In an Allied Health practice, every bottleneck is a signal. If your diary is full, that’s an admin workflow snowballing into something unmanageable. If your clients are waiting for weeks to get an appointment, that’s a broken feedback loop. And if you’ve begun turning away referrals, that’s a revenue leak. 

Each of these signals ladder up to the same truth - you’ve outgrown working solo. If you’ve been wrestling with the idea of hiring your first employee or contractor but need help with the “if”, “when” and “how”, we’re here to help. This practical, step-by-step checklist covers everything from registering as an employer to choosing the right award, plus the Allied Health-specific traps that often catch sole traders out. 

Can I employ people as a sole trader? 

Yes, as a sole trader in Australia, you can hire employees. Being a sole trader only describes your business structure and is the simplest way to register and operate a business under your own Australian Business Number (ABN) [1]. As a sole trader, you can hire an admin assistant, a part-time therapist, or a whole team without any change to your business status or ABN. 

The confusion usually comes from the word "sole." It refers to single ownership, not solo staffing. As a sole trader, you own the business outright and carry personal responsibility for its obligations. But you're also free to build a team around you.

Do the employment rules change based on the state I practice in? 

They don't. Employment law in Australia operates under the national Fair Work system, so the same obligations apply whether your practice sits in Sydney, Perth, or Hobart. State-based differences do exist for payroll tax and workers compensation, but the core right to employ people is uniform across Australia.

How many employees should I add on as a sole trader?

The ideal number of employees for an Allied Health practice being run by a sole trader depends on your business needs and financial stability. Most sole trader practices choose to grow steadily by only adding people as necessary. Initially this could be an admin person, then a second clinician, then more. But as your headcount climbs, there are a few practical considerations to bear in mind such as: 

• Cash flow is the first since every employee’s wages, superannuation, and on-costs need to be covered before you see a profit.
• Insurance is the second, since workers compensation premiums rise with your wage bill.
• Administrative capacity is the third, because payroll, rostering, and compliance take time away from providing client care. 

With every new employee, your personal liability exposure climbs alongside it. That's exactly why you also need to consider whether a company or trust structure would serve your business needs better. 

What is the 80% rule for sole traders and why does it matter while hiring?

The 80% rule is a tax test that Allied Health practices need to focus on if they engage contractors. If a contractor earns 80% or more of their income from your business in a financial year, the Australian Taxation Office (ATO) may treat that income as Personal Services Income (PSI). For example, a subcontracting speech pathologist may work four days a week exclusively for your practice. During this time, they use your rooms, follow your schedule, and take no other clients. The ATO may deem them an employee for superannuation purposes regardless if their invoice says they are a contractor. If a worker you've treated as a contractor is later found to be an employee, you can be liable for back-paid super, Pay As You Go (PAYG) withholding you never deducted, and penalties on top [8].

How do I get the distinction right between an employee and a contractor in Allied Health?

Start by examining the level of control your contractor has in your business relationship. This includes: 

• Does the contractor decide how and when they do the work, or do you?
• Does the contractor provide their own tools, or do you?
• Do you decide which rooms the contractor operates in?
• Can the contractor delegate the work to someone else?
• How is the contractor paid?
• Does the contractor carry their own commercial risk?

A subcontracting physiotherapist who sets their own hours, sees clients across several practices, invoices for results, and carries their own insurance is more likely to be viewed as a genuine contractor by the ATO. A permanent part-time admin officer who works set shifts, uses your equipment, and follows your direction is clearly an employee. 

The ATO and Fair Work use a multi-factor test that looks at the whole working relationship, not any single feature [8]. Recent High Court decisions have tightened this further, placing more weight on the written terms of the actual agreement between the parties. That makes a clear, accurate contract more important than ever. 

Here’s a hiring checklist to review before your new employee starts

To hire your first employee as a sole trader in Australia, you'll work through the following eight steps: 

1. Confirm the employee’s right to work in Australia: You need to check if the person you’re about to hire is an Australian citizen, permanent resident, or holds a visa with work rights. Use the free Visa Entitlement Verification Online (VEVO) service and keep a record of the check.
2. Confirm you have a valid ABN: As a sole trader, you should already have one. You hire and pay employees under your existing ABN, so there's nothing new to register here [10].
3. Register for PAYG withholding with the ATO: PAYG withholding lets you deduct tax from your employee's wages and remit it to the ATO. Register before your first payday, either online through the Business Portal or via your accountant.
4. Set up Single Touch Payroll (STP): STP reports wages, tax, and super to the ATO each pay run. Most payroll and practice management software handles this automatically once configured.
5. Identify the correct Modern Award: For most Allied Health support roles and many clinical roles, the Health Professionals and Support Services Award applies. It sets minimum pay rates, penalty rates, and conditions. Be sure to check the classification level carefully.
6. Determine the employment type:  Decide whether the role is full-time, part-time, or casual. Each carries different entitlements, with casual roles attracting a loading instead of paid leave.
7. Arrange workers compensation insurance: This is mandatory from your first employee onward. Premiums and providers vary by state, so arrange cover before your first new hire starts.
8. Draft a written employment contract: Set out pay, hours, role, and conditions, and make sure it meets the National Employment Standards (NES) as a minimum floor.

What paperwork do I need when onboarding a new contractor or employee?

To make sure your first pay run goes smoothly for your new hire, here’s a list of the paperwork you need to collect and confirm: 

• Tax File Number (TFN) declaration form: Make sure your new hire completes this so you withhold the correct amount of tax.
• Superannuation Standard Choice Form: This lets the employee nominate their fund. If they don't choose one, check the ATO for their stapled super fund so you pay into an existing account rather than opening a new default one.
• Fair Work information statement: You're legally required to give this to every new person you hire.
• Casual Employment information statement: You’re also required to provide this if the role is casual.
• Confirm the pay rate meets the Award minimum: You need to cross-check against the correct classification level so you're not underpaying from the outset.
• Set up the employee in your payroll software: Make sure you enter the correct employee details, super fund, and tax settings so that the STP reports correctly.
• Australian Health Practitioner Regulation Agency (AHPRA) registration: If your new hire is a clinician rather than admin, you need to AHPRA registration through the public register before they see a single client. 

What are my ongoing employer obligations as a sole trader? 

Once you have your first hire on the books, a handful of recurring obligations kick in. To stay on top of recurring obligations, we recommend keeping the following tasks on a simple calendar: 

• Superannuation: You pay the superannuation guarantee on top of wages, currently 11.5% rising to 12% from 1 July 2025 [10]. Super must be paid by the quarterly due dates, the 28th of January, April, July, and October. Miss a deadline and you face the Superannuation Guarantee Charge, which isn't tax-deductible. Pay on time, every time.
• Payroll tax: This is a state tax that only applies once your total wages cross a threshold. Thresholds and rates differ by state, so be sure to check the specific rate in your state.
• PAYG withholding: Remit the tax you've withheld to the ATO on your Business Activity Statement, monthly or quarterly depending on your size.
• STP reporting: Report each pay run to the ATO through your software.
• Leave and the NES: Permanent employees accrue four weeks of annual leave and ten days of paid personal/carer's leave each year, plus the other entitlements under the National Employment Standards [10].
• Pay slips: Issue a compliant pay slip within one working day of each pay.

Are there any specific hiring considerations for Allied Health?

Yes, Allied Health practices carry unique obligations that a general small business doesn't. Here’s a list of the obligations you need to manage from your very first clinical hire: 

• Verify AHPRA registration: This applies to any registered clinician. You also need to recheck at renewal. Working with lapsed registration is a serious risk to the practitioner and to you.
• Supervision and delegation: Graduates and practitioners on limited or provisional registration often require supervision. If you engage an Allied Health assistant as an employee or contractor, make sure your delegation framework is documented and clinically sound. The treating practitioner stays responsible for work delegated under their supervision [3]. A self-employed assistant working under their own ABN can still operate under your delegation, but the clinical responsibility doesn't transfer with the invoice [3].
• Professional indemnity insurance: When you add staff, you need to confirm your cover extends to work performed by employees, or arrange the right policy so everyone treating clients is covered.
• Privacy obligations: Every new staff member with access to client records falls under the Privacy Act. Build privacy and confidentiality into onboarding, set role-based access in your practice management software, and have new hires sign a confidentiality agreement before they touch a single file.

When should I consider reassessing my sole trader business structure? 

Sole trader is the right starting point for most practice owners. But as you add employees, your personal exposure grows. This is because, as a sole trader, there's no legal separation between you and the business. A company or trust structure offers asset protection that can shield your personal assets if something goes wrong. Payroll tax thresholds, structuring for tax, and how you pay yourself all become more consequential as the team expands.

There's no single trigger here but a growing payroll, rising revenue, and two or three clinicians on the books are good prompts to have the conversation about shifting from a sole trader to a partnership or even a company structure. Speak with an accountant who understands Allied Health before you make the move. And whatever structure you land on, make sure your practice management systems can scale with the team, so adding the next clinician is straightforward rather than a scramble.

splose is here to ease your practice management workload 

Hiring as a sole trader is absolutely within reach. As long as you follow the hiring checklist outlined above, keep track of your ongoing obligations, and have the conversation about potentially shifting your practice structure when you see your employee count grow past a certain threshold, you should be just fine. Once you’re on firm ground from a compliance standpoint, splose can help you with your day-to-day operational workload. We help Allied Health practitioners run scheduling, billing, and client records with ease, so the business side feels as considered as your clinical work. Book a demo to see how we can integrate seamlessly into your practice. We’ll even let you put all our features to the test for 14 days with no-obligation.

Sources

[1] Therapy Coalition — https://www.therapycoalition.com.au/blog/what-is-a-sole-trader

[2] Can a Sole Trader Have Employees? Rules & Guide - Wise — https://wise.com/au/blog/can-sole-trader-have-employees

[3] Can Self-Employed Allied Health Assistants Safely be Delegated Tasks by Allied Health Professionals — https://www.ahana.com.au/news-item/17973/can-self-employed-allied-health-assistants-safely-be-delegated-tasks-by-allied-health-professionals

[4] How Many Employees Can a Sole Trader Have in Australia? - Sleek — https://sleek.com/au/resources/sole-trader-employees

[8] The Employee vs Contractor Decision in Allied Health — https://www.conwaygroup.com.au/insights/the-employee-vs-contractor-decision-in-allied-health-what-every-provider-and-clinician-should-know

[10] Can a Sole Trader have Employees - EndureGo Tax — https://www.endurego.com.au/can-a-sole-trader-have-employees

Disclaimer: This article contains general information only and should not be considered accounting, taxation or financial advice. Business owners should seek advice from their accountant, bookkeeper or financial adviser regarding their specific circumstances.