Turn your freelancing skills into a business
Wondering how to start a freelance business in Australia? The hardest part isn’t finding clients, it’s working out what’s legally required to get started. ABN or ACN? GST now or later? What must be on a tax invoice? And how do you stay compliant without drowning in admin?
The good news? It doesn’t have to be complicated. This guide breaks down every essential step, from getting your ABN to setting up your finances and protecting your work, so you can launch your freelance business legally, confidently, and with total peace of mind.
Is freelancing in Australia considered a business or a hobby?
Freelancing is considered a business if your primary intention is to make a profit. The distinction is crucial for your tax and legal obligations and is determined by the Australian Taxation Office (ATO) based on your activities and intent, not just the amount of money you earn.
If you are actively marketing your services, issuing invoices, and working to earn an income, the ATO will view your freelancing as a business.
How the ATO decides: Business vs hobby
The ATO considers many key factors to determine whether an activity is a business. You don’t need to meet all of them, but the overall impression of your activities matters.
- Intention to profit: You have a clear plan and purpose to make money from the activity.
- Business-like manner: You operate professionally. This includes having a separate business bank account, keeping financial records, creating contracts, and issuing invoices.
- Repetition and regularity: Your activities are not a one-off project; you regularly seek out and perform work for clients.
- Size and scale: The activity is of a significant size and scale. For example, you’re regularly investing money into tools, software, or advertising for your freelance work.
Why is this distinction critical?
Understanding whether you’re a business or a hobby has significant consequences for your finances and legal standing.
As a business, you must:
- Declare all income on your tax return
- Must have an Australian Business Number (ABN)
- Claim tax deductions for legitimate business expenses
- Register for GST if your annual turnover is $75,000 or more
As a hobby, you
- Don’t declare the income for tax purposes
- Can’t claim tax deductions for any expenses related to the hobby
- Can’t get an ABN for the activity
In short, freelancing is self-employment, and setting it up like a business helps you stay compliant and professional.
Read more: Do I need an ABN for a side hustle
10 steps to start a freelancing business in Australia
Step 1: Identify your services and target audience
Before you launch your freelance business, define what services you’ll offer and who your ideal clients are. Having a clear and simple business plan in place is essential for your freelancing journey. A clear niche helps you stand out and set competitive rates.
Key points to consider:
- What services do you offer?
- Who will be your target audience or clients?
- What will be your pricing model? Will you be charging hourly, per project, or on a retainer?
- How do you plan to reach your clients?
- What sets you apart from your competitors?
Step 2: Choose the right business structure for your freelance business
The best business structure for freelancers to operate is a sole trader because it’s simple, low-cost, and gives you full control. However, as your income grows, you might consider forming a company (Pty Ltd)for better tax flexibility and liability protection.
Let’s break down the structures:
Structure | Liability | Tax | Control |
Sole trader | No separation, personal assets exposed | Income taxed to you at individual rates; PAYG instalments may apply | Full control |
Company (PTY LTD) | Separate legal entity; limited liability | Company pays tax; you pay tax on salary/dividends; director obligations apply (Director ID before appointment) | Directors/shareholders govern |
Partnership | Shared liability, partners are jointly and severally liable | Each partner taxed individually on share of profit | Shared control |
Pro tip: Start sole trader (fast, simple). Move to Pty Ltd when revenue, client requirements, or risk profile justify it (e.g., team, bigger contracts, limited liability, brand positioning). Director IDs are mandatory before you become a director.
Step 3: Get an ABN to work as a freelancer
Once you’ve chosen your structure, you need to register to operate legally. Many new freelancers get stuck in this step, but it’s crucial.
Do I need an ABN to freelance in Australia?
Yes, absolutely. An Australian Business Number is an 11-digit business identifier. Entitlement rules apply (you must be genuinely carrying on a business). It’s not optional. You need an ABN to:
- Legally operate as a business in Australia.
- Invoice your clients professionally.
- Avoid having clients withhold 47% of your payment under the “No ABN withholding” rule.
- Claim GST credits (if you are registered for GST).
Getting an ABN is the official step that turns your “side hustle” into a legitimate business.
You can apply for an ABN free of charge via the Australian Business Register or have Sleek handle it for you as part of your setup.
Moreover, if you plan to operate under a brand name (other than your own personal name), register your business name with ASIC (costing $45 per year).
Step 4: Understand your tax and GST obligations
As a freelancer in Australia, you’re responsible for:
- Manage your taxes
- Report all your income on your individual tax return
- Keep accurate records
- Claim allowable business deductions
Do I need to register for GST as a freelancer
If your freelance business earns or is likely to earn $75,000 or more in a financial year, you must register for GST.
Even if you earn below the threshold, voluntary GST registration lets you:
- Claim GST credits on business purchases
- Appear more professional to clients
- Simplify compliance if your income grows
Sleek can help you register for GST and automate BAS lodgements so you never miss a deadline.
How to choose the right company registration services in Australia?
Step 5: Set up your finances for success
Managing your freelance finances efficiently is key to staying profitable.
- Open a separate business bank account: Even as an individual freelancer, open a separate bank account for all your business income and expenses. This keeps your finances clean, makes bookkeeping simple, and saves you a massive headache at tax time.
- Understand your tax obligations: Clients won’t deduct tax from your pay. You are responsible for putting money aside to pay your income tax bill. A common rule of thumb is to set aside 25-30% of every payment you receive in a separate savings account. You will likely need to pay your tax in quarterly instalments to the ATO, known as PAYG (Pay As You Go) instalments.
- Plan for your superannuation: Clients do not pay for your super. It’s your responsibility to make contributions to your own superannuation fund to plan for your retirement.
- Use accounting platforms for budgeting and finance: Modern freelancers use simple accounting platforms (like Xero, MYOB, or Wave) to manage their finances. These tools help you:
- Create and send professional invoices.
- Track income and expenses automatically by linking to your business bank account.
- See your financial position at a glance, making budgeting simple.
- Make lodging your tax return far easier.
Read more: Xero vs QuickBooks: Which Is Better For Your Small Business
Step 6: Protect yourself with legal documents and insurance
Freelancing might be flexible, but you still need protection, legally and financially.
Essential legal documents
- Client service agreement: Outlines deliverables, payment terms, and IP ownership.
- Contractor agreement: Defines your role if working through agencies.
- Privacy policy: Required if collecting or handling client data.
Recommended insurance
- Professional indemnity insurance: Covers you if a client claims negligence.
- Public liability insurance: Covers injury or property damage.
- Income protection (optional): Safeguards your income if you can’t work.
Read more: A complete guide to business insurance
Some clients will ask for proof of insurance before signing a contract, so it’s smart to get covered early.
Step 7: Maintain ongoing compliance
Once your freelance business is up and running, your work isn’t over. Staying compliant is an ongoing process that protects you from fines and stress.
This means you’ll need to stay on top of:
- BAS each quarter if GST-registered (report/pay GST; claim credits).
- Annual tax return (business income and deductions).
- PAYG instalments (if the ATO places you in the system or you opt in).
- Superannuation: As a sole trader, you’re not obligated to pay SG for yourself, but personal contributions can be tax-effective; if you hire employees, employer super rules apply.
- Fair Work & ATO compliance if/when you employ staff (payroll, STP, super, workers’ comp).
Step 8: Set up your pricing model and rates
Determining how much to charge is one of the biggest challenges for new freelancers. Your pricing should cover your business expenses, pay you a fair salary, and align with what the market is willing to pay. Start by choosing a model that suits your services.
- Hourly rate: You charge for every hour you work. This is simple and great for projects with an unclear scope. To calculate your rate, factor in your desired salary, business costs (software, insurance), and non-billable hours (admin, marketing).
- Per-project fee: You charge a flat fee for the entire project. This provides cost certainty for the client and rewards you for being efficient. This model works best when you can accurately estimate the time and effort a project will require.
- Retainer fee: A client pays you a fixed amount each month for a set amount of work or to have you available. This is ideal for ongoing work and provides you with a predictable, stable income.
Don’t just guess your rate. Research what other freelancers with your experience level are charging. Price yourself too low, and you’ll struggle to build a sustainable business; price yourself too high, and you may struggle to land your first clients.
Step 9: Build your portfolio
A strong online presence helps you win trust fast. Start by building a simple portfolio website or setting up professional profiles on top freelance platforms.
Where to start:
- Showcase your best work and results (case studies > quantity).
- Write a short, clear bio describing your skills and niche.
- Use platforms like Upwork, Fiverr Pro, or Freelancer.com to get early traction.
- Keep your portfolio updated as you complete new projects.
Step 10: Find your first client
Start with your existing network, former colleagues, clients, and peers. Referrals are often the fastest way to land your first projects.
Once you’ve built momentum, explore:
- Freelance marketplaces: Great for reviews and consistent work.
- LinkedIn and social media: Share tips, past projects, and client wins.
- Cold outreach: Email or message businesses that fit your niche.
- Agencies and subcontracting: Many larger firms hire freelancers for overflow work.
What laws do freelancers need to comply with in Australia?
Law/Obligation | Key responsibility | Actionable steps |
You must be honest and deliver a professional standard of work. |
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You must be clear about who owns the work you create. |
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You must handle clients’ personal information responsibly. |
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You cannot send unsolicited marketing emails. |
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How much does it cost to start as a freelancer in Australia?
Starting a freelance business in Australia can have very low upfront costs: the Australian Business Number (ABN) is free, and an optional business name is about $45/year (2025 rate). You might also choose a low-fee business bank account, basic website/portfolio hosting, and bookkeeping or invoicing software, often keeping total launch costs well under $1,000 for an online service.
How Sleek can help you set up your freelancing business in Australia
Starting a freelance business is exciting, but the admin and compliance side can be overwhelming. That’s where Sleek makes it simple:
- Business setup done right: We handle your ABN and (if you want a brand) business name registration with ASIC, so you’re compliant from day one, no paperwork stress.
- Tax guidance: Get expert advice on whether/when to register for GST, with clear guidance on business structure.
- All-inclusive accounting: Never miss a deadline. Our accountants manage bookkeeping in Xero, timely BAS lodgements, and tax returns, helping you claim every eligible deduction.
- Ongoing compliance support: The experts will keep you on track with a light compliance calendar (ATO record-keeping, BAS/tax dates).
Focus on winning clients and doing great work, let Sleek handle the business side. Schedule a call now.
FAQs on how to start a freelance business in Australia
Common triggers: rising profit (tax planning), client/contract requirements (PI cover levels, vendor onboarding), IP ownership/brand building, or you’re hiring. Factor in costs: ASIC incorporation/annual review, payroll/super, director obligations, and more complex tax/ASIC filings.
Often GST-free if “used or enjoyed” outside Australia. Keep client residency, engagement scope, and delivery evidence to substantiate.
To claim input tax credits, you generally need a valid tax invoice for acquisitions ≥ a small threshold (check current ATO threshold); it must show supplier identity/ABN, date, description, price, and GST amount or statement. Ensure your own invoices meet these standards if you’re GST-registered.
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