Starting a Tradie Company in Australia: When and How to Make the Move

Most tradies start out as sole traders. It's simple, cheap, and gets you working fast. But at some point — usually as the jobs get bigger, the income grows, or you start taking on employees — the question comes up: should I start a tradie company instead?

It's one of the most important financial decisions you'll make as a tradie, and it's worth understanding properly before you make the call either way.

This article explains what it actually means to operate as a company, when it makes sense to make the switch, and exactly how to set one up.

Sole Trader vs Company: What's the Real Difference?

When you operate as a sole trader, there's no legal separation between you and your business. Your business income is your income. Your business debts are your debts. If a client sues and wins, they can come after your personal assets — your home, your savings, your car.

When you register a company (a Pty Ltd), the business becomes a separate legal entity. It can own assets, enter contracts, and take on debt in its own name. As a director and shareholder, your personal liability is limited — in most circumstances, you're not personally responsible for the company's debts if things go wrong.

The other big difference is tax. As a sole trader, your business income is taxed at your personal income tax rate, which can be as high as 47% at the top bracket. A company pays the corporate tax rate — 25% for small businesses with a turnover under $50 million. That gap can represent a significant amount of money as your income grows.

When Does It Make Sense to Start a Tradie Company?

There's no single right answer, but these are the situations where moving to a company structure tends to make financial and practical sense:

Your taxable income is consistently above $120,000–$150,000. At this level, the tax rate difference between a company (25%) and your personal rate (39–47%) becomes meaningful. A company allows you to retain profits in the business at the lower rate and draw only what you need as a salary or dividend.

You're taking on larger commercial contracts. Many commercial clients, builders, and facility managers prefer or require working with a registered company. It signals a more established business and provides additional protection for both parties.

You're employing people. A company structure creates clearer separation between the business and yourself, which can matter when you're responsible for employees, payroll, and workers compensation.

Your personal asset exposure is growing. If you own a home or have significant savings, the liability protection of a company becomes more valuable. A sole trader doing $80,000 worth of work that results in a serious claim faces personal exposure. A company limits that risk.

You want to bring in a business partner. A company is much easier to structure for shared ownership through a shareholders' agreement than a sole trader arrangement.

What It Costs to Start a Tradie Company

Setting up a company is not free, and it comes with ongoing costs that a sole trader doesn't face.

ASIC registration fee: Around $590 to register a new company with ASIC. This covers the legal creation of the Pty Ltd entity.

Registered agent or accountant fees: Most tradies use an accountant to set up their company correctly, including the shareholders' agreement, any associated trust structures, and the initial setup of the books. This typically runs $1,000–$2,500 depending on the complexity.

Annual ASIC review fee: Once registered, companies pay an annual review fee (currently around $310 per year for small proprietary companies).

Company tax return: Separate from your personal tax return. Most accountants charge $800–$2,000+ to prepare a company tax return annually.

More complex accounting: Running a company means stricter record-keeping requirements, more complex payroll if you pay yourself a salary, and generally more time spent on admin or bookkeeping.

For most tradies, these extra costs only make financial sense once the tax savings outweigh them — which typically happens somewhere in the $100,000–$150,000 annual profit range.

How to Register a Tradie Company: Step by Step

If you've decided a company is the right move, here's exactly how to get it done.

1. Choose a Company Name

Your company name needs to be available and end in "Pty Ltd" (Proprietary Limited). Check availability through the ASIC company name search at asic.gov.au. Unlike a business name, a company name is protected nationally — no other company can use the same name.

Many tradies operate their company with a simple name like "MT Electrical Pty Ltd" or "Turner Plumbing Services Pty Ltd." You can still register a separate business name (trading name) if you want to operate under a different brand.

2. Register with ASIC

Company registration is done through ASIC's online portal. You'll need to provide:

• The company name
• The registered address (must be a physical Australian address)
• The names and addresses of all directors (at least one required, must be an Australian resident)
• The names and addresses of all shareholders and their share ownership percentages
• The company's constitution (you can use the replaceable rules under the Corporations Act, or have a custom constitution drafted)

Once submitted, ASIC issues an ACN (Australian Company Number) — your company's unique identifier.

3. Apply for an ABN

Once you have your ACN, apply for an ABN through the Australian Business Register. The ABN is used for tax purposes and on invoices. You'll also need to register for GST if your expected turnover exceeds $75,000.

4. Open a Company Bank Account

The company needs its own bank account, completely separate from your personal accounts. All income goes in, all business expenses go out. This separation is not just good practice — it's a legal requirement for maintaining the liability protection of the company structure.

5. Set Up Payroll for Yourself

If you'll be drawing a salary from the company (rather than just dividends), you need to set up payroll. This means:

• Registering as a PAYG withholding employer
• Paying yourself a salary with tax withheld and remitted to the ATO
• Paying yourself superannuation (as a company employee, you're entitled to super)
• Reporting through Single Touch Payroll (STP), which is mandatory for all employers

Your accountant or a payroll tool like Xero Payroll can handle most of this automatically once set up.

6. Keep the Company's Books Properly

Company record-keeping requirements are more stringent than for sole traders. At a minimum, you need to maintain:

• Financial statements (profit and loss, balance sheet)
• Records of all income and expenses
• Minutes of any director meetings (even if you're the only director)
• Share register

Accounting software like Xero, MYOB, or QuickBooks handles most of this, especially when connected to your business bank account through bank feeds.

Tax Considerations When Running a Tradie Company

Corporate tax rate: Small companies pay 25% tax on profits. This is the rate applied to what's left in the company after paying your salary and other expenses.

Paying yourself: There are two main ways to take money out of a company as the owner:

• Salary: Taxed at your personal rate as income, with PAYG withholding. Super must be paid.
• Dividends: Distributions of after-tax company profits to shareholders. These come with franking credits, which can reduce your personal tax liability.

The optimal mix of salary and dividends depends on your situation and should be worked out with your accountant annually.

Division 7A: If you take money from the company without properly classifying it as a salary or dividend, the ATO treats it as an unfranked dividend and taxes it accordingly. This is a common mistake for tradies new to operating through a company. Keep a clear record of every dollar you take out.

Fringe Benefits Tax (FBT): If the company provides you with benefits — like a company vehicle used for personal purposes — you may be liable for FBT. Your accountant can structure these arrangements to minimise exposure.

Do You Need a Trust as Well?

Many small business owners in Australia operate through a company trustee and a discretionary (family) trust structure. This allows income to be distributed to family members in lower tax brackets, further reducing the overall tax bill.

This is worth exploring with your accountant but adds another layer of complexity and cost. For tradies just transitioning from sole trader to company, it's usually better to get the basic company structure right first and consider a trust arrangement once you're established.

Making the Transition from Sole Trader to Company

If you're already operating as a sole trader and moving to a company, there are a few things to manage:

• New ABN: The company gets its own ABN. Your old ABN as a sole trader is cancelled.
• Existing contracts: Any contracts in your sole trader name need to be renegotiated or novated to the company.
• Licences: Many trade licences are issued to individuals, not companies. Check whether your licence needs to be updated or a company licence obtained.
• Notify clients and suppliers: Update your invoices, account details, and business information with anyone you work with regularly.
• Tax implications: Transferring assets from your sole trader business to a new company can have capital gains tax and GST implications. Your accountant needs to structure this correctly.

Getting the Right Advice

Starting a tradie company is one of the few business decisions where getting professional advice upfront pays for itself many times over. The structure you choose affects your tax for years, your liability exposure, and how complicated your admin is.

A good accountant who works with trade businesses — not just any accountant — will understand the specific licences, cash flow patterns, and deductions relevant to your industry. The cost of that advice is itself a tax-deductible business expense.

Tradie Money AU helps Australian tradies understand their financial options and make smarter decisions about their business structure, tax, and cash flow. The content on this site is general in nature — speak with a registered tax agent or accountant for advice specific to your situation.