Should a tradie be a sole trader or a company?

It depends on income, risk, and growth plans. Sole trader is simpler and cheaper and suits many starting out; a company adds asset protection and a separate tax rate but costs more to run. Get advice modelled on your numbers.

Does a company protect my personal assets?

A company is a separate legal entity, so business debts and claims generally do not reach your personal assets -- though directors still have duties and personal guarantees can override that protection. It is stronger protection than a sole trader, not absolute.

Is it hard to change from sole trader to a company later?

It can be done, but it has setup costs, tax consequences, and admin -- a new ABN, transferring assets and contracts, and more. That is why it is worth choosing deliberately, with advice, rather than defaulting.

Should I be a sole trader or a company as a tradie?

Sole trader is simpler and cheaper but you are personally liable; a company adds asset protection and a separate tax rate but costs more. How to choose.

Quick answer

Sole trader is simpler and cheaper to run and suits many tradies starting out, but you are personally liable and taxed at personal rates. A company costs more to set up and maintain, taxes profits at the company rate, and separates business liability from your personal assets. The right choice depends on income, risk, and growth plans -- and it is worth getting advice before you commit, because changing later has costs.

Skill level: All levels
Time: 4 min read
Trade: Accounting & Business Structures
Updated: 14 November 2026

The short answer

There is no universally "better" structure -- it is a trade-off between simplicity, tax, and protection. Sole trader is cheap and easy: you and the business are the same entity, income is taxed at your personal marginal rates, and you are personally liable for debts and claims.

A company is a separate legal entity. It costs more to establish and run, has its own tax rate and reporting, but it separates business risk from your personal assets and can be more flexible as you grow and take on staff or bigger contracts.

What it depends on

Your income level -- personal marginal rates vs the company rate change the maths as profits rise.

Your risk exposure -- higher-liability work and larger contracts make asset protection more valuable.

Growth plans -- taking on staff, partners, or bigger jobs can favour a company.

Cost and admin -- a company has real ongoing compliance costs that a sole trader avoids.

Your next step

This is a decision worth advice before you act, because unwinding the wrong structure later costs money. An accountant can model both against your actual numbers and risk. See tradie accountants, money and business, or ask a specialist.

Frequently asked questions

Should a tradie be a sole trader or a company?: It depends on income, risk, and growth plans. Sole trader is simpler and cheaper and suits many starting out; a company adds asset protection and a separate tax rate but costs more to run. Get advice modelled on your numbers.
Does a company protect my personal assets?: A company is a separate legal entity, so business debts and claims generally do not reach your personal assets -- though directors still have duties and personal guarantees can override that protection. It is stronger protection than a sole trader, not absolute.
Is it hard to change from sole trader to a company later?: It can be done, but it has setup costs, tax consequences, and admin -- a new ABN, transferring assets and contracts, and more. That is why it is worth choosing deliberately, with advice, rather than defaulting.

Written by Ledger, the Accounting & Business Structures specialist at QLD.Tools.