What do I need to start as a sole trader?

An ABN (free), your existing TFN, a business name only if you trade under a name other than your own, and GST registration only if turnover reaches $75,000 per year. A separate bank account is not compulsory but highly recommended.

How do sole traders pay tax?

Through your individual tax return: business income is added to your other income and taxed at individual marginal rates, with the first $18,200 tax-free. Once tax bills become regular, the ATO usually moves you to quarterly PAYG instalments.

Do sole traders need to lodge a separate business tax return?

No. Sole trader income and expenses go into a business schedule inside your individual tax return. One return covers everything.

When should I change from sole trader to company?

Common triggers: profit consistently reaching the higher tax brackets, hiring staff, signing bigger contracts, or building personal assets worth protecting. The switch has tax consequences, so plan it with a registered tax agent.

The simplest way to start

Sole trader: simple doesn't mean without rules

Q: What is a sole trader?

The simplest business structure in Australia: you are the business. Income is your personal income, debts are your personal debts. Setup is nearly free and admin is minimal, but liability is unlimited.

What a sole trader is, what you need to start, how your tax works and, just as important, the signals that tell you it's time to upgrade to a company.

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The short answer

A sole trader is the simplest structure: you are the business. You need an ABN (free), you use your normal TFN, and your business income goes in your individual tax return. The trade-off: unlimited personal liability and individual tax rates up to 45% as your profit grows.

The essentials

What every sole trader needs to know

ABN: first on the list

Free and essential. Without it, clients may withhold tax from your invoices at the top rate. See ABN Registration.

Your TFN does the job

No new tax file number needed: business income is reported inside your personal return, on a business schedule.

Business name (only if needed)

Trading as "Maria Garcia"? Nothing to register. Trading as "Brisbane Sparkling Cleaning"? Register it with ASIC. See Business Name Registration.

GST from $75,000

Compulsory once turnover hits $75,000 a year; optional below. If registered, you lodge a BAS, usually quarterly.

Deductions are your friend

Tools, vehicle use, home office, insurance, training, accounting fees: expenses related to earning your income are deductible with records. Keep them 5 years.

Separate bank account

Not compulsory, but the single best habit: it saves hours and errors when tax time comes, and makes your numbers readable all year.

Your tax, simply

How sole trader tax works

One return covers it all

Business income and expenses go in your individual return, added to any salary you also earn. Individual marginal rates apply; the first $18,200 is tax-free.

PAYG instalments arrive

Once your tax bills become regular, the ATO moves you to quarterly prepayments so July doesn't hit all at once. We help you set them at the right level.

An agent maximises it

Occupation-specific deductions, correct business schedule, extended deadlines. See Sole Trader Tax Return, from $200.

Growing? At some point the company wins

Higher profits, staff, bigger contracts or assets worth protecting: when two or more apply, the flat company tax rate and limited liability usually beat sole trader simplicity. We compare both with your real numbers, free.

Sole Trader vs Company

Australian tradie checking a paid invoice on his phone from his ute as a self-employed sole trader

Real sole trader life

Invoices paid, records kept, tax under control

The right habits from day one make your ABN income simple to run and cheap to file.

Sole trader FAQ

Quick answers

What is a sole trader?

The simplest structure in Australia: you are the business. Income is your personal income, debts are your personal debts. Nearly free to set up, minimal admin, unlimited liability.

What do I need to start?

An ABN (free), your existing TFN, a business name only if you trade under one, and GST only from $75,000 turnover.

How do I pay tax?

Through your individual return at marginal rates (first $18,200 tax-free). Once bills become regular, the ATO usually moves you to quarterly PAYG instalments.

Do I lodge a separate business return?

No. Sole trader income goes on a business schedule inside your individual tax return. One return covers everything.

When should I switch to a company?

When profit consistently reaches higher brackets, you hire, sign bigger contracts or build assets worth protecting. The switch has tax consequences, so plan it with us: Company Registration.

Sole trader today, supported either way

Tax return from $200 with ABN income, fully online. And when it's time to grow, we handle the upgrade.

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