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What Do You Need to Start Freelancing in Australia?

Financial freedom. It can sound like a far-fetched dream. 

But the truth is, remote work has made it possible for many people to switch to freelancing and FIRE (financial independence, retire early) lifestyle.  

In Australia, 2.2 million persons are currently self-employed, which equates to 17% of the Australian workforce.   

Not to mention that when the pandemic hit in early 2020 and remote work turned into a new way of life, Australian freelancers experienced ​​86% YoY revenue growth.  

This begs the next question…How to start freelancing in Australia? 

If you’re ready to go solo and reap the benefits of working independently, get off to a good start by following these 5 steps.

Table of contents:

  1. Choose your freelancing business model
  2. Set up an Australian Business Number (ABN)
  3. Choose your business location
  4. Learn the legal basics 
  5. Start looking for work 

1. Choose Your Freelancing Business Model

Starting a Freelance Business in Australia

If you want to make a career out of freelancing, the first step to take is to choose how you are going to legally operate. 

Anyone who makes more than $4,000 a year living in Australia is expected to pay taxes, so you have to find a legal form for your freelancing business. 

Generally, you can operate as a sole trader, in partnership with someone, as a company, or through a trust structure. 

For freelancers and independent contractors in Australia, it is very common to operate as sole traders when setting up their businesses. 

This is because a sole trader is the simplest business structure and you take all the responsibility of running your business. It is generally a low-cost structure with less paperwork that enables you to pay taxes as one entity instead of separating yourself from your business. 

To set up as a sole trader, the first step is to register a business name (as a sole trader, you can operate either under your personal name or a different business name). You also have to apply for an ABN (more on that below). 

You may also need to register for goods and services tax (GST) if you have an annual turnover of $75,000 or more. 

Learn more about registering for GST

2. Set up an Australian Business Number (ABN)

Working as a Freelancer in Australia

As we mentioned before, as a freelancer legally working in Australia, you will need to set up an Australian Business Number (ABN).  

An ABN is a unique 11-digit number that businesses need to deal with a range of government departments and agencies. 

You can use an ABN to:

  • Identify your business on tax invoices and other tax-related documents 
  • Avoid having money temporarily withheld as part of the pay-as-you-go (PAYD) withholding system 
  • Claim GST on goods and services 
  • Get an Australian domain name

Getting an ABN is free and you can easily apply for one online by filling in your personal details. 

Once your application is processed and approved, certain information will become publicly available, such as the state and territory of the main business location. 

Now, you might ask yourself whether or not it’s possible to freelance without an ABN. 

The short answer is, yes, you need to have an ABN as a freelancer if you intend to receive income from your activities.

Businesses won’t hire you without an ABN, and if they did they can legally withhold 47% of the invoice amount. An ABN will give you access to tax benefits and credits and provide you with more opportunities.

3. Choose Your Business Location

Australian Freelancer Registering for an ABN

If you are able to provide your services remotely, you have the freedom to work from the comfort of your own home (or from anywhere in the world). 

There are some huge benefits to working as an online freelancer. You often have the freedom to set your own schedule, limit the stresses of a commute and, at the end of the day, find your ideal work-life balance. 

However, registering your business with ASIC means that your address will be displayed on the Business Name Register and become publicly available. 

This would not apply if you operate as a sole trader – If you’re a sole trader and your principal place of business is the same as your home address, only the suburb, postcode and territory will be displayed.

But even so, using your home address as a business address can sabotage your credibility. 

Whether you’re a photographer, consultant, or writer, you need to establish the credibility you deserve with a professional business address that promotes confidence in your clients. 

Just think – For security reasons, you do not want to display your own phone number and home address on your website. However, if you do not display your contact details, customers can teeter on the edge of a purchase and bail because you have a website with no phone number or address.  

While you may not need a dedicated physical office to run your freelancing business, a virtual office location can give your brand that sense of legitimacy while also giving customers the opportunity to meet you in person in a professional office space. 

This can be a huge benefit for your business, as most virtual offices are extremely affordable, so you don’t have to worry about costly overheads. 

Make sure you find a prestigious office location that is not only convenient for you, but for your clients as well if you’re planning to hold meetings there. 

4. Learn the Legal Basics

Running a Freelance Business With a Virtual Office

As a freelancer, you don’t need to become a legal professional. However, there are some important legal issues you need to consider when running a freelancing business. 

First and foremost, you must remember that you are required to file an annual tax return and pay income tax on your business profits. 

If you choose to register as a sole trader, you are eligible for the tax-free threshold, meaning you won’t pay any taxes on the first $18,200 earned.

To lodge your taxes, you need to make a payment to the Australian Taxation Office (ATO) or through your myGov account. As a sole trader, you are allowed to use your individual tax file number (TFN) to lodge tax returns.

You are also required to keep financial records for at least 5 years.

In addition, you need to make sure each of your invoices includes details such as your ABN, contact details, your rate and the number of hours worked (plus GST if required), bank details, invoice number, date, and payment terms. 

You can use an online service such as Wave Accounting, FreshBooks or HoneyBook to help you easily manage your invoices. 

Finally, it is important to ensure that contract terms are clearly defined so that you can manage your client’s needs. Your contract should include information such as purpose of the project, terms and conditions, payment terms, termination conditions, completion date, and impact of late delivery.  

5. Start Looking for Work

Freelancer in a Virtual Office

Once you’ve got a good understanding of the legal requirements for freelancers, it’s time to connect with future employers. 

You may already have a contact list that you can reach out to for possible projects.

However, don’t worry if you’re starting from scratch – once you’ve packaged your skills into a service offering and put together your portfolio on a website, chances are people will see what you can do and contact you. 

Make sure you define your target clients so you can understand exactly who needs your services and how to tap into your potential clients’ pain points. 

One way to get a steady flow of projects is to speak to specialist recruiters that may provide you with regular opportunities. 

You can also use a variety of services that can help you connect with future employers, such as Freelancer, Upwork, and Fiverr

Using social media platforms such as LinkedIn and attending industry events can also help you grow your professional network and find potential clients.   

Don’t forget to get recommendations and testimonials from anyone you’ve worked with. Display them on your website to help you sell your services to potential new clients. 

Freelancer in a Virtual Office

Conclusion: Working as a freelancer in Australia can be a rewarding a fulfilling career choice.

With a growing demand for flexible remote work, chances are you will get a steady flow of projects and create an income while doing the work you love. 

However, if you want to work legally in Australia as a freelancer, you need to start by getting your ABN and choosing a business type that will make it easy for you to pay your taxes and handle the paperwork. 

It may seem daunting at first, but with the right approach and mindset, freelancing can be a powerful and life-changing career path that lets you have more freedom, flexibility and income.

Ready to get started as a freelancer? Set yourself up for success with B2B HQ’s New Business Creation package. We will help you move your freelancing business idea from concept to reality by getting your new business completely set up in under a week and keeping it running for a low monthly rate. If you’d like to discuss your freelance business with our team further, please don’t hesitate to contact us today. 

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