Operating as a sole trader is the simplest of business structures. There are many people who do so, notably farmers.
If you choose to operate as a sole trader here are some of the main advantages and disadvantages.
- you can take funds out of, or put then into the business, with no restrictions
- but you have no limited liability – all claims or debts of the business are yours
- you have sole control and no minutes of business decisions required
- but you are exposed to tax rate at top marginal rate plus Medicare levy and surcharge plus any superannuation surcharge
- you can use tax losses as they arise
- but tax losses are only usable by you as proprietor
- you claim business deductions directly as well as any CGT discount on capital gains