Article
6 min read
How to Register a Sole Proprietorship (Sole Trader) in Australia
Contractor management
Author
Joanne Lee
Last Update
September 04, 2025
Table of Contents
What is a sole proprietorship in Australia?
How does a sole proprietorship (sole trader) work in Australia?
Sole trader vs other business structures in Australia
Step-by-step guide: How to register as a sole trader in Australia
Financial and tax obligations for sole traders in Australia
Launch your contracting career and stay compliant with Deel
Becoming an independent contractor as a sole trader in Australia is appealing because it offers maximum flexibility and control. The setup process is relatively simple, making it a great choice for freelancers, consultants, and gig workers.
In general, it’s more streamlined than forming a company, though some administrative steps are still required. You'll need to handle tasks like registering for an Australian Business Number (ABN), registering a business name, and managing tax obligations. However, it's generally a low cost and straightforward process.
The main challenges include ensuring your paperwork is accurate, understanding your tax responsibilities, and accepting that your personal assets remain exposed to liability.
On the upside, benefits include being your own boss, low setup costs, minimal ongoing compliance, and full control over your income and decisions.
Disclaimer: This article is for informational purposes only and is not a substitute for legal advice. Please always check official sources or seek professional guidance before taking action.
What is a sole proprietorship in Australia?
In Australia, a sole proprietorship is known as a sole trader. Other common terms include self-employed worker or independent contractor. All of these refer to a business structure where a single individual runs a business without incorporation.
How does a sole proprietorship (sole trader) work in Australia?
| Category | Description |
|---|---|
| Official name | Sole trader |
| Registration body | Australian Business Register (ABR) and tax agencies like the Australian Taxation Office (ATO) |
| Minimum capital | None required |
| Liability | Unlimited (you’re personally liable for all business debts) |
| Tax structure | Business income is reported on personal tax returns and may require goods and services tax (GST) registration if annual turnover exceeds $75,000. If you hire employees, you’re required to withhold tax from wages. |
| Naming conventions | You can use your personal name without registration. Any other business name requires registration with the Australian Securities and Investments Commision (ASIC). If you wish to trade mark your business name, you’ll need to register for that separately. |
| Key advantage | Easy and inexpensive to set up with full control and fewer reporting requirements |
| Key disadvantage | Personal assets are at risk due to unlimited liability |
Sole trader vs other business structures in Australia
While a sole trader structure is simple, alternatives offer distinct advantages and trade-offs:
| Feature | Sole trader | Company (Pty Ltd) |
|---|---|---|
| Liability | Unlimited | Limited |
| Setup cost | Low | Higher (company setup fees, compliance) |
| Taxes | Personal income tax, GST if applicable | Company tax, possibly different compliance |
| Setup time | Quick (usually same day for ABN) | Longer (requires more preparation and documentation) |
| Best for | Freelancers, small independent businesses | Scaling operations seeking investors or liability protection |
Step-by-step guide: How to register as a sole trader in Australia
Step 1: Check eligibility
To qualify as a sole trader in Australia, you must be the only owner of the business and legally responsible for all aspects of the business.
Step 2: Choose your business name
You may use your legal personal name without registration. If you want a different trading name (e.g., “Melbourne Design Co.”), you must register it via ASIC’s business names register.
Step 3: Gather required documents
You’ll need:
-
Your personal Tax File Number (TFN)
-
Identity and contact details
-
Business activity description and expected start date
-
Desired business name information (optional)
Forms can be completed through the Australian Government Business Registration Service.
Step 4: Register with the authority
Use the Business Registration Service to simultaneously apply for your ABN, business name (if any), and tax registrations like GST or PAYG withholding.
Step 5: Pay fees and contributions
Registration for an ABN is free, and you can apply for it through the Australian Business Register (ABR) online. Business name registration costs $45 for one year or $104 for three years as of 2025.
Step 6: Post-registration obligations
You must display your ABN on invoices and documents. If you registered a business name, you must also display that on your signage and paperwork. Additionally, you’ll need to file Business Activity Statements (BAS) if you registered for GST.
As part of maintaining compliance and reporting requirements, you must keep your business registration details updated (ABN, business name, license details), file annual income tax returns, stay updated with regulation changes, and retain business records for at least five years.
Deel for Contractors
Financial and tax obligations for sole traders in Australia
Income taxes: Business income is taxed at personal rates through your annual tax return.
Superannuation contributions: If you hire employees, you must contribute to superannuation to provide for retirement as well as workers’ compensation insurance.
GST obligations: You must register for goods and services tax (GST) if your annual turnover is $75,000 or more.
Recordkeeping: It’s required to keep records such as invoices, receipts, and BAS for at least five years to remain compliant.
Launch your contracting career and stay compliant with Deel
Registering as a sole trader gives you independence, but it also means handling taxes, invoices, and records on your own. Deel’s all-in-one platform helps you manage obligations without the stress. With Deel, you can:
- Automate invoicing and expense tracking with essential Bookkeeping tools
- Create, send, and sign localized work agreements
- Keep accurate records for tax season
- Access expert tax advice and compliance support
- Get paid through multiple payment and withdrawal methods
- Spend your earnings in USD with the Deel Card
- Access funds early with Deel Advance
- Enjoy contractor perks from 150+ partners
Stay independent, without the admin overload. Sign up to Deel for free today.
Deel has completely alleviated the stress of being a global freelancer. The platform's simplicity and reliability mean I can trust payments are on time, allowing me to focus on work instead of paperwork.
—Sabrina Montero,
Colombia
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FAQs
What is the minimum capital required to start as a sole trader in Australia?
There is no minimum capital required to start as a sole trader in Australia. You'll need to manage practical start-up costs yourself.
Do sole traders need to register for GST?
Only if your projected or actual annual turnover is $75,000 or more. Otherwise, it’s optional.
How much are the standard setup or annual fees?
ABN registration is free. Business name registration costs $45/year or $104 for three years.
Can a sole trader hire employees?
Yes. If you hire employees, you must handle payroll tax, PAYG withholding, superannuation contributions, and insurance (e.g., workers' compensation).
How long does it take to register?
ABN applications are typically instant. Full setup with business name and tax registrations can often be completed in one session.
Can foreign nationals register as sole traders in Australia?
Yes, but you must have a visa to run a business in Australia. Learn more about how to apply for the right visa and set up your business via the Australian Government Business site.
Do sole traders need a separate business bank account?
It’s not mandatory, but it’s strongly recommended for clean accounting and tax clarity.
What happens if I stop operating?
You can cancel your ABN and deregister your business name via ABR and ASIC. Be sure to finalize tax returns and GST obligations first.
Any government incentives for new sole traders?
Not specifically for sole traders, though small business grants and assistance may be available via business.gov.au.
Can I use Deel as a sole trader to get paid by international clients?
Yes. Deel allows sole traders to receive payments in multiple currencies, with low fees and transparent exchange rates.
Does Deel generate compliant invoices for sole traders?
Yes. Deel automatically generates compliant invoices that meet Australian legal and tax requirements.
Can Deel help with taxes as a sole trader?
Yes. Deel offers downloadable tax reports and payment records to simplify your recordkeeping. It’s not a substitute for an accountant, but it’s a helpful tool.
Does Deel offer contracts for freelancers/sole traders?
Yes, Deel provides contract templates compliant with local laws for safe, professional client engagement.
Can I access benefits via Deel as a sole trader?
Yes, Deel provides optional perks like health insurance and retirement savings plans, delivering added peace of mind for independent workers.
Joanne Lee is a content marketing professional with 6+ years of experience creating effective social, search, email, and blog content for companies ranging from start-ups to large corporations. She's passionate about finding creative ways to tell a purpose-driven story, staying active at the gym, and diversity and inclusion. At Deel, she specializes in writing about topics related to global payroll.
