The Question Every Successful Creative Eventually Asks
You started out as a sole trader. Maybe you were freelancing as a director, cinematographer, editor, or producer. You had an ABN, you invoiced your clients, and you lodged a tax return once a year. Simple.
But then things grew. Your income increased. You started engaging other people. You took on larger projects with real budgets and real liability. And someone – maybe another producer, maybe your agent, maybe your accountant – said the words: “You should probably think about setting up a company.”
At Count Out Loud, we have helped hundreds of creative professionals make the transition from sole trader to company structure. Here is how to know when the time is right, and what is involved.
Signs It Is Time to Move from Sole Trader to Company
Your Income Has Crossed the Threshold
As a sole trader, all your business income is your personal income. It gets taxed at your marginal tax rate. For the 2025-26 financial year, that means:
- $0 – $18,200: 0%
- $18,201 – $45,000: 16%
- $45,001 – $135,000: 30%
- $135,001 – $190,000: 37%
- $190,001+: 45%
Once your taxable income consistently exceeds $120,000-$130,000, the maths starts favouring a company structure. A company pays a flat 25% tax rate (for base rate entities with aggregated turnover under $50M), compared to the 37% or 45% marginal rate you would pay as a sole trader on income above $120,000.
For a filmmaker earning $180,000, the difference is meaningful. We will walk through the detailed comparison below.
You Are Taking On Liability
As a sole trader, there is no legal separation between you and your business. If something goes wrong on a production you are running – an accident on set, a contractual dispute with a distributor, a claim from a disgruntled investor – your personal assets are at risk. Your house, your car, your savings. Everything.
A company is a separate legal entity. It has its own assets and liabilities. While directors have certain legal obligations, the company structure provides an important layer of protection between your business activities and your personal life. For anyone running productions where things can and do go wrong, this protection alone justifies the cost of incorporation.
You Are Engaging Crew or Contractors
Once you start engaging other people to work on your productions – even a small crew of five or six – the risk profile changes. You have workers compensation obligations, potential unfair dismissal exposure, and the general duty of care responsibilities that come with being an employer. A company structure formalises these obligations and protects you personally.
You Are Applying for Funding or Investment
Funding bodies and investors overwhelmingly prefer (and often require) dealing with a company. Screen Australia, state screen agencies, and private investors will typically require a company as the applicant entity. If you are approaching these sources as a sole trader, you are creating unnecessary friction.
Why You NEED a Company for Producer Offset Claims
This is the big one for Australian filmmakers. If you are planning to claim the Producer Offset – the 40% rebate on qualifying expenditure for feature films, or 30% for other formats – you must have a company.
The legislation is explicit. Division 376 of the Income Tax Assessment Act 1997 requires that the applicant for a Producer Offset be a company that is an Australian resident. Not a sole trader. Not a partnership. Not a trust (unless it is a corporate trustee applying in its capacity as trustee, which comes with its own complications). A company.
This means if you are a sole trader filmmaker producing your first feature film with a $500,000 budget, and you want to claim the 40% Producer Offset (potentially worth $200,000), you need to incorporate before you can apply for a provisional certificate.
The timing matters too. The company needs to be established and properly structured before you incur significant production expenditure. Setting up a company after the fact and trying to retrospectively assign production costs to it creates significant complications and may jeopardise the offset claim entirely.
We have seen producers lose tens of thousands of dollars in potential offset claims because they did not incorporate early enough. It is one of the most avoidable mistakes in Australian independent production.
Loan-Out Companies for Directors and Above-the-Line Talent
A loan-out company is a structure where a creative professional (typically a director, showrunner, or lead producer) sets up a company that “loans out” their services to productions. Instead of being engaged personally, the production pays the company, and the company pays the individual.
Why Use a Loan-Out Company?
- Tax efficiency – the company can retain earnings at the 25% corporate rate rather than distributing everything at the individual’s marginal rate
- Income smoothing – a director might earn $300,000 on one production and nothing for the next 12 months. A company allows income to be managed across financial years rather than being taxed at the peak rate in a single year
- Expense deductions – the company can claim deductions for business expenses including a home office, equipment, professional development, travel to festivals and markets, and agent fees
- Asset protection – the individual’s personal assets are separated from the business activities
- Professional image – dealing with a company rather than an individual sends a signal of permanence and professionalism to production companies and funders
How It Works in Practice
The director sets up a proprietary limited company (Pty Ltd). The production company enters into a services agreement with the loan-out company, not the individual director. The loan-out company invoices the production for the director’s fees. The company pays the director a salary (attracting PAYG withholding and super) and may also pay dividends from retained profits.
For the production company engaging the director, this arrangement can simplify things – they are paying a company for services rather than employing an individual, which avoids payroll tax and workers compensation obligations for that engagement.
However, loan-out companies need to be set up and operated correctly. The ATO looks closely at personal services income (PSI) rules, and if your company exists solely to receive your personal services income without any real business structure, the ATO may attribute the income directly to you. The company needs to have a genuine business purpose, ideally with multiple clients or contracts.
Tax Comparison: Sole Trader vs Company for a $150K-Earning Filmmaker
Let us look at a practical example. Alex is a freelance producer earning $150,000 per year in net business income (after deducting business expenses).
Scenario 1: Sole Trader
| Net business income | $150,000 |
| Tax on $150,000 (2025-26 rates) | $38,592 |
| Medicare levy (2%) | $3,000 |
| Total tax | $41,592 |
| After-tax income | $108,408 |
Scenario 2: Company Structure
Alex sets up a company and pays herself a salary of $90,000, retaining $60,000 in the company.
| Company income | $150,000 |
| Salary paid to Alex | $90,000 |
| Super on salary (12%) | $10,800 |
| Taxable income of company | $49,200 |
| Company tax (25%) | $12,300 |
| Personal tax on $90,000 salary: | |
| Tax on $90,000 | $18,592 |
| Medicare levy (2%) | $1,800 |
| Total tax (company + personal) | $32,692 |
| Tax saving vs sole trader | $8,900 |
Plus, Alex now has $10,800 going into super that she would not have received as a sole trader (sole traders have no obligation to pay themselves super, and many do not). And the $36,900 retained in the company ($49,200 less $12,300 tax) is available for future business investment, equipment purchases, or distribution as dividends in a lower-income year.
Important note: this is a simplified comparison. The actual tax outcome depends on many factors including other income, deductions, super contributions, and whether the company qualifies as a base rate entity. This is exactly the kind of analysis we do for clients as part of our business advisory service.
The Setup Process: Timeline, Costs, and What Count Out Loud Handles
Setting up a company is not as daunting as many people assume. Here is what the process looks like when you work with us.
Week 1: Planning and Structure
We start with a conversation about your specific situation – your current income, your expected future earnings, your production plans, and your personal circumstances. We determine the right structure (standard Pty Ltd, trustee company, or a combination) and the appropriate shareholder and director arrangements.
Week 1-2: Registration
We handle all the paperwork:
- ASIC company registration – including company name reservation, constitution preparation, consent forms, and lodgement
- ABN and TFN – new registrations for the company entity
- GST registration – if applicable (mandatory if turnover exceeds $75,000)
- PAYG withholding registration – if the company will be paying salaries
- Bank account setup – we provide the documentation your bank needs
Week 2-3: System Setup
We set up the company on Xero with a chart of accounts tailored to your business, connect bank feeds, configure payroll (including STP), and set up any add-on tools you need (Dext for receipts, ApprovalMax for payment approvals, etc.).
Week 3-4: Transition
We manage the transition from your sole trader structure to the new company. This includes:
- Transferring any existing contracts or client relationships
- Setting up a salary arrangement for you as a director-employee
- Advising on the treatment of any assets being transferred to the company
- Updating your registrations with funding bodies and industry organisations
Costs
For a standard company setup through Count Out Loud, expect:
- ASIC registration fee – approximately $576 (government fee, reviewed annually)
- Professional setup fee – covers company formation, registrations, Xero setup, and initial consultation
- Annual ASIC review fee – approximately $310 per year
- Ongoing accounting – the company will need its own tax return lodged annually, and depending on the structure, you may need two tax returns (company + personal) instead of one
The upfront cost is modest relative to the tax savings. In the example above, Alex saves $8,900 in the first year alone – more than covering all setup and ongoing costs.
When NOT to Incorporate
A company is not the right structure for everyone. We would generally advise against incorporating if:
- Your income is consistently below $80,000-$90,000 per year – the additional compliance costs may outweigh the tax benefits
- You are just starting out and your income is unpredictable – wait until you have a clearer picture of your earning trajectory
- You have no intention of engaging crew or taking on productions with significant liability
- You are close to retirement and have simple affairs – the additional complexity may not be worth it
The right structure depends on your individual circumstances. A 15-minute conversation with our team can usually clarify whether now is the right time.
Frequently Asked Questions
How much does it cost to set up a company for a freelance filmmaker?
ASIC registration costs $576 for a proprietary limited company. Our setup fee at Count Out Loud covers company registration, ABN and TFN applications, Xero configuration, bank account setup, and the first BAS period walkthrough. Total costs including ASIC fees typically range from $2,000 to $3,500 depending on complexity. The ongoing annual compliance cost (ASIC review fee, company tax return, financial statements) adds approximately $2,000-$4,000 per year on top of your existing sole trader tax obligations.
Can I keep my sole trader ABN after incorporating?
Yes. Many creative professionals keep their sole trader ABN active for small personal jobs while using their company for larger projects, productions, and loan-out arrangements. This is a common and legitimate structure. Your accountant can advise on which income should flow through which entity based on your specific circumstances.
Do I need a company to claim the Producer Offset?
Yes. The Producer Offset can only be claimed by an Australian company. Sole traders and partnerships are not eligible. This is one of the most common reasons filmmakers and producers incorporate – without a company structure, you cannot access the 40% feature film offset or 30% non-feature offset, which can represent hundreds of thousands of dollars on even modest productions.
What is a loan-out company and do I need one?
A loan-out company is a company you set up to “loan” your services to production companies. Instead of being engaged personally, the production company contracts with your company. This is standard practice for directors, producers, DOPs, and other above-the-line talent earning above $120,000-$150,000. Benefits include the company tax rate (25% vs up to 47% personal), income smoothing across uneven production years, and clearer separation of business and personal finances.
At what income level should I consider incorporating?
As a general guide, once your taxable business income consistently exceeds $120,000-$150,000 per year, a company structure usually delivers meaningful tax savings. However, the right threshold depends on your personal circumstances, including whether you need all the income for living expenses, whether you have other income sources, and your plans for the business. A 15-minute conversation with our team can usually clarify whether the numbers work in your favour.
If you do incorporate, every director needs a Director Identification Number – make sure you apply before your appointment. For production-specific accounting needs, see our guide to accounting for film and TV production.
Talk to Count Out Loud About Your Business Structure
Deciding when and how to incorporate is one of the most consequential financial decisions a creative professional makes. Get it right, and you set yourself up for years of tax efficiency, asset protection, and the ability to access funding and offsets. Get it wrong – or wait too long – and you leave money on the table and expose yourself to unnecessary risk.
Our team of nine has helped hundreds of filmmakers, producers, directors, and creative professionals make this transition. We understand the screen industry’s unique requirements, from Producer Offset eligibility to loan-out structures to the practical realities of managing a business that earns unevenly across financial years.
Get in touch with Count Out Loud to discuss whether a company structure is right for you. Call us on (02) 9043 1525 or book a consultation through our website. We will look at your numbers, your plans, and your risk profile, and give you clear advice on the best path forward.