Got questions about which structure to choose for your small business? We spoke with Sam Notley, Partner at Roberts + Morrow, who’s been with the firm for more than 25 years. Based in Armidale, Sam works within the Business Services team, supporting small to medium-sized businesses across the New England region, with a particular focus on the agricultural industry. Sam has spent decades helping regional businesses navigate everything from tax and compliance to long-term growth and succession. In this Q&A, he explains the four main business structures and what each means for new business owners in regional New South Wales.
Sam, for someone starting a small business in New South Wales, what are the main structure options?
There are four main business structures: sole trader, partnership, company, and trust. A sole trader is the simplest because you run the business in your own name. The money you make is yours, and it’s very straightforward to set up. The downside is that everything’s in your name, so if something goes wrong, your personal assets are on the line. The second structure is a partnership, which is when two or more people go into business together. It’s still easy to start, but I always say a partnership is easy to get into and hard to get out of. The key is to have a proper partnership agreement that spells out the rules so everyone knows where they stand. Then there is a company. It’s a separate legal entity, which means the business stands on its own, and your personal assets are generally protected if something goes wrong. A company also benefits from a capped 25 per cent tax rate for small businesses, which can be a real advantage. That said, it’s a more formal structure. There are extra rules to follow, and you can’t just dip into the funds whenever you like. Any money you take out has to be done through wages, dividends, or a loan – not as personal spending. Finally, there’s a Trust. Trusts have been around for centuries, and they’re brilliant for flexibility and asset protection. You can distribute income each year to different people, whether that’s adult children, a company, or whoever makes sense from a tax perspective, but there are more rules and paperwork involved, so it’s really for people planning to be in business for the long haul.
What about people starting small? Say they’re selling at markets, running classes or have started an online business. Do they need to register?
It’s not compulsory, but I always recommend it. Registering your business name protects it – it’s yours, and no one else can use it. It’s also only about $100 for three years through ASIC. You’ll also need an ABN, and from there you can operate as a sole trader or a partnership. It’s a nice and simple structure to use while you’re finding your feet.
How does your choice of structure affect tax and how you run things day-to-day?
With sole traders and partnerships, the income just goes onto your personal tax return. So, if you’ve got wages from another job and then make a few thousand from your business, that income is added on top and taxed at your marginal rate. Companies and trusts are different. Companies pay a flat tax rate of 25 per cent and trusts can distribute income to whoever in the family has the best tax position. The trade-off is that they’re more expensive to set up and run, with separate accounting and reporting each year.mMost people start as sole traders because it’s easy. Once the business grows and gets a bit more complex, that’s when it’s worth looking at changing your structure.
How much should people think about their future plans when choosing a business structure?
As your business grows and you start taking on staff, things naturally become more complex. There’s more responsibility: payroll, safety, and liability if someone gets hurt. That’s when it’s important to think about protecting your personal assets. The more you grow, the more it makes sense to look at a structure that offers that protection, like a company or a trust. With help from your accountant and lawyer, it’s relatively easy to transition from a sole trader or partnership into a company or trust when the time’s right. So as your business evolves, it’s worth stopping to ask yourself: Is my structure still the right fit? That’s usually the point where we sit down and weigh up the advantages and disadvantages of making a change.
Are there any quirks or specific things small businesses in NSW should watch for?
Every state has its own versions of certain taxes, but in NSW the main ones are payroll tax, workers’ compensation, and land tax. Payroll tax kicks in once your total wages go over $1.2 million, so it’s only for businesses that have really started to grow. Everyone with employees needs workers’ comp insurance, and land tax comes into play once you own property above the threshold. They’re not things you need to worry about when you first start out, but it’s good to know about these things as you grow.
How does someone know when it’s time to review their structure?
Usually, when life or business changes. If you’re growing, hiring staff, or buying assets, that’s a good time to check if your setup still suits. Sometimes people leave it too long, and changing later can trigger tax consequences – but if you plan ahead and get advice early, there are concessions available to help you restructure without big costs.
Why is professional advice so important at the start?
Getting it right the first time saves you a lot of headaches down the track. The structure you choose affects everything: tax, liability, and even how easy it is to pass the business on one day. We always tell people: start simple, get advice early, and review things as you grow. That’s the best way to set yourself up for long-term success.
What makes Roberts + Morrow different when it comes to helping small businesses?
The beauty of Roberts + Morrow is that everything’s under one roof. We’ve got accountants, lawyers, and financial planners who can all work together. If a client needs help restructuring, rolling assets over, or accessing tax or stamp duty concessions, we can sort it internally: it saves time, money, and stress. Plus, with the depth of experience here – there’s not much we haven’t seen before.
To find out more, go to www.rm.net.au
Meg Miller
Digital Marketing Manager. Adventure seeking writer, free spirit, smitten aunt and dog mum.
