By FMTeam Many people start their business journey as a sole trader because it’s simple, flexible, and affordable to set up. However, as the business grows, many sole traders quickly realise they need help, but can a sole trader hire employees, or do they need to change their business structure?
The answer is yes, you can hire employees, and it’s more common than you might think. Running your own business as a sole trader doesn’t mean doing everything alone; it means you’re the legal owner responsible for managing and reporting the business in your own name. Just as you would hire an accountant in Blackburn to help manage the financial aspect of your business, you can hire employees to help grow your business.
What is a Sole Trader?
A sole trader is someone who runs a business independently under their own name or a registered business name. This structure is ideal for freelancers, tradespeople, consultants, and small business owners because it’s easy to set up and maintain. However, unlike a company, there’s no legal separation between you and the business, meaning you’re personally responsible for any debts or liabilities. Despite that responsibility, as a sole trader, you enjoy complete control over how your business operates, who you hire, and how profits are managed.
Hiring Employees as a Sole Trader
As a sole trader, you can employ casual, part-time, or full-time staff to help run your business. The key difference is that, as a sole trader (meaning as an individual, not a company), you’re responsible for managing employee wages, tax, and superannuation. You’ll also need to register for PAYG withholding so you can withhold tax from employee payments, and ensure your business has the necessary insurance, such as workers’ compensation and public liability cover.
Hiring staff can be an excellent way to expand your operations, improve productivity, and reduce your own workload. Many sole traders reach the point where demand exceeds what they can handle alone, and bringing in employees allows them to take on more work or introduce new services.
Responsibilities of a Sole Trader with Employees
When you employ staff, you assume several important responsibilities to remain compliant with Australian law. These include:
- Paying wages and entitlements: Ensure employees are paid according to the relevant award or agreement.
- Managing superannuation: You must pay super contributions to your employees’ nominated funds.
- Withholding tax (PAYG): Register with the ATO to withhold and remit tax on behalf of your employees.
- Providing a safe workplace: Maintain safe working conditions and carry appropriate insurance.
- Keeping accurate records: Track hours, payments, and entitlements to meet your reporting obligations.
These requirements might seem daunting at first, but with proper systems in place and professional advice when needed, most sole traders handle these new tasks smoothly. It’s important to know that hiring employees doesn’t change your status as a sole trader; it simply expands the scope of your business and responsibilities.
Growing Your Business as a Sole Trader
Hiring staff is an exciting step that clearly business is growing. It allows you to delegate, scale operations, and deliver better service to your clients. Whether you hire one assistant or a small team, surrounding yourself with skilled people helps your business reach new levels of efficiency and success. With good systems and professional guidance, employing staff can be a smart and rewarding step toward expanding your business.