What is the Best Family Business Structure in Australia?
- Future Accounting
- Aug 18
- 3 min read
Updated: Aug 20
Family business structures Australia - Choose the right fit for growth and protection
Choosing the right business structure for a small to medium family business in Australia is a critical decision. It affects your tax obligations, level of control, liability exposure, succession plans, and even family harmony.
This guide will walk you through the most common options, key considerations, and how to decide what works best for your unique situation.
Common business structures in Australia
When it comes to family business structures in Australia, here are the most widely used:
Sole trader
Partnership
Company (Pty Ltd)
Discretionary or family trust (often with a company as trustee)
Unit trust
Hybrid or combination structures (e.g. trust + company + shareholders)
Key factors to consider when choosing your structure
Liability protection
Companies and trusts provide limited liability, helping protect personal assets from business risk.
Sole traders and general partnerships offer no such protection, which means your personal property may be at risk.
Best suited for: Businesses with employees, equipment or legal exposure.
Tax effectiveness
Discretionary (family) trusts allow you to distribute income to family members in lower tax brackets.
Companies are taxed at a flat rate (currently 25% for base rate entities).
Sole traders and partnerships are taxed at personal marginal rates, which can increase as profits grow.
Best suited for: Families seeking flexible tax planning or income splitting.
Ownership and control
Companies offer defined ownership through shareholding and are governed by shareholder agreements.
Trusts are controlled by trustees and appointors, not necessarily the beneficiaries.
Sole traders and partnerships often blur control and decision-making lines.
Tip: Clarify control arrangements early to prevent family disputes later.
Succession planning
Companies allow for transfer or sale of shares, making succession easier.
Trusts require planned transitions for trustees and appointors.
Sole traders have no legal separation from the business, making succession more complex.
Best suited for: Families with multi-generational involvement plans.
Asset protection
Companies and trusts help separate personal and business assets.
Trading through a trust with a corporate trustee is common for maximising protection.
Valuable assets like property should be held in a separate entity to the trading business.
Tip: Keep risky and safe assets in different entities.
Setup and ongoing costs
Sole trader and partnership structures are simple and inexpensive to set up.
Companies and trusts have higher initial and ongoing compliance costs (ASIC, ATO reporting, etc.).
Tip: Don’t just think short-term, consider long-term protection and flexibility.
Flexibility for growth
Companies make it easier to bring in investors, partners, or scale operations.
Trusts can be limiting when it comes to raising capital or handing over control.
Sole traders and partnerships can become roadblocks to expansion.
Best suited for: Businesses aiming to grow, franchise or eventually sell.
Profit distribution
Trusts allow income to be distributed to family members, including minors in some cases.
Companies distribute profits via dividends.
Sole traders and partnerships cannot split income without also splitting control.
Best suited for: Families with multiple adult members involved in the business.
Summary: choosing the right fit
Final thoughts: Make confident decisions with expert advice
Your ideal structure depends on many factors, including family dynamics, risk tolerance, tax goals, growth plans, and succession vision.
Get it right from the beginning. Restructuring later can be expensive and disruptive.
Ready to get tailored advice for your family business? Book an appointment with one of our expert advisers today - we’ll help you build a structure that supports your future.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
