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For what it’s worth, my side business is a Pty Ltd company and that structure works very well for me. It makes around 20K profit per year. I was a sole trader initially but set up the company when it started making (decent) money.
The Pty Ltd structure allows me very good control over my personal income which I really like. That’s because I can leave the profits in the company until it suits my personal tax situation. Note that my company doesn’t earn personal service income (PSI), because my revenue is from the sale of products, not personal services. As I understand it, PSI negates the tax/timing benefits I enjoy.
When I want to get my profits out of the company I can either pay myself a salary (deducting tax and paying super) or I can distribute a dividend to myself.
The overall amount of tax that gets paid per dollar is the same, but the company structure gives me more choices about when the tax is paid. If I quit my day job next year, for example, and my personal income drops to a low tax bracket, I can pay myself a salary from the company’s savings and, if it is a small salary, then my personal tax bill will be small (income also small!).
The other benefit is that if something goes wrong with customers or products my personal assets will be (more) protected from litigation than if I were a sole trader.
Every situation is different so my setup might not be best for you, but perhaps that helps a little.
