Business Structures

A business structure is the legal form a farm business takes — sole trader, partnership, family trust or company — and it shapes liability, tax, control and how the business can be passed on. The right structure suits the people in the business. 

Common structures 

  • Sole trader — a single individual controls and manages the business. 
  • Partnership — individuals or entities control the business as partners and share the income. 
  • Family trust — a trustee holds property and earns and distributes income for the benefit of others (the beneficiaries).
  • Company — a legal entity separate from its shareholders (the owners); directors, elected by the shareholders, make the decisions and enter contracts for the company.

Business.gov.au explains each structure, and its tax and legal obligations, in more detail.

What to weigh when choosing

  • the purpose, nature and objectives of the business,
  • credit and capital requirements,
  • limiting liability for business debts,
  • ease of operating, and management and control — including the flexibility to change if objectives shift,
  • simplicity and cost, and minimising tax liability, and
  • the ease with which an interest in the business can be transferred to others, or the business wound up. 
Watch out

It is essential to seek professional advice before choosing and setting up a structure. Get advice from an accountant first — they can set out the options for each structure — and from a solicitor (see Getting Help with Planning).

Common questions

What are the main business structures for a dairy farm?

Sole trader, partnership, family trust and company — each with different rules for liability, tax, control and how the business can be passed on. 

What should be considered when choosing a structure?

Liability, tax, capital and credit needs, ease of operating and control, simplicity and cost, and how easily the interest can be transferred or the business wound up. 

Who can advise on the right business structure?

An accountant in the first instance, and a solicitor. The right structure depends on the individuals and the business, so professional advice is essential.