A sole proprietorship is a long and fancy name for an unincorporated business that has one business owner, who operates the business on their own.
Solely, you could say. They trade solely. They are a sole soul trading solo. A sole trader, if you will.
Incidentally, helping sole traders earn an income is what Hnry’s all about. But we’ll get to that in a sec – first, let’s talk about sole proprietorships, aka sole trader businesses.
Sole proprietor businesses
Sole proprietor businesses in Australia, more commonly known as sole trader businesses, are businesses that have a single owner/operator. Because they’re unincorporated, they don’t pay company tax – instead, their owner will pay tax as an individual, at individual income tax rates.
💡 Note: a sole director company is not a sole proprietorship, because it uses a company structure.
What this means is that the business’ finances are the individual’s finances. Unlike an incorporated company that has barriers between business earnings and the owner, there is no separation between a sole proprietor business’ income and the owner’s income. Heck, business and personal finances might even share the same bank account.
How to start a sole proprietorship
Becoming a sole trader in Australia is pretty simple – you apply for an Australian Business Number (ABN), and then you just start trading. Anything that comes into your business’ bank account is yours to keep – well, mostly.
As a self-employed sole trader, you’ll need to set aside money for things like income tax, Medicare levy, student loan repayments, GST, and super contributions. You’ll also need to be careful that you’re able to balance your business expenses with your personal expenses – there’s nothing worse than needing to purchase business supplies and realising that you accidentally spent business money on your personal mobile phone bill!
But running a sole trader business is easier and cheaper than incorporating a company from the get go. For starters, there’s less paperwork involved. The tax admin is less complex. If you’re planning eventual world domination, becoming a sole trader is a good way to see if your business idea has legs. It’s a far easier business structure to stand up, and you’ll soon be off and running.
How Hnry helps
Hnry is an award-winning accounting service specifically designed for sole traders. For just 1% +GST of your sole trader income, capped at $1,500 +GST, we will automatically calculate, deduct, and pay your:
We also lodge your tax return every year, all as part of the service. Oh, and we chase-up late paying clients on your behalf. And we review and claim your expenses for you, so you get all the tax-savings you’re entitled to in real time.
Basically, we make it so that you never have to think about taxes again.
Save time, save money, join Hnry today.
Share on: