Why your business structure matters
This is one of the first decisions you need to make when going into private practice, and it affects almost everything else: how you pay tax, whether your personal assets are protected, how you register for Medicare, and how much paperwork you deal with on an ongoing basis.
The two realistic options for a solo allied health practitioner in Australia are sole trader and Pty Ltd (proprietary limited company). There are other structures (partnerships, trusts), but for someone starting out on their own, it almost always comes down to these two.
Getting this wrong early is expensive to fix later. Changing from sole trader to Pty Ltd down the track means a new ABN, potentially a new Medicare provider number, new bank accounts, updated contracts with every clinic you work from, and a chunk of accountant fees. It is not the end of the world, but it is a hassle you can avoid by thinking about it upfront.
Key point
Your business structure affects your tax obligations, personal liability, Medicare billing setup, and ongoing admin load. The right answer depends on your income level and risk tolerance, but most solo allied health practitioners start as a sole trader.
Sole trader
A sole trader is the simplest business structure in Australia. You and the business are legally the same entity. There is no separation between your personal finances and the business. You register for an ABN, and that is basically it.
This is the most common starting structure for solo allied health practitioners, and for good reason. It is the cheapest, fastest, and easiest to set up. There is no company to register, no ASIC fees, no separate company tax return. Your business income goes straight onto your personal tax return.
Your Medicare provider number is registered in your personal name, which is straightforward. You bill Medicare as yourself. No corporate arrangements needed.
How tax works as a sole trader
All your business income is your personal income. You declare it on your individual tax return and pay tax at your marginal rate. In 2025-26, that looks like this:
- $0 to $18,200: nil
- $18,201 to $45,000: 16c for each $1 over $18,200
- $45,001 to $135,000: $4,288 plus 30c for each $1 over $45,000
- $135,001 to $190,000: $31,288 plus 37c for each $1 over $135,000
- $190,001 and over: $51,638 plus 45c for each $1 over $190,000
Plus the Medicare levy of 2% on top. At lower incomes, sole trader is actually tax-advantaged because of the tax-free threshold ($18,200) and the lower marginal rates. The company tax rate is a flat 25%, so sole trader is better until your taxable income gets well above $120K or so.
The downside: personal liability
Because you and the business are the same legal entity, you are personally liable for all business debts. If something goes wrong and the business owes money, creditors can come after your personal assets: your car, your savings, your house. For most solo allied health practitioners starting out, the risk is relatively low (you are not taking on inventory or massive debts), and professional indemnity insurance covers clinical liability. But it is worth understanding what you are accepting.
Pty Ltd (proprietary limited company)
A Pty Ltd is a separate legal entity from you. The company earns the income, the company pays its debts, and the company has its own tax obligations. You are a director and shareholder, but the company is its own thing.
The big advantage is limited liability. Your personal assets are generally protected from business debts (with some important exceptions, like if you personally guarantee a loan or if directors are found to have traded while insolvent). The company is the shield between the business and your personal finances.
How tax works with a Pty Ltd
The company pays a flat 25% company tax rate on its profits (for base rate entities with turnover under $50 million, which covers every solo practitioner). You then pay yourself a salary from the company, and that salary is taxed at your personal marginal rate.
The tax advantage kicks in when you are earning enough that your marginal rate exceeds 25%. You can leave profits in the company (taxed at 25%) rather than paying them all out to yourself (taxed at up to 45% plus Medicare levy). This starts to matter once your practice income is consistently above $120,000 to $150,000 per year. Below that, the additional accounting costs and complexity usually eat up any tax savings.
Medicare provider number under a Pty Ltd
This is where it gets a bit more complicated. Your Medicare provider number is still registered to you as an individual practitioner, but the billing arrangements can differ. If the company is the billing entity, you may need to set up a pay-to arrangement or a corporate provider number link. Your accountant and Medicare will guide you through this, but it is more involved than the sole trader setup where everything is just in your name.
The downsides
A Pty Ltd costs more to set up and maintain. You are looking at ASIC registration fees ($576 to register, then $310 per year in annual review fees), a separate company tax return, and more complex bookkeeping. Your accountant bills are higher because there is more work. For a solo practitioner earning under $120K, the tax savings rarely justify these costs.
Side-by-side comparison
Sole Trader
You and the business are the same entity.
Pros
- +Cheapest to set up (free ABN registration)
- +Simplest admin and bookkeeping
- +Tax-free threshold and lower marginal rates at lower income
- +Straightforward Medicare provider number setup
Cons
- −No asset protection (personal liability)
- −Cannot income split with a spouse
- −Harder to sell the business later
- −Higher tax rate at higher incomes
Pty Ltd
A separate legal entity that you own and direct.
Pros
- +Limited liability (personal assets protected)
- +Flat 25% company tax rate
- +Easier to bring in partners or sell later
- +Can retain profits in the company at lower rate
Cons
- −More expensive to set up and maintain
- −More complex bookkeeping and tax returns
- −ASIC fees ($576 setup, $310/year ongoing)
- −More complex Medicare billing arrangements
GST implications for allied health
Most allied health services are GST-free under the A New Tax System (Goods and Services Tax) Act 1999. That means even if you are registered for GST, you do not charge GST on your clinical services. This applies to physiotherapy, podiatry, dietetics, speech pathology, occupational therapy, chiropractic, and osteopathy services that are generally accepted in the relevant profession as being necessary for the appropriate treatment of the recipient.
Exercise physiologists: read this carefully
Exercise physiology services are only GST-free when they are “treatment” for a specific medical condition. General fitness programs, wellness coaching, or gym-based exercise prescription that is not treating a diagnosed condition may not qualify for the GST exemption. If you provide a mix of clinical and non-clinical services, you may need to charge GST on the non-clinical portion. Talk to your accountant about this specifically.
When you must register for GST
If your annual turnover (gross revenue, not profit) exceeds $75,000, you must register for GST. This is the case regardless of whether your services are GST-free. You still need to lodge BAS (Business Activity Statements) and report your income. You can also choose to register voluntarily below the $75K threshold, which can be useful if you want to claim GST credits on your business purchases (like equipment, software, and rent that includes GST).
Here is the part that trips people up: being registered for GST does not necessarily mean you charge GST on your services. If your services are GST-free (which most allied health clinical services are), you still do not charge GST on those. But you do get to claim GST credits on your business expenses. For many solo practitioners, voluntary GST registration can actually save money once your business expenses are significant enough.
ABN registration
Your Australian Business Number (ABN) is the foundation of everything. You need one before you can get a Medicare provider number, before you can invoice anyone, and before you can register for GST.
Registering for an ABN is free and you do it online at abr.gov.au. It takes about 10 minutes. You will need your tax file number (TFN) and some basic details about your business activity. Most applications are processed immediately, but some get referred for manual review, which can take a few weeks. If yours gets referred, do not panic. It is common for new registrations.
If you are setting up as a sole trader, you get an ABN as an individual. If you are setting up a Pty Ltd, you register the company first (through ASIC) and then apply for an ABN for the company. The company ABN is separate from any personal ABN you might already have.
Business name registration
If you are trading under your own personal name (for example, “Jane Smith, Physiotherapist”), you do not need to register a business name. But if you want to trade under any other name (for example, “Bayside Physiotherapy” or “Smith Allied Health”), you need to register that name with ASIC.
Business name registration costs $44 for one year or $104 for three years. You do it through the Australian Business Register website (same place you got your ABN). You need an ABN before you can register a business name.
Before you register, search the business name register to make sure the name is available. Also check that the name does not conflict with any existing trademarks, and that a matching domain name is available if you want a website (you should want a website). A few extra minutes of checking upfront saves you having to rebrand later.
AHPRA advertising rules
If your profession is AHPRA-regulated (physio, podiatry, chiro, osteo, OT), your business name and any advertising must comply with AHPRA's advertising guidelines. You cannot use titles or terms that are misleading about your qualifications or the services you provide. Check the AHPRA advertising hub before committing to a name.
When to get an accountant
The answer is before you start earning. Not after your first BAS is due. Not at tax time. Before you set up.
A good accountant will help you choose the right structure (sole trader vs Pty Ltd), set up your bookkeeping system, advise on GST registration, make sure your superannuation obligations are sorted, and tell you what records you need to keep. They will also help you understand what you can and cannot claim as a business deduction, which for a healthcare practice has some specific quirks (like the deductibility of professional development, registration fees, and insurance).
You specifically want an accountant who understands allied health or at least healthcare businesses. They need to know about Medicare billing structures, the GST-free status of health services, and the common setups for solo practitioners. A general small business accountant can handle the basics, but one with health industry experience will save you money and headaches.
What it costs
Expect to pay $1,000 to $3,000 per year for a basic sole trader setup (annual tax return, BAS lodgements, and general advice). A Pty Ltd setup will be at the higher end of that range or above it, because the company tax return and compliance obligations are more involved.
That might feel like a lot when you are starting out and watching every dollar. But the right accountant will save you more than they cost. They will identify deductions you did not know about, keep you compliant so you avoid ATO penalties, and structure things so you are not paying more tax than you need to. Think of it as an investment, not an expense.
Ask your professional association for referrals. Many have lists of accountants who specialise in their profession. Ask colleagues who they use. Word of mouth is the best way to find someone good.
The most common path for starting out
Here is the honest answer: most solo allied health practitioners start as a sole trader, and that is the right call for most people.
It is the simplest, cheapest structure. Your admin load is minimal. Your accounting costs are lower. Your Medicare provider number setup is straightforward. You get to focus on building your client base and learning how to run a practice without also dealing with corporate compliance.
The typical progression looks like this:
- Year 1: Start as a sole trader. Focus on getting clients, building GP referral relationships, and figuring out Medicare billing. Keep your costs low.
- Years 2-3: Your income grows. You start understanding your numbers. You have a relationship with an accountant. At some point, your accountant says “it might be worth looking at a company structure now.”
- Year 3+: If your income is consistently above $120,000 to $150,000 and you want asset protection, you transition to a Pty Ltd. Your accountant manages the process.
Not everyone follows this path. Some people know from day one that they want a company structure because they plan to bring in other practitioners or they have significant personal assets they want to protect. That is fine too. The point is to make a deliberate choice based on your situation, not to default to the most complex option because it sounds more professional.
The transition is not trivial
Switching from sole trader to Pty Ltd later is doable but it is not just ticking a box. You need a new ABN for the company, potentially new Medicare provider number arrangements, new bank accounts, updated contracts with clinics and referrers, and your accountant will charge for the setup work. This is why it is worth having a conversation with an accountant before you start, even if you end up going sole trader. At least you will know the plan.
Quick reference: what you need to register
| Registration | Cost | Where | Notes |
|---|---|---|---|
| ABN | Free | abr.gov.au | Takes ~10 minutes. Need this before everything else. |
| Business name | $44/yr or $104/3yr | abr.gov.au | Only needed if trading under a name other than your own. |
| Pty Ltd company | $576 setup + $310/yr | ASIC | Only if choosing Pty Ltd structure. Usually done by your accountant. |
| GST registration | Free | ATO / ABR | Mandatory above $75K turnover. Optional below. |
| Medicare provider number | Free | Services Australia | Need ABN first. See our provider number guide. |
Common mistakes
Setting up a Pty Ltd because it sounds more professional
Your clients do not care whether you are a sole trader or a Pty Ltd. They care whether you can help them with their shoulder pain. Do not spend $2,000+ on company setup and ongoing compliance when a sole trader ABN (free) does the same job at your income level.
Not getting an accountant early enough
The most expensive accounting advice is the kind you get after the fact. Setting up the wrong structure, missing BAS deadlines, failing to track deductible expenses for the first six months: these all cost more to fix than getting proper advice at the start.
Forgetting about superannuation
As an employee, super was handled for you. As a sole trader, it is your responsibility. You are not legally required to pay yourself super as a sole trader, but you should. The ATO allows you to claim a tax deduction on personal super contributions, which can be a significant tax saving. Your accountant will help you figure out the optimal amount.
Ignoring the GST exemption nuances
Not all services provided by allied health professionals are automatically GST-free. The service needs to be “generally accepted in the relevant profession as being necessary for the appropriate treatment of the recipient.” If you offer wellness programs, group fitness classes, or non-clinical services alongside your treatment sessions, you may need to charge GST on those. Do not assume everything you do is exempt.
Bottom line
If you are a solo allied health practitioner starting out in private practice, here is what to do:
- Find an accountant who understands healthcare businesses. Do this first.
- In most cases, start as a sole trader. It is simpler, cheaper, and appropriate for your income level when starting out.
- Register your ABN for free at abr.gov.au. Takes 10 minutes.
- Register a business name if you are not trading under your own name ($44/yr).
- Discuss GST registration with your accountant. You may benefit from voluntary registration even below the $75K threshold.
- Plan your transition to Pty Ltd with your accountant once your income consistently exceeds $120,000 to $150,000.
None of this is complicated on its own. The trick is doing it in the right order and getting advice before you need it, not after.