The right structure before the wrong one costs you.
Choosing, establishing, and restructuring business entities for Queensland operators.
The structure through which you operate a business determines how you are taxed, how exposed you are to personal liability, how decisions are made, and how the business can be sold or passed on. It also determines how complicated it is to change any of those things later.
Choosing a structure at the start is not bureaucracy. It is a decision about the legal and financial architecture of everything that follows.
The four main structures in Queensland are the sole trader, the partnership, the company, and the trust. Each has genuine advantages in the right context. Each creates problems in the wrong one. The question is rarely which structure is objectively best. It is which structure is appropriate for this business, these owners, this level of risk, and this plan.
Fraser Lawyers advises on the selection, establishment, and restructure of business entities for Queensland businesses, working alongside accountants and financial advisers where the tax implications are central to the decision.
What we help with
Fraser Lawyers acts on business structure matters, including:
- Matter
- What it usually involves
- Sole trader setup
- Registering and establishing a trading name and ABN structure.
- Partnership establishment
- Drafting partnership agreements under the <em>Partnership Act 1891</em> (Qld).
- Company incorporation
- Registering a proprietary limited company under the <em>Corporations Act 2001</em> (Cth).
- Trust establishment
- Drafting discretionary, unit, and hybrid trust deeds.
- Shareholder agreements
- Governing the relationship between company shareholders.
- Business restructuring
- Changing structure mid-operation, including interposing companies and trusts.
- Succession planning
- Ensuring the business can be transferred, sold, or wound up in an orderly way.
- Joint venture structures
- Contractual and entity-based joint ventures between unrelated parties.
- Family business structures
- Structures that accommodate family ownership and management over time.
- Winding up structures
- Dissolving companies, partnerships, or trusts that have served their purpose.
The difference between a well-structured business and a poorly structured one often becomes visible at a transaction: a sale, a dispute, a separation of owners, or a death. At that point, restructuring is expensive, sometimes impossible, and always complicated by the fact that it is happening under pressure.
Structure decisions are most efficiently made at the start, or at natural transition points, not in response to a crisis.
What happens after you are charged.
The starting point for any structure conversation is understanding what the structure is trying to achieve. The common objectives, and how each structure responds to them, are worth setting out plainly.
Liability protection. A sole trader and a general partnership offer no separation between the owner and the business. Business debts are personal debts. A company incorporated under the Corporations Act 2001 (Cth) creates a separate legal entity: the company, not the shareholder, is liable for its debts. That separation is real but not absolute. Directors can become personally liable for company debts in defined circumstances, including under the insolvent trading provisions in s 588G of the Act.
Tax efficiency. A company pays tax at the corporate rate. A trust can distribute income to beneficiaries and be taxed at their marginal rates. A sole trader is taxed at personal income tax rates on all business income. The right answer depends on the income level, the number of owners, and the distribution of income among family members. This is where a tax adviser’s input is essential.
Control and flexibility. Partnerships are governed by the Partnership Act 1891 (Qld) and any partnership agreement. Companies are governed by the Corporations Act 2001 (Cth), the company constitution, and any shareholders’ agreement. Trusts are governed by their trust deed and trust law. All of these frameworks impose obligations and constraints alongside their protections.
Succession and exit. Sole traders cease to exist when the operator retires or dies. Companies can continue indefinitely. Trusts have a fixed vesting date. Partnerships dissolve on the death or retirement of a partner under Queensland law unless the agreement says otherwise.
The four main structures, plainly stated.
Sole trader. The simplest structure. One person, one ABN, no separation between personal and business assets. Inexpensive to establish. No ongoing compliance obligations beyond tax. Unsuitable for businesses with material liability risk or multiple owners. The structure most people outgrow.
Partnership. Two or more persons carrying on business with a view to profit. Under the Partnership Act 1891 (Qld), a partnership can exist without any written agreement. That is a risk, not a feature: the Act’s default rules may not reflect what the partners actually intend, particularly on profit-sharing, decision-making, and what happens when a partner wants to leave. A written partnership agreement does not need to be complicated. It needs to exist.
Company. A separate legal entity incorporated under the Corporations Act 2001 (Cth). Shareholders own the company. Directors manage it. The company owns its assets and is liable for its debts. Most operating businesses of any scale use a proprietary limited company structure. Compliance obligations include ASIC registration, financial record-keeping, and directors’ duties under ss 180-184 of the Act.
Trust. Not a legal entity. A legal relationship in which a trustee holds assets for the benefit of beneficiaries. A discretionary trust (family trust) allows the trustee to distribute income and capital among a class of beneficiaries as circumstances change. A unit trust allocates fixed entitlements. Trusts offer tax flexibility and asset protection in specific circumstances. They also create complexity in obtaining finance, executing contracts, and managing succession.
When to change the structure you have.
Most business restructures happen for one of three reasons: the current structure has become tax-inefficient, the liability exposure has grown beyond what the structure protects, or the ownership arrangement has changed and the structure no longer reflects it.
Restructuring mid-operation is more complicated than getting the structure right at the start. Assets need to be transferred. Contracts and licences may need to be assigned or novated. If real property is involved, stamp duty may apply. If a trust is involved, there are timing and resettlement issues to navigate.
The legal and tax aspects of restructuring are intertwined. Fraser Lawyers handles the legal mechanics and works with your accountant on the tax implications. The two are not separable: a restructure that is legally clean but tax-inefficient is not a good result.
Common restructuring triggers worth noting:
- A sole trader whose personal assets are now at risk from the business.
- A partnership that needs to add or remove a partner.
- A company whose share structure no longer reflects the owner relationships.
- A business that has grown to the point where succession planning is a real consideration.
Deadlines and risks.
There is no legal deadline for choosing a business structure. The deadline is practical: the longer an unsuitable structure is in place, the more embedded the problems become, and the more expensive the restructure.
A sole trader who has operated for years with no liability separation and has accumulated personal assets is in a more difficult position than someone who makes the structure decision before those assets exist.
For companies, ongoing obligations run from the moment of incorporation. Directors of a company are subject to duties under the Corporations Act 2001 (Cth) from the date of appointment. Those duties do not wait for the business to grow into them. A director who does not understand their obligations under s 180 (care and diligence) or s 588G (insolvent trading) is taking a risk that the structure is supposed to contain.
The risk of inaction is not always immediate. It tends to crystallise at the worst moment: a dispute, a creditor claim, a separation of owners, or a forced sale.
How Fraser Lawyers acts in these matters.
Fraser Lawyers advises on the selection of a structure appropriate to the business, drafts the documents needed to establish it, and handles the registrations and filings required to make it operational.
For companies, that includes drafting or reviewing the constitution, preparing any shareholders’ agreement, and advising directors on their duties. For partnerships, it includes drafting a partnership agreement that reflects the partners’ intentions rather than the Act’s defaults. For trusts, it includes reviewing or drafting the trust deed with attention to distribution, investment, and succession provisions.
For restructures, Blake Fraser identifies the legal steps required, coordinates with the relevant advisers, and manages the execution. The work is methodical and benefits from being planned rather than reactive.
Documents to bring.
- Existing business documents Any existing registration certificates, ABN documentation, or ASIC records.
- Current trust deed If a trust is involved, the original deed and any deeds of variation.
- Company constitution The current constitution, if the company has one.
- Shareholders register Current shareholding and share class details.
- Partnership agreement If one exists, even if informal or old.
- Financial statements Recent accounts, particularly if restructuring is being considered.
- Accountant's advice Any advice already received on tax implications of the proposed structure.
- Ownership intentions A plain description of who will own what, and in what proportions.
- Succession intentions What you want to happen to the business when you retire, sell, or die.
The likely path.
Step 1 — Understanding the objective.
The starting point is a conversation about what the structure needs to achieve: liability protection, tax position, ownership clarity, succession, or some combination. There is no useful advice without understanding what problem is being solved.
Step 2 — Structural recommendation.
Fraser Lawyers advises on the appropriate structure, identifies the tradeoffs, and outlines the steps required to establish or transition to it. For decisions with significant tax implications, the firm coordinates with your accountant before a final recommendation is made.
Step 3 — Document preparation.
The legal documents required to establish the structure are prepared: company constitution, partnership agreement, trust deed, shareholders’ agreement, or a combination. Each document is explained before execution.
Step 4 — Registration and filings.
ASIC registration for companies, ABN applications, and any state-based registrations are completed. If assets are being transferred as part of a restructure, the relevant transfers, stamp duty assessments, and title registrations are managed.
Step 5 — Ongoing governance advice.
Fraser Lawyers is available for ongoing advice on governance matters as the business grows: director duty compliance, constitutional amendments, share transfers, and structure review at natural transition points.
Questions we hear often.
Plain-English answers to the questions clients tend to ask. If your question is not here, call us.
Get in touchDoes a partnership need to be in writing?
No. Under the Partnership Act 1891 (Qld), a partnership can arise from conduct without any written agreement. Two people carrying on a business together with a view to profit may be partners under Queensland law whether or not they have signed anything. The problem with an unwritten partnership is that the Act’s default rules apply to everything the partners have not addressed. Those rules may not reflect what the partners actually intended, particularly on profit-sharing, decision-making authority, and what happens when the relationship ends.
What is the difference between a director and a shareholder?
A shareholder owns shares in the company and is entitled to a proportionate share of dividends and, on winding up, surplus assets. A director manages the company and is subject to duties under the Corporations Act 2001 (Cth), including the duty of care and diligence under s 180, the duty to act in good faith under s 181, and the prohibition on insolvent trading under s 588G. In a small company, the same person often holds both roles. The distinction matters because the duties and liabilities are different.
Can a trust enter into contracts?
A trust is not a legal entity and cannot contract in its own name. The trustee contracts on behalf of the trust. This creates a practical issue: contracts must be executed by the trustee (for example, “ABC Pty Ltd as trustee for the XYZ Family Trust”), and the trustee can be personally liable if the trust assets are insufficient to meet the obligation. In practice, a corporate trustee is often used to provide a liability buffer, but that arrangement has its own compliance and cost implications.
What happens to a partnership when a partner dies or becomes bankrupt?
Under the Partnership Act 1891 (Qld), a partnership is generally dissolved upon the death or bankruptcy of a partner, unless the partnership agreement provides otherwise. That default rule is often inconvenient for the surviving partners, who may want to continue the business. A partnership agreement that addresses this explicitly, including the basis on which the outgoing partner’s share is valued and acquired, prevents the partnership from being forced to wind up at the worst possible time.
When should I consider restructuring from a sole trader to a company?
There is no single trigger, but the common ones are: the business is generating income above your personal tax threshold and the corporate tax rate would be more efficient; your personal assets have grown to the point where their exposure to business liabilities is a material concern; you want to bring in a co-owner; or you are planning to sell the business and the buyer prefers to acquire shares. Restructuring has costs: ASIC fees, legal fees, and potentially stamp duty. The decision requires a comparison of those costs against the ongoing benefit of the structure.
Do I need a lawyer to set up a company, or can I do it online?
ASIC registration can be done online without a lawyer. For a simple single-director, single-shareholder company with no particular governance requirements, that may be adequate. The issue arises when the company has multiple shareholders, requires a customised constitution, or forms part of a broader structure involving a trust or holding company. In those cases, the documents that are not generated by the online registration (the shareholders’ agreement, the constitution, the trust deed) are where the legal work lies. The registration itself is mechanical. What the company’s documents say is what matters.
Talk to Fraser Lawyers about your business structure.
A short conversation about what the business does, who owns it, and what you want from it is usually enough to identify the right structure and the steps required to establish it. Fraser Lawyers is based at 86 Bundall Road, Bundall, and acts for businesses across the Gold Coast and Queensland.
Visit us in Bundall.
Five minutes from Surfers Paradise, ten from Robina. On-site parking. Talk to us about your matter; we will tell you what we think and what the next step is.
- Office86 Bundall Road, Bundall QLD 4217
- Phone(07) 5554 6116
- Email[email protected]
- HoursMonday to Friday, 8:30am to 5:00pm