Sole Trading
13. Setting up as Sole Trader
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 23 Sep 2015
- Once you have taken relevant considerations into account and obtained legal advice on how your specific business enterprise will be advantaged or disadvantaged by choosing a sole trading structure you will need to register your business.
- Generally it is fast and simple to do so. The steps are as follows.
- You will need to register for a Tax File Number (TFN). Usually if you have received income from wages previously you will already have a TFN. Sole traders generally use their individual TFN for their business purposes.
- You will need to register online for an Australian Business Number (ABN). You cannot do so without a TFN. Registering for an ABN is not compulsory however if you intend to deal with other business they are entitled to withhold 46.5% of any payments owed to you if your ABN is not declared. It is therefore advisable that you register for an ABN.
- You should investigate and decide if any additional registrations apply to you.
- If your annual revenue is expected to reach or exceed $75,000 then you must register for Goods and Services Tax (GST). You may choose to register for GST if your annual revenue is less than this amount. This increases your paperwork but allows you to claim back GST credits on purchases you make for the business.
- Many sole traders also decide to register a business name where they do not intend to trade under their personal name. You can do so through the ASIC Connect homepage. You must ensure that:
- your name is not already in use by another business; and
- that you are not infringing on the registered trade mark of any other business.
- If you want to protect your business name against use by others then you must do more than just register your business name. Registration of a name alone does not provide you with any rights to stop others from using that name or a name like it. In order to achieve protection you must register a trade mark. This is particularly important if you intend to grow your business over time and will rely heavily on a unique brand name and identity.
- Your business as a sole trader will come into existence from the day on which you are registered.
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