Choosing the right business structure isn't the most exciting part of starting a business. It's one of the most important.
One of the first questions we hear from Gen Z founders is: "Should I be a sole trader, set up a company, or use a trust?"
Unfortunately, many founders make the decision after watching a few videos online or taking advice from someone whose business looks nothing like theirs.
The truth is, there is no one-size-fits-all answer.
The right structure depends on what you're building, how much you expect to earn, and where you want the business to go.
Starting Simple: Sole Trader
Many founders start as sole traders because it's quick, simple, and inexpensive.
A sole trader structure can work well if you're:
Testing a business idea
Freelancing or consulting
Running a small side hustle
Generating modest revenue
The downside? You and the business are legally the same entity. That means you're personally responsible for business debts and obligations. As your business grows, this can become a risk.
Growing Up: Company Structure
Many successful startups eventually move into a company structure. A company creates a separate legal entity from its owners, providing a greater level of protection and credibility.
A company may be worth considering if you're:
Scaling quickly
Hiring employees
Working with investors
Signing larger contracts
Building a long-term business
Companies also come with additional responsibilities, reporting requirements, and compliance obligations. They're not automatically "better." They're simply better suited to certain situations.
Where Does a Trust Fit In?
Trusts are often the most misunderstood structure.
We regularly hear:"Someone on TikTok said I should have a trust."
A trust can be a useful structure for asset protection and tax planning in certain circumstances. But a trust is not a magic solution. For some founders, it may make sense. For others, it may create unnecessary complexity and cost. The decision should be based on your individual circumstances, not social media trends.
The Bigger Question
Many founders focus on the structure itself.
What they should be focusing on is:
Where do I see the business in three years?
Will I have business partners?
Am I planning to employ staff?
What risks does my business face?
How quickly do I expect to grow?
The answers to these questions often point you toward the right structure.
Don't Let the Structure Delay the Business
One of the biggest mistakes we see is founders waiting for the "perfect" setup before getting started. The perfect structure today may not be the perfect structure next year. Businesses evolve. Structures can evolve too. What's important is understanding your options and making an informed decision from the start.
The 7 Bells Perspective
At 7 Bells, we don't believe in recommending the same structure to every founder.
Your business is unique.
Your goals are unique.
Your structure should be too.
Whether you're launching a side hustle, an AI startup, a digital agency, or the next big idea, the right foundation can save time, stress, and costly mistakes down the track.
Because choosing a business structure isn't just a tax decision.
It's a business decision!
Book an appointment with us today: info@7bells.com.au