The simplest way for a person to commence operating a business is as a sole trader.  In doing so decisions need to be made about obtaining an ABN and registering for GST based upon whether it is anticipated that the business will meet the required turnover threshold and claim input credits.

Operating a business from home may be subject to satisfying local council planning requirements or a lease of commercial premises may be necessary.

Trading under a name other than your own will mean registering the trading name under the Business Names Act.

Whilst operating as a sole trader may have benefits because of its simplicity, it does not provide much attraction from an income tax point of view when the business becomes profitable or from an asset protection or succession planning point of view. 

From a liability point of view, if a claim is made against the business for money owed by it or if there is a claim for faulty workmanship or breach of contract then the sole trader is exposed to that liability personally, which may affect other assets notwithstanding that they are not related to the operation of the business including the family home.

From an asset point of view, the goodwill generated by setting up a business and its plant and equipment and stock are owned by the sole trader and form part of his estate unless he is leasing items or has borrowed to purchase plant and the borrowings are secured.

Consideration should be given to operating under more involved business structure which may have benefits over the sole trader situation.

Our contacts:
Trevor Kuhle Accredited Specialist