The short answer
business.gov.au says a sole trader is personally liable for business financial and tax debts, while a company is generally liable for its own debts. Directors are still personally liable for PAYG withholding and super debts. Your accountant can tell you which suits your income and risk.
General information read in full from business.gov.au on 12 November 2026, which shows no page date. Not tax or legal advice. We publish no tax rates here, so check current figures with the ATO.
Liability
business.gov.au says you are personally liable for financial or tax debts in a sole trader business, so your personal assets can be used to pay business debts. In a company, the company is generally liable for business debts, and company assets belong to the company, not to its directors or shareholders.
Directors still have some personal risk
The same page says a director is personally liable for PAYG withholding and superannuation debts, and this continues for the period you were a director, even after you stop.
Tax
The ATO treats the money you earn in a sole trader business as your individual income, and you report business income and expenses in your individual tax return. Money a company earns belongs to the company, and companies lodge their own tax returns.
Insurance matters either way
Whatever structure you choose, customers expect public liability insurance. See our guide.
Questions for your accountant
- What do I expect to earn in the next two years?
- How much risk does my work carry?
- What will setup and yearly costs be?
- How do I pay myself and my super?
Common questions
Should a tradie be a sole trader or a company?
It depends on income, risk and costs. Ask your accountant before you set up or switch.
Sources
- business.gov.au: difference between a sole trader and a company, checked 12 November 2026