On this page
- What is a sole trader?
- Which business structure is best for you?
- Registrations for a sole trader
- Superannuation for the sole trader
- Employing people as a sole trader
- Insurance for a sole trader
- Register as a sole trader
What is a sole trader?
A sole trader is a self-employed person who owns and runs their business as an individual. The individual is legally responsible for all aspects of the business including debts and losses. You can still hire people under this business structure.
Many tradespeople operate their businesses as a sole trader.
Which business structure is best for you?
If you're not sure which structure is best for your business, our step-by-step guide can help.
Remember, you can change your business structure as your business grows or situation changes.
Registrations for a sole trader
Your business name
If you want to operate under a name other than your personal name, you must register it as your business name. For more details and examples, read our page on registering a business name.
If you want ownership or legal protection of your business name, you'll need to trademark it. For more details, read our page on protecting your business name or idea.
Tax file number (TFN)
A key feature of a sole trader business structure is that you can use your individual tax file number (TFN) when lodging your income tax return.
Australian business number (ABN)
An Australian business number (ABN) allows clients to pay you in full. If you don't quote an ABN, your clients must withhold 47% of their payments to you for tax purposes.
An ABN is also compulsory if your business collects goods and services tax (GST).
When you apply for an ABN with the Australian Business Register (ABR), you'll be asked if you want to register under the sole trader business structure.
You're not entitled to an ABN if you're a sole trader working as an employee or in connection with earning payment as a company director, office holder or under a labour hire arrangement.
Goods and services tax (GST)
You need to register for GST if your expected or current annual turnover is $75,000 or more.
Other licences and permits
Check the Australian Business Licence and Information Service (ABLIS) to find other local, state and federal licences, registrations and permits that you need for your business.
Superannuation for a sole trader
As a sole trader, you're responsible for your own superannuation arrangements. You might be able to claim a deduction for any personal super contributions you make on your tax return.
Before you can claim a deduction, you must notify the fund that you intend to claim the amount and wait to receive confirmation.
Employing people as a sole trader
If you employ people, you'll be responsible for paying:
- employee payroll tax and PAYG, including reporting and paying fringe benefits tax
- superannuation for eligible employees.
Insurance for a sole trader
A sole trader owns all the business assets and is responsible for the business's liabilities. Liability is unlimited and includes all personal assets, including any assets the owner shares with another person (such as a jointly owned home or money in a joint bank account).
The right insurance can protect your business from events that can disrupt your ability to trade.
Find the right insurance to protect your business from trade interruptions.
Register as a sole trader
Once you've decided that being a sole trader is right for you, follow these steps to register:
- Decide whether you want to register a business name (you only need to do this if you're using a name other than your personal name).
- Check your proposed business name doesn't infringe on existing trade marks.
- Register your business name.
- Apply for the relevant licences and registrations for your business type, such as a TFN or ABN.
- Find the right insurance for your business.
Coronavirus (COVID-19) support for sole traders
Assistance is available to help sole traders navigate the challenges of coronavirus (COVID-19).
- Upskill My Business — short courses, online events and resources from the state’s top education providers and industry experts
- Business recovery and resilience mentoring — Up to four 2-hour mentoring sessions with an experienced professional who will help eligible business owners make informed decisions about how to navigate the economic challenges of coronavirus (COVID-19)
- Mental health during coronavirus — Advice and resources to maintain mental health during coronavirus (COVID-19) in Victoria.
Find more support options on the Victorian government's coronavirus (COVID-19) website.