How to Set Up Your First Business ABN, Tax, and Insurance as a Sole Trader

Stepping into self-employment can be exciting — and a little overwhelming. Whether you’re starting a side hustle, freelancing, or going full-time, getting your legal, tax, and insurance essentials sorted early will save you stress (and fines) later.

If you’re becoming a sole trader in Australia, here’s a step-by-step guide to get you up and running.

1. Apply for Your ABN

An Australian Business Number (ABN) is a unique 11-digit number that identifies your business with the government, suppliers, and clients.

Why you need it:

• To issue invoices

• To avoid having clients withhold tax from payments

• To register for GST if you earn over $75,000/year

How to get it:

• Apply online via the Australian Business Register

• It’s free, and in most cases you’ll get it instantly

2. Understand Your Tax Obligations

As a sole trader, you and your business are taxed as one entity. You’ll report your business income in your personal tax return.

Key things to know:

• Keep good records of all income and expenses

• Put aside a percentage of every payment for tax (many set aside 25–30%)

• If you expect to earn over $75,000/year, register for GST

• You may need to pay PAYG instalments — quarterly pre-payments towards your tax bill

Tip: Consider using accounting software like Xero, MYOB, or QuickBooks to make BAS and tax time easier.

3. Set Up Business Insurance

The insurance you need will depend on your work, but as a minimum:

• Public Liability Insurance – Covers you if your work causes injury or property damage to others.

• Professional Indemnity Insurance – Protects you if a client claims your advice or service caused them a loss.

• Income Protection Insurance – Provides income if you can’t work due to illness or injury.

Some industries legally require certain insurances before you can operate. Always check with your industry body.

4. Keep It Organised from Day One

• Open a separate bank account for your business income and expenses

• Use a bookkeeping app or spreadsheet from the start

• Store all receipts and invoices digitally

• Schedule time each month to review your finances

Setting yourself up as a sole trader isn’t complicated, but it does require getting your ABN, tax systems, and insurance in order before you start trading. A few hours of setup now will give you the confidence and compliance you need to focus on growing your business.