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Pros and Cons of Sole Trader, Partnership, Company and Trust

There are so many factors to consider when you finally make up your mind to start a business. There are the product and service, there’s the sourcing of employees, there’s the marketing and there’s location. However, the one choice that will affect every other aspect of your future company is the business structure you’re going to do.

You have your hands full by picking among the four main business structures: sole trader, partnership, company or trust. If you’re not entirely sure about what you want from a business structure, ask these questions to yourself: Who is answerable? Who will benefit from the company? Who will oversee company operations? Will the expenses be manageable with the business structure you’re eyeing?

The business structure you choose will significantly affect who is liable if the business runs into any legal problems and manages the enterprise itself. Although you know that you will be a proprietor, you need to consider what kind of structure your business can best operate under and what you could manage. Here is a short rundown of the pros and cons you may face with each business structure:

Sole trader

  • Pros: It can be a little easier to manage the business and the expenses that come with it when you’re running it yourself. There’s no need to worry about miscommunication or splitting the profit.

  • Cons: You are single-handedly liable for any debts or issues your business will undergo. You will have to personally cover-up and account for any legal pursuits without any assistance from a partner.


  • Pros: A partnership often entails having a confidante, which is good to have when the business is going up and down. You split everything, from liability to costs and more. Some brands with this business structure can have multiple partners.

  • Cons: Because you’re managing the business with someone else, there is a potential for heated arguments and different viewpoints about the company’s direction. Aside from sharing liability, you also have to share debt and profit.


  • Pros: A company means there’s a group of people at the top of the company. Responsibility and different duties are delegated, which can ease some pressure off of you. You also get to protect your personal interests compared to a sole trader and partnership business structure.

  • Cons: One of the most notable disadvantages of a company is the costs. Business growth in a company would entail the need for more workers and more resources. The bigger business is booming, the larger the expenses are.


  • Pros: Using a trust business structure is quite beneficial because of how affordable it is to set up right away. Trustors, or business owners, find that trusts give the business a little more privacy and a lot more flexibility overall. Trustees are appointed to take on any liabilities.

  • Cons: Although we consider flexibility as an advantage, it can also be a drawback. Trusts can be rather complex as they can shift and change nature; one company’s trust may be a little different from another’s.


You could choose one business structure and alter the future of your brand. Don’t rush it and give some thought to the decision you’re going to make. All that’s important is that it coincides with your goals and your enterprise’s goals.

If you need an eCommerce business advisor, turn to The ECommerce Accountant. We give business advice to online stores and influencers in Australia. Get in touch with us today!

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