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.
Sole trader at work

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. 

Sole Trader meeting lawyer

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 Principal Lawyer

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 Autonomy First

Jeremy Duffy

Principal Lawyer

Jeremy Duffy is a contracted Principal Solicitor based in South Australia. Jeremy has over 38 years of experience including as a partner in two Adelaide law firms. His background includes numerous litigation matters in both State and Federal jurisdictions and non-litigious advisory and transactional work in trusts, estate planning, property law and commercial transactions. Jeremy’s clients over the years have included corporates, banks, property developers and managers, financial advisors, representative bodies and private clients. Leveraging his extensive and varied skill set, he adeptly handles a broad spectrum of legal matters for a diverse clientele. Jeremy has a strong interest in developing technology to help deliver legal services more efficiently.

Amber Geake Autonomy First Lawyes

Amber Geake

Associate Lawyer

Amber Geake, Associate Lawyer at Autonomy First Lawyers, has been working in the legal sector since 2016 and was admitted to the Supreme Court of New South Wales in 2020. A passionate advocate, Amber’s focus is on all matters dealing with estates, including succession planning, estate administration and estate litigation. She has substantial experience in contested estate litigation (family provision, contested probate, testamentary capacity and validity, protected persons and general equity matters) in the Supreme Court of New South Wales. Her background also includes assisting clients within the Guardianship Division of the NSW Civil and Administrative Tribunal. Amber is currently undertaking her Master of Applied Law (Wills and Estates) at the College of Law.

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