How to set up as a sole trader tradie in Australia: ABN, GST and BAS

Going out on your own is a big step. The trade side you already know. The paperwork side is where new sole traders get stung, usually by a tax bill they didn’t set money aside for.

This guide walks through the setup in the order you’ll actually do it. Facts are from the ATO, ASIC and business.gov.au, checked in October 2026. It’s general information, not tax advice, and a good tax agent is worth their fee in your first year.

Step 1: Check your licence covers working for yourself

An ABN doesn’t give you permission to do trade work. Licensing is handled by each state and territory, and the rules depend on your trade and the value of the work.

Plumbing, gasfitting and electrical work need a licence in every state, whatever the job size. Building work usually needs a licence or registration above a dollar threshold, and some states have a separate contractor licence for running your own business, on top of the qualification you work under. If you’ve been working as an employee under your boss’s licence, check whether you need a contractor licence of your own before you quote a single job. Our licence renewals guide lists renewal cycles by state, and when a white card needs redoing.

Our homeowner guide to checking a tradie lists the regulator in each state. The same sites explain what licence you need.

Step 2: Get an ABN (it’s free)

An Australian Business Number identifies your business to the ATO and to your clients. You apply through the Australian Business Register, and it doesn’t cost anything. Sites that charge a fee are just lodging the same free form for you.

As a sole trader you use your own tax file number. Your ABN goes on every quote and invoice.

Without an ABN, a business that pays you is generally required to withhold tax from your payment at the top marginal rate (47%) under the no-ABN withholding rules. Builders won’t pay you without one, and nor should they.

Step 3: Business name, only if you need one

If you trade under your own name, you don’t need to register a business name. “Sarah Nguyen” is fine. “Nguyen Electrical” needs registering with ASIC.

From 1 July 2026 the ASIC fee is $47 for one year or $108 for three years. business.gov.au says it takes about 10 to 15 minutes to apply online, and you need your ABN first. Registering a business name doesn’t give you trade mark rights. If you’re building a brand, search IP Australia’s trade mark records too.

Step 4: Decide on GST

You must register for GST within 21 days of your GST turnover reaching $75,000, either over the past 12 months or projected for the next 12. GST turnover is your total business income (not profit), excluding GST and certain other items. For a tradie, $75,000 comes up faster than you’d think. That’s around $1,450 a week of work.

Below the threshold you can register voluntarily. Here’s the trade-off:

If most of your work is for builders and businesses, registering early often makes sense. If you mostly work for homeowners and you’re well under the threshold, holding off can keep your prices sharper. Talk it through with your tax agent.

Step 5: Learn your BAS routine

Once you’re registered for GST, you lodge a business activity statement (BAS). It reports the GST you’ve collected, the GST credits you’re claiming and, later, any PAYG instalments.

Most small businesses lodge quarterly. The ATO due dates are:

Swipe the table sideways to see every column

Lodging online may get you an extra two weeks for most quarters (not for the October to December quarter, which already has extra time built in). A registered tax or BAS agent may also have later dates. If the due date falls on a weekend or public holiday, you have until the next business day.

A few things make BAS easier for small businesses:

• Simpler BAS reporting is available to small businesses with GST turnover under $10 million, so you only report a handful of labels.
• Cash basis. Small businesses can usually account for GST when they’re paid rather than when they invoice. If clients are slow payers, this helps cash flow.
• Accounting software. Bank feeds plus GST coding in software like Xero or MYOB means your BAS is mostly done by the time it’s due. See our Xero vs MYOB comparison.

Our BAS and GST guide for tradies sets out the due dates, tax invoice rules and a weekly routine in more detail.

Step 6: Set money aside for income tax

As a sole trader, your business profit goes in your personal tax return and is taxed at individual rates. Nobody withholds tax from your payments the way an employer did. That means your first tax bill can arrive in one lump, sometimes alongside the start of PAYG instalments for the following year.

PAYG instalments are the ATO’s way of collecting tax through the year. Once your tax return shows enough business income, the ATO will usually put you into the system and you’ll pay instalments with your BAS or on a separate notice.

A simple habit works for most people: transfer a fixed percentage of every payment into a tax account. Your tax agent can suggest the right percentage for your income. Many people start somewhere between 20% and 30% of profit, on top of the GST.

Step 7: Know the trade-specific rules

Taxable payments annual report (TPAR). If you’re in building and construction and you pay contractors or subbies for building and construction services, you may need to lodge a TPAR by 28 August each year, reporting what you paid them. If you’re the subbie, the builders you work for are probably reporting payments to you, so make sure your own records and tax return match.

Personal services income (PSI). If most of your income comes from your own labour for one builder, the PSI rules may limit what you can claim. Your tax agent can check.

Contractor or employee? If a builder controls your hours, supplies your tools and pays you by the hour with no ability to subcontract, you may legally be an employee, with super and other entitlements. An ABN alone doesn’t make you a contractor.

Step 8: Records, super and the bank account

• Records. The ATO generally requires you to keep business records for five years. Photograph receipts as you go, or use your accounting app’s receipt capture.
• Separate bank account. Not legally required for a sole trader, but it makes tax time much simpler and clearly separates personal and business spending.
• Super. You don’t have to pay yourself super. Nobody else will pay it for you either. Personal contributions may be deductible if you meet the conditions, and your fund or a licensed financial adviser can explain the options.
• Deductions. Protective gear such as hi-vis, steel-capped boots, safety glasses and gloves are generally claimable. Ordinary clothes like jeans and plain shirts aren’t, even if you only wear them at work. The ATO publishes a tradie-specific guide in the sources below.

Our tradie tax deductions guide sets out what the ATO says you can claim, including the $20,000 instant asset write-off.

Super, insurance, tools and the ute all have to come out of what you charge. Our hourly rate calculator adds them up with your wage and the hours you can bill, so you can see the rate you need before you quote your first job.

Step 9: Insurance before your first job

Many builders and commercial clients won’t let you on site without public liability insurance. Tools cover and income cover are separate products, and workers compensation generally doesn’t cover sole traders. Our tradie insurance guide explains each type and what to watch for.

See BizCover public liability quotes → Affiliate link. We may be paid a commission if you buy. Not a recommendation of any policy: read the PDS and TMD first.

Your setup checklist

1. Confirm your licence covers contracting in your own right.
2. Apply for your free ABN.
3. Register a business name with ASIC if you won’t trade under your own name.
4. Decide on GST now, and set a reminder to watch the $75,000 threshold.
5. Open separate accounts for business, GST and tax.
6. Choose accounting software and connect your bank feed.
7. Arrange public liability, tools cover and income cover.
8. Find a tax agent who works with tradies.
9. Set up quote and invoice templates with your ABN (and “Tax invoice” wording if you’re registered for GST).
10. Put your BAS due dates in your phone calendar.

Once the basics are done and jobs are flowing, a job management app can take care of quotes, scheduling and invoices. Our ServiceM8 vs Tradify vs Fergus comparison covers which one suits which kind of business, and our guide to invoicing and quoting apps covers cheaper options if you’re just starting.