Many businesses in the construction industry start with a simple structure – often as a sole trader or basic company – because it’s easy and cheap. But as your business grows, your structure becomes critical. It directly affects your risks, taxes, your ability to scale, and how smoothly you can run your operation.
In this guide, we’ll simplify the two core purposes behind business structures – trading and investment – and clearly explain how common structures fit into these roles.
Your business structure typically serves two main roles:
Let’s dive into each type.
Most builders operate through a company because it separates your personal assets from business risk and provides clarity around finances and compliance. Companies offer a flat corporate tax rate, currently 25% for most builders, making them efficient from a tax perspective.
Important Licensing note: In most states, it’s you must trade through a company for QBCC licensing purposes. Trading trusts, even those with a company as a trustee, aren’t recognised by QBCC, potentially causing licence suspension or rejection.
Trusts, including discretionary (family) trusts, can offer flexibility and tax advantages in some cases, but for operators in Queensland, NSWs and many other states, they’re generally unsuitable as your primary trading entity because of compliance restrictions. However, trusts still have their place, often in investment, not trading.
SPVs are specific companies created for individual projects or developments. They’re particularly useful if you’re working on joint ventures or projects with significant risk. An SPV isolates that project’s risk from the rest of your business.
A joint venture (JV) is a structured partnership between builders or investors, usually established for a single project. Good practice is to use an SPV company to keep financials clean and clearly defined, reducing disputes or legal headaches later.
Occasionally, builders set up service entities to handle admin tasks or labour hire separately from the main trading entity. These are more common as businesses scale and seek efficiencies or specific tax and structural advantages.
Once you’re operating smoothly, it’s critical to manage the profits you’re making smartly and safely.
A bucket company is designed to collect and hold profits distributed from a trust, capping your tax rate at 25%. Profits can be reinvested into future growth or accessed later when needed, offering tax-planning advantages and asset protection.
A discretionary trust offers flexibility, allowing you to distribute profits among family members or entities, minimising your overall family tax bill. It’s excellent for building wealth and protecting assets outside your day-to-day operations.
A holding company owns shares in your main trading company or multiple SPVs. This structure helps you move profits from operational entities, shielding those funds from daily trading risk and providing more options for reinvestment or distribution.
An SMSF can invest in business property, such as your commercial premises, and lease it back to your trading entity. While it’s a smart investment strategy, SMSFs come with strict regulatory obligations and complexities.
To maximise growth and security, your structure should clearly separate your trading operations from your wealth-building activities. A well-designed structure:
Your business structure isn’t something to set and forget. As you grow, what worked previously might become risky or inefficient. Regularly reviewing your structure ensures it continues to protect your assets, reduce taxes, and support your future growth plans.
If you’re unsure whether your current structure is optimised for growth and compliance, particularly regarding licensing regulations, let’s talk. A quick review can make a huge difference in your long-term success. Book your free structure review today.
