How to register as a sole trader: Step-by-step guide for Australian small businesses

Published Friday 5 December 2025

Table of contents

• What is a sole trader?
• Pros and cons of being a sole trader
• How to register as a sole trader
• Sole trader registration costs
• Additional registration tasks
• FAQs on registering as a sole trader

Key takeaways

• Complete the four mandatory registration steps online through the Business Registration Service, which typically takes 1-2 hours and includes obtaining an ABN, registering a business name (if not using your legal name), and registering for GST if your annual turnover exceeds $75,000.

• Register for GST within 21 days of reaching the $75,000 annual turnover threshold, as this is a legal requirement enforced by the Australian Taxation Office.

• Budget for potential startup costs including business name registration fees ($45 for one year or $104 for three years), industry-specific licences, permits, and professional advice, even though ABN registration itself is free.

• Understand that as a sole trader you assume personal liability for all business debts and report business income on your personal tax return, making you fully responsible for both profits and financial obligations.

What is a sole trader?

A sole trader is a business structure where you're the single owner of your enterprise. You have complete control over all business decisions and operations.

Key characteristics of sole traders:

• Single ownership: No partners or directors involved
• Full control: Complete authority over business decisions
• Can hire employees: The term "sole" refers to ownership, not workforce size
• Personal responsibility: You're personally liable for business debts and obligations

Who should consider sole trader registration:

• New entrepreneurs: Starting their first business with minimal complexity
• Freelancers and contractors: Formalising existing self-employment
• Service providers: Consultants, tradespeople, and professionals
• Small retailers: Testing business concepts before scaling up

Pros and cons of being a sole trader

Sole trader benefits include minimal setup costs, simplified reporting, and complete profit retention. However, you'll face personal liability for business debts.

Benefits:

• Low startup costs: Minimal registration fees and requirements
• Simple reporting: Business income reported on personal tax return
• Complete profit control: All profits belong to you
• Quick setup: Registration completed in hours, not weeks

Drawbacks:

• Personal liability: Your personal assets are at risk for business debts
• Limited growth options: Difficult to raise investment capital
• Superannuation and tax: you’re responsible for making your own superannuation contributions and paying tax on your business income
• Harder to sell: Business value tied to your personal involvement

How to register as a sole trader

Sole trader registration requires four mandatory steps and takes most people 1–2 hours to complete online. Here's exactly what you need to do:

1. Get an individual tax file number (TFN) for paying income tax
2. Apply for an Australian Business Number (ABN)
3. Register a business name with the Australian Securities and Investment Commission (ASIC), if you're not using your own name
4. Register for Goods and Services Tax (GST), if you expect your annual turnover to be $75,000 or more

Streamlined registration: The Australian Government's Business Registration Service lets you complete steps 2, 3, and 4 simultaneously using one online form, saving significant time.

1. Get an individual tax file number (TFN)

TFN requirement: Most Australian residents already have a tax file number (TFN) from previous tax returns. If you don’t have a TFN, apply through the Australian Taxation Office (ATO) before you register your business.

2. Apply for an Australian Business Number (ABN)

An Australian business number (ABN) is mandatory for most business activities and serves as your unique business identifier with government agencies. This 11-digit number enables you to register for GST, claim business expenses, and invoice other businesses. You can apply for an ABN through the Business Registration Service.

Find out more about what an ABN is and how to get one.

3. Register a business name

Business name registration depends on how you'll trade:

• Using your legal name: No business name registration required (e.g., "John Smith")
• Using any other name: Must register with ASIC (e.g., "John Smith Consulting" or "ABC Services")

Registration requirement: Any variation of your legal name, including adding descriptive words, requires ASIC registration. This means you can operate your business in any state or territory in Australia.

There are fees for registering for one year or three years. See the business name fees on the ASIC website. You can register your business name through the Business Registration Service.

Difference between a business name and a trade mark

A registered business name doesn’t mean you have exclusive ownership of it. Other people can register and use similar names. To gain exclusivity over your business name, you need to register it as a trade mark with IP Australia.

Learn more about registering a business name and trade mark.

4. Register for GST

GST registration is required when:

• Annual turnover reaches $75,000. The Australian Taxation Office (ATO) requires registration when your business has a GST turnover of $75,000 or more, with the threshold increasing to $150,000 for not-for-profits.
• You expect to exceed these thresholds in the next 12 months

Important deadlines:

• Register within 21 days of reaching the threshold; the ATO mandates that businesses must complete their GST registrationwithin 21 days of becoming eligible.
• Monitor monthly if you're approaching the limit
• Voluntary registration is available for businesses below the threshold

Being registered allows you to claim back the GST you've been charged for some of the goods and services you use for your business. You can do your GST registration through the Business Registration Service once you have your ABN.

Learn more about goods and services tax (GST) and business activity statements (BAS) in this detailed guide.

Sole trader registration costs

It can be free to register as a sole trader in Australia. Applying for an Australian Business Number (ABN), which is essential, costs nothing.

However, you may have some startup costs. If you trade under a name that isn't your own, you'll need to register a business name, which has a fee. According to ASIC, you currently pay $45 to register a business name for one year or $104 for three years. Other costs could include professional advice, licences, or permits depending on your industry. It's smart to budget for these potential expenses from the start.

Additional registration tasks

Additional requirements may apply depending on your business:

If employing staff:

• Pay as you go (PAYG) withholding registration: required for employee tax obligations
• Workers' compensation insurance: Mandatory in most states
• Workplace safety compliance: Industry-specific requirements

Industry-specific needs:

• Professional licences: Required for trades, healthcare, financial services
• Business permits: Food handling, liquor sales, construction permits
• Qualifications: Professional registration for regulated industries

You can read more about additional business registrations on the ATO site.

Employing staff

Employee obligations for sole traders:

• Understand entitlements: Minimum wage, leave, and working conditions
• Arrange workers' compensation: Mandatory insurance coverage for injuries
• Register for PAYG withholding: Manage employee tax deductions
• Pay superannuation: Minimum 11% of employee wages to approved funds

Learn more about hiring staff.

Licences and permits

You may need licences or permits from federal, state, territory or local government bodies to run your business. Some common permits are food and beverage, property use and zone permits, and general business licences and permits. Find out what you need from the Australian Business Licence and Information Service.

Professional qualifications or registrations

Depending on your business, you may need a professional qualification or registration. For example, if you want to operate as an electrician you need to be registered and licensed in your state or territory. Check with your industry bodies for their requirements.

FAQs on registering as a sole trader

Here are answers to some common questions people have when registering as a sole trader.

How much tax will I pay as a sole trader?

As a sole trader, you pay income tax on your business profits at the same rates as an individual. You'll report your business income in your personal tax return. The exact amount depends on your total taxable income for the financial year.

What are the main disadvantages of being a sole trader?

The biggest disadvantage is unlimited liability, which means your personal assets could be at risk if the business has debts. It can also be harder to raise capital or sell the business compared to a company structure. You're also personally responsible for your own superannuation, and while you can claim deductions for personal contributions, CPA Australia notes there is a capping on concessional contributions to $27,500 annually.

Can I change from sole trader to company later?

Yes, you can change your business structure from a sole trader to a company as your business grows. This is a common step for businesses looking to expand, take on investors, or limit personal liability. It's a good idea to get advice from an accountant or lawyer to manage the transition smoothly.

Do I need an accountant as a sole trader?

While not legally required, having an accountant or bookkeeper is highly recommended. They can help you manage your tax obligations, track finances correctly, and provide valuable advice on growing your business. Using accounting software like Xero makes it easy to collaborate with them.