Sole trader

What is a sole trader?

A person can, of course, trade by themselves under their own name or a business name. This is the most simple and basic trading structure. A sole trader is responsible for all of his or her debts incurred in the course of his or her business activity.

How does a company structure differ from a sole trader?

A company:

has a separate legal existence distinct from its owners
has its own property, rights and obligations (a company’s assets belong to the company and must be used for the company’s purposes)
has the powers of an individual
has limited liability, that is the shareholders of a company are not prima facie liable for the company’s debts
is generally the best structure for the growth of a business, as well as the full or partial transfer of the business.

A sole trader structure may not be as appropriate a vehicle for a growing business. A sole trader cannot take on equity investors or have stakeholders move in and out of the business with the ease and lower costs that a company can.

If you believe that your business will require third party equity investment at some time in the future, you should perhaps consider changing to a company structure sooner rather than later. You can learn more about companies here and we can provide you with advice and assistance in this regard.

As a sole trader, are my personal assets protected against bankruptcy?

As a sole trader, it is vital that you give consideration to the protection of your assets against the effects of legal action and, ultimately, bankruptcy. This cannot be left to the time that you are in trouble, because by then it will almost certainly be too late. You should put the protective structures and arrangements, such as a discretionary trust, in place now.

This may also be less costly now than it might be later, particularly if your business is likely to grow. You can read more about Trusts here and contact us for advice in this regard.

Sole trader requiring protection of personal assets against bankruptcy

Our Business and Commercial Lawyers

Michael Perkins

Lawyer, author, educator

Michael Perkins, Co-Founder and Principal Lawyer Dip Law SAB, TEP, MICW has over 30 years’ experience of in resolving complexities for clients managing their family and business interests. While many professionals manage and deliver transactions for clients, Michael provides additional support with resolving broader complexity and conflict in the lives of his clients, where possible without resorting to litigation or other dispute resolution processes. He helps clients deal with the practical, strategic and operational needs of their businesses, conservation of their assets, activating community and philanthropic interests and planning for succession to their estate over time. Michael applies a multidisciplinary approach in dealing with the challenges of achieving growth, asset protection, estate governance and succession. Methodologies finessed with experience are applied, paving a way forward for globalising businesses as well as families making plans to manage their wealth for the benefit of subsequent generations.

Jeremy Duffy

Experienced business lawyer

Based in South Australia, Jeremy Duffy has over three decades of experience in practice including property law and commercial transactions. Jeremy’s clients over the years have included corporates, banks, property developers/managers, financial advisory firms, representative bodies and private clients.

Clarence Leung

(Chi Chiu Leung)

Clarence Leung LL.B, LL.M (London); Diploma in Law (Sydney); TEP is a senior lawyer with over two decades of experience in trusts, commercial law, property law, litigation and migration law. Proficiently tri-lingual, Clarence is an experienced Private Client lawyer who is skilled in working with clients of diverse backgrounds and has extensive knowledge of business dynamics and trade practices. He has acted in or advised on disputed matters for clients with an Asian background including Singapore, Malaysia, South Korea, Taiwan, Hong Kong and mainland China. Trusts disputes and Litigation – Clarence has represented large-scale international companies in Trade Practice and fraudulent activity matters. He has represented individual clients in relation to caveats, partnership disputes, contested estates and injunctions. Commercial Law – Clarence helps clients deal with their wealth preservation and succession objectives for their commercial enterprises. He works for a diverse range of manufacturing distribution and retail market-focused businesses. Clarence also helps his clients deal with the legal issues that flow from the operations, management, planning and decision making processes as well as ownership of their commercial enterprises.

Zabina Naem

Associate Lawyer

Zabina Naem can support your business in areas including Trust Law and Property Law. She has strong practical knowledge in:

Advising on business succession planning.
Advising on tax implications in estate planning and property law such as stamp duty concessions, land tax and capital gains tax.
Assisting clients with residential and commercial conveyancing.
Advising on the succession of discretionary trusts and self-managed superfunds.
Drafting and settling discretionary trusts.

As a fluent Hindi speaker, Zabina has the capacity to assist clients from the Indian community.

Let’s talk.

To make an appointment, simply call 1300 31 42 82 or email enquiry@autonomyfirst.com