Starting a business

You’re entitled to an ABN if you’re carrying on or starting an enterprise in Australia. You’re not entitled to one for work you do as an employee, even if you or your employer calls it contracting. ABN entitlement depends on carrying on or starting an enterprise. An invoice or a client’s request alone does not establish it.

1. Record the work arrangement, independence, activity and evidence that the enterprise has started.
2. Read the ABR entitlement guidance before applying.

An ABN does not decide whether a worker is an employee for tax, super or workplace law.

ABR ABN application and entitlement · ABN entitlement, ABR

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The bold answer was checked on 27 September 2026.

Apply online through the ABR. Details such as your TFN help the ABR identify you and process the application faster; if it needs to check details, it aims to review the application within 20 business days. Apply through the official ABR route after checking entitlement.

1. Gather the entity structure, business activity, start date and contact information required by the ABR.
2. Enter identity information directly into the official application and save its confirmation.

This site neither applies for an ABN nor handles identity documents.

ABR ABN application and entitlement

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The bold answer was checked on 27 September 2026.

Generally, a business involves continuous and repeated activities done to make a profit. The ATO asks whether you intend to and have a prospect of making a profit, whether the scale is enough to make one, and whether the activities are repeated and continuous; a hobby you don’t seek to profit from is not a business. Assess the pattern of activity, commercial purpose and how the activity is organised.

1. Document your intention, pricing, repetition, scale, records and plan to make a profit.
2. Keep the conclusion and supporting facts, and reassess when the activity changes.

There is no single revenue figure in this guide that classifies every activity.

Starting, registering or closing a business · Are you in business?

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The bold answer was checked on 27 September 2026.

A sole trader reports business income as their own and is personally liable for the business’s debts. A company is a separate legal entity with higher set-up and running costs and an annual ASIC review; it pays tax at 25% or 30%, and it pays directors wages or fees rather than drawings. Compare liability, ownership, administration, tax and how profits will reach the owners.

1. Prepare the same forecast under each structure, including compliance costs and money taken out.
2. Discuss asset protection, existing contracts and restructuring costs with the relevant advisers before choosing.

A lower company tax rate alone does not establish a lower total cost or a suitable structure.

Starting, registering or closing a business · Difference between a sole trader and a company, business.gov.au · Changes to company tax rates · 13-week cash forecast

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The bold answer was checked on 27 September 2026.

The ATO automatically enters an individual, including a sole trader, into PAYG instalments when their latest return shows instalment income of $4,000 or more, tax payable of $1,000 or more and estimated tax of $500 or more. You can also enter voluntarily. Reserve cash against an estimate of your annual personal tax position and instalments already paid.

1. Forecast business profit alongside salary and other personal income, deductions and credits.
2. Place expected instalments and the remaining tax payment into the cash forecast on their due dates.

A fixed percentage of sales can miss deductions, other income and tax already paid.

Your tax return · Starting PAYG instalments · 13-week cash forecast

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The bold answer was checked on 27 September 2026.

A sole trader doesn’t have to have a business bank account, although it’s a good idea. A partnership, company or trust must have a separate bank account for tax purposes. A separate account makes business transactions easier to trace. The requirements also depend on the entity.

1. Record which accounts hold business money and reconcile each to its statement.
2. For a company or trust, keep entity funds and private funds clearly identified and correctly recorded.

Check the account requirements for your structure before opening or changing banking arrangements.

Starting, registering or closing a business · Set up your business bank account, business.gov.au

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The bold answer was checked on 27 September 2026.

What you draw doesn’t change what a sole trader reports: all your business income goes in your individual tax return, whatever amounts you transfer to your personal account. Sole-trader drawings transfer the owner’s money out of the business; they are recorded separately from operating expenses.

1. Record the transfer against drawings or the owner’s equity account in your agreed chart.
2. Keep drawings visible in the cash forecast so the business can meet upcoming obligations.

A sole trader’s drawings do not set the amount of taxable business profit.

Starting, registering or closing a business · Using business money and assets · 13-week cash forecast

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The bold answer was checked on 27 September 2026.

For income that is mainly a reward for your personal effort or skill, the PSI rules apply when 80% or more of it comes from one client and its associates, unless you pass the results test or hold a personal services business determination. Review whether the income is mainly a reward for personal effort or skill, then work through the applicable PSI tests.

1. Keep contracts, invoices, working arrangements and evidence for any test relied on.
2. Record the income streams separately and review personal-services-business conditions with your adviser.

An ABN or company structure does not by itself switch off the PSI rules.

Starting, registering or closing a business · The PSI 80% rule

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The bold answer was checked on 27 September 2026.

Income from providing services or assets for a fee through a sharing economy platform, such as ride-sourcing, renting out a room or sharing assets, is taxable, and GST can apply. Platform operators report these transactions to the ATO. Reconcile gross platform activity to payouts before deciding how to report it.

1. Export sales, fees, refunds and activity records for the income year.
2. Document whether the activity is business, employment or another income category and check GST separately.

Net bank deposits can omit fees and gross receipts that need separate reporting.

Starting, registering or closing a business · Types of activities in the sharing economy

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The bold answer was checked on 27 September 2026.

Only if you meet the non-commercial loss rules: your income for the income requirement must be under $250,000 and you must pass one of 4 tests, such as earning at least $20,000 of assessable income from the business. Otherwise the loss is deferred. A business loss needs a separate review before it can reduce other income.

1. Keep the loss calculation, activity history and records relevant to the non-commercial loss tests.
2. Record whether an exception, test or discretion applies, or whether the loss must be deferred.

A loss in the accounts does not automatically offset salary in the tax return.

Starting, registering or closing a business · Non-commercial losses

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The bold answer was checked on 27 September 2026.