Most coaches in Australia start as a sole trader, because it's simple and cheap, and move to a company as their income, profile or risk grows. But for a coach, structure is only one part of protecting your business. Your advice is your product, so a well-drafted coaching agreement, professional indemnity insurance and a clear line between coaching and regulated advice matter just as much. Choose your structure with your accountant and your lawyer.
Should a coach be a sole trader or a company?
The two most common structures for coaches are sole trader and company.
A sole trader structure suits many coaches starting out:
it's simple and inexpensive to set up and run
you keep complete control and direct access to the profits
but you're personally liable for everything the business owes, and your personal assets are exposed if a client makes a claim against you.
A company (a "Pty Ltd") suits coaches who are growing, or carrying more risk:
the company is a separate legal entity, so it signs your client agreements and carries the business's debts
it can make it easier to bring in a business partner, build a team, license your program or sell the business one day
but it costs more to set up and run, and as a director you take on duties under the Corporations Act 2001 (Cth).
Tax is a big part of this decision too, and that's one for your accountant. For the full comparison, read sole trader or company? What is the best business structure for me?
What legal risks do coaches face?
Coaching is built on advice, guidance and results, and that creates some specific risks:
A client relies on your advice and it goes wrong. A business client loses money, or a career client makes a move that doesn't work out, and they say it was your advice.
Disputes about results and refunds. A client expected a breakthrough, a promotion or a revenue target, and asks for their money back.
Payment plans that stop. A client stops paying partway through a six or twelve month program.
Claims about your marketing. Results, income claims and testimonials in your sales pages must not be misleading under the Australian Consumer Law.
Does a company protect me from claims about my coaching?
Partly. A company carries the business's contracts and debts, so if a client sues over the coaching agreement, it's generally the company they sue. But you deliver the coaching personally, and a company won't always shield you from a claim about your own advice. That's why your structure works alongside your insurance and your coaching agreement, not instead of them.
What insurance does a coach need?
Professional indemnity insurance covers claims that your advice or services caused a client loss. For most coaches, this is the essential one.
Public liability insurance matters if you run in-person sessions, workshops or retreats.
Check your policy covers the type of coaching you actually do, and update it as your offer changes.
What should a coaching agreement include?
Your coaching agreement is where most of your protection sits. It should cover:
what coaching is, and what it isn't, for example that you don't provide financial, legal, medical or psychological advice
the scope of the program: sessions, access, materials and how long it runs
no guarantee of results, and the client's responsibility for their own decisions and actions
fees, payment plans and what happens if payments stop, including your right to pause access
cancellations, rescheduling and refunds, drafted so they're fair (the unfair contract terms laws apply, and you can't exclude the consumer guarantees)
confidentiality, and how you handle recordings and personal information
intellectual property in your program, worksheets and frameworks, so clients can use them but not resell them
group program rules, if you run masterminds or memberships
how either party can end the agreement.
If a coaching relationship isn't working, a clear exit path protects both of you. I've written about this in how to end a coaching contract.
When does coaching become regulated advice?
Coaching isn't a regulated profession in Australia, but some of the advice coaches are asked for is. Be careful if your coaching strays into:
financial product advice, such as recommending investments or super strategies, which generally requires an Australian financial services licence
tax advice, which is for registered tax agents
legal advice
mental health treatment, where you should refer clients to a registered health professional. If you work in health and wellness, a code of conduct for unregistered health practitioners may also apply in your state.
Your coaching agreement and your website should make the boundaries of your service clear.
What should I watch when selling coaching programs?
The Australian Consumer Law applies to how you market your coaching:
don't promise results you can't guarantee, such as income or revenue figures
make sure testimonials are genuine and represent typical results fairly
be clear about the price, what's included and your refund terms.
Your website terms and privacy policy matter too, especially if you sell programs online or offer free downloads.
When should I change my structure?
Consider moving to a company when:
your income grows and your accountant recommends it
you run bigger programs, retreats or corporate contracts, where the stakes are higher
you bring in other coaches, build a team or want a business partner
you want to license your method, certify other coaches or one day sell the business.
If you're building a signature program, protect it as you grow, including registering a trade mark for its name.
Getting your structure and your legal foundations right from the start means you can focus on what you do best: helping your clients. If you'd like to talk through the right setup for your coaching business, book an introduction call.
This article provides general information only and does not constitute legal, tax or financial advice. Your obligations depend on your specific circumstances.
Frequently asked questions
What is the best business structure for a coach in Australia?
Most coaches start as a sole trader because it's simple and inexpensive, then move to a company as their income, profile or risk grows. The right choice depends on your risk, your growth plans and your tax position, so decide with your accountant and your lawyer.
Does a coach need a licence in Australia?
No. Coaching isn't a regulated profession. But some advice is regulated, including financial product advice, tax advice, legal advice and mental health treatment, so stay within the boundaries of coaching or refer clients on.
Do coaches need professional indemnity insurance?
It's strongly recommended. Professional indemnity insurance covers claims that your advice or services caused a client loss, which is the main risk in a coaching business.
Can I guarantee results in my coaching program?
It's risky. Promising results, such as income figures, can be misleading under the Australian Consumer Law if they're not typical or can't be guaranteed. Your coaching agreement should make clear that results aren't guaranteed.
What should a coaching agreement include?
The scope of the program, fees and payment plans, what happens if payments stop, cancellations and refunds, confidentiality, intellectual property in your materials, that results aren't guaranteed, and how either party can end the agreement.
