Starting a building business in Australia: licences and money

What do you need before you start a building business?

Going out on your own is mostly a matter of getting the order right. A sensible sequence is:

• Check the licence you need for the work you plan to do, in each state where you will work.
• Choose a business structure, because licences, insurance and tax registrations are tied to the entity that holds them.
• Register for an ABN and, when required, GST, and set up your record keeping from day one.
• Arrange insurance before you quote, sign or start work.
• Set up contracts and pricing that comply with your state’s home building laws.
• Plan cash flow so you can pay suppliers, subcontractors and tax while you wait to be paid.
• Set up your WHS systems before anyone else sets foot on your site.

Each step affects the others. A licence held by you personally, for example, does not automatically allow a company you later set up to contract for building work.

Do you need a builder's licence, and who issues it?

Almost certainly, yes, at least above a minimum job value. Each state and territory has its own licensing law, regulator and thresholds:

• New South Wales. Building Commission NSW administers contractor licences. You need one for general building work over $5,000 in labour and materials, including GST, and applications are made through Service NSW. Specialist work such as electrical, plumbing and gasfitting is licensed separately.
• Victoria. The Building and Plumbing Commission (BPC), which replaced the Victorian Building Authority on 1 July 2025, registers building practitioners. Domestic builders must be registered for domestic building work worth more than $10,000, including labour, materials and GST, and for some work, such as re-stumping, re-blocking and demolishing a home, at any value. Commercial builders register in limited or unlimited classes.
• Queensland. The Queensland Building and Construction Commission (QBCC) requires a licence for building work valued over $3,300.
• Western Australia. Building and Energy registers building contractors and practitioners. Registration is generally needed for building work that requires a building permit, is valued at about $20,000 or more, and is in the prescribed area of the state.
• South Australia. Consumer and Business Services (CBS) issues building work contractor’s licences for building work carried out for others.
• Tasmania. Consumer, Building and Occupational Services (CBOS) licenses builders under the Occupational Licensing Act 2005, with licence classes set by work type.
• Australian Capital Territory. Builders must be licensed under the Construction Occupations (Licensing) Act 2004 to carry out work that needs building approval, in classes ranging from unrestricted commercial work down to non-structural work.
• Northern Territory. The Building Practitioners Board registers residential building contractors for work of $12,000 or more on houses, units and associated structures.

Most licences require relevant qualifications and experience, and many have continuing professional development requirements. Operating outside your licence class, or contracting through an entity that is not licensed, can leave you unable to recover payment and exposed to penalties. Check with your regulator before you advertise or quote.

What financial requirements come with a licence?

Several regulators check that a builder has the financial capacity to complete the work it takes on. Examples include:

• Queensland. QBCC licensees must meet minimum financial requirements (MFR) set by a maximum revenue category, from the smallest SC1 and SC2 categories (up to $800,000) through Categories 1 to 7 for larger businesses. Most licensees must report their financial position each year, although individual licensees in SC1 and SC2 no longer need to lodge annual reports. They must still meet the MFR.
• South Australia. According to the Australian Business Licence and Information Service (ABLIS), applicants for a building work contractor’s licence need at least $10,000 in net assets.
• Northern Territory. ABLIS states that applicants for residential building contractor registration need net tangible assets of at least $50,000.

Home warranty insurers and schemes also assess a builder’s finances before they will provide cover, and in most states you cannot take on residential work above the threshold without that cover.

Which business structure should you choose?

Business.gov.au lists sole trader, partnership, company and trust as the four most common structures. In broad terms:

• Sole trader. The simplest and cheapest to set up. You and the business are legally the same, so you are personally liable for its debts.
• Partnership. Two or more people carrying on business together. Partners can be liable for the partnership’s debts, including those incurred by the other partners.
• Company. A separate legal entity with its own tax obligations. It can limit personal liability, but directors have legal duties and can still be personally liable in some situations.
• Trust. A trustee holds the business for beneficiaries, often with a company as trustee. Trusts are more complex and cost more to run.

For builders, structure also affects licensing. In most states, a company that contracts for building work needs its own licence or registration, usually with a licensed nominee or director. Changing structure later can mean new licences, new insurance and new contracts, so choose with your accountant and lawyer at the start.

What tax registrations do you need?

The core registrations and obligations for a new building business are:

• ABN. An Australian Business Number identifies your business to the government and other businesses, and is needed to register for GST and many other things.
• GST. You must register for GST when your GST turnover reaches $75,000 or more, based on your current or projected turnover. Many builders cross this quickly, because turnover includes materials passed through to clients.
• Taxable payments annual report (TPAR). If your business is mainly in building and construction, has an ABN and pays contractors for building and construction services, you must lodge a TPAR with the ATO by 28 August each year, reporting each contractor’s details and the total paid, including GST.
• PAYG withholding. If you employ people, you must withhold tax from their wages and report it.

Keep business and personal money separate from day one, and put aside GST and tax as you are paid, not when the bill arrives.

What insurance do you need?

At a minimum, most builders need public liability insurance, contract works insurance for the projects they build, and workers compensation if they employ anyone. Designers, project managers and design and construct contractors may also need professional indemnity cover, and residential builders need access to their state’s home warranty scheme.

Some licences require specific cover. In Tasmania, for example, CBOS lists contract works and public liability insurance among its requirements for builders. Our guide to construction insurance explains what each cover does, who arranges it and where licences depend on it.

How do you manage cash flow in a building business?

Profitable builders still fail when the cash runs out. Building work ties up money in materials, labour and subcontractors long before the client pays, and margins can disappear through underpricing, unclaimed variations or slow payment.

Practical habits include:

• Price properly. Build a real estimate with overheads, contingency and margin, rather than matching a competitor’s price.
• Use the deposit and progress payments the law allows. Home building laws cap deposits, for example at 10% in NSW and at 5% for Victorian contracts of $20,000 or more, so progress stages need to match your costs.
• Claim on time, every time. Invoice each stage as soon as it is reached, and document and claim every variation.
• Know your payment rights. Security of payment laws give you a statutory right to progress payments and a fast way to resolve disputes; our guide to security of payment explains each state’s rules.
• Forecast weekly. Track money in and out for the next 8 to 12 weeks, including GST, super and tax.
• Watch your exposure. Avoid relying on one client, and check the credit of new clients before you start.

What are your WHS and employment duties?

As soon as you run a business, you have work health and safety duties. In every state and territory except Victoria, the model WHS laws apply. Under section 19 of the WHS Act, a person conducting a business or undertaking (PCBU) must ensure, so far as is reasonably practicable, the health and safety of its workers, including subcontractors and their workers, and that other people are not put at risk by its work. In Victoria, the Occupational Health and Safety Act 2004 places similar duties on employers and self-employed people.

On a construction project, the builder is often the principal contractor, with extra duties such as preparing a WHS management plan for larger projects and making sure safe work method statements are in place for high risk construction work. Our guide to principal contractor WHS duties explains what that involves.

When you employ people, you also need to:

• Take out workers compensation under your state’s scheme.
• Pay the right wages and conditions under the relevant modern award or agreement.
• Pay super. The super guarantee rate is 12%, and since 1 July 2026, under Payday Super, contributions must reach employees’ funds within 7 business days after each payday.
• Engage contractors genuinely. Treating a worker as a contractor when they are really an employee (sham contracting) carries serious risks. Our guide to Fair Work for building businesses covers the rules.

Checklist: starting your building business

• Confirm your licence class and the threshold for each state where you will work.
• Choose your structure with an accountant and lawyer, and licence the right entity.
• Register an ABN, and register for GST when you reach the $75,000 turnover threshold or before.
• Set up bookkeeping, a separate business bank account and a tax and GST holding account.
• Arrange insurance: public liability, contract works, workers compensation and any cover your licence requires.
• Check home warranty eligibility before quoting residential work above your state’s threshold.
• Use compliant contracts that meet your state’s home building laws on deposits, cooling-off and variations.
• Diarise TPAR, BAS, super and licence renewal dates.
• Set up WHS systems: risk assessments, safe work method statements, inductions and incident records.
• Know your security of payment rights before your first payment dispute.

Frequently asked questions