Q: How do I Register as an Independent Contractor (Sole Trader) in Australia?
Learn the basic steps of registering as an independent contractor (Sole Trader) in Australia, including tax and insurance concerns.
So you want to be self-employed in the land down under? You have come to the right place! It’s not so hard to become an independent contractor in Australia, known there as a Sole Trader. We can help you dive into the Australian freelancing world with this basic info. However, the information here should not be used in place of legal or financial counsel.
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Australia Sole Trader: The Basics
A sole trader is not a registered company, but rather an individual who owns and is legally responsible for a business. This means that as a sole trader, you bear all the risks and rewards involved in profits and losses.
Registering as an Austrlaian Sole Trader (ABN and TFN)
All businesses in Australia need an Australian Business Number (ABN) and a Tax File Number (TFN) to operate legally. You will need your ABN to register your business name, and you must include your ABN on all business documents. As a sole trader, an individual TFN will suffice (you don’t need a business TFN).
You qualify for an ABN if: you run or start an enterprise in Australia, make supplies that are in connection with Australia’s direct tax zone, or if you are a Corporations Act company. You don’t qualify for an ABN if you do work as an employee, even if your employer designates it as “contracting.” By these definitions, a sole tradership counts as “running an enterprise.”
To apply for an ABN, go to the Australian government’s official ABN webpage. There you can fill out an application and read more about what a successful application looks like.
Sole Trader Taxes (GST, VAT, Payments)
You must report your entire income in your individual tax return. Keep in mind Goods and Services Tax (GST), which is a 10% sale tax applied to goods and services you provide. You will need to register for GST if your turnover is more than $75,000, or if you want to claim fuel tax credits, or if you provide taxi/limousine travel (Uber counts!). Aside from GST, VAT is charged based on where your customer is from, so keep that in mind when dealing with international businesses.
You can always choose the pay as you go option for tax installments. All you have to do is register at the Australian Business Register website online. While you’re at it, you should check online for what specific permits, licenses, or registrations you need for your particular business at the Australian Business License and Information Service (ABLIS) site.
Australia Sole Trader Insurance
As a sole trader, you have unlimited liability, meaning you are held responsible for everything occurring in your business. You will need insurance coverage, and you can pick your plan here.
Become an Australia Sole Trader Today!
Now you know the basics behind sole tradership in Australia. No matter what type of freelancing you want to do, the information here will help you succeed. As a self-employed person, you will gain the freedom and flexibility you desire to enjoy your time in Aus. You can scuba over the Great Barrier Reef without any barriers in your work life!
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Updated: December 29, 2020
Quick note: This is not to be taken as tax advice or legal advice or payroll advice. Since tax rules and laws change over time and can vary by location and industry, consult a CPA / tax advisor and/or attorney for specific guidance.