Thinking about becoming your own boss? Many Australians dream of running their own show, and one of the easiest ways to get started is by becoming a sole trader. In this guide, we’ll walk you through what it means to be a sole trader, why it might be the right move for you, and how to get started — step by step.
✨ Real talk: A friend of mine, Sam, left a 9-to-5 job to start a home bakery. She began as a sole trader, and within six months, she was making more than her old salary — all while doing what she loved!
Let’s dive in.
What is a Sole Trader?
A sole trader is a person who runs a business as an individual. You are the owner, manager, and worker — all in one. This doesn’t mean you have to work alone (you can hire staff), but you are legally responsible for everything the business does.
You’re not setting up a company, which means you and the business are one legal entity. It’s the most straightforward and affordable business structure in Australia.
➡️ Learn more about the sole trader structure on business.gov.au
Why Choose to Be a Sole Trader?
Becoming a sole trader has many benefits:
-
Simple setup and low costs
-
Full control over decisions
-
Fewer legal and tax obligations
-
Keep all the profits (after tax, of course!)
But remember, being a sole trader also means full responsibility for any debts and losses.
Step-by-Step: How to Set Up as a Sole Trader in Australia
Setting up as a sole trader is surprisingly easy. Here’s a simple guide:
1. Choose Your Business Name
You can trade under your own name or register a different name.
➡️ Register a business name with ASIC
2. Apply for an ABN (Australian Business Number)
This is essential. You’ll need it to invoice clients, register for GST (if required), and more.
3. Register for GST (if earning over $75,000)
If your business earns more than $75,000 a year, you must register for the Goods and Services Tax.
4. Set Up a Business Bank Account
Keep your personal and business finances separate. It’ll save you tons of time — especially at tax time!
5. Keep Accurate Financial Records
You must keep track of all income and expenses for at least 5 years.
Tip: Use an accountant to help with setup and tracking. Perfect Accounting PTY Ltd offers expert accounting services tailored for sole traders. They’ll handle the boring stuff while you focus on your business!
Your Tax Responsibilities as a Sole Trader
As a sole trader, you report business income as part of your personal income tax return. There’s no separate business tax return.
You’ll need to:
-
Lodge an annual tax return
-
Pay income tax on profits
-
Possibly pay PAYG (Pay As You Go) installments
-
Register and pay for GST (if applicable)
-
Superannuation (if you want to pay yourself for retirement)
Pros and Cons of Being a Sole Trader
Let’s break it down simply:
✅ Pros
-
Easy and cheap to start
-
Fewer reporting requirements
-
Full control
-
You keep the profits
❌ Cons
-
Unlimited personal liability
-
Harder to raise funds
-
May be seen as less “professional” than a company
-
Less tax flexibility
Still, for many — especially freelancers, tradies, and small retailers — it’s the perfect fit!
Real-Life Example: How Josh Turned His Hobby into a Business
Josh loved fixing bikes. On weekends, he’d help friends and family with repairs. One day, he decided to go all in and registered as a sole trader. With just an ABN and some social media marketing, his “BikeFix by Josh” business took off. Within a year, he had clients across Melbourne.
What helped Josh most?
“Honestly, I had no idea about tax. Perfect Accounting PTY Ltd handled my setup and tax returns. They even helped me claim deductions I never knew about.”
Boost Your Confidence: Work With the Right Experts
Starting a business is exciting — and a little overwhelming. That’s why working with trusted professionals like Perfect Accounting PTY Ltd is a smart move.
They offer:
-
Business structure advice
-
Tax preparation for sole traders
-
BAS and GST services
-
Bookkeeping and more
Whether you’re just starting or already established, Perfect Accounting makes it simple, stress-free, and affordable.
FAQs About Being a Sole Trader
Can I employ people as a sole trader?
Yes! You can hire staff, but you’ll need to register for PAYG withholding and meet your employer obligations.
Do I need an accountant?
While you’re not required to use one, a good accountant will save you time and money — and help avoid costly mistakes. (Hint: Call Perfect Accounting)
Can I change to a company later?
Absolutely. Many people start as sole traders, then switch to a company structure when their business grows.
Final Thoughts
Becoming a sole trader is one of the best ways to dip your toes into the business world. It’s simple, affordable, and gives you complete control. Whether you’re starting a side hustle, freelancing, or turning a passion into income, this structure works beautifully for many Australians.
But don’t go it alone — let the experts guide you. Contact Perfect Accounting PTY Ltd to get started on the right foot. With their help, your business won’t just survive — it’ll thrive.
Useful Links
Need help setting up your business?
Visit Perfect Accounting PTY Ltd now and get expert support from real people who care.
