Structuring your trade and construction business for future success

Imagine you’re an experienced plumber and start a business. In the early days it’s just you, your ute, and a handful of customers.

You hope you’ll be successful in the future but aren’t quite sure where it will all lead. 

Fast forward several years and your business now employs several qualified plumbers, two apprentices and a bookkeeper. You have invested in valuable equipment with finance over those, as well as the family home. You have also signed a lease for a small commercial premises to use as a work base and are about to secure a major contract with a leading builder.

Is your structure still the best fit for your business?

This is a common scenario in trade and construction, and the answer to this question is different for every business. Each business structure has its own advantages and disadvantages, and the structure you decide on can have a significant impact on everyday business outcomes – as well as your ability to turn years of effort into lasting value.

Choosing the right structure for your trade and construction business

The main options to structure a business are: 

• Sole trader
• Partnership
• Company
• Trust
• A combination of the above

There are many factors that determine the ideal structure at any given time, however three of these factors deserve particular attention.

Risk and asset protection

Building and construction consistently ranks among the industries with the highest rates of business failure in Australia. It is considered a high-risk industry, and likely always will be due to its nature, so taking steps to minimise that risk is essential. 

The level of risk you are taking on as a business owner is often comparable to the size of your operation. High turnover, high worth contracts, higher risk. Low turnover, low risk contracts, lower risk. While many trade and construction businesses start small, they can quickly find themselves exceeding growth expectations – especially in the current market. This is why it’s worth keeping a close eye on both growth and structure as the business evolves.

Another area to think about is investment in tools, equipment and materials. The ability to protect these assets from creditor claims or business liabilities can be heavily influenced by how the business is structured.

Tax efficiency 

Contrary to some opinions, business structures are usually one of the biggest driving factors of tax outcomes. 
For example, sole traders are taxed entirely at the marginal rates of the individual’s name being traded under in the year the profits are earned. A corporate structure, however, may offer opportunities for tax planning, particularly through reinvestment of profits at a lower tax rate depending on the size of your business.

When it comes to trusts (particularly discretionary trusts), they can provide flexibility in how income is distributed to eligible beneficiaries, however can be problematic when it comes to the retention and reinvestment of profits in a tax effective manner.

Although certain structures and a combination of structures can present more tax efficient opportunities, they may be more expensive to maintain from a compliance and administrative perspective. This applies where a structure includes a combination of entities, such as a company and trust.

Structuring has been further complicated by changes to the taxation of discretionary trusts announced in the May 2026 Federal Budget which are expected to commence from 1 July 2028.

Ownership and scaling

If your business involves related and unrelated parties – such as friends, siblings, or external investors – your structure should be set up to enable a clear distinction between who owns what. This helps to:

• ensure transparency and avoid confusion
• make everyone's entitlements clear 
• reduce the risk of disputes down the track.

Also consider that some government or private tenders may only be available to certain types of entities, such as companies. If you plan to pursue larger or more formal contracts, this could influence your business structuring decisions.

Want help deciding on the right structure?

When it comes to structuring a trade or construction business, there is no one size fits all answer. The best choice for you depends on a wide range of factors – from where your business sits at this moment to where you want it to sit 12, 24 or even 48 months down the track.

For help understanding the structuring options available, and their advantages and disadvantages, you can start by completing the questionnaire and one of our advisors will be in touch.