Alex is Sprintlaw's co-founder and principal lawyer. Alex previously worked at a top-tier firm as a lawyer specialising in technology and media contracts, and founded a digital agency which he sold in 2015.
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Freelancing is one of the fastest-growing ways to work in Australia. Whether you’re a graphic designer, web developer, writer, or consultant, working for yourself gives you flexibility and independence. However, setting up as a professional freelancer isn’t just about landing your first client – it’s crucial to take the right legal steps from the beginning. One of the most important is registering for an Australian Business Number (ABN).
If you’re wondering whether you need an ABN as a freelancer, how to get one, and what else is involved in legally setting up your business, you’re not alone. Many new freelancers feel uncertain about paperwork and compliance. The good news is that, with the right guidance, getting your freelancer ABN and meeting your obligations can be straightforward. In this guide, we’ll walk you through what a freelance ABN is, why it matters, and how to set yourself up for success as an independent contractor in Australia.
Keep reading to ensure your freelance business is not only thriving but also protected from day one. If you need more tailored advice, Sprintlaw’s team of small business lawyers is here to help you navigate every step.
What Is An ABN And Why Do Freelancers Need One?
An ABN, or Australian Business Number, is a unique 11-digit identifier issued by the Australian Government for anyone carrying on an enterprise. In the eyes of the law, if you’re providing services as a sole trader, partnership, company, or trust, and you’re aiming to earn money, you’ll likely need an ABN.
For freelancers, having an ABN is essential. Here’s why:
- Legitimises Your Business: Many clients won’t work with you unless you provide an ABN, as it reassures them you’re operating as a business and not just getting paid “cash-in-hand”.
- Billing & Tax: You need an ABN to issue tax invoices, claim GST (if you’re registered), and manage your tax affairs properly.
- Avoiding Withholding Tax: If you don’t provide an ABN to clients, they may have to withhold 47% of your payment for tax purposes, significantly affecting your cash flow and earnings.
- Professionalism: An ABN is often seen as a mark of professionalism and can give clients confidence in dealing with you as a legitimate business.
In short, if you’re a freelancer operating your own enterprise in Australia, securing a freelancer ABN is a must.
Is Freelancing A Business Or A Hobby?
It's important to understand when freelancing crosses over from being a hobby to a business. According to the Australian Taxation Office (ATO), a hobby is an activity you pursue for pleasure and not for commercial gain, while a business (including freelancing) is run with the intention of earning an income.
Signs that your freelancing is a business and not a hobby include:
- Advertising for clients or seeking repeat work
- Keeping records and invoices
- Having a business name, website, or ABN
- Intention to make a profit
If you tick any of these boxes, you’re probably carrying on a business – and you’re required to register for an ABN.
Step-By-Step Guide: How To Get An ABN As A Freelancer
Ready to go from side hustle or hobbyist to professional freelancer? Here’s a straightforward guide to getting your freelancer ABN and starting your business on the right foot.
1. Research Your Freelance Offering & Market
Before you register for your ABN, take a moment to clearly define your services and target market. Outline your capabilities, set your rates, and have a business plan in mind. This ensures you’re starting with a firm foundation and helps you identify any unique legal requirements in your industry (for example, copyright for creative freelancers, or privacy requirements for handling client data).
If you’re new to business planning, our guide to writing a business plan can help you get started.
2. Decide On Your Business Structure
Freelancers usually operate as a sole trader, as this is the simplest and lowest cost structure. However, you might consider a company or partnership structure as you grow or if you work with others. Here’s a quick overview:
- Sole Trader: The business is owned and run by you. You’re personally liable for debts and obligations, but it’s the easiest structure to set up and manage.
- Partnership: Two or more people in business together. Responsibilities, profits, and debts are shared.
- Company: A separate legal entity that provides limited liability protection for your personal assets, but involves more expenses and reporting obligations.
Most freelancers start as sole traders. You can learn more about each option in our Sole Trader vs Company Guide.
3. Register For An ABN
You can apply for your ABN for free through the Australian Government’s online portal. You’ll need to provide:
- Your personal details (name, date of birth, tax file number)
- Business structure and details (sole trader, company, partnership)
- Business activity (what services you offer)
- Contact information and address
Once your application is processed, you’ll receive your ABN and can start operating as a registered freelancer. Keep your ABN safe – you’ll need it for invoices, contracts, and tax returns.
For a detailed walkthrough, check out our step-by-step ABN registration guide.
4. Register A Business Name (If Needed)
If you plan to operate under a name other than your personal legal name (like “Bright Ideas Design” or “Sydney SEO Pro”), you’ll need to register your business name with ASIC. This protects your brand and reassures clients that you’re legitimate. Note, registering a business name isn’t the same as trademarking it – to fully protect your brand, consider registering a trade mark.
5. Understand Your Tax and GST Obligations
With an ABN, you’re responsible for reporting your income and paying tax on your earnings. If your annual turnover exceeds $75,000, you’ll also need to register for GST (Goods and Services Tax). For earnings under that threshold, GST registration is optional but may be required in specific industries.
Keep records of your income and expenses to simplify your tax returns each year. Many freelancers choose to use cloud accounting software to make this easier. For details on business tax, you can review our guide to taxable income for businesses.
Legal Requirements: What Laws Apply To Freelancers?
Starting out as a freelancer isn’t just about getting an ABN – you need to ensure your business is compliant with relevant laws and regulations. Here are some key legal areas to keep in mind:
Australian Consumer Law (ACL)
If you’re providing services or digital goods to clients, you need to comply with the Australian Consumer Law (ACL). This covers issues like fair trading, customer rights, and misleading advertising. Always deliver your work as promised, and have clear terms for revisions, payments, and refunds.
Intellectual Property
Protecting your ideas is crucial as a freelancer, especially for creatives. You may wish to register a trade mark for your business name or logo, set out terms in client contracts for ownership of work, and ensure you don’t infringe on other people’s IP.
Privacy & Data Protection
If you collect any personal information from clients (names, emails, project details), even as a small business or sole trader, you may need a Privacy Policy and should comply with the Privacy Act. This is especially important if you work with sensitive client data or handle online information.
Contracts & Agreements
Always use well-drafted contracts when working with clients. This protects both parties and clearly sets out the scope of work, payment terms, intellectual property ownership, and what happens if there’s a dispute or cancellation. You can learn more about strong customer contracts here.
Insurance and Risk Management
Consider professional indemnity insurance to protect yourself in case a client claims your advice or services caused them loss. Public liability insurance may also be wise if you visit client premises or host meetings. Not all freelancers need insurance, but it’s good risk management as your business grows.
Workplace Health and Safety (WHS)
Even as a solo freelancer, you may have work health and safety responsibilities, especially if you work in shared spaces or have contractors yourself. Think about your workspace, ergonomics, and any hazards your work could present to others.
What Legal Documents Do Freelancers Need?
Having the right legal documents in place isn’t just for big businesses. Even as a freelancer, strong paperwork protects your interests and builds trust with clients. Here are the essentials:
- Freelancer or Service Agreement: Sets out exactly what you’ll deliver, when you’ll deliver it, payment terms, and what happens if there’s a dispute. Tailor this to each client and project.
- Privacy Policy: Required if you collect or store any personal information. Explains how client data is handled and builds confidence in your professionalism.
- Terms and Conditions: Especially for digital or ongoing services – outlines how you work, limits your liability, and manages client expectations. This is crucial if you operate online.
- Invoice Template: Ensures you collect the information needed for tax and legal compliance, including your ABN and payment terms.
- Non-Disclosure Agreement (NDA): For protecting confidential information when working with clients or collaborators on sensitive projects.
You can find templates online, but it’s best to make sure contracts are tailored for your specific business. Our guide to business contract templates explains why getting legal help early can save you time and headaches later.
Changing Or Cancelling Your Freelance ABN
It’s normal for businesses to evolve over time. If you want to change your business structure – for example, switch from sole trader to company – you may need to cancel your existing ABN and apply for a new one. Similarly, if you stop freelancing or move overseas, you’re required to cancel your ABN.
Make sure you keep your ABN details up to date with any change of address, email, or business activity. Here's our complete guide to cancelling or reactivating your ABN if your business circumstances change.
Can I Run My Freelance Business Without An ABN?
Technically, you can work without an ABN, but in practice, it’s risky and limits your opportunities. Without an ABN:
- Clients may be legally required to withhold tax from your payments (at the highest marginal rate).
- You can’t register for GST or claim GST credits.
- It sends the message that you’re not running a true business.
If you’re taking your freelancing seriously, an ABN is non-negotiable. It’s a simple process that opens more professional doors and keeps you onside with the ATO.
Next Steps: Protecting And Growing Your Freelance Business
Securing your freelancer ABN is just the start. As you grow, keep your eye on:
- Upgrading Your Structure: If you hire staff or grow your freelance business into a larger operation, consider whether switching to a company structure would provide extra protection and options. Our company vs partnership guide explains the difference.
- Registering Trademarks: As your brand grows, protecting your name and logo with a registered trade mark helps secure your reputation and competitive edge. Learn more about registering trademarks here.
- Staying Compliant: Stay on top of invoicing, tax, and super obligations – and always update your legal documents when your services change.
- Seeking Legal Advice: As your business develops, get legal support to review your contracts, IP protection, and compliance obligations, so you can focus on the work you love.
Key Takeaways
- Registering for an ABN is a crucial first step for freelancers in Australia and signals you’re running a legitimate business.
- Sole trader is the most common structure for freelancers starting out, but partnerships and companies are options as your business evolves.
- Freelancers must comply with key laws, including the Australian Consumer Law, privacy regulations, and intellectual property rules – not just tax obligations.
- Professional contracts, privacy policies, and appropriate insurance give you protection and confidence as you scale your freelance business.
- Keeping your ABN, business records, and compliance up to date sets a solid foundation for long-term growth.
- Getting experienced legal support early can help prevent mistakes and future disputes as you build your freelance success.
If you’d like a consultation on starting your freelance business or navigating your freelancer ABN, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no-obligations chat. We’re here to help you take your next step with confidence.
