Published on 20/11/2019 by Any Business.Com.Au

Why a changing business means a changing structure

A change in business structure often means that you want to re-organise the governance structure of your business. Usually, you do this to be more profitable, improve processes and adapt to the changing needs of your business.

A business structure is often the first change you make when your business grows. Particularly, if you start as a sole trader and then want to take on a partner or register as a company.

When you change your business structure, you need to understand your reasons for this change. A business structure change can have implications for your business's legal and tax obligations as well as your personal liability.

Reasons to change your business structure

A few common reasons to change your structure include:

  • Change in management - You may take on a business partner, and decide to change from a sole trader to a partnership structure.
  • Change in ownership - If you buy an existing business, you may decide to change the business structure to meet your goals for the business.
  • Financial reasons - You may restructure to meet financial goals and objectives, such as improving cash flow or profitability of the business.
  • Operational reasons - You may reorganise your internal functions, such as sales and marketing, to improve the way your business operates.
  • Business growth - Your business may now operate in overseas markets or the business expanded or changed its product functions and you need to change your structure to accommodate this growth.
  • Economic downturn or downsizing - You may want to downsize or simplify your business structure, for example moving from a company to sole trader.

Common business structure changes

Businesses often change their business structure in similar ways. The most common business structure changes are:

  • sole trader to company
  • sole trader to partnership
  • partnership to company

Moving from being a sole trader to a company

As your business grows, you may outgrow your sole trader business structure. If you hire employees, take on an investment or own assets, a company structure can protect your personal liability. A company is a separate legal entity.

Bringing a partner into your company

If you decide to bring a partner into your business, you'll need to apply for a new Australian Business Number (ABN). You should consider a partnership agreement to understand how your partnership will run and what Intellectual Property (IP) transfers you need to make. Your partnership agreement will have certain terms and conditions that both parties need to abide by.

Before you restructure your business, you need to consider the reasons why you want to change and what you aim to achieve with your new structure.

Different business structures have different legal, tax and compliance obligations. You need to understand the differences between each before you decide if changing business structures is the right move for your business.

Checkout our listings here
Ab Assets/Broker Avatar

AnyBusiness.com.au

Curtis is a leading expert in the business-for-sale industry, serving as a senior content creator at anybusiness.com.au.

With a career spanning over fifteen years, Curtis has accumulated extensive knowledge in the domain of business sales, acquisitions, and valuations. His deep understanding of market dynamics and his ability to translate complex industry jargon into accessible insights make him a trusted resource for entrepreneurs and business owners looking to buy or sell businesses.

Related articles

07/08/2025 by AnyBusiness
Running a small business in Australia is incredibly rewarding but far from easy.From juggling cash flow to dealing with rising costs and navigating red tape, many small business owners find themselves stretched thin.In fact, according to recent reports by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), economic pressures and staffing shortages remain top concerns across industries.If you're a small b...