Anja Pich is a commercial lawyer and the Managing Lawyer at Lawpath. She practises across all areas of commercial law and advises businesses of every size, from first-time founders to established companies, on their legal, regulatory and commercial needs.
How to start an air conditioning business in Australia comes down to licences first and everything else second. You need an ARCtick refrigerant handling licence for every technician, a refrigerant trading authorisation for the business, and a state contractor licence, plus a business structure, customer contracts and insurance. Sort those before your first install and the rest is finding customers.
Here’s the uncomfortable bit. Plenty of skilled installers go out on their own with a Cert II, a ute and a few mates in the trade. Then a head contractor’s onboarding system rejects them because the licence is in the wrong name, or a subbie’s dodgy install lands on their insurance. None of that is hard to avoid. It just has to happen before the phone starts ringing.
- Every technician needs an ARCtick licence. The restricted “splits” licence only covers installing single-head split systems under 18kW. It doesn’t let you service or repair anything that involves the refrigerant.
- The business needs its own authorisation. A refrigerant trading authorisation lets your business buy, store and handle refrigerant, and your technicians must be affiliated with it.
- State licensing sits on top. NSW, VIC and QLD each run their own contractor rules. In NSW, a company or partnership needs its own contractor licence, not just the person doing the work.
- Electrical work is the most common trap. Restricted licences cover testing and repairs, not installation wiring. In Queensland, that includes running interconnect cables.
- Contracts protect your cash flow. Customer terms, a subcontractor agreement and terms of trade for builders cover most of the risk a new aircon business faces.
What does an air conditioning business actually do?
An air conditioning business supplies, installs, services and repairs cooling and heating systems for homes and businesses. That runs from a single back-to-back split in a bedroom to ducted systems in new builds and plant on commercial rooftops.
The real decision is which lane you start in. Your lane decides your licence, your tools and how your cash flow behaves.
| Business model | ARCtick licence you’ll need | Cash flow | Watch out for |
|---|---|---|---|
| Residential split installs | Restricted splits licence (single-head, under 18kW) | Lumpy, peaks in summer | You can’t take service calls that involve refrigerant |
| Service and maintenance | Full RAC licence | Steadier and recurring | Recovery gear and record keeping |
| Ducted and light commercial | Full RAC licence, plus your state contractor licence | Bigger jobs, longer payment terms | Builders want credit terms and progress claims |
| Supply and install | Full or restricted, plus a trading authorisation | Margin on units and labour | Warranty claims and head contractor liability |
Most new owners start with residential splits because the entry cost is lowest. Fine. Just know the restricted licence will cap you. The day a past customer rings about a unit that’s lost its gas, you can’t legally touch the refrigerant side. Maintenance work is what keeps many aircon businesses busy through winter, so plan your licence path with that in mind.
What licences do you need to start an air conditioning business?
This is where most guides get vague. Think of it as three layers, and you need all three.
Layer 1: an ARCtick licence for every technician
The Australian Refrigeration Council (ARC) runs the national refrigerant handling licence scheme on behalf of the Australian Government. It’s the only licence that applies in every state, and no state licence replaces it.
Two ARC licence types cover split systems. The full refrigeration and air conditioning (RAC) licence lets you work on any system. The restricted heat pump split systems licence lets you install, commission and decommission single-head splits under 18kW, and add refrigerant on extended pipe runs.
What can’t you do on the restricted licence? Install multi-head systems. Work on anything 18kW or bigger. Carry out any service or repair that means accessing the refrigerant. Starting on the restricted licence is common and sensible. Building a service business on it isn’t possible.
Layer 2: a refrigerant trading authorisation for the business
Your technicians hold licences. Your business holds an authorisation. A refrigerant trading authorisation lets the business acquire, store and handle refrigerant, and each licensed technician has to be affiliated with an authorisation holder before they handle it. In practice, you list your employed technicians on your authorisation.
ARC recommends displaying your authorisation number on all your air conditioning advertising, from quotes to the side of the van. Do it from day one. Customers who know to look for it will, and it costs you nothing.
Layer 3: your state contractor licence
Every state handles this differently, and the rules shift as regulators restructure. Here’s where things stand for the three biggest markets.
| State | Who licenses the work | What to know |
|---|---|---|
| NSW | Building Commission NSW | The air conditioning and refrigeration contractor licence covers installing, maintaining and servicing systems, plus associated electrical work like disconnecting and reconnecting components. Plug-in units are excluded. Companies and partnerships need their own contractor licence. |
| VIC | Building and Plumbing Commission | Air conditioning sits under plumbing registration and licensing for mechanical services. A restricted class covers single-head splits up to 18kW and requires a current ARCtick licence, supervised experience and an exam. |
| QLD | QBCC for building work, Electrical Safety Office for electrical | A restricted electrical work licence covers testing, repairing and maintaining air conditioning equipment. It doesn’t cover electrical installation work such as interconnect cables. A business doing electrical work for others needs an electrical contractor licence. |
| Other states and territories | State building and electrical regulators | Requirements differ. Electrical licensing still applies to any wiring. Check with your regulator before you quote. |
The NSW rule catches a lot of people. Your personal licence doesn’t cover your company. Incorporate, and the company needs its own contractor licence. Head contractors and facility managers check that the name on your licence matches your registered business name when they onboard you, and a mismatch can stall your first commercial job.
Electrical work: the trap that catches tradies from both sides
NSW Fair Trading has written to traders flagged by industry for chasing air conditioning work outside their licence. The usual culprit was an electrician or plumber doing refrigeration work. The reverse happens too, with refrigeration mechanics doing wiring their licence doesn’t cover.
Before you quote, ask two questions. Does my licence cover the electrical work this job needs? If not, who’s my licensed electrician? Answer both in writing on the quote and you’ll avoid most of the grief.
What about heating?
Reverse cycle splits and ducted systems are heat pumps, so the same ARCtick and state rules apply. Gas heating is a separate trade. To install or service gas ducted heaters, you’ll need a gasfitting licence in your state or a licensed gasfitter on your subbie list.
How much does it cost to start an air conditioning business?
There’s no honest single number for what it costs to start an air conditioning business. Anyone who gives you one is guessing. Your costs depend on your lane and how much you buy versus hire, so build your budget from these line items.
| Cost | What drives it | Founder tip |
|---|---|---|
| Vehicle | New van or used ute, racking, signage | Put your ARC authorisation number on the signage |
| Tools and gear | Vacuum pump, recovery unit, gauges, leak detector, nitrogen kit, drills, ladders | Buy the core kit. Hire specialist gear until the work justifies owning it. |
| Licences and registrations | ARC licence and authorisation, state licence, ABN, business name, company | Renewals recur. Put every expiry date in one calendar. |
| Insurance | Public and products liability, tools, vehicle, workers compensation | Get quotes before you set your rates |
| Software | Quoting, invoicing, job scheduling | Pick one that handles deposits and progress claims |
| Working capital | Paying suppliers before customers pay you | The cost most founders forget to budget |
Two tax points soften the hit. In the 2026-27 Budget, the Government announced the $20,000 instant asset write-off for small businesses will be permanent from 1 July 2026. It works per asset, so your vacuum pump, recovery unit and gauge set can each qualify. Confirm with your accountant that the measure is law before you rely on it.
Then there’s GST. You must register once turnover reaches $75,000 a year. Registering earlier means you can claim back the GST on that startup kit, which counts when you’ve just spent big on gear.
How should you price your air conditioning services?
Price from your costs, not from a competitor’s Facebook ad. Work out your hourly cost to run the van, insurance and tools, then add your margin. Decide early which services you’ll offer, how far you’ll travel and whether you’ll take after-hours call-outs at a premium.
Fixed prices suit standard back-to-back installs. Time and materials suits anything with unknowns, like long pipe runs or roof access. If a job changes after the customer accepts, you’ll want to know whether you can update a quote once it’s agreed. And for home owners, your quote has to show the GST-inclusive price. Here’s more on specifying GST on a quote.
Which business structure works best for an aircon business?
Most people start as a sole trader because it’s cheap and quick. That works while you’re solo on residential splits. The trade-off is that your personal assets are exposed if a job goes badly, and in this trade a botched install can mean water damage, an electrical fault or a refrigerant leak.
A company gives you limited liability and looks stronger on commercial tenders, but costs more to run. Our guide to deciding on your business structure walks through the trade-offs. When you’re ready, you can register a company online in minutes.
Where this goes wrong is timing. Owners incorporate, then keep invoicing in their own name or forget to move their licence and insurance across. Lawpath advisors regularly tell clients to move their insurance into the company’s name before the company sends its first invoice. Treat your contractor licence the same way.
Register your air conditioning business
- An Australian Business Number (ABN), so the ATO and your customers can identify you.
- A business name, unless you trade under your own name or your company’s exact name.
- GST, once you hit $75,000 turnover or earlier if you want to claim credits on your setup costs.
- A taxable payments annual report (TPAR), which is due by 28 August each year if you pay contractors for installation work.
One myth worth busting: a registered business name doesn’t give you exclusive rights to it. A registered trade mark does. If your brand is about to go on three vans and a website, protect it first.
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What contracts does an air conditioning business need?
Most disputes in this trade aren’t about the install itself. They’re about scope, site access, payment and who fixes what when it breaks. Your contracts settle those arguments before they start.
- Customer terms. A Services Agreement sets out scope, deposits, access, variations, warranty and payment for every job you quote.
- Supply and install terms. If you sell the units as well as fit them, equipment sale terms and conditions cover the sale, the quote and the installation together.
- Subbie paperwork. A Subcontractor Agreement should require each subbie’s licence, ARC affiliation and insurance, and say who fixes defective work.
- Staff contracts. When you hire your first tech, a Full Time Employment Agreement covers hours, vehicle use, tools and licence conditions.
- Credit terms. Builders and strata managers will ask for 30-day accounts. Terms of Trade set the rules, including what happens when they pay late.
If a builder doesn’t pay, you’re not stuck chasing invoices for months. Security of payment laws give contractors a fast-track claims process. Here’s how the Security of Payment Act works in NSW, and every state has its own version.
One clause pays for itself on residential jobs: the customer confirms they own the property, or have the owner’s written consent to the install. The next section explains why.
What we see in Lawpath consultations
Lawpath lawyers and accountants speak with trade business owners every week. Four patterns come up again and again with air conditioning work.
Selling units with subbie installs makes you the head contractor
A business sells air conditioners online, then books subcontractors to install them. Our lawyers see this setup regularly, and the advice is consistent. As head contractor, the business can still be liable for a subbie’s faulty work, even when that subbie carries their own insurance.
There are two clean fixes. Own the head contractor role properly, with tight subbie agreements and insurance that covers it. Or split the product sale from installation with a genuine referral model, where the installer contracts with and invoices the customer directly. Half-and-half setups are where owners get burnt. Whichever you pick, tell your insurer exactly how your subcontracting works. Non-disclosure can put your cover at risk.
Tenants can’t give you permission to install
Once installed, an air conditioner is treated as a fixture. It becomes part of the property and belongs to the landlord unless a written agreement says otherwise. We see this with tenants and short-stay operators who want units put into rentals.
Your risk is simple. Install without the owner’s consent and you’re standing in the middle of someone else’s dispute. Ask for written owner consent on every rental job, and back it up with a warranty in your customer terms.
Commercial leases decide who gets to touch the system
Our property lawyers review plenty of commercial leases that name a specific air conditioning contractor, or warn that using anyone else may void the system’s warranty. Tenants push back and ask to use any licensed, insured contractor instead.
That’s your opening. Introduce yourself to local managing agents and ask what it takes to join their approved contractor list. Keep your licence, ARC authorisation and certificate of currency in one PDF, ready to send the same day.
Going full-time? Set up the money side in month one
Many clients come to our accountants while moving from a full-time job into their own air conditioning company, often with a partner as co-owner. The same gaps show up: no plan for GST as turnover heads towards $75,000, and personal and company money running through the same account.
Fix both early. Untangling a year of mixed transactions costs far more than a separate business account and a GST plan on day one.
How do you find customers for a new air conditioning business?
Word of mouth is slow when you’re new. These channels move faster.
- Supplier referrals. Wholesalers and retailers who sell units but don’t install them need someone to send customers to, and many will do it for a finder’s fee. Get the fee, the payment trigger and any exclusivity in writing.
- Your ARC listing. ARC runs consumer campaigns pointing people to licensed businesses through its authorisation search. Keep your details current so those enquiries reach you.
- Google and your website. A Google Business Profile with real reviews wins local “aircon installer near me” searches. If you take bookings online, add website terms and conditions.
- Maintenance contracts. Strata managers, property managers and small offices need regular servicing. That work keeps you busy when installs dry up in winter.
Pick two channels and do them well rather than five badly. Our guide on how to write a marketing plan will help you choose, and a simple business plan keeps your targets honest.
What safety and consumer law rules apply to air conditioning work?
Air conditioning work stacks up WHS risks: working at heights on roofs, electrical isolation, manual handling of condensers and pressurised refrigerant. Write safe work method statements for the high-risk tasks and induct every subbie before they set foot on site. Never vent refrigerant. Recover it, and keep the records ARC expects.
On the consumer side, most founders assume the manufacturer’s warranty covers them. It covers the unit. Your workmanship is on you, and under the Australian Consumer Law, guarantees that your work is done with due care and skill can’t be contracted out of. Write your own workmanship warranty in plain English and make sure it doesn’t promise less than the law already does.
Joining an industry body helps you stay across changes. The Australian Institute of Refrigeration, Air Conditioning and Heating (AIRAH), the Air Conditioning and Mechanical Contractors’ Association (AMCA) and the Refrigeration and Air Conditioning Contractors Association (RACCA) all offer training, technical guidance and contractor networks.
FAQs about starting an air conditioning business
Do I need a licence to install split system air conditioners?
Yes. Anyone handling refrigerant needs an ARCtick refrigerant handling licence, and the business needs a refrigerant trading authorisation. Most states also require a contractor licence for air conditioning work, and electrical licensing applies to any wiring.
Can an electrician install air conditioning?
Not on an electrical licence alone. Handling refrigerant needs an ARCtick licence, and states like NSW have a separate licence class for air conditioning work. NSW Fair Trading has written to traders for seeking air conditioning work outside their licence.
How much does it cost to start an air conditioning business?
It depends on your lane. A residential split installer with a used ute and core tools needs far less than a ducted or commercial operator. Budget for a vehicle, tools, licences, insurance, software and enough working capital to pay suppliers before customers pay you.
Does my aircon business need to register for GST?
You must register once your turnover reaches $75,000 a year. Many new owners register earlier so they can claim GST credits on vans, tools and stock bought during setup.
Should an HVAC business be a sole trader or a company?
A sole trader setup is cheaper and fine for solo residential work. A company limits your personal liability and suits commercial work and hiring staff. If you incorporate, move your contractor licence and insurance into the company’s name before it invoices.
What insurance does an air conditioning business need?
Public and products liability is the baseline, and most head contractors won’t let you on site without it. Add tools and vehicle cover, and workers compensation once you employ staff. See what types of insurance employers need.
Can I sell air conditioners online and use subcontractors to install them?
Yes, but you may be liable as head contractor for the subbie’s work. Either manage that role with strong subcontractor agreements and disclosed insurance, or use a genuine referral model where installers contract with the customer directly.
Can I service split systems on a restricted ARCtick licence?
No. The restricted licence covers installing, commissioning and decommissioning single-head splits under 18kW. Any service or repair that involves accessing the refrigerant needs a full RAC licence.
How Lawpath can help you start your air conditioning business
Lawpath puts the legal side of starting an air conditioning business in one place. Register your ABN, business name or company, then build your customer terms and subbie agreements from 550+ legal document templates. Got something unusual, like a supply-and-install model or a big commercial contract? Speak with an experienced lawyer at a fixed price. More than 650,000 Australian businesses have used Lawpath to get this done faster.
You don’t need everything perfect on day one. Most people who start an air conditioning business begin with one van, one licence and a handful of jobs. Get your licences in the right names and your customer terms signed, and you’re ahead of plenty of operators who’ve been at it for years.
Start your Services Agreement today and send it with your next quote.
