Blog & Resources

What are the advantages and disadvantages of operating a business / investments as a Sole Trader?

As they name suggests it is a business / investment entity that is owned and run by one individual.  There is no distinction between the owner and the business / investments.  It is the most common form of business / investment operation.


    - Easy to setup.

    - Generally inexpensive to operate and maintain.

    - Generally both income / revenue losses and capital losses can be carried forward.

    - Able to access the 50% discount available.

    - Small Business Tax Concessions are available.

    - Capital Gains tax concessions available:
           -  15 year exemption - had business for more than 15 years; over 55 then tax free upon sale;
           -  50% active asset reduction - If the asset has been active you will be able to access a 50% discount;
            - CGT Retirement exemption; and
            - Rollover - If you sell a small business asset and buy a replacement or improve an existing one, you can defer the capital gain until a later year.

       - Should you wish to terminate the business / investments this is relatively straight forward.


    - All the income and capital gains will be assessed in the owner's name.
    - Minimal asset protection.
    - Upon death the business / investments will pass to the individual's estate.  Difficult for succession planning.

If you would like to discuss further please contact us:
McNamara & Company - Chartered Accountants, located minutes from the Melbourne CBD
Phone +61 3 9428 1062

Please refer to the disclaimer at the bottom of the page.