- A sole trader can employ staff without registering a company
- Payday Super means super must reach the fund within 7 business days
- The national minimum wage is $26.44 an hour from 1 July 2026
- Sole traders carry unlimited personal liability for employment debts
Can a sole trader have employees in Australia? Yes, and you do not need to register a company first. business.gov.au puts it plainly: you can employ people to help run your business under the sole trader business structure.
What changes is the list of obligations attached to you. Before the first pay run you need to register for PAYG withholding, collect a Tax File Number declaration, set up super, and report through Single Touch Payroll. Since Payday Super commenced on 1 July 2026, super of 12% of qualifying earnings has to reach the employee’s fund within 7 business days of each payday, which is a far tighter clock than the one most guidance was written for.
The other half of the answer is the part nobody searches for: as a sole trader you remain personally liable for the business’s obligations, employment-related ones included. This guide covers the full sequence first, then the point at which that liability starts to matter, and if you would rather not run any of it yourself, Sleek offers payroll services for Australian businesses.
Can a sole trader have employees in Australia?
Yes. The sole trader structure does not restrict you to working alone, and nothing about holding an ABN rather than an ACN prevents you from putting someone on the payroll. Readers search this as can sole traders have employees, and the answer does not change with the phrasing.
Can you have employees as a sole trader while keeping the business separate from you personally? No. The structure keeps you and the business as the same legal person, so your employee’s wages, super and entitlements are your personal obligations rather than a company’s, and that thread runs through everything below.
So can a sole trader employ staff and stay a sole trader? Yes, indefinitely. Plenty of Australian businesses run for years with a handful of staff under a sole trader ABN.
How many employees can a sole trader have?
There is no cap in the structure itself. No ATO, Fair Work Ombudsman or business.gov.au guidance sets a limit on how many employees a sole trader can have, and business.gov.au simply says you can employ people to help run your business.
What does scale badly is everything around the headcount. Three things tighten as you add people:
- Personal liability grows with the wage bill, because every employment obligation sits with you personally
- Payroll administration stops being a monthly half hour, particularly under the 7-business-day super deadline
- State payroll tax eventually applies once your total wages cross the threshold in your state
So the practical answer to how many employees can a sole trader have is: as many as you can carry the risk and the admin for. Can sole traders have employees at real scale? Yes, and some do, but the liability question further down gets louder with every hire.
What do you need to set up before your first payday?
Can you employ people as a sole trader without a long setup project? Mostly yes: there are seven things to put in place, and most have a deadline attached. The sequence below is the short version, and each step has its own section underneath.
| Step | What it is | Deadline | Source | If you skip it |
|---|---|---|---|---|
| PAYG withholding registration | Registering to withhold tax from wages | Before the first payment you need to withhold from | ATO | You are withholding without being registered to do so |
| TFN declaration | Collecting the employee’s tax details | Before the first pay run | ATO | You cannot apply the correct tax table |
| Super fund and SuperStream | Setting up how you pay super | Before the first payday | ATO | Super misses the 7-business-day window |
| STP-enabled software | Payroll software that reports to the ATO | Before the first pay run | ATO | You cannot meet your reporting obligation |
| Award and pay rate | Confirming the correct minimum rate | Before you agree the rate | Fair Work | Underpayment, backpay and penalties |
| Pay slip process | A pay slip you can issue every cycle | Within one working day of pay day | Fair Work | A breach on every pay run |
| Workers compensation | Insurance through your state scheme | Before the employee starts | State authority | Uninsured exposure and state penalties |
Record-keeping sits underneath all seven and runs for years afterwards.
When do you have to register for PAYG withholding?
Before the first payment you need to withhold from, and that applies even if no amount is actually withheld from that payment. It is a registration trigger tied to the payment, not to the end of a period.
Once registered, you withhold from every payment using the employee’s Tax File Number declaration and the current tax tables. The mechanics of the wider PAYG system, including the instalments you pay on your own income, are covered in PAYG withholding explained.
The ATO also expects a few things in place around it: a Digital ID linked to your ABN through Relationship Authorisation Manager, STP-enabled software, and SuperStream set up for super payments.
What did Payday Super change from 1 July 2026?
Nearly everything about how and when you pay super. If your understanding of super deadlines predates July 2026, it is out of date, and this is the obligation first-time employers most often get wrong.
Under Payday Super, contributions must be received by the employee’s fund within 7 business days after you pay them. Super is calculated at 12% of qualifying earnings, which covers ordinary time earnings plus all commissions, salary sacrifice contributions and other amounts. The maximum contribution base for 2026-27 is $270,830 annual, replacing the 2025-26 quarterly base of $62,500.
The consequences of being late also changed. The super guarantee charge is now assessed by the ATO rather than self-reported, it is calculated on qualifying earnings, interest compounds daily at the general interest charge rate, and the charge is tax deductible. Penalties are 25% or 50% of the unpaid super guarantee charge depending on any prior penalties.
One clarification worth making, because the two get blurred constantly: this section is about super you pay for your staff. Super you contribute for yourself as a sole trader is a separate question with different rules.
How does Single Touch Payroll reporting work?
You report through STP-enabled software every payday, sending the ATO your salaries and wages, the amounts withheld and your super guarantee liability information. There is no separate monthly or quarterly lodgement; the pay run is the report.
At the end of the financial year you make a finalisation declaration. The dates depend on who you employ:
- 14 July for arm’s length employees
- 30 September for closely held payees, where you are a small employer
- 31 October where you have only closely held payees, matching the due date of their individual income tax return
A closely held payee is someone directly related to you, such as a family member working in the business. If you hire your spouse, that is the deadline that applies to them.
What’s the minimum you can legally pay someone?
From 1 July 2026 the national minimum wage is $1,004.90 per week based on a 38-hour week, or $26.44 per hour. Casual employees covered by the national minimum wage get $33.05 per hour, which includes the 25% casual loading.
Most Australian employees are not on the national minimum wage though. They are covered by an award, and award minimum wages rose 4.75% on 1 July 2026. The award rate for your employee’s role is what you actually have to pay, and it is usually higher than the national minimum.
Check the specific rate on the Fair Work Ombudsman’s Pay Calculator before you agree a figure with anyone. Guessing the award, or assuming the national minimum applies, is the most common way a small employer ends up owing backpay.
What do pay slips and records have to show?
Pay slips go out within one working day of pay day, including when the employee is on leave. Each one has to show:
- Your name and ABN, and the employee’s name
- The payment date and the pay period it covers
- Gross and net amounts, plus any loadings and allowances
- For hourly employees, the hourly rate, hours worked and the amount at that rate
- For salaried employees, the annual rate
- Super contribution details and any deductions
Employee records have to be kept for 7 years, in a form that is readily accessible, legible and in English. That obligation outlives the employment, so a person who works for you for three months still generates records you hold until 2033.
Will they be on payroll or will they be contractors?
It is the question Australian business owners ask most often when they first hire, and it is usually asked in the hope that “contractor” is the simpler answer. Sometimes it is. Often it is not, and the gap between the two is where expensive mistakes live.
On withholding, the rule is narrow. You withhold from a contractor only where they do not quote an ABN to you, or where you have a voluntary agreement with them to withhold.
Super is where the assumption breaks. You may still owe super for a contractor who meets the extended definition of employee, even where they have given you an ABN, typically where the contract is wholly or principally for their labour. Engaging someone as a contractor is not a way to avoid super, and treating it as one is a liability that accrues quietly until the ATO assesses it.
Do you need workers compensation and payroll tax?
Workers compensation, yes. Safe Work Australia is explicit that under Australian law employers must have insurance to cover their workers if they get sick or injured because of work. What varies is the scheme: workers compensation is administered by each state and territory, across eleven main schemes governed by different laws.
That means the answer to how you arrange it, what it costs and exactly who is covered depends on where your employee works, and this article deliberately does not state those rules. Go to your state or territory’s workers compensation authority before the employee starts, not after. Our overview of business insurance in Australia covers where it sits alongside your other cover.
Payroll tax is the one most first-time employers can stop worrying about immediately. It is a state tax on total wages, and it only applies above a threshold that a business with one or two employees will not come close to.
| State or territory | Annual threshold | Rate |
|---|---|---|
| ACT | $1,750,000 | 6.75 to 8.75%, tiered |
| NSW | $1,200,000 | 5.45% |
| NT | $2,500,000 | 5.5% |
| QLD | $1,300,000 | 4.75 to 4.95%, plus a mental health levy above $10M |
| SA | $1,500,000 | 0 to 4.95%, progressive |
| TAS | $1,250,000 | 4 to 6.1%, tiered |
| VIC | $1,000,000 | 4.85%, or 1.2125% regional |
| WA | $1,000,000 | 5.5% |
What can go wrong, and what does it cost?
Five failures account for most of what small employers get caught by, and none of them require bad intent.
- Late super. Under the new regime the ATO assesses the charge, interest compounds daily, and penalties run at 25% or 50% of the unpaid charge
- Withholding before registering. The registration trigger is the first payment you withhold from, so this one is easy to trip on day one
- Underpaying against the award. Award rates rose 4.75% on 1 July 2026, so a rate set last financial year may now be below the minimum
- Missing pay slips. One working day after pay day, every cycle, no exceptions for leave
- Calling an employee a contractor. The extended definition of employee can leave super payable regardless of the label or the ABN
The pattern is worth naming. None of these are judgement calls you get wrong; they are deadlines you miss because nobody told you they existed.
When does hiring mean it’s time to stop being a sole trader?
Sometimes it does not, and that is worth saying first. Hiring as a sole trader is legal, common and perfectly sensible for a lot of businesses, and the paperwork is identical either way. The real difference is not admin, it is that a sole trader has unlimited liability and, as business.gov.au puts it, all your personal assets are at risk if things go wrong.
Employing someone raises that exposure, because employment creates obligations that continue whether or not the business has money. Five prompts, answered honestly, tell you more than any comparison could:
| Ask yourself | What a yes means |
|---|---|
| Are you hiring more than one person | Your wage bill is now a standing personal obligation |
| Is the work high-risk or client-facing | Your exposure is not limited to unpaid wages |
| Are you taking on premises or equipment debt | Personal assets sit behind the commitment |
| Do you have personal assets you would not want exposed | Unlimited liability is doing real work against you |
| Is your income high enough that the company tax rate matters | The structure may now be costing you money as well as risk |
Two or three yeses is worth a conversation. If you want the full comparison rather than a prompt, it is in company or sole trader: which structure fits, and when you are ready you can register a Pty Ltd company. Your own income tax position as a sole trader sits in tax brackets in Australia.
How Sleek helps with payroll for a sole trader
Most first-time employers do not need advice so much as a system that does not depend on them remembering a date. The 7-business-day super window is the clearest example: it is not hard, it is just unforgiving.
Sleek handles accounting for sole traders with payroll, super and STP reporting run together, so each pay run reports itself and super goes out inside the window. If you also need to register for GST, that sits in the same place. More answers for new employers are in our starting a business in Australia FAQs.
Ready to hand payroll to someone else?
450,000
businesses worldwide.
from 4,100+ reviews.
FAQs on can a sole trader have employees
Can a sole trader employ their spouse or family member?
Yes, and the usual obligations apply in full: PAYG withholding, super and a correct award rate. What changes is your STP finalisation deadline, because a family member working in the business is a closely held payee. That moves your finalisation to 30 September, or 31 October if they are the only person you employ.
Do I need a new ABN to hire someone?
No. You hire under the ABN you already trade with, and what you add is a PAYG withholding registration against it. A new ABN is only relevant if you change the structure itself, such as moving to a Pty Ltd company.
Can you have employees as a sole trader on a casual or part-time basis?
Yes, and most first hires are one or the other. Casual employees covered by the national minimum wage are on $33.05 per hour from 1 July 2026, which includes the 25% loading, though an applicable award may set a higher rate. Super, pay slips and record-keeping apply to casual and part-time staff the same as to full-time.
Does it cost extra to add payroll?
Payroll is priced as an add-on to Sleek’s accounting plans, and what it costs depends on how many people you are paying. It is worth weighing against what your own time is worth once the 7-business-day super deadline is in play. Talk to us with your headcount and we will give you the figure rather than a range.
What happens to my employees if I later register a company?
The company becomes the employer, and it needs its own PAYG withholding registration, super arrangements and STP setup. Can you employ people as a sole trader right up until that point? Yes. How accrued leave and length of service carry across is a transfer-of-business question with its own rules, so get advice before the switch rather than after it.
