Why Your Business Structure Matters More Than You Think

In my book The Lifestyle Accountant’s Tradie Handbook, I use Mick and Dave to show the real world difference between doing it the hard way and setting up the business structure for tradies right from the start. They’re fictional tradies, but their stories are based on what I see tradies do every single week, the wins, the stuff-ups, and the wake-up calls that come when it’s sometimes too late.

Mick got his licence and went the usual route. He registered as a sole trader, slapped a name on the ute, and hit the tools. Easy as, he thought. No paperwork dramas, cheap tax return, and he could get going straight away.

Eighteen months later he’s sitting in my office pale as a ghost. One of his jobs went south, roof leak turned into a large claim and he had no insurance so no protection. The client was threatening legal action. And because Mick was a sole trader, they were coming after him personally, not the business, but his ute, his tools, even his family home.

Here’s the problem. When you’re a sole trader, there’s no line between you and your business. If something goes wrong, everything you own is fair game. No protection. No buffer. Just you and your assets on the chopping block.

Now Dave, he came to me before he even bought his first van. We set him up as a company from the start. His business had its own ABN, own bank account, and most importantly, its own legal identity. So, if something went wrong on the job, the company carried the risk, not Dave personally. His house was protected. His personal money safe. And he had the bonus of a flat 25 percent company tax rate instead of getting stung at 47 percent once he reached over $120k.

But to be clear, setting up a company isn’t just ticking a box with ASIC and calling it a day. There’s a lot more for you as a director with responsibilities under the Corporations Act. You need to keep proper records, run meetings and keep minutes even when the meeting is only you, and meet compliance deadlines. You’ve got to understand what it means to manage someone else’s money, not just your own. And you need a clear pathway to navigate things like super, capital gains, tax planning, and eventually your retirement.

Most of that doesn’t show up on a simple registration form. It only comes out in a proper sit-down chat where we dig into your goals, your risks, and what you’re actually trying to build.

It’s not just about getting the business off the ground, it’s about laying the foundation for the next five, ten, even twenty years. That includes when it becomes prudent and cost effective to set up family trusts, asset holding companies, or separate entities for investment. Those structures can save you hundreds of thousands in tax and protect your hard earned assets, but only if they’re set up at the right time and for the right reasons.

Running a company takes more work, no doubt about it. But the mindset shift is what really matters. You stop thinking like a bloke with a job and start thinking like someone building wealth. You learn the difference between being self-employed and being an owner. And once that switch flips, you start building something that lasts and that you can one day sell or pass on.

Being a sole trader might feel simpler at the start but it can cost you big in the long run. No asset protection. Limited tax options. And most bigger contractors want to deal with a company, not a one-man band.

So, if you’ve got a house, a missus, or kids to look after, ask yourself is your business structure doing the job or putting everything you’ve worked hard for at risk?

If you’re ready to become a business owner with the right mindset and are looking for setting up with company the right way, request a no obligation “business structure for tradies” consultation on my website robards.com.au. We can discuss if you are ready to take the steps to build a business that will build a lifestyle and wealth and sets you up for the long haul.

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