Here are six of the most common mistakes new business owners make, and how you can avoid them.
- Choosing the Wrong Structure for Your Goals
Many entrepreneurs default to a sole trader setup because it’s the cheapest and fastest option. But if you plan to scale, bring in investors, or protect personal assets, you may be better off starting with a company or trust.
Pro Tip: Don’t just think about today—choose a structure that matches your long-term vision.
- Ignoring Tax Implications
Tax rules vary depending on your structure:
- Sole traders pay tax at personal income rates (up to 45%)
- Companies pay a flat 25% if annual turnover is under $50M
- Trusts can distribute income to beneficiaries, offering flexibility
Failing to plan for tax can leave you with bigger bills or missed opportunities for savings.
Read more: Business structures and tax obligations – ATO
- Overcomplicating the Setup
Some people start with a trust or company when a simple sole trader or partnership would work just fine in the beginning. Complex structures add compliance, legal fees, and admin you might not need right away.
Pro Tip: Start simple. You can always restructure later when growth demands it.
- Choosing the Cheapest Option Without Considering Risks
Yes, sole trader setups are cost-effective, but they also come with zero asset protection. If something goes wrong, your home, car, or personal savings could be at risk.
Your budget matters, but so does your financial safety.
- Skipping Legal Agreements
If you’re in a partnership or company, failing to have written agreements can spell disaster. Even with friends or family, handshake deals don’t protect you from disputes.
Better approach: Always draft shareholder or partnership agreements. It’s cheaper than fighting in court later.
- Skipping Professional Advice
DIY-ing your business structure may save a few dollars upfront, but mistakes can cost you thousands later. A quick consultation with a tax adviser or business lawyer can prevent restructuring headaches and protect your assets.
Pro Tip: Think of professional advice as an investment, not an expense.
Your business structure shapes your taxes, protection, and growth potential. Avoiding these six mistakes can save you stress and set your business up for success.
At Business Genie, we make this process easy. Book a free consultation today, and let’s build the right foundation for your business.
Get started now, because the wrong choice today could cost you tomorrow.
