Can a sole trader hire employees?
Learn what tax, payroll and super obligations may arise when a sole trader hires employees or other workers.
Summary
A sole trader can hire employees, but doing so can create employer obligations including PAYG withholding, Single Touch Payroll (STP), super guarantee and record keeping. From 1 July 2026, Payday Super also affects when super is paid and what is reported through STP.
What this means
When a sole trader hires staff, they take on employer obligations in addition to their own sole trader income tax responsibilities. The first step is to correctly work out whether each worker is an employee or independent contractor.
For eligible workers, super guarantee is generally calculated at 12% of qualifying earnings under Payday Super from 1 July 2026, with contributions generally needing to reach the worker’s super fund within 7 business days of payday. Employers also report required payroll and super information through STP.
Typical actions
- Work out whether the worker is an employee or independent contractor using current ATO guidance.
- Register for PAYG withholding if required.
- Set up STP-enabled payroll reporting.
- Meet Payday Super obligations for eligible workers.
- Keep payroll, withholding, STP and super records.
Official ATO sources
Last checked: 24 August 2026
Hiring and paying your workers
Main ATO hub for worker, payroll and withholding obligations.
Single Touch Payroll
Explains payroll reporting through STP.
Payday Super
Explains super payment and reporting changes from 1 July 2026.
Related questions
- What is PAYG withholding?
- What is Single Touch Payroll?
- What is the difference between employee and contractor?
- Do employers need to pay super for contractors?
Important notice: Tax Clarity is an independent information tool. This page provides general information based on official sources. It does not provide tax, legal, financial, or accounting advice. Tax rules can change, and how they apply depends on your circumstances. For advice about your situation, speak with a registered tax agent or qualified professional.
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