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As a sole trader, you're responsible for all business decisions.

In a company, the directors are responsible for business decisions and must make a record of certain decisions. If you're the only director, you have full control.

If there is more than one director, the way the company will be run (including how decisions are made) will follow certain rules. These rules are usually set out in the company's constitution or replaceable rules.

Cost of setting up as a sole trader

The cost of setting up a sole trader depends on the type of business you want to set up. Sole trader start-up costs can include:

• Registering a business name (if you need one) - $42 for one year or $98 for three years.
• Licences and permits (you may not need any — this depends on the industry you're in)
• Domain name and web hosting (if you want a business website)

See our Start-up costing sheet for examples of other costs that are common in the first year of a business.

Cost of setting up a company

The cost of setting up a company is much higher compared to a sole trader. Company start-up costs include:

• Company registration - $576 for a proprietary limited company. With an annual review fee of $310.
• Business name registration (if you need one) - $42 for one year or $98 for three years.
• Licences and permits (you may not need any — this depends on the industry you're in).
• Domain name and web hosting (if you want your business to have a website).

See our Start-up costing sheet for a list of examples of some of the other costs typical in the first year of a business.

Setting up as a sole trader

Setting up a sole trader structure is relatively easy. Generally, you're ready to go once you get your Australian Business Number (ABN) and register for any taxes, licences and permits. It's recommended you set up a separate bank account, but it's not necessary.

Setting up as a company

Setting up a company is more complicated, and you must understand your legal and tax obligations before registering. On top of the typical business and tax registrations, licences and permits you'll also need to set up a separate bank account and ensure the company has a registered office and principal place of business.

Find out more about the volume of paperwork and legal requirements for a company.

A sole trader can easily switch to a partnership or company.

A company can't easily change business structures. To change, you need to:

1. deregister the company so that it is no longer a legal entity. To do this, you either voluntarily deregister the company (if it has net assets worth less than $1000) or wind up the company (if it has net assets worth more than $1000). Winding up a company can be quite complicated
2. register your business in the new structure.

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