You’ve done your time, got your ticket, and you’re thinking about working for yourself. Being your own boss is a big step up — more freedom, more money on a good week, and all the admin that used to be someone else’s problem now landing on you. Here’s the plain-English version of what you need to sort before you swing the first invoice as a sole trader.
Short version: Get an ABN, sort your licences, get the right insurance, and understand your tax and GST obligations. Do those four things properly and the rest is just good habits.
Sole trader — the simplest way to start
Most tradies going out on their own start as a sole trader. It’s the simplest business structure: you and the business are the same legal entity, the setup is cheap, and the paperwork is light. You keep the profits, you’re personally responsible for the debts, and you report the business income on your own tax return.
Down the track you might look at a company or trust structure — usually once the income grows or you want to separate your personal assets from business risk. That’s a conversation for an accountant. For getting started, sole trader is the common, sensible choice. The official rundown of business structures sits on the ATO site and the Government’s business information at ato.gov.au.
Get your ABN
An Australian Business Number (ABN) is your business’s identifier. You’ll need one to invoice properly, and without it other businesses may have to withhold tax from what they pay you. Applying is free through the official channel — never pay a third party to “get you an ABN”.
What to have ready
- Your tax file number and personal details.
- A description of your trade activity.
- The date you’re starting.
Apply straight through the official government channel linked from ato.gov.au. Once you’ve got your ABN, keep the details current — you’re required to update them if things change.
Sort your licences and registrations
Qualifying and being licensed to work for yourself aren’t always the same thing. Many trades — electrical, plumbing, gas, refrigeration and others — require a contractor or trade licence in your own name before you can take on work directly for customers, on top of the qualification you hold. The rules are set state by state.
Before you take a single job, confirm exactly what licence you need to operate as a contractor in your state, and whether there’s a difference between a worker’s licence and a contractor’s licence. Check with your state licensing authority. You can confirm the qualification behind your trade on the national register at training.gov.au, and check any high-risk work tickets you rely on through your state WHS regulator. Don’t guess with licensing — working unlicensed can void your insurance and land you a serious fine.
Get the right insurance
When you work for yourself, there’s no employer’s policy standing behind you. The main types of cover tradies typically consider are described generically below — the specifics depend on your trade and situation, so get proper advice.
- Public liability — covers you if your work injures someone or damages property. Many clients and sites won’t let you start without it.
- Personal accident / income protection — replaces income if you’re hurt and can’t work, since you won’t have an employer’s cover behind you.
- Tool and equipment cover — for theft or damage to the gear you depend on.
- Professional indemnity — relevant for some trades that give advice or design.
If you take on your own apprentices or workers later, workers’ compensation becomes a legal requirement. For neutral guidance on the types of cover and how to compare them, start at moneysmart.gov.au. This guide won’t name any insurer.
Tax, GST and keeping records
As a sole trader, no one’s taking tax out of your pay anymore — you have to manage it yourself. Two big habits keep you out of trouble.
Put money aside for tax
You’ll pay income tax on your business profit through your annual return. Once your income reaches a certain level, the ATO may put you into pay-as-you-go instalments, where you pay tax progressively through the year. Set aside a chunk of every payment from day one so a tax bill never catches you out.
Know when GST applies
You must register for GST once your business turnover reaches the registration threshold (or expects to). Once registered, you add GST to your invoices, lodge business activity statements, and can claim GST back on business purchases. Check the current threshold and rules at ato.gov.au — don’t rely on a figure you heard on site.
Keep clean records
- Keep every invoice you send and every receipt for business expenses.
- Separate your business and personal money — a dedicated account makes tax time far easier.
- Track your work-related deductions (tools, vehicle use, protective gear) as you go.
- Consider a good accountant — their fee is usually money well spent.
The ATO explains what records you must keep and for how long. Good bookkeeping isn’t just for the taxman — it’s how you actually know whether you’re making money.
FAQ
Do I need an ABN to work for myself?
Practically, yes. Without one, businesses you invoice may have to withhold tax at the top rate, and you can’t register for GST. It’s free through the official channel.
Am I automatically licensed to contract once I qualify?
Not always. Many trades require a separate contractor licence in your own name. Confirm with your state licensing authority before taking work.
When do I have to register for GST?
Once your turnover reaches the GST registration threshold, or you expect it to. Check the current threshold at ato.gov.au — it changes over time.
How much should I put aside for tax?
There’s no fixed figure — it depends on your income and deductions. A common habit is to set aside a solid portion of every payment. An accountant can give you a rate to aim for.
Should I stay a sole trader or set up a company?
Sole trader is simplest to start. As income and risk grow, a company or trust may suit better. Get advice from an accountant — it’s a decision worth paying for.
Where to confirm everything
- ato.gov.au — ABN, GST, tax, PAYG instalments and record-keeping.
- training.gov.au — the qualification behind your trade.
- moneysmart.gov.au — neutral guidance on insurance and managing business money.
- Your state licensing authority — for contractor licence requirements in your trade.
General information only — not financial, legal or tax advice. Check the official source and your state authority before acting.
Related guides
- ABN and Sole Trader Basics for Tradies
- Tax Deductions for Apprentices and Tradies
- Income Protection Insurance for Tradies
- Superannuation for Apprentices
- High-Risk Work Licences Explained
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