Sole Trader vs Company: Which Structure Should a Tradie Choose?

Every tradie hits this question, usually at midnight, usually after a mate said “you should really be a company.” Here’s the plain-English version of what each structure actually means, and the honest caveat up front: this is general information. The right answer depends on your income, your family, your risk and your plans, which is exactly what an accountant is for. Walk in informed, walk out with a decision.

Sole trader: simple, cheap, exposed

Cheapest to set up, simplest to run: an ABN, your own tax return, done. The catch is in the name. YOU are the business. Every contract is with you personally, every debt is yours, and if a job goes badly wrong, your personal assets, house included, are in the conversation. Fine for getting started and for lower-risk work. Less fine as the jobs, the crew and the exposure grow.

Company: protection and structure, at a price

A company is its own legal person. It signs the contracts, carries the debts, and pays tax at the company rate. Your personal assets sit behind a wall, though not an unbreakable one: directors can still be personally liable for negligence, for unpaid employee entitlements and tax in some situations, and banks will often want personal guarantees anyway. In exchange you take on setup costs, annual fees, separate accounts and more paperwork. For a growing trade business with employees and bigger contracts, that trade is usually worth it. For a weekend handyman operation, usually not.

The ones in between

You’ll also hear about partnerships, two or more people sharing a business and, importantly, sharing liability for each other’s decisions, which is why they need real agreements in writing, and trusts, which can offer flexibility for family businesses but add cost and complexity. Both have their place. Neither is a default.

The signals it’s time to review your structure

• You’re putting on employees or regular subbies.
• Job values are climbing and one bad project could hurt you personally.
• Your income has grown to where the tax difference matters.
• You’re buying serious assets, or you’ve bought a family home you want protected.
• A builder or commercial client is asking for a structure you don’t have.

Don’t set and forget

The structure you started with at 24 with a ute and a toolbox is rarely the right one at 34 with a crew of four. As part of compliance and legal setup, we help you look at the whole picture, structure, licences, insurance and asset protection together, and get you in front of the right professionals to make the change properly. It’s duller than buying a new drop saw. It matters more.