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Ask HN: Do I need an ABN to do a one off consultancy gig? (Australia)

2 points by jsmeaton ↗ HN
I'm trying to find out some information about my responsibilities with regard to a one off consultancy gig. I expect the income to be less than $20k, and I don't expect to be doing any work after this (at this stage).

Am I going to need an ABN? Will I need a business name as well? Do I need to pay tax, and if so, will it be company or personal income? Any Australian contractors or consultants around to offer advice?

Thanks

7 comments

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brotchie
The easiest thing to do is apply for a sole trader ABN. The application takes a few minutes and usually you'll get your ABN immediately.

$20k will easily put you under the GST threshold and the requirement to file business activity statements (BAS), but remember to still charge the client GST.

jsmeaton
Thanks for the answer, I'm looking into sole trader structures now. To your knowledge, should I be paying personal income tax on the income, or company tax through the business?

Also, WRT GST, should I put a GST line item on the invoice, but not pay it? Is this specifically for the entity I'm charging?

codepeach
i'm no accountant but i'm pretty sure sole trader would be paying personal income tax rather than company tax, which would be for registered companies.
Gustomaximus
You will be assessed to pay tax on income above $18k if I remember correctly. That said on lower levels of income it's quite likely you're expenses will neutralise any tax obligations. E.g. Keep records of costs such as maintaining a home office, driving costs, phone internet etc. Id say get an accountant but if this is your total work for the year you might want to put the time in reading information on e-tax. Make sure you read about deductibles before you start now so you can keep records.
leriksen
You could engage a contract management agency to do your invoicing, and to deduct your tax, super etc commitments. Companies like Entity Solutions, ADAPS etc offer this service at either a flat or percentage rate, based on length of contract, rate of income etc. Some even bundle in an accountant at the end of the FY to do your tax for you. For a one-off gig it might be easier than setting up your own structure. The other consideration is Professional Indemnity/Public Liability insurance -(usually referred to as PI/PL) - you can get your own policy, or again there are agencies willing to bundle you under their cover for a flat or percentage rate. Do your research and don't work without insurance.
jsmeaton
Thanks, I was wondering about whether or not I would need insurance. Do you think it's necessary for providing a proof of concept module for an existing piece of software?
seekingcharlie
Yes, you need an ABN. You don't need a business name or anything. Just register as a sole trader - your "business" is just your name then.

You have to declare & pay personal income tax on the income that you earn (not company).

GST is something you need to register for, however you do not need to charge or pay GST if you earn under a certain amount (from memory it is $75k).