Individual vs Company Licence: Contractor and Builder Explained
One of the biggest points of confusion in the construction industry is understanding the difference between individual and company licences, and how this applies to both contractor licences and builder licences.
Many people assume a single licence covers everything. In reality, licensing is based on two things:
- The type of work (contractor or builder)
- The legal entity (individual or company)
If either of these is wrong, you are operating unlicensed.
Individual Contractor Licence
An individual contractor licence is issued to a person.
It allows that person to:
- Enter contracts in their own name
- Invoice clients personally
- Advertise as a contractor
- Trade as a sole trader
This licence does not allow you to trade through a company.
Company Contractor Licence
A company contractor licence is issued to a business entity.
It allows the company to:
- Sign contracts
- Invoice clients
- Advertise services
- Operate legally as a contractor
The company must have a nominated individual who meets all technical and experience requirements.
Individual Builder Licence
An individual builder licence is issued to a person.
It allows that person to:
- Carry out building work
- Supervise projects
- Contract as a sole trader
- Hold personal insurance
It does not allow trading under a company name.
Company Builder Licence
Individual licence:
- Linked to a person
- Used for sole traders
- Personal financial assessment
Company licence:
- Linked to the business entity
- Requires nominated individual
- Company financial assessment
- Separate insurance
They are not interchangeable.
The Legal Entity Rule (Most Important Section)
Your licence must match your legal trading entity.
If you trade as:
- A sole trader → You need individual licences
- A company → You need company licences
You cannot use an individual licence under a company name.
Contractor vs Builder Licence
A contractor licence generally allows you to:
Contract for work
- Manage projects
- Coordinate trades
A builder licence allows you to:
- Perform and supervise building work
- Take responsibility for structural compliance
- Manage entire construction projects
Many people need both.
For example:
A company may need:
- Company contractor licence
- Company builder licence
With a nominated individual holding:
- Individual contractor licence
- Individual builder licence
Nominated Individual Requirement
All company licences require a nominated individual.
This person must:
- Hold the correct personal licences
- Meet qualification requirements
- Provide experience evidence
- Be actively involved in operations
If the nominated individual leaves, the company must stop trading.
Financial Requirements Comparison
Individual licences:
- Personal financial assessment
- Personal assets and liabilities
Company licences:
- Company financial statements
- Company net assets
- Business cash flow
- Credit history
Companies face far stricter scrutiny.
Insurance Differences
Individual licences:
- Insurance in personal name
Company licences:
- Insurance must be in company name
- Higher coverage requirements
- Directors may still be personally liable
Insurance in the wrong entity name voids cover.
Common Compliance Failures
The most common mistakes include:
- Using personal licence under company
- Holding contractor licence but not builder licence
- No nominated individual
- Insurance in wrong name
- Applying for wrong licence type
These errors often result in:
- Fines
- Contract disputes
- Insurance refusal
- Regulator penalties
Which Structure Is Better?
Individual structure suits:
- Sole traders
- Small operations
- Lower financial risk
Company structure suits:
- Growth businesses
- Larger projects
- Asset protection
- Multiple staff
Most serious businesses eventually require both company contractor and company builder licences.
In Summary
There are four main licence types in construction:
- Individual contractor licence
- Company contractor licence
- Individual builder licence
- Company builder licence
Your licence must match:
- The work you do
- The legal entity you trade under
If either is wrong, you are operating unlicensed, even if you hold "a licence".
This is one of the most common and expensive mistakes in the entire industry.
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