There is no universal answer, and anyone who gives you one without seeing your numbers is guessing. A sole trader is cheaper to run and simpler to lodge; a company adds cost and compliance but can cap your tax rate and separate your personal risk. The crossover depends on your profit, how much you draw, and the risk you carry — not on a rule of thumb.
What it depends on
Where judgement stays human: Modelling the tax is arithmetic; choosing the structure is judgement about risk, growth and how you want to be paid. That trade-off is exactly what a CPA is signing off on.
A sole trader is taxed at your personal marginal rates, with business income and personal income in one return. A company is a separate entity taxed at the company rate, but money only reaches you as wages, dividends or a loan — each with its own tax treatment. So the “cheaper” structure is really a question about total tax across you and the entity, plus the running cost of the structure.
The non-tax reasons often matter more: limited liability, bringing in a co-owner, or presenting to clients and lenders. A structure chosen only to save tax this year can be the wrong one the moment you take on risk or a partner.
Modelling the tax is arithmetic; choosing the structure is judgement about risk, growth and how you want to be paid. That trade-off is exactly what a CPA is signing off on.
Local Knowledge · general information current as at 1 September 2026. This is general information only, not personal financial, tax or legal advice.