Sole Trader
An individual who runs a business in their own name, reporting business income and expenses in their personal tax return.
A sole trader is the simplest business structure in Australia — an individual trading on their own, without a separate legal entity. As a sole trader, you use your individual TFN (though you still need an ABN), and all business income and expenses are reported in your personal tax return. Business profits are taxed at your individual marginal tax rates, and you are personally liable for all business debts and obligations.
Sole traders must register for GST if their annual turnover reaches $75,000 or more. They can claim business expenses as deductions, including home office costs, vehicle expenses, equipment, supplies, and professional development. The ATO requires sole traders to keep records of all income and expenses for at least 5 years, and many use accounting software (Xero, MYOB, QuickBooks) to manage this.
Advantages of the sole trader structure include simplicity (no separate tax return, no ASIC registration fees, minimal regulatory burden) and full control. Disadvantages include unlimited personal liability, difficulty raising capital, no income splitting, and paying tax at potentially higher individual rates compared to the company tax rate (25%). Many sole traders transition to a company or trust structure as their business grows.