When you first start a business, choosing a structure may seem like a straightforward decision.You might operate as a sole trader, partnership, company or trust based on your circumstances at the time.
But businesses change.As revenue increases, employees are hired, new owners become involved or the business expands into new markets, the structure that worked when the business started may no longer reflect how it operates today.
A business structure can affect taxation, registrations, reporting requirements, administration, ownership, control and personal liability.There is no single structure that is right for every Australian business, but changing circumstances can make a business structure review worthwhile.
What is a business structure?
In Australia, common business structures include sole trader, partnership, company and trust.Each structure has different legal, tax and administrative characteristics.
A sole trader structure is generally simple to establish and operate, while a company is a separate legal entity with its own obligations.Partnerships involve two or more people carrying on a business together, while trusts can provide a different way of holding and distributing business or investment assets.
The structure chosen can influence how the business is controlled, how income is treated and the extent to which owners may be personally exposed to business liabilities.Business.gov.au recommends considering factors such as the costs involved, tax implications, personal liability, control and the amount of paperwork and reporting required when choosing a structure.As a business develops, those considerations can change.
Signs your business structure may need a review
Business growth does not automatically mean you need to restructure.However, certain developments may be a good reason to revisit the original decision.
Your revenue has increased
A business that started with modest revenue may look very different several years later.Increasing turnover can change the tax and cash-flow considerations surrounding the business.It may also mean that the owner needs to consider whether the current structure remains appropriate for the scale and complexity of the operation.
You are employing staff
Taking on employees can introduce additional responsibilities, including PAYG withholding, superannuation and other employer obligations.While employing staff does not necessarily require a new business structure, it can be a useful trigger for a broader business health check.
New owners are becoming involved
Bringing a spouse, family member, business partner or investor into the business can significantly change ownership and control arrangements.The existing structure may not provide the most suitable framework for the new ownership arrangements, particularly where different people will have different financial interests or responsibilities.
The business is expanding
Expansion into new products, services, locations or markets can introduce new commercial risks and administrative requirements.For example, a business that began as a small consulting operation may eventually employ staff, enter significant contracts, lease premises and take on larger financial commitments.As the risks and responsibilities change, it can be sensible to review whether the existing structure continues to provide an appropriate foundation.
Your long-term goals have changed
Your original business plan may have been based on remaining a small owner-operated business.Several years later, you may be considering selling the business, bringing in investors, expanding interstate or passing the business to the next generation.Those future plans can be relevant when reviewing the current structure.
A structure review is about more than tax
Tax is an important consideration when reviewing a business structure, but it should not be the only one.The ATO recognises that different structures have different tax and reporting obligations.The broader commercial consequences should also be considered.
A review may consider:
- Ownership and control – who owns the business and who makes important decisions?
- Personal liability – what exposure do owners have to business debts and risks?
- Tax obligations – how is business income taxed and what reporting is required?
- Administration – how much record keeping, reporting and compliance is involved?
- Succession planning – what happens if an owner retires, dies or wants to exit?
- Growth – can the structure accommodate future expansion or additional owners?
- Exit planning – could the current structure affect a future sale or transfer?
A structure that appears attractive because of a particular tax outcome may not necessarily be suitable when these broader considerations are considered.
When should you review your business structure?
There is no universal timetable for reviewing a business structure.Instead, consider undertaking a review when there has been a significant change in the business or when future plans have changed. Useful questions include:
- Has the business grown significantly since it began?
- Has turnover or profitability changed substantially?
- Have you started employing staff?
- Have new owners or investors become involved?
- Has the business taken on significant debt or commercial risk?
- Are you expanding into new markets or locations?
- Have your personal or business goals changed?
- Are you considering selling or transferring the business?
- Has the current structure become increasingly difficult to administer?
If the answer to several of these questions is yes, it may be time to discuss whether the existing structure remains appropriate.
What happens if you decide to restructure?
Changing a business structure is not simply an administrative exercise.Depending on the circumstances, restructuring can have tax, legal, accounting and administrative consequences.
The ATO provides specific guidance on changing business structures and notes that there can be tax implications when moving from one structure to another.
These can include capital gains tax, income tax and other consequences depending on what is being transferred and how the restructure is undertaken.
There may also be new registrations, record-keeping requirements, contracts, licences or reporting obligations to consider.For this reason, business owners should obtain appropriate professional advice before implementing a restructure rather than changing the structure first and considering the consequences afterwards.
The business is expanding
Expansion into new products, services, locations or markets can introduce new commercial risks and administrative requirements.For example, a business that began as a small consulting operation may eventually employ staff, enter significant contracts, lease premises and take on larger financial commitments.As the risks and responsibilities change, it can be sensible to review whether the existing structure continues to provide an appropriate foundation.
Your long-term goals have changed
Your original business plan may have been based on remaining a small owner-operated business.Several years later, you may be considering selling the business, bringing in investors, expanding interstate or passing the business to the next generation.Those future plans can be relevant when reviewing the current structure.
A structure review is about more than tax
Tax is an important consideration when reviewing a business structure, but it should not be the only one.The ATO recognises that different structures have different tax and reporting obligations.The broader commercial consequences should also be considered.
A review may consider:
- Ownership and control – who owns the business and who makes important decisions?
- Personal liability – what exposure do owners have to business debts and risks?
- Tax obligations – how is business income taxed and what reporting is required?
- Administration – how much record keeping, reporting and compliance is involved?
- Succession planning – what happens if an owner retires, dies or wants to exit?
- Growth – can the structure accommodate future expansion or additional owners?
- Exit planning – could the current structure affect a future sale or transfer?
A structure that appears attractive because of a particular tax outcome may not necessarily be suitable when these broader considerations are considered.
When should you review your business structure?
There is no universal timetable for reviewing a business structure.Instead, consider undertaking a review when there has been a significant change in the business or when future plans have changed. Useful questions include:
- Has the business grown significantly since it began?
- Has turnover or profitability changed substantially?
- Have you started employing staff?
- Have new owners or investors become involved?
- Has the business taken on significant debt or commercial risk?
- Are you expanding into new markets or locations?
- Have your personal or business goals changed?
- Are you considering selling or transferring the business?
- Has the current structure become increasingly difficult to administer?
If the answer to several of these questions is yes, it may be time to discuss whether the existing structure remains appropriate.
What happens if you decide to restructure?
Changing a business structure is not simply an administrative exercise. Depending on the circumstances, restructuring can have tax, legal, accounting and administrative consequences.
The ATO provides specific guidance on changing business structures and notes that there can be tax implications when moving from one structure to another. These can include capital gains tax, income tax and other consequences depending on what is being transferred and how the restructure is undertaken.
There may also be new registrations, record-keeping requirements, contracts, licences or reporting obligations to consider.For this reason, business owners should obtain appropriate professional advice before implementing a restructure rather than changing the structure first and considering the consequences afterwards.
A business health check can identify opportunities
A business structure review can be part of a broader business health check.Business owners regularly review their pricing, staffing, cash flow, marketing and operational systems. The legal and tax structure supporting those activities deserves similar attention. A review can help identify whether the current structure continues to align with the business’s:
- current operations;
- ownership arrangements;
- risk profile;
- tax obligations;
- administration requirements; and
- long-term objectives.
It may also confirm that the existing structure remains appropriate and that no change is necessary.That can be just as valuable as identifying a potential restructure.
Recent tax reforms make structure reviews more important
The 2026–27 Federal Budget introduced significant proposed changes affecting business and investment structures, including a 30% minimum tax on discretionary trusts from 1 July 2028.Since the Budget, the Government has released a consultation paper and, more recently, exposure draft legislation providing further detail on how the new trust rules are intended to operate.
The latest proposals also include expanded restructuring options and rollover relief for eligible businesses and taxpayers considering whether their existing trust structure remains appropriate.These changes do not mean that every business operating through a discretionary trust needs to restructure.However, with significant tax reforms approaching, business owners should consider whether the structure they established years ago remains suitable for their current business, ownership arrangements and longer-term objectives.
Don’t wait until the business changes again
The structure selected when a business first started trading may have been entirely appropriate at the time.But businesses evolve. A growing business may have different ownership arrangements, greater revenue, additional employees, increased commercial risk and more ambitious plans than it did several years earlier. That does not automatically mean the business needs a new structure.
It does mean that the original decision should not necessarily be treated as permanent. Regularly reviewing the structure can help ensure it continues to reflect the way the business operates and the objectives of its owners. Before making any changes, obtain advice on the potential tax, legal and administrative consequences of restructuring.
Frequently Asked Questions
How often should I review my business structure?
There is no set period that applies to every business.A review can be particularly useful after significant changes in ownership, revenue, staffing, risk or business objectives.
Does business growth mean I need to change my structure?
Not necessarily.Growth can be a reason to review your structure, but whether a change is appropriate depends on your specific circumstances.
Is choosing a business structure mainly about tax?
No. Tax is one consideration. Ownership, control, personal liability, administration, succession and future growth should also be considered.
Can I change my business structure later?
Yes, but changing structures can have tax, legal and administrative consequences. Professional advice should be obtained before implementing a restructure.
What are the main business structures in Australia?
The common structures are sole trader, partnership, company and trust. Each has different legal, tax and administrative characteristics.
Where can I find Australian government information about business structures?
Business.gov.au provides information about choosing and changing business structures, while the ATO provides tax information and guidance relevant to different structures.
Do the recent Federal Budget and proposed trust tax changes mean I should review my business structure?
Potentially. The 2026–27 Federal Budget proposed significant changes affecting discretionary trusts, and the subsequent consultation paper and exposure draft legislation have provided further detail on how these changes may operate from 1 July 2028.These reforms do not mean every business needs to restructure, but businesses operating through trusts may benefit from reviewing whether their existing structure remains appropriate before the new rules commence.
How Can We Help?
If you have any questions or would like further information, please contact Camden Professionals on:
Phone: 08 9221 5522
Email: info@camdenprofessionals.com.au
You can also arrange a meeting so we can discuss your requirements in more detail.
General Advice Warning
The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person.
Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.
Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances.
The examples provided on this page and on this website are for illustrative purposes only.
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