Choosing the right structure for intellectual property (IP) ownership can have lasting commercial, tax and legal implications.
Whether your IP is held personally, in a company, partnership or trust, each option has unique advantages and disadvantages when it comes to protection, control and commercialisation.
This article explains how to structure intellectual property ownership, the pros and cons of each model and when to consider professional advice.
Why your intellectual property ownership structure matters
If you’ve developed intellectual property, you likely own it in your personal capacity – at least at first.
However, the way you structure IP ownership affects:
- How profits and income are distributed
- Who controls the IP
- Whether the IP is protected from liability
- How efficiently your business can commercialise its assets
Establishing the right structure early can help you protect your IP, optimise tax outcomes and avoid disputes down the track.
Owning intellectual property as a sole trader
A sole trader is the simplest and least expensive structure for owning intellectual property. However, it comes with significant limitations.
Advantages
- Simple to set up and administer
- Full control and ownership of all IP decisions
Disadvantages
- Unlimited liability – your personal assets are at risk if the business fails
- No capacity to share ownership or control with others
- No ability to share profits or losses for tax efficiency
Sole trader ownership is best suited to independent creators or small-scale projects with limited commercial exposure.
Owning intellectual property in a partnership
A partnership allows two or more people or entities to share ownership and control of intellectual property.
Advantages
- Shared input, funding and management
- Useful for early collaboration between inventors or founders
Disadvantages
- Unlimited liability – each partner is personally liable for partnership debts
- Limited flexibility for tax planning and profit distribution
- Risk of ownership disputes if IP rights are not clearly defined in a written agreement
For these reasons, partnerships are typically used only at the pre-commercialisation stage of an IP venture.
Owning intellectual property through a private company
A private company offers stronger protection and flexibility for IP ownership. It is a separate legal entity, meaning it owns the IP, not the individuals involved.
Advantages
- Limited liability for shareholders and directors
- Ability to have multiple shareholders (including trusts)
- Easier to raise capital and commercialise IP assets
Disadvantages
- Higher setup and compliance costs
- More complex governance requirements
If a company’s shareholders include a trust instead of individuals, it can help reduce tax exposure and improve profit distribution.
Private companies are highly practical and flexible for scaling and commercialising intellectual property ventures.
Owning intellectual property through a trust
A trust is a legal structure in which a trustee holds IP on behalf of beneficiaries.
Where the trustee is a private company, the trust can operate similarly to a company while offering added tax flexibility.
Advantages
- Income can be distributed to beneficiaries to minimise tax
- IP protection from personal liability (depending on trust deed terms)
- Ability to integrate family or business group ownership
This structure is often preferred for ventures anticipating licensing, commercialisation or asset protection benefits.
In practice, a company trustee holding IP in trust provides a strong balance of control, flexibility and tax efficiency.
Choosing the right IP ownership structure
There is no one-size-fits-all approach. The best structure depends on:
- The nature and value of your intellectual property
- Whether you plan to commercialise, license, or sell it
- Your broader business, asset protection, and tax strategy
Getting it wrong can expose your IP to legal risks, tax inefficiencies or disputes over ownership.
If you are looking to transfer or assign ownership of intellectual property to another entity, visit our IP Transfer page for practical guidance on how to do so effectively and minimise tax and legal risks.
To understand how you can commercialise your intellectual property without transferring ownership, see our IP Licensing page for insights on preparing and negotiating licence agreements.
For further information on how we can support you with brand protection, registration and enforcement, visit our Intellectual Property page.