank you for helping me in an area of business I do not love!

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We are delighted with the service Ash and his team at Clear Tax Accountants has afforded us since we joined them. They are very forward thinking utilising new software apps and technology. Most importantly for us, they are always accessible to help and answer our queries, as well as taking the time to get to know more about our business, Government Grants and how it works – a rare thing!

Jacqueline Chatlin

Excellent Service & help with all aspects of my accounts. Working as a micro-business I have little time to spend on accounts and the team at Clear Tax Accountants have looked after me brilliantly from the very beginning. I feel I am in safe hands and they answer queries in a very straightforward manner so I understand everything in order to decide what to do best for my business. Delighted with Ash and Yuvraj. Thank you!

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Why choose Clear Tax as your sole trader business accountant?

Clear Tax offers accurate and impartial support, advice, and services for sole traders. We’ll work with you from the outset to ensure that your business is structured to maximise your tax position and lower the tax you pay. We’ll help you understand all of your responsibilities, and get you every deduction that you’re entitled to.

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Frequently Asked Questions

About Business Structures

Below are answers to some of the most common questions our accountants get asked.

How do I restructure to become a sole trader?
There are several things you need to consider before restructuring from a business or company to a sole trader. For example, you may need to cancel and reapply for your ABN. You must also consider how your restructured business will affect your business and clients. At Clear Tax, we want to help you understand what this change means for you.
What’s the difference between sole trader tax and company tax?
The biggest difference between sole trader and company taxes is the rate. Sole traders pay tax using a sliding scale, which is the same as the personal tax rate. Company taxes are levelled at 25% for companies who turnover under $50 million each year.

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