Going Sole Trader Setup

You have got your trade ticket and a builder wants you on site as a subbie. Before you send a single invoice, there is a setup sequence to work through — structure, ABN, registrations, banking, licences and insurance. Here is the order, and the first-year mistakes that catch new sole traders.‍‌‌‌​‌​‌‌‌‌‌‌‌‌​​​‌‌​​‌​​‌​​‌​‌​‌‍

The setup sequence

Work through these in order before you invoice:

1. Structure and TFN. The simplest start is sole trader — you are the business and your business income is taxed in your own return. You use your individual Tax File Number (TFN) (apply through the ATO if you do not have one). Decide later whether to incorporate (see Business Structures).
2. Register an ABN. Apply free through the government Business Registration Service (business.gov.au) using your TFN — straightforward applications can be approved on the spot. Trade under your own name, or register a business name with ASIC in the same flow if it differs. (Detail: ABN & Contractor Status.)
3. GST and PAYG. Register for GST once your turnover will pass $75,000 in a 12-month period (many new sole traders hold off until they are close, then register and add 10% to taxable invoices). You only need PAYG withholding if you later hire.
4. Bank and bookkeeping. Open a separate business account on day one — it is not legally required for a sole trader, but it keeps your books clean and your accountant cheap. Use simple software (Xero, QuickBooks or even a tidy spreadsheet), keep every receipt, and build an invoice template with your name, ABN, the client, a work description, the date, payment terms and GST if registered.
5. Licences before you contract. Check your state regulator for the licence your trade and job value require — many trades (especially electrical, plumbing and building over thresholds) need a licence to lawfully do the work, and where you contract in your own right (even to a builder) a contractor or business licence too. Hold both before you take the job.
6. Insurance before site. Arrange public liability (and workers' comp where you employ) before you set foot on site, and get a Certificate of Currency from your broker to prove it. (Detail: Your First Quote, Contract & Insurance and Public Liability Insurance.)
7. Tax and super. You lodge one individual return a year with a business schedule; the ATO will likely start you on quarterly PAYG instalments after your first return. Set up a super fund and pay yourself — your contributions can be tax-deductible (see Sole Trader Super & Retirement).

The Certificate of Currency

Builders will ask for a Certificate of Currency (CoC) before they let you on site or pay you — it is a one-page document from your insurer confirming your public liability policy is active, with the insurer, policy number, cover type, period and limit. When you buy PL, ask your broker to issue one; request a generic "To whom it may concern" version and grab a few copies at renewal so you can fire one off as each new site onboards. No CoC, no access, no payment.

First-year mistakes that hurt

• Not registering for GST when you cross $75k → back-dated GST plus penalties. Watch your rolling 12-month income and register early if you are close.
• Mixing personal and business money → a bookkeeping nightmare and missed deductions. Separate account from day one.
• Not paying yourself super → nothing for retirement. Automate a percentage of each payment.
• No cash-flow plan → blindsided by the first tax bill or a blown motor. Set aside for tax, GST and emergencies as the money comes in.
• Letting PL lapse, or not understanding it → personally liable. Use a trade-savvy broker and read the schedule.
• Working outside your licence, or with nothing in writing → fines, disputes, unpaid invoices. Stay inside your scope and use written work orders.
• Doing everything solo → costly errors. Get a registered tax/BAS agent early.

Common mistakes

• Sending invoices before the ABN, licence or PL is sorted.
• Treating "I will register for GST later" as "never".
• No separate bank account.
• No money set aside for tax.

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