If you have decided to work as a freelancer, you will usually have more flexible hours and control over your work. However, before you start offering your goods or services, you will need to consider your legal obligations, which includes using an Australian Business Number (ABN). This article discusses the key legal issues to consider when setting up as a freelancer, including whether all freelancers need an ABN.

What is a Freelancer?

A freelancer is someone who is self-employed and usually offers goods or services to multiple clients at once.

A typical example is a freelance writer who may work for multiple clients, including magazines and news websites. Another example of freelancers are those who perform small, one-off tasks through online platforms like Airtasker. Here, community members can complete everyday tasks outsourced by users (e.g. assembling furniture or mowing the lawn).

Accordingly, with the increasing number of online marketplaces and platforms, whether someone is actually a freelancer (as opposed to an employee) will not always be clear cut.

For example, in December 2017, the Fair Work Commission found that Uber drivers in Australia are not employees, but are instead independent contractors. This was determined after considering a number of factors, including the amount of control that Uber drivers have over their work.

If you are not sure if you are a freelancer, you should consider whether you:

  • have control over when, where, and how you complete your work;
  • receive payment on a project-by-project basis;
  • supply your own equipment and tools to complete the work; and
  • do not receive paid holidays or sick leave.

If you meet these requirements, you are likely a freelancer.

What is an ABN?

An ABN is a unique 11-digit number that the Australian Business Register issues to all businesses. An ABN identifies your business to the community and government. It also identifies your business to the Australian Taxation Office (ATO) when dealing with your tax obligations, such as claiming deductions for business expenses incurred in the financial year.

Do I Need an ABN as a Freelancer?

The short answer is yes. If you are or will be paid for your goods or services, then you will need an ABN to legally operate. This is on the basis that you are an individual running a business, as opposed to a hobby.

Accordingly, when you apply for an ABN, you will need to acknowledge that you meet or will meet the key characteristics of a business, including that you:

  • source your own clients;
  • invoice for your work and set your rate of pay;
  • have a separate business bank account; and
  • have your own business insurance, such as public liability and WorkCover.

So, you will likely need an ABN when you are, for example, a:

  • freelance writer;
  • driver for Uber; or
  • delivery rider for Deliveroo.

Additionally, if you do not quote an ABN when you provide a good or service to another business, then they can legally withhold up to 47% of your payment.

It is also important to note that, in most cases, if you are making more than $75,000 per annum, then you must also register for the Goods and Services Tax (GST), which requires an ABN.

How Do I Obtain an ABN?

You can obtain an ABN at no cost by applying online through the Australian Business Register. If your application is successful, you will receive your 11-digit ABN immediately.

Once you receive your ABN, you will need to ensure that you display it on your quotes and invoices alongside your contact details.

Key Takeaways

If you are or will be a freelancer, you will need an ABN to legally operate. Freelancers are self-employed and offer goods or services usually to multiple clients at once. An ABN is a unique 11-digit number that you will mostly use when dealing with your tax obligations with the ATO. You can register for an ABN online through the Australian Business Register. If you are making more than $75,000 per annum, then you must also register for GST, which will require an ABN. If you have any questions, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Graci Chen
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