Running a business in Australia as a sole trader is the simplest business structure. As the name suggests, a sole trader personally operates and manages every aspect of the business, and the individual’s tax affairs are the same as the business’s. When starting a business as a sole trader, you need to:

1. Apply for an ABN (Australian Business Number);

2. Register a business name. If trading under a name other than your own, you must register it with the Australian Securities and Investments Commission (ASIC);

3. Register for GST (Goods and Services Tax);

4. Apply for relevant licences.

Meeting these four requirements is the prerequisite for a sole trader to successfully run a business in Australia. Below we will go through the key considerations for each step.

1

Apply for an ABN

ABN stands for Australian Business Number, a unique 11-digit number used to identify a business. Each operator relies on this 11-digit number to interact with other businesses as well as government bodies such as the Australian Taxation Office (ATO). Its main purposes are:

To verify your business identity when transacting with other companies;

Having an ABN is a prerequisite for registering for GST;

It is essential if you want to register an Australian domain name and build a business website;

If the company’s annual turnover is equal to or greater than AUD $75,000, GST registration is compulsory. If annual turnover is less than AUD $75,000, GST registration is voluntary.

2

Business Name Registration

In Australia, almost all sole traders trade under their own personal name. Therefore, if you trade under your own name, you do not need to register a business name with ASIC.

However, if you wish to use another name to run the business, you must register that business name with ASIC. The process is straightforward: simply register the business name online, pay the relevant fee, and you will receive a certificate confirming the registration of that business name.

Note that before registering a name, you need to:

Have a valid ABN;

Search the ASIC Business Name Register before registering to confirm that the business name you want is still available and has not already been registered.

* Note: ASIC will not register two businesses with the same name. However, this does not necessarily mean that once an operator has registered a business name, they have the exclusive right to use, licence or sell that name. In other words, simply registering a business name does not give the operator “ownership” of the name.

To obtain exclusive rights to a name, the operator may need to consider registering a trademark to protect the business name. Unlike registering a business name, registering a trademark is not a legal requirement. However, it can be an effective way of maintaining the competitive advantage of the business, as it allows the operator to exclusively use the business name when marketing and selling goods and services.

3

Register for GST

In the following situations, an operator must register for GST:

When the business or enterprise’s GST turnover (gross income less GST) reaches or exceeds AUD $75,000;

When starting a new business and expecting turnover to reach or exceed the GST threshold in the first year of operation;

If the business is already operating and has reached the GST turnover threshold;

If a non-profit organisation’s GST turnover reaches or exceeds AUD $150,000 per year;

When the operator provides taxi or limousine services to passengers (including ride-sharing), GST registration applies regardless of your GST turnover — whether your taxi vehicle is your own or leased;

If you wish to claim fuel tax credits for the business or enterprise.

4

Apply for Relevant Licences

Typically, when a sole trader operates a business, the operator must obtain specific licences. For example, the local government where the operator is based may require certain permits to approve the compliant use of the business premises. Generally, without the relevant business licences, the operator cannot commence business operations.

Final Thoughts

Although starting a business as a sole trader appears straightforward, those with no prior experience may still face many uncertainties — for example, which licences are mandatory, and whether registering a trademark to protect the business name is necessary. We recommend consulting a qualified lawyer to help safeguard your first venture into business.