How to set up as a sole trader

You can turn your passion or skill into a profitable small business and setting yourself up as a sole trader is quick and easy. The sole trader business structure is popular for its flexibility and simplicity and is commonly used by tradespeople, freelancers and consultants.

How to register as a sole trader

If the sole trader business structure is right for you, here are the steps usually involved to register and get your business up and running.

Apply for an Australian Tax File Number (TFN)

You must have a TFN regardless of the type of business you’re starting. If you’re setting up as a sole trader, you can keep your individual TFN. You can register for a TFN on the Australian Business Register, opens in new window website.

Register for an ABN

When setting up your business as a sole trader, you may need to register for an Australian Business Number (ABN). An ABN is a number that identifies your business to others when ordering and invoicing. An ABN is also important for tax purposes as your business can claim GST credits and avoid pay as you go (PAYG) tax on payments you receive from your customers. Furthermore, you can use your ABN to get an Australian domain name for your business’s website. The registration process is free and can be done by visiting the Australian Business Register, opens in new window (ABR). Not everyone needs an ABN but the ABR can help you determine if your business needs one.

Register for Goods and Services Tax (GST)

Once you have registered for an ABN, you will then need to register for GST if you expect your business to have an annual turnover of $75,000 or more. There can be significant financial penalties if you do not register for GST and your business’s annual turnover exceeds that threshold. Learn more about registering for GST, opens in new window.

Consider additional permits and licences

Depending on your location and industry, there may be additional registrations or licences required by industry governing bodies, local councils or regulators. Many professions and trades will require professional qualification or registration so it’s important to check specific industry bodies for the particular requirements.

Register your business name

Deciding what to call your business is an important part in establishing your business’s identity. You can use your personal name but you may want to operate your business with a new identity, image and brand. Your business name should be unique, easy to spell and pronounce, and appropriate to your chosen industry. You will need to check if your proposed business name has already been taken elsewhere at Check Name Availability, opens in new window.

Additionally, you should check that your business name isn’t already a registered trademark at IP Australia, opens in new window website. If your business name doesn’t already exist or isn’t a registered trademark, you should register your business through the Business Registration Service, opens in new window and trademark your name as soon as possible.

Consider the cost of setting up and maintaining the business

Starting a successful business as a sole trader will generally involve some start-up costs. Understanding these costs can help you to plan ahead, seek further investment if required and increase your chances of business success.

It’s also important to have enough funds to sustain and operate your business. You may need professional advice and services to help with managing your business finances.

Consider insurance for your business

When setting up as a sole trader, consider getting insurance to protect you, your business and your customers. Given sole traders are self-employed who own and run their business, you may want to consider taking out income protection insurance or personal accident insurance to protect you from injury and illness. Additionally, your business may require certain types of insurance, such as workers’ compensation or public liability insurance.

You may need to talk to a licensed insurance broker for professional advice.

Open a business bank account

If you're setting up as a sole trader, it’s a good idea to set up a separate business bank account, even if you run your business part time. A separate account will allow you to easily manage your business’s finances, track deductions for tax time and preparing your business for future growth. Here’s why you should open a separate business bank account. You can also learn how to open a business account.

Set up a website for your business

A business website can be a great way to stand out from other businesses. It can be as simple as a page with your business’s brand, description of services and contact details, or a complete online store. Some of its benefits may include having a digital shopfront for your customers to access, marketing your products, enhancing your brand and reputation, and improving productivity and efficiency.

It’s important to do your research before you build your business website and wider digital strategy. Choose an option that suits your business and targets your main audience, as well as find a way to make your online presence unique.

Keep track of your finances

Starting up your business as a sole trader will often mean there are challenges with managing time and juggling other commitments, whether they be other forms of employment or balancing your lifestyle. If you have a business bank account you can link to an accounting software package to make bookkeeping a lot easier. Many accounting packages can integrate directly with your bank account, to automate a lot of the bookwork. Manage business finances easily with our simple, smart and powerful bookkeeping solution. Seamlessly connect to your NAB business account, so everything is in one place with NAB Bookkeeper. You could connect software like Xero, MYOB or Quicken to a NAB Everyday Business Account, which has no monthly fees. Learn more at accounting package integration.

Consider how you will take payments from customers

Offer as many ways as possible to get paid or pay. It’s important to make it as convenient as possible not only for customers to pay you, whether that’s through cash, direct transfer, by credit card or through a portable EFTPOS machine. NAB has a range of products designed to help your business make and receive payments. They could be in-store, on the go or online including options such as:

• NAB EFTPOS for on-the-go and in-store payments
• NAB Direct Debit allows you to debit funds straight from your customers’ accounts
• NAB Easy Tap for accepting mobile payments with your Android device.