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In Australia in 2025, the business environment remains both large and competitive. However, when it comes to embarking on your business journey, you don’t have to follow a one‐size‐fits‐all approach. In fact, there are several paths you can choose from when starting your business, allowing you to tailor your structure to your ambitions and resources.
There are different types of businesses and business structures in Australia, and the one you choose will often depend on your specific goals and current resources. Whether you’re planning to run your business from home-keeping in mind home business legal requirements-or aiming for nationwide expansion, the right structure makes all the difference.
In this article, we’ll explore the various types of businesses that exist in Australia and how business owners choose the structure that suits them best in today’s fast‐paced 2025 market.
What Types Of Business Structures Are There In Australia?
As mentioned, there are different types of businesses – and with them, varied structures that determine your legal, tax and financial responsibilities. The nature of your business activities and the platform on which they are offered will influence your choice.
A common question we receive from small businesses and startups is, “Which business structure should I choose?”.
This is perhaps the most important consideration in the early stages of your venture, as your chosen structure lays the foundation for your business moving forward. While you can change your business structure later, doing so can create disruptions in your business plan. It’s best to be confident in your decision from the start.
So, what are the different types of business structures in Australia, and how do you know which one is right for your venture in 2025?
Let’s discuss these in more detail below.
Sole Trader
A sole trader structure is arguably the easiest and most cost‐effective option. When we say “easy”, we mean it’s simple and involves fewer registration requirements compared to other structures.
Once you register your business, you receive an Australian Business Number (ABN), which serves as your business’ unique identifier for taxation and other regulatory purposes. The process remains straightforward in 2025, even as digital applications have made registration even quicker.
You can choose a business name; however, while registration is optional, it’s always safer to register your business name as a trade mark. Simply registering a business name does not grant you exclusive ownership.
There is a trade-off with the simplicity of a sole trader setup; its ease of establishment exposes you to greater liability. This structure features unlimited liability, meaning that if the business incurs debt or legal issues, your personal assets could be at risk.
A sole trader arrangement is best for those looking to keep their operations small or local, and who do not anticipate engaging in high‐risk transactions. It’s also an ideal option if you’re operating a home-based venture, as detailed in our guide on starting a business from home.
Partnership
An alternative option is a partnership structure, which involves a minimum of two people jointly controlling the business. In this model, partners share both the income and the losses.
Like a sole trader, a partnership features unlimited liability, but the responsibility is spread across all partners. This is why it’s crucial to have a clear Partnership Agreement in place. Such an agreement outlines how profits are shared, how liabilities are managed, and what procedures should be followed if a partner wishes to exit.
During registration, you too need to apply for an ABN, and if your annual turnover exceeds $75,000, registration for Goods and Services Tax (GST) will be necessary. Additionally, preparing a Partnership Dissolution Agreement from the outset can simplify proceedings should the relationship end.
Company Structure
If your business plans to engage in higher-risk activities or you aim to expand overseas, a company structure is generally the more appropriate and safer option. In 2025, companies continue to be favoured for larger ventures due to the significant benefit of limited liability.
A company’s debts and liabilities are confined to the business itself, protecting the personal assets of its owners or directors. However, this increase in security comes with additional set-up complexity and ongoing responsibilities. Thanks to streamlined online services by ASIC, registering a company is now more efficient-but it still requires careful planning.
Some key responsibilities and requirements for companies include:
- Obtaining an Australian Company Number (ACN) in addition to your ABN
- Registering your company with ASIC
- Adhering to directors’ duties which, if breached, can result in severe penalties
- Fulfilling reporting obligations by submitting necessary financial information to ASIC
- Maintaining a Company Constitution as the governing document for your organisation
All companies in Australia are governed by the Corporations Act 2001, which sets guidelines ranging from directors’ duties to company liquidation procedures.
If you’re a company director, it’s essential to understand your rights and responsibilities under the Act and ensure that your company’s documents reflect these requirements. Our lawyers specialise in company set-up and can assist with all aspects of compliance.
Trust
A trust business structure functions somewhat differently, involving typically three parties:
- Trustee – the individual or entity managing the trust pursuant to a trust deed
- Beneficiary – the person or group that benefits from the trust
- Settlor – an unrelated third party who establishes the trust by signing the deed
This structure allows the trustee to manage business assets on behalf of the beneficiary according to the terms laid out in the deed. As a trustee, there is a duty to act with fiduciary duty – managing the business in a way that maximises profits and minimises losses for the benefit of the beneficiary.
People often opt for a trust structure for the added safety it offers for business assets. However, the complexity of this arrangement usually necessitates professional legal assistance to draft an appropriate trust deed that sets out beneficiaries, trustee responsibilities, distributions, and exit clauses.
For expert guidance on setting up a trust and drafting the corresponding deed, our team at Sprintlaw is ready to help.
Incorporated Association
For those running an organisation that operates on a not-for-profit basis, an Incorporated Association may be the ideal structure. This option is particularly suited to community organisations, sporting clubs, and similar bodies where profit is not the primary motive.
Incorporated associations are regulated at the state or territory level, so it’s important to check the requirements specific to your jurisdiction. For example, in NSW, the key regulator remains the Office of Fair Trading. In addition, you must register as an Australian body by applying for an Australian Registered Body Number (ARBN).
At Sprintlaw, we offer an ARBN package for incorporated associations that includes an initial consultation with a lawyer, preparation of the necessary ASIC forms (such as Form 401 and Form 911), and expert advice on your organisation’s Constitution.
Reach out to our friendly team if you need help with your business set up or any questions regarding incorporated associations.
As we progress further into 2025, it’s also important to keep an eye on emerging trends. Many businesses are now adopting hybrid models that combine both online and brick-and-mortar elements, necessitating regular updates to your legal documents. Whether you’re reviewing your business structure or updating your Website Terms and Conditions to reflect evolving privacy and cyber security requirements, proactive legal review is key. Our experienced team, including specialists in eCommerce law and small business legal advice, can support you in staying ahead of regulatory changes.
Types Of Businesses In Australia
Now that we’ve covered the different types of business structures, let’s move on to the various types of businesses defined by their operational model and where they function.
Brick And Mortar Stores
A typical example of a traditional business is a brick and mortar store, which operates in a physical location such as a retail outlet. Despite the growth of online commerce, physical stores continue to be a popular option, with many consumers still enjoying the in-person shopping experience.
If you’re running a brick and mortar store, you will likely need to negotiate a Commercial Lease Agreement. Such an agreement typically details elements including:
- The amount of rent to be paid
- The rights and responsibilities of both landlord and tenant
- Procedures for breaking the lease early
- Permitted and prohibited activities on the premises
- Repair and maintenance obligations
It is highly recommended that you have your commercial lease reviewed by a legal professional to ensure you retain all essential rights and avoid any potential risks.
eCommerce Stores
Online stores, commonly known as eCommerce stores, have surged in popularity over recent years. With expansive reach both nationally and globally, eCommerce provides increased opportunities to tap into international markets and drive customer engagement.
An online presence not only offers convenience to your customers but also demands strict attention to legal detail. Legal requirements for online business in 2025 include having robust Website Terms and Conditions to manage platform activity, as well as a comprehensive Privacy Policy for handling personal data securely.
For further insights into protecting your online venture, consider reviewing our guide on how to move your business online legally, which covers the latest developments in cyber security and privacy law.
Marketplaces
An online marketplace connects sellers with buyers, providing a platform for transactions while acting solely as an intermediary. However, due to this intermediary role, the legal responsibilities surrounding transactions can become complex.
It is imperative that your Marketplace Terms and Conditions clearly delineate the roles and liabilities of all parties involved-especially to limit your liability in disputes between buyers and sellers. Additionally, specifying how payments are processed and whether account creation is required can safeguard your operations.
While marketplaces may share similarities with dropshipping models, it’s important to note that they operate under different legal frameworks and require distinct contractual arrangements.
Charities And Not-For-Profit Businesses
Charities are a specific subset of not-for-profit businesses that operate to support social causes rather than generate profit. These organisations often have unique legal requirements concerning registration, reporting, and compliance.
For example, charities must be registered with the ACNC and adhere to specific governance structures, such as drafting a Charity Charter to manage internal processes. Failure to comply with these regulations can jeopardise your organisation’s status, as highlighted in discussions on false charity claims.
If you require tailored legal advice for setting up or restructuring your charity or not-for-profit organisation, our charity lawyers are here to help.
Key Takeaways
Running a business in Australia can be both exciting and challenging. With a variety of business structures and operational models to choose from, it’s important to familiarise yourself with the legal requirements to ensure a solid foundation for success.
To summarise, here are the key takeaways:
- Choosing the right business structure is crucial, as it sets the legal and operational framework for your business.
- A sole trader or partnership is best suited for smaller, lower-risk ventures, but be mindful of the unlimited liability that comes with these structures.
- A company or trust structure offers greater security-especially for larger or riskier businesses-by limiting personal liability.
- eCommerce stores and online marketplaces have specific legal obligations, including robust cyber security measures, comprehensive Website Terms and Conditions, and Privacy Policies.
- For charities and not-for-profit organisations, following the correct registration and governance procedures is essential to maintain compliance and credibility.
Choosing the right business structure and type isn’t always straightforward. Our experienced team at Sprintlaw understands the complexities of the modern Australian business landscape in 2025. Whether you need advice on setting up your business or updating your legal documents, chat to our friendly team for expert guidance.
If you would like a consultation on your options going forward, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat.
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