Structures
Sole trader or company?
Nathan Roe · 24 September 2026 · 1 min read
The structure question is mostly about risk, then about money. A straight comparison without the jargon.
This question is usually asked as a tax question. It is more usefully asked as two: how much personal risk do you carry, and how much profit will you leave in the business?
Sole trader
Simple, cheap and entirely transparent to the tax office. Your business income is your income, and you can generally offset a bad year against other personal income. The trade-off is that you and the business are the same legal person, so a claim against the business reaches your personal assets.
Company
A company exists separately. It can hold profits at the company rate, and liability generally stops with it, provided you have kept your obligations met and have not been personally guaranteeing everything. It costs more to run, needs its own accounts, and any profit you take out is taxed again unless it comes out as salary.
The question that decides it
If the work involves physical risk, contractual exposure, or substantial debt, the separation is usually worth its cost regardless of the tax result. If you are a solo service business with low exposure, a company can simply add paperwork.
When to revisit it
Structure should be reviewed when profit becomes steadier, when you take on staff, or when a client requires you to contract through a company. It is not a decision anyone should make once and never look at again.