When people think of a sole trader, they often picture a one-person business. In fact, sole traders in Australia can absolutely hire employees—and many do as their businesses grow. Let’s break down what you need to know if you’re considering expanding your team.
What Is a Sole Trader?
A sole trader is the simplest business structure in Australia. It means you run the business as an individual, and you are legally responsible for all aspects of the business, including debts and obligations. Your ABN (Australian Business Number) is registered in your name, and you report business income on your individual tax return. While it is straightforward to register for an ABN, don’t be afraid to contact an accountant Melbourne if you need assistance.
Can a Sole Trader Employ Staff?
A sole trader is the simplest business structure in Australia. It means you run the business as an individual, and you are legally responsible for all aspects of the business, including debts and obligations. Your ABN (Australian Business Number) is registered in your name, and you report business income on your individual tax return. While it is straightforward to register for an ABN, don’t be afraid to contact an accountant Melbourne if you need assistance.
Responsibilities of a Sole Trader with Employees
Before you bring staff on board, it’s important to understand the legal and financial obligations you’ll take on. These include:
- Registering for PAYG Withholding
You must withhold tax from your employees’ wages and pay it to the ATO. A business accountant Melbourne, like Nobel Thomas, can assist with this if required.
- Superannuation
You’re required to pay super contributions (currently 12% of ordinary time earnings in 2025/2026) for eligible employees.
- Fair Work Compliance
You need to comply with the Fair Work Act, including paying correct award rates, penalty rates, and entitlements such as leave.
- WorkCover Insurance
You must take out workers’ compensation insurance in your state or territory to protect employees if they’re injured at work. Your accountant Melbourne can assist with this.
- Single Touch Payroll (STP)
All wages, tax, and super information must be reported to the ATO through STP each pay cycle.
Benefits of Hiring as a Sole Trader
- Growth Potential: Employees allow you to take on more clients, scale operations, and generate more income.
- Specialisation: Hiring people with skills you don’t have can improve efficiency and quality.
- Work-Life Balance: Delegating tasks gives you more time to enjoy more personal time.
Things to Consider
- Costs: Wages, super, insurance, and payroll compliance all add up. Use the skills of a business accountant Melbourne to make sure your business cash flow can support employees.
- Business Structure: While you can hire as a sole trader, if you’re planning to grow significantly, it might be worth considering whether a company or trust structure would better suit your long-term goals and offer greater asset protection. An accountant Melbourne can assist with this decision.
Final Thoughts
Yes—sole traders can have employees if your business is growing and you need help. The key is understanding and meeting your obligations as an employer.
Best to make sure you get professional advice from a business accountant Melbourne, like Nobel Thomas, to ensure you’re compliant and financially prepared.
