When should a tradie change from sole trader to company?

Guide

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Navid | Managing Director

14 November 2025

Overview

A bigger job or a first apprentice can prompt a tradie to consider a company. Compare the effect on your take-home pay, your paperwork and the risks you carry personally before switching.

Knowledge

Sole Trader vs. Company?

A sole trader operates the business as an individual and is personally responsible for its debts. A company is a separate legal entity that can earn income and sign contracts in its own name. A personal guarantee is a promise to cover a debt yourself if the company can’t pay.

Knowledge

Sole Trader vs. Company?

Compare what you keep and what you carry

Your plumbing business has grown from call-outs to quoting whole builds. A builder wants to know who’ll sign the next contract, and you’re thinking about taking on an apprentice. That’s a good time to compare structures. There’s no single turnover figure that makes a company the right choice.

As a sole trader, you and the business are the same legal person. A company is a separate legal entity with its own tax and reporting obligations. Money earned by the company belongs to it. How you pay yourself matters, especially if the household needs most of each month’s profit.

Ask your accountant to run two versions of a normal year. Use the same sales, material costs, wages and household cash needs in each. Include the cost of company accounts and administration. Then look at liability with your solicitor. Personal guarantees on equipment finance, for example, can still leave you personally exposed.

Plan the first job under the new ABN

A company needs its own ABN. List the items that need to move or be reissued, including relevant licences, insurance, supplier accounts, finance agreements and contracts. Work out who owns the ute and tools, and check any tax or duty consequences before transferring them. Existing debts and guarantees need their own plan.

Choose a cutover date and walk through one job that straddles it. Who invoices the deposit? Which entity completes the work and handles the warranty?

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Your business has grown. Let’s see whether its structure still fits.

Maybe you’ve taken on an apprentice, started quoting larger builds or bought equipment for a second crew. What worked when you were on the tools alone may need another look.

Bon Conseil takes the time to understand your jobs, your costs and what your household needs from the business. We compare the tax and administrative implications of each structure and help you plan a transition with your bookkeeper and legal adviser.

You keep the jobs moving. We’ll help plan the change.

From your ute and tools to supplier accounts and unfinished contracts, we can help identify what needs attention before your company takes on its first job.

Talk to Bon Conseil about your business structure. You can bring your plans for the next year, even if you haven’t decided whether to make the switch.

Good advice makes a difference.

From your first tax return to building a business or planning for retirement, Bon Conseil supports individuals, families and businesses at every stage. Our qualified accounting, tax and advisory professionals bring years of experience, specialist knowledge and genuine care to every client relationship.

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