Sole Trading
7. You as the Only Worker
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 23 Sep 2015
- If you intend to operate your business as sole trader with you as the only person working in and operating the business there can be several advantages and disadvantages.
- Individuals operating as sole traders are not considered to be employees of their business.
- Usually an individual who owns a business will take drawings (money) from the business in order to pay for their day-to-day personal expenses.
- Drawings must be differentiated from ‘wages’ that would be paid to an employee.
- Drawings are not taken into account when determining any compulsory employee superannuation payments nor for payroll tax purposes or workers compensation liabilities.
- While this can simplify your taxation affairs it also means that you will not receive the benefit of such payments.
- If you suffer an injury at work for example you would not receive work cover benefits.
- You will also have to contribute money personally to any superannuation fund. Some of the money you personally contribute to superannuation can be used as a tax deduction however it is often a disadvantage when compared to the superannuation received when being paid a wage as an employee.
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