How to Become a Sole Trader in Australia (Step by Step, in a Day)

To become a sole trader in Australia you register for an ABN (free, about 15 minutes online), register a business name only if you'll trade under something other than your own name, and register for GST if you expect to turn over $75,000 or more. That's the legal minimum, and it's done before lunch. The rest — bank account, licences, insurance, records, tax set-aside — is the housekeeping that stops your first year hurting. For tax and liability, read the complete sole trader guide; this page is purely the setup.

Step 1: Confirm sole trader is the right fit (2 minutes)

Two questions. Is it just you owning the business? Staff and contractors are fine — "sole" means one owner, not one worker. And can you accept that business debts and claims are personally yours, with insurance as the buffer? Yes to both, keep going; if not, read the structure section of the full guide first.

Step 2: Register your ABN — free (15 minutes)

There is no separate "sole trader registration" — applying for an Australian Business Number as a sole trader is how you become one. Use the Business Registration Service at register.business.gov.au, which lets you add a business name and GST in the same session. Choose "sole trader", use your existing tax file number, and enter your details exactly as the ATO has them. Verified applications are issued instantly.

Never pay for this: .com.au sites charging $50–$100 are reselling a free government service, and an ABN costs nothing at any stage. Every screen, and who is and isn't entitled, is in how to register an ABN. And without an ABN on your invoices, business customers must withhold 47% of your payment.

Step 3: Business name — only if you need one (20 minutes)

Trading as "Priya Sharma" needs no registration. Trading as "Sharma Bookkeeping" or anything else means registering the name with ASIC before you use it: $47 for one year or $108 for three (as at September 2026; fees are indexed every 1 July, so check asic.gov.au). It's an option inside the same registration application.

Three checks before paying:

1. Availability — search the ASIC business names register; near-identical names are rejected.
2. Trade marks — search IP Australia. A business name gives you no ownership; only a trade mark does, and using someone else's means a forced rename later.
3. Domain — check the .com.au is free at the same time (you need your ABN to register it). A name with no matching domain is worth rethinking before the signage is printed.

Step 4: Decide on GST (10 minutes)

Registration is compulsory once GST turnover hits $75,000 in a rolling 12 months, or you expect it to in the next 12. You then have 21 days; miss it and the ATO can charge you GST on sales you never added it to.

Below that it's your call. Register now if you'll clearly pass $75,000 in year one, or if your customers are mostly GST-registered businesses (they claim it back, so your price isn't really higher to them) and you want credits on start-up costs. Hold off if you sell to the public and will sit well under the threshold — adding 10% voluntarily is a handicap. Registering means a BAS, usually quarterly; see BAS and GST explained.

Step 5: Open a separate business bank account (30 minutes)

Not legally required — it's all your money anyway — but practically non-negotiable. Mixed accounts mean every BAS and tax return starts with untangling groceries from supplier payments, at your accountant's hourly rate.

Most banks open a sole trader account online the same day with your ABN and ID; an account in your business name needs the Step 3 registration. Pick low fees and a bank feed into your accounting software (Step 8), and open a second savings account labelled "Tax" for Step 9.

Step 6: Check licences and permits on ABLIS (20 minutes)

The Australian Business Licence and Information Service (ablis.business.gov.au) asks what you'll do and where, then lists every Commonwealth, state and council licence, permit and registration that applies. Do it even if you're sure you need nothing: home-based businesses, food, children, health and most trades carry requirements people don't expect. Some take weeks to approve, so this is the step most likely to delay "trading tomorrow".

Step 7: Get insurance quotes (30 minutes)

You don't need cover bound today, but get quotes so you know the real cost of trading:

Cover	What it does	Who needs it first
Public liability	Injury or property damage to others caused by your work	Anyone whose customers or the public come near their work; often a client requirement
Professional indemnity	Claims that your advice or service caused financial loss	Advice and service businesses; mandatory in some professions
Income protection	Replaces part of your income if illness or injury stops you working	Every sole trader — you have no sick leave

Premiums are generally deductible.

Step 8: Set up record-keeping (30 minutes)

The ATO requires records of income, expenses and asset purchases for five years. Decide today how you'll keep them, because "sort it later" becomes a shoebox in June.

For most new sole traders an entry-level accounting plan on a bank feed is the answer: it captures every transaction, stores receipt photos, issues invoices with your ABN on them and prepares your BAS if you're registered. Every major provider has a sole trader tier for a few dollars a month. A spreadsheet and a receipt-photo folder is legal — just less forgiving. Reconcile weekly from day one.

Step 9: Tax — nothing more to register, but start setting money aside

There's no business tax return. Profit goes into a business schedule inside your personal return, taxed at individual rates, and there's nothing else to tell the ATO at setup. But nothing is withheld during the year, so your first bill arrives as a lump sum — where new sole traders get hurt.

Move a slice of every payment into the "Tax" account. Rough guide using 2026-27 rates plus the 2% Medicare levy (as at September 2026), ignoring offsets and deductions:

Your situation	Set aside per dollar of profit
Business is your only income, profit up to $45,000	10–15%
Only income, profit $45,000–$135,000	20–25%
Only income, profit above $135,000	25–30%
You also earn wages	Your marginal rate plus 2% — 32% in the 30% bracket, 39% above $135,000

After your first return the ATO automatically moves you onto quarterly PAYG instalments once business and investment income is $4,000 or more and tax payable was $1,000 or more. Nobody pays your super either — treat 10–12% of profit as a deductible super contribution. The full 2026-27 rates, worked examples and everything you can claim are in sole trader tax: what you can claim and how much you pay.

Step 10: If you'll hire (not today, but know what's coming)

Sole traders can employ people; you don't need a company. But hiring switches on four things: PAYG withholding registration (same Business Registration Service); reporting every pay run through Single Touch Payroll software; 12% super each payday, in the fund within seven business days (as at September 2026, under payday super); and workers compensation insurance, compulsory in every state and territory. Pay at least the award rate.

The one-day checklist

#	Task	Where	Cost
1	Confirm sole trader fits	This page	$0
2	Register ABN	register.business.gov.au	$0
3	Business name, trade mark, domain check	Same session; IP Australia; registrar	$47 / 1 yr or $108 / 3 yrs
4	GST decision	Same session	$0
5	Business account + "Tax" savings account	Your bank	$0–small fee
6	Licence and permit check	ablis.business.gov.au	Varies
7	Insurance quotes	Insurer or broker	Free to quote
8	Accounting software + bank feed	Software provider	Free to entry-level plan
9	Automate tax set-aside	Bank app	$0
10	If hiring: PAYG withholding, STP, super, workers comp	See Step 10	Varies

Tick it off and you're trading by the end of the afternoon.

Key takeaways

• Becoming a sole trader is one free ABN application — there's no separate registration and no fee.
• Register a business name ($47 a year or $108 for three, as at September 2026) only if you trade under something other than your own name; check trade marks and the .com.au first.
• GST is compulsory from $75,000 turnover with a 21-day window; below that, register early only if your customers are businesses or you want start-up credits.
• A separate bank account and bank-fed accounting software aren't legally required, but they're the difference between a 20-minute BAS and a lost weekend.
• Nothing is withheld from your income — set aside 10–30% of profit from the first invoice, and expect PAYG instalments after your first return.

Where to get help

• register.business.gov.au — ABN, business name, GST and PAYG withholding in one application.
• ablis.business.gov.au — licence and permit search for your activity and location.
• asic.gov.au — business name rules and current fees.
• ato.gov.au — GST registration, record-keeping, PAYG instalments and payday super.
• Your accountant or a registered BAS agent (check them at tpb.gov.au) — for the GST decision, your set-aside rate, and anything that turns on your actual numbers.