“I’m buying a business.”
“I’m selling my business.”

Both sound perfectly straightforward.
Then your lawyer or accountant asks:

“Are you buying the business assets, or are you buying the shares in the company?”

And suddenly something that seemed very simple becomes surprisingly confusing.

Victoria Tuttle, Associate at Cohen Legal, says this distinction comes up regularly when people are buying or selling businesses.

“People start saying, ‘We’re selling the company.’ And I’m like, ‘Well, no — are you selling the company, or are you selling the business?’ They’re different.”

They are different. But there is a good reason business owners often do not think about the distinction.

For most people, the legal structure sits quietly behind the business while they get on with running it.

So let’s unpack it in plain English.

Why is this so confusing?

Imagine you started a business as a sole trader.

You found customers. Bought equipment. Registered a business name. Built a website. Hired staff.
A few years later, your accountant recommended moving the business into a company structure.

So you registered a company.
Perhaps you became its sole director and sole shareholder.
From your perspective, Monday morning probably did not feel dramatically different from Friday afternoon.

You still dealt with the same customers.
You still drove to the same premises.
You still used the same equipment.
You still made the decisions.
You probably did not wake up every morning thinking: “I am the shareholder of a proprietary limited company.”

You thought: “I own a business.”

That is completely understandable.
But legally, something important has changed.

ASIC explains that a company is a separate legal entity from the people who own and run it. It can own property, enter contracts, borrow money and incur debts in its own name. In many small companies, the same individual is both the sole director and sole shareholder.

That distinction becomes particularly important when it is time to buy or sell.

A business and a company are not the same thing

The easiest place to start is with two simple definitions.

The business is the operation.

It is the combination of things that allows customers to buy your product or service.

That could include:

• equipment
• stock
• employees
• customers
• goodwill
• a business name
• a website and domain
• intellectual property
• supplier and customer contracts
• systems and processes
• premises or lease arrangements.

The company is a legal entity that may own and operate those things.

For example, imagine a mechanical workshop trading as Smith Mechanical.
The legal entity behind it might be:
Smith Mechanical Pty Ltd.

Smith Mechanical Pty Ltd might own the workshop equipment, employ the mechanics, hold the lease and operate the Smith Mechanical business.

The shareholder might be one person — the person who has always thought of themselves simply as “the business owner”.

ASIC makes an important distinction here: shareholders own shares in the company. They do not personally own the company's individual assets. Those assets belong to the company itself.

That brings us to the two different ways the business might change hands.

Option 1: Buy or sell the business assets

Suppose you want to buy Smith Mechanical.

One option is for the buyer to purchase the agreed assets that make up the operating business from Smith Mechanical Pty Ltd.

The contract might include:

• workshop equipment and tools
• stock
• the registered business name
• goodwill
• the customer database
• the website and domain
• phone numbers
• certain intellectual property
• selected contracts
• lease arrangements, subject to whatever approvals are required.

The buyer takes those agreed assets and uses them to continue operating the business.

But something important has not been sold.

Smith Mechanical Pty Ltd still belongs to its existing shareholder.

The company may no longer operate the Smith Mechanical business after settlement, but the legal entity itself remains with the seller unless they separately deal with it later.

This is commonly called an asset sale.

A simple way to picture it is:
You are taking selected things out of the box and selling those things to the buyer.
The seller keeps the box.

Option 2: Buy or sell the shares in the company

Now imagine a different transaction.

Instead of Smith Mechanical Pty Ltd transferring its equipment, goodwill and other assets to the buyer, the owner sells their shares in Smith Mechanical Pty Ltd.

If that person owns 100% of the company and sells all of those shares, the buyer becomes the new shareholder.

The company itself remains the same legal entity.
Smith Mechanical Pty Ltd still owns the workshop equipment.
It still has its existing contracts.
It still employs its staff.
It still owes whatever debts belong to it.
Its history has not disappeared.

The thing that has changed is who owns the shares in the company.

Victoria explains the distinction simply: “If you’re selling the company, you’re selling the shares. Whereas if you’re selling the business, you’re selling the assets.”

So, our box analogy becomes:
Asset sale: you buy selected contents of the box.
Share sale: you buy the whole box with everything still inside it.

That “everything inside” is one of the reasons share purchases often involve particularly careful due diligence.

Why does the difference matter to a buyer?

This is where the distinction stops being theoretical.

Victoria has seen buyers think they are effectively buying the operating assets of a business when the proposed transaction is actually a purchase of shares.

Her concern is that the buyer may not fully appreciate what remains within the company.

“Someone says, ‘Okay, well, I’m going to buy the shares in the company,’ but they haven’t actually realised that means it comes with all the company debt.”

Victoria's broader point is not that every company has problematic liabilities.
It is that the buyer needs to understand what they are buying.
If you are buying selected assets, you can negotiate which assets form part of the transaction.

If you are buying shares, you are acquiring ownership of a company with an existing legal, financial and operational history.

That may mean examining matters such as:

• debts and liabilities
• tax and BAS history
• employee obligations
• superannuation compliance
• contracts
• legal disputes
• leases
• licences
• security interests
• other obligations held by the company.

It is not simply a question of whether one structure is “better”.

It is a question of understanding the risks and consequences of the transaction being proposed.

Why does it matter to the seller?

For a seller, the distinction changes what actually leaves your hands.

If you sell the business assets, the relevant assets are transferred away from the existing entity.

Your company may remain yours afterwards.

That means you need to be very clear about:

• what is included
• what is excluded
• which entity actually owns each asset
• what liabilities remain behind
• what happens to contracts and employees
• what you intend to do with the company afterwards.

This became an important theme in Victoria's other articles.

Business structures often become more complicated over time. A business owner may have a company, a trust or more than one entity, without necessarily thinking about which one legally owns every piece of equipment or holds every contract.

Victoria says sellers sometimes know broadly how their business is structured without knowing exactly where each asset sits.

“They know that they have a trust. They know that they have a company. But they may not necessarily understand how that works in an entity tree.”

That can mean discovering that one entity owns the plant and equipment while another employs the staff or holds another important part of the operation.

If instead you sell your shares, you are transferring your ownership of the company.

That is why the structure should be worked out with your lawyer and accountant before everyone starts negotiating on different assumptions.

What if you are a sole trader?

A sole trader does not have a separate company sitting between themselves and the business.

ASIC explains that unlike a company, a sole trader business structure is not a separate legal entity from the individual operating it.
So, if a sole trader sells their business, there are no shares in a company to sell.

Instead, the transaction generally involves selling the assets and other transferable parts that make up that business.

That might include:

• equipment
• stock
• goodwill
• the registered business name
• intellectual property
• website and digital assets
• customer information where lawfully transferable
• contractual rights where they can be assigned.

Victoria's view was that from the practical buying perspective, many of the same questions still need to be asked.

“You’d still be considering what you are and aren’t buying.”

The major difference is the legal structure around the operation and the consequences that flow from it.

What if I buy the assets through my own company?

Here is another point that can trip people up.

The question of what you are buying is separate from the question of who is buying it.

For example, you might establish Jones Mechanical Pty Ltd and use that company to purchase the assets of Smith Mechanical.

That is still an asset purchase.
Smith Mechanical Pty Ltd sells the agreed business assets.
Jones Mechanical Pty Ltd buys them.

After settlement:

• the seller still owns Smith Mechanical Pty Ltd
• you own Jones Mechanical Pty Ltd
• Jones Mechanical Pty Ltd now owns the assets it purchased and operates the business.

Alternatively, you personally might purchase the shares in Smith Mechanical Pty Ltd.

That would be a share purchase, even though the buyer is an individual.

Victoria touched on this distinction: “whether you buy personally or through another entity is not the same question as whether you are buying shares or business assets.”

Keeping those two questions separate makes the structure much easier to understand:

Question one: What is being bought — assets or shares?
Question two: Who is buying them — you personally, a company, a trust or another entity?

Your lawyer and accountant can then advise on the structure appropriate to your circumstances.

What happens to contracts, employees and licences?

This is another reason the distinction matters.

With an asset sale, individual contracts, leases, licences and other rights may need to be transferred, assigned, replaced or consented to.
Some may not be transferable at all.

With a share sale, the company itself remains the contracting party because the legal entity has not changed.
But that does not mean everything automatically continues without a problem.

Contracts can contain change-of-control provisions, and licences or regulatory approvals may have their own rules when ownership or control of a company changes.

The detail depends on the particular business.

So “the company stays the same” should never be translated into “nothing needs checking”.

Does it matter for tax and GST?

Yes — potentially significantly.

The tax treatment of an asset sale and a share sale can differ, and the consequences can also differ between buyer and seller.

For example, selling business assets can trigger different tax consequences depending on the type of assets involved. Selling shares can give rise to a capital gains tax event. Business.gov.au notes that CGT may arise when assets are sold and that eligible businesses may have access to concessions depending on their circumstances.

A sale of an operating business may also potentially qualify as a GST-free supply of a going concern where the legal requirements are satisfied. The ATO requires, among other things, that everything necessary for continued operation be supplied, that the business continue to be carried on until the day of supply, that the purchaser be registered or required to be registered for GST, and that the parties agree in writing that the sale is of a going concern.

Victoria repeatedly emphasised in both articles that tax is an area where the accountant needs to be involved.
That is exactly where we would leave it.

Do not choose between an asset sale and a share sale based on one tax assumption you have heard somewhere.

Have your accountant and lawyer look at the proposed structure before you commit.

So which is better: assets or shares?

There is no universal answer.

An asset purchase may appeal to a buyer who wants to identify exactly what they are acquiring.

A share transaction may make sense in circumstances where keeping the existing company and its commercial arrangements intact has advantages.

But either structure can carry consequences that are not immediately obvious.

The answer depends on things such as:

• the structure of the existing business
• what assets are involved
• liabilities within the company
• contracts and licences
• employees
• financing arrangements
• tax
• the objectives of both buyer and seller.

That is why Victoria keeps returning to one deceptively simple question: “What are you actually buying?”

It is also why sellers need to ask the reverse: What am I actually selling?

You do not need to know the answer before you call us

If this has made you realise you have owned a company for ten years without ever really thinking of yourself as a shareholder, you are unlikely to be alone.

For many small business owners, the legal entity exists quietly in the background.

You run the business.
Your accountant deals with the company accounts.
ASIC paperwork gets completed.
Life goes on.

It is usually when something significant happens — particularly buying, selling or restructuring — that the distinction suddenly matters.

You do not need to arrive at your lawyer's office already knowing whether an asset sale or share sale is right for you.

But you should know there is a difference.

Before you agree on a structure, price or contract, ask: Are we buying or selling the business assets — or the shares in the company that owns the business?

That one question can make the rest of the transaction much clearer.

If you are considering buying or selling a business in Townsville, Mt Isa or elsewhere in North Queensland, Cohen Legal can help you work through the proposed structure and understand what will actually change hands.

If you’re unsure where to start, our team is here to guide you.

Disclaimer: This article provides general information only and does not constitute legal advice. You should obtain advice specific to your circumstances before making any decisions.