Key taxation differences between companies and sole traders

Tax-free threshold

Sole traders are treated as part of your own personal income, hence they are subjected to the same tax-free threshold. In contrast, companies pay tax on every dollar earned.

 

Tax rates

The full company tax rate is 30%, however rates may vary.

Sole traders however, are taxed on the individual income tax rates.

 

Tax return

Sole traders require an individual tax return every year. Companies on the other hand, have their own company tax returns.

 

Payroll tax

Payroll tax applies to both sole traders and companies. Each state and territory has their own rules.

 

All information was sourced from business.gov.au, with further details on sole traders vs company tax.