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How to start freelancing in Australia: registration and tax basics explained

By FastBuySale Newsroom · 9 Nov 2026 · 18m ago

Before you start

Freelancing means selling your skills to clients on a project or ongoing basis rather than working as an employee. In Australia, that usually means running a small business as a sole trader. The steps below follow official guidance from business.gov.au, the Australian Business Register, ASIC and the ATO. Individual circumstances vary, so check official pages or a registered tax agent for your situation. This guide makes no promise about income.

Step 1: confirm you are really freelancing

If a single client controls your hours, supplies your equipment, pays you for time rather than results and you cannot delegate the work, you may legally be an employee, even if you have an ABN. Since 26 August 2024, the Fair Work Act requires the real substance of the whole relationship to be considered. Sham contracting, where an employer disguises employment as contracting, is unlawful. Being genuinely in business usually means you can work for several clients, set your own methods and carry commercial risk.

Step 2: choose a business structure

Sole trader. You and the business are legally the same; business income is taxed as part of your personal income. It is cheap and simple to set up and the most common choice for freelancers.

Company. A separate legal entity with its own tax rate and more reporting obligations and costs. Directors have legal duties.

Partnership. Two or more people carrying on business together and sharing income.

Trust. Used in some situations for asset protection or distributing income, with added complexity.

You can change structure later, though changing may have tax consequences. Most freelancers start as sole traders.

Step 3: apply for an ABN

An Australian Business Number identifies your business to the government and to clients. Applying is free through the Australian Business Register or the Business Registration Service. You will need your tax file number and details of your business activity. If you supply services to a business without quoting an ABN, the business may have to withhold tax at the top marginal rate from your payment, so it is important to have one before invoicing.

Step 4: register a business name if you need one

If you trade under your own first and last name, such as Jane Smith, you do not need to register a business name. If you trade under any other name, such as Jane Smith Design or Bright Pixel Studio, you must register it with ASIC. Registering a business name does not give you trade mark rights, which are handled separately by IP Australia.

Step 5: decide on GST

You must register for GST when your GST turnover reaches 75,000 dollars a year, or if you provide ride-sourcing services, from the first trip. Below that, registration is optional. If registered, you charge GST on taxable sales, claim credits for GST on business purchases and lodge business activity statements. Many services supplied to overseas clients who are not in Australia are GST-free, but they still count toward turnover.

Example: Ellie, a freelance copywriter, expects to earn 50,000 dollars in her first year, mostly from small Australian businesses. She does not register for GST yet, so she does not charge it, but she monitors turnover monthly. When a large contract pushes her expected turnover above 75,000 dollars, she registers within 21 days, as required.

Step 6: set up contracts and invoices

Use a written agreement for each client or project covering scope, deliverables, deadlines, fees, payment terms, revisions, intellectual property, confidentiality and termination. Invoices should show your name or business name, ABN, invoice date and number, description of work and amount. If you are registered for GST, your tax invoices must also show GST and meet the ATO's tax invoice requirements.

Step 7: open a separate bank account

A dedicated account for freelance income and expenses makes bookkeeping, tax returns and BAS much simpler, and helps show that you are running a genuine business.

Step 8: plan for income tax

As a sole trader, you report business income and expenses in your individual tax return, and your profit is added to other income and taxed at your marginal rate, plus the Medicare levy. The tax-free threshold of 18,200 dollars applies once to total taxable income. Because clients do not withhold tax, set aside a share of each payment. Once your business income grows, the ATO may place you into PAYG instalments, which spread tax payments across the year.

Worked example: Omar earns 6,000 dollars a month freelancing as a web developer and has no other job. He transfers 25 to 30 percent of each payment, 1,500 to 1,800 dollars, into a tax savings account. At the end of the year he lodges his return, claims business deductions and pays any balance from that account. The exact amount depends on his deductions and current tax rates.

Step 9: claim legitimate deductions

You can generally claim expenses incurred in earning your income: software subscriptions, equipment, a home office share of running costs, professional memberships, business insurance, advertising and the business share of phone and internet costs. Larger assets such as computers are usually depreciated, although small business concessions may let you write off some assets sooner. Keep records for five years.

Step 10: think about super and insurance

Sole traders do not have to pay super guarantee for themselves, but retirement savings still matter. Voluntary contributions may be tax-deductible if you notify your fund. Some contractors who are paid mainly for their labour may be entitled to super guarantee contributions from the client, so check the ATO's guidance if that describes you.

Consider professional indemnity insurance if a mistake in your work could cost a client money, public liability insurance if you visit clients' premises, and income protection insurance in case illness stops you working. Some clients require specific cover in their contracts.

Step 11: keep records and stay organised

Keep invoices, receipts, bank statements, contracts and logbooks for five years. Bookkeeping software or a simple spreadsheet updated weekly saves a great deal of stress. If you are registered for GST, reconcile your accounts before each BAS is due.

Step 12: find clients safely

Build a portfolio, ask past colleagues and employers for referrals and use reputable freelance platforms where helpful, reading their fee structures and terms. Be wary of anyone who asks you to pay to access work, sends overpayments and asks for refunds, or pressures you to start without a contract. Report scams to the National Anti-Scam Centre's Scamwatch service.

Step 13: set rates that cover the hidden costs

An employee's salary comes with paid leave, super and equipment provided by the employer. A freelancer has to fund all of these from fees, and not every hour is billable, because time goes on finding clients, admin, invoicing and learning. A common way to set a starting rate is to estimate the income you need for a year, add business costs, super and insurance, then divide by a realistic number of billable hours, often well below 40 hours a week across 52 weeks.

Example: if Ellie wants 70,000 dollars before tax, expects 8,000 dollars of costs and voluntary super, and estimates 1,100 billable hours a year, she needs about 71 dollars an hour. The salary calculator linked on this page helps compare a freelance rate with an employee salary.

Printable checklist

Status: genuinely in business, not disguised employment?

Structure: sole trader or another structure chosen?

ABN: applied for and quoted on every invoice?

Business name: registered with ASIC if not trading under my own name?

GST: turnover tracked against 75,000 dollars; registered if required?

Contracts and invoices: templates ready, payment terms clear?

Tax: separate account; share of each payment set aside; PAYG instalments expected?

Super and insurance: voluntary super planned; professional indemnity and other cover considered?

Records: kept for five years?

The bottom line

Starting freelancing in Australia is straightforward: most people operate as sole traders with a free ABN, register a business name only if needed and register for GST once turnover reaches 75,000 dollars. The harder part is discipline: contracts, records and setting money aside for tax and super. Use business.gov.au, the ABR, ASIC and the ATO as your official references. This guide is general information, not legal or tax advice, and does not promise income.

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