Your calendar is full and the referrals keep coming. Slowly, your waitlist starts growing, and you begin to turn people away or push their appointments out for weeks at a time. It's a good problem to have. But it also makes you question whether you should bring someone on to help manage your workload. That decision leads straight to a more technical one - hiring employees as a sole trader.
In this guide, we'll compare the sole trader, company, and partnership structures with scenario-based guidance built for Allied Health practitioners. Let's start with what each structure actually means for you.
Can I have employees in Australia as a sole trader?
Yes, a sole trader can hire employees in Australia, and there's no legal limit on how many [10]. You can run a busy practice with a receptionist, an Allied Health assistant, and even other clinicians while remaining a sole trader.
To simplify this further, it helps to understand what ‘sole trader’ actually describes. The term refers to how your business is owned and taxed, not how many people work within it. As a sole trader, you're the legal owner, your business income is assessed at your personal marginal tax rate [12], and you trade under your own Australian Business Number (ABN).
Do I have new obligations once I hire people as a sole trader?
Yes, as soon as you make your first hire, you have a new set of obligations. These include Pay As You Go (PAYG) withholding, superannuation guaranteed contributions, workers compensation insurance in your state or territory, and compliance with the Fair Work Act [1]. All of these obligations apply whether you're engaging someone as a contractor or bringing them on as an employee.
As you decide to bring on your first hire, here’s a practical checklist of Let’s look at each of these in more detail:
Register for PAYG withholding
Before your first pay cycle as a new employer, register for PAYG withholding with the Australian Taxation Office (ATO). This lets you withhold tax from your employee's wages and pass it to the ATO. You can register online through the Business Portal, and it usually takes minutes if your ABN is already active.
Pay the superannuation guarantee
You must pay superannuation guarantee contributions for eligible employees, currently 12% of ordinary time earnings (as of July 2026). Contributions are paid at least quarterly into each employee's nominated fund.
Hold workers compensation insurance
Workers compensation is mandatory once you employ staff, and it's administered by each state and territory. In New South Wales, this is managed by State Insurance Regulatory Authority (SIRA), iCare and SafeWork NSW. In Queensland, this is the purview of The Workers' Compensation Regulator and WorkCover Queensland. Finally, in Victoria, this falls under WorkSafe. Premiums across each territory are based on your wages bill and industry classification.
Issue payslips and meet fair work standards
Under the Fair Work Act, you must issue payslips within one working day of payday and keep employment records for seven years. You also need to meet the National Employment Standards covering leave, hours, and notice periods.
Picture a sole trader physiotherapist hiring a receptionist and an Allied Health assistant. That single decision triggers PAYG registration, two super accounts, a workers compensation policy, two sets of payslips, and award-compliant pay rates. None of it is hard once the systems are in place. But it does need to be in place from day one, not bolted on three pay cycles later when you realise you've underpaid super.
Should I hire people as employees or contractors? Make the right choice for your practice.
Whether you're a business owner building a sustainable team or a clinician weighing up your options, the consequences of your decision land on both the provider and the clinician. To guide you towards making an informed decision, the ATO applies a multi-factor test rather than relying solely on what the contract says. These factors include:
- Control: Who decides how, when, and where the work is done?
- Hours: Are they set by you or by the worker?
- Tools and equipment: Who provides them?
- Ability to subcontract: Can the worker delegate the work to someone else?
- Financial risk: Does the worker carry any?
To better understand how these factors are taken into consideration, here’s a potential scenario. Imagine you engage another practitioner as a contractor who works under their own ABN. If that person works set hours in your rooms, uses your equipment, sees clients you allocate, and can't send someone else in their place, the ATO may classify the relationship as employment regardless of the ABN. [2]. The ABN alone doesn't decide the working relationship for the ATO. The working reality does.
The classification of the type of working relationship also affects personal services income (PSI). PSI is income earned mainly from a person's own skills rather than from a business structure or assets. Most clinical work is PSI by nature. Misclassifying an employee as a contractor carries penalties, back-pay liability, and superannuation shortfalls that can stretch back years.
To avoid these risks, we recommend following a simple rule of thumb - if the working relationship looks like employment, treat it as employment.
Is there legal separation between my personal and business assets as a sole trader?
As a sole trader, there's no legal separation between your personal and business assets. Hiring introduces personal liability exposure, because any claim against the business is a claim against you. Bear this in mind before you take on the added responsibility of an employee or contractor.
What is the 80% rule for sole traders? Why does it matter for Allied Health professionals?
The 80% rule (also known as the personal services income 80% test) means that if 80% or more of your personal services income comes from a single client or payer such as a single hospital contract, one health fund, or one NDIS plan manager, then PSI rules treat that income as essentially your own personal earnings. This closes off strategies like splitting income with a spouse or retaining profit at a lower company tax rate.
You can sometimes step outside the PSI rules by passing the results test, which looks at whether you're paid for a result, supply your own tools, and are liable to fix defects at your own cost. Other tests, including the unrelated clients test and the employment test, can also affect the outcome.
As your revenue grows and your client base concentrates down to a single, dominant payer, the 80% rule becomes a tax structuring issue. To know if your practice is exposed to such risk or if you need to move to a company structure, we always recommend talking to your accountant before making any decisions.
What is the $75,000 GST threshold?
Once your annual turnover reaches or is expected to reach $75,000, it’s compulsory to register for GST. Most Allied Health services are GST-free, but that doesn't exempt you from registration. If your turnover crosses the threshold, you still register, lodge a Business Activity Statement (BAS), and report your GST-free supplies. You remit little or no GST on those services.
Product sales and some non-clinical services can attract GST. So it’s recommended to get advice on which parts of your income, if any, attract GST.
Do I still need an ABN if my income sits below the $75,000 GST threshold?
You need an ABN regardless of how much you earn. The $75,000 figure relates to mandatory Goods and Services Tax (GST) registration, not ABN registration. Anyone owning, managing or contracting to a business in Australia is expected to hold an ABN, even if income sits well under any threshold.
How do I get an ABN in Australia?
To get an ABN, you need to apply online through the Australian Business Register (ABR) at abr.gov.au. [7]. You'll need your Tax File Number (TFN), proof of identity, and a few details about your business activity and structure. Most straightforward applications are approved instantly. Some are referred for manual review, which can take up to 28 days to be resolved. Never pay a third party a fee to set up or manage your ABN. The application is always free directly through the ABR.
What are the differences between a sole trader and a company in an Allied Health practice?
For most new Allied Health practitioners in Australia, sole trader is the right starting point. The time to change is usually when you’re hiring your first employee or contractor, or at the time you reach the top personal tax bracket. At this point, your personal assets become liable for any losses your business may incur.
| Features | Sole Trader | Company | Partnership |
|---|---|---|---|
| Setup cost and complexity | Free ABN with no registration fee | ASIC registration ~$597, ongoing | Needs a partnership agreement |
| Personal liability | Personal assets exposed to business | Only company assets exposed to business | Each partner liable to exposure |
| Tax rate and flexibility | Personal marginal rates up to 45% | Flat 25% (base rate entity) | Each partner taxed at their own marginal rate |
| Hiring employees | Yes, with no cap on maximum employees | Yes, with no cap on maximum employees | Yes, with no cap on maximum employees |
| NDIS and Medicare | Provider registered to the individual | Provider can register to the entity | Registration sits with partners or entity |
| Solution best suited for | Solo clinician building a caseload | Practitioner with staff or high profit | Two clinicians sharing one practice |
When should I transition from a sole trader to a company?
There are a few clear signals which should tell you it's time to transition from a sole trader to a company such as:
- Your practice records consistent profit above the top personal tax bracket
- You’ve started to hire one or more employees or contractors
- You notice that the current NDIS registration requirements would be more favourable to to a company
- You have significant equipment or intellectual property worth protecting
- You have plans to bring a business partner on board
What is the process for transitioning from a sole trader to a company?
The transition itself is manageable, but you have to account for a few weeks to complete the process.
To start, you register a company with the Australian Securities and Investments Commission (ASIC) ajd obtain a new ABN and TFN for the entity. You then update your Medicare and NDIS provider registrations, and migrate payroll and billing across.
Provider registration updates are usually the slowest steps in the process. Medicare and NDIS move at their own pace, and you can lose a few weeks of clean billing if you don't plan ahead for the changeover. Most practitioners do this with an accountant and a commercial solicitor a few weeks ahead of time.
Can splose support me as a sole trader and as a company?
Whichever structure you operate under, clean and compliant billing and scheduling reduce administrative drag. splose supports Allied Health practices at every stage of growth, from a sole trader managing their own diary to a multi-practitioner company running team schedules, payroll reporting exports, and client billing in one place. Your structure can change without your day-to-day operations skipping a beat.
Ensure your business structure keeps pace with your ambition
Being a sole trader doesn't stop you from hiring or growing. But as your team expands and your revenue climbs past those Medicare and NDIS thresholds, the way you're set up starts to shape your tax, your liability, and most importantly decides how much money you get to keep. So before you sign that first employment contract or cross a major revenue milestone, book a short session with an accountant or commercial solicitor. It's a small investment that protects everything you're building.
The right structure frees you to focus on clients, fill your calendar, and run a practice that works for you. And whichever structure you choose, splose scales alongside it, so your operations never miss a beat.
Sources
[1] Can sole traders hire employees? - BizCover — https://www.bizcover.com.au/blog/can-sole-traders-hire-employees
[2] Allied Health Assistants' National Association Ltd — https://www.ahana.com.au/news-item/17973/can-self-employed-allied-health-assistants-safely-be-delegated-tasks-by-allied-health-professionals
[6] 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
[7] Basics of Business SetUp - Rebound Academy — https://www.reboundacademy.com.au/basics-of-business-setup
[10] Can a Sole Trader Have Employees? Rules & Guide - Wise — https://wise.com/au/blog/can-sole-trader-have-employees
[12] The 2026 Budget and the Self-Employed - Hudson Financial Planning — https://hudsonfinancialplanning.com.au/resources/education-reports/the-2026-budget-and-the-self-employed
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.
