How to Register a Sole Proprietorship (Sole Trader) in Australia

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?

Sole trader vs other business structures in Australia

While a sole trader structure is simple, alternatives offer distinct advantages and trade-offs:

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 2025-26.

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. Other records are required to be kept for more than five years, such as records of depreciating assets, capital gains tax assets, petroleum resource rent taxes, and more.

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 Advance
• Enjoy contractor perks from 150+ partners

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