What is the best structure for your contracting business? - Contractors Insurance Australia

June 8, 2015

So you have decided to go it alone and start your own business as a contractor – Congratulations! Taking the reins of your future is a great step and there is so much potential for growth. So where do you start and which is the best way to structure your business?

A great place to start is with making a decision about which legal business structure will work best for the type of work you are performing and what will suit and sustain your growth in the future. You will need to consider the size of your business, goals, and your individual circumstances. It is always best to get professional advice from a financial or legal advisor before getting started. However, here is our quick guide to some of the common business legal structures you can base your business on so you remain fully informed.


Partnerships happen when two or more people receive a joint income due to running the business together as partners. This is a fairly inexpensive way to structure the business. Formal partnership agreements are recommended but not essential in this structure. Partners will own the assets and liabilities of the business jointly, meaning all debts are shared equally regardless of who is responsible for them.


Companies are considered separate legal entities from persons. A company may itself hold assets and conduct business in its own right. Companies are regulated by the Australian Securities and Investment Commission (ASIC) and is controlled by directors whilst owned by shareholders. This type of structure is more complex to set up and requires extra reporting and detail in drawing up the paperwork and structure.
A company, as a separate entity and can be sued, however the directors can also be held personally liable for certain offences if found negligent.


A trust structure is when a trustee (such as an individual or company) carries out business on behalf of the beneficiaries of the trust. This is a common way for family businesses to be set up so family members can be beneficiaries without working in the business. This can be a little expensive to set up as formal deeds are required and yearly admin needs to be completed. However it can pay off in the end to have this type of structure in place for future company growth.

Sole trader

You will find the sole trader structure is likely the easiest and cheapest way to set up your company. However do remember that as a sole trader you are in control and you manage your business, meaning you take on all legal responsibility for any claims.

Also do not forget that as a new business you will require a few different forms of insurance before getting started. Different structures may require a focus on different areas of insurance. Make sure you gain advice from someone such as Contractor Cover to ensure you have an idea of what type of insurance cover you might need.

At Contractor Cover we specialise in insuring new and existing contractor businesses of any business structure. Contact us today or fill in our fast online form for an immediate quote.

General Advice Warning – retail clients *

General advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, please consider its appropriateness. You should also consider our disclosure documents, which include our Financial Services Guide (FSG) and Product Disclosure Statements (PDS) for some products.
*Retail clients are individuals or those purchasing an insurance product for use in connection with a small business where the product is a designated retail product (eg motor vehicle, home buildings, home contents, personal and domestic property, sickness and accidental and travel insurance). All other clients are wholesale clients.

We are a member of the Australian Financial Complaints Authority (AFCA). If you have a complaint and it is not resolved to your satisfaction by us, you have the right to refer the matter to the AFCA. The AFCA can be contacted at:

Mailing address
Australian Financial Complaints Authority, GPO Box 3, Melbourne, VIC 3001

Ph – 1800 931 678
Email – info@afca.org.au
Website – www.afca.org.au

Website By Cohesion Co.

Contractor Cover is a registered trading name of
Elliott Australia Group Pty Ltd
AFSL 418512
ABN: 81 153 685 922
© Contractor Cover – Insurance for Contractors in Australia