Freelancing as a career – G’day Business

General information only. This guide is general information, not financial, legal or tax advice. It doesn't take your circumstances into account. For advice about your situation, talk to a licensed professional.

In short

Freelancing suits people with an in-demand skill, a network and the discipline to manage irregular income.
Most freelancers start as a sole trader with an ABN. You're personally responsible for the business and its debts.
Price for your real costs - unpaid admin time, leave, super, software and insurance - not just an hourly wage.
Use a written agreement for every job, and invoice promptly with clear payment terms.
Calling yourself a contractor doesn't decide it. The whole working relationship does.

Is freelancing right for you?

Freelancing tends to suit people who have:

A skill businesses pay for: design, writing, development, bookkeeping, marketing, trades, consulting, photography, project management.
Proof of that skill: a portfolio, references or a track record.
A network: past employers, colleagues and clients are often the first source of work.
Discipline: to find work, manage time, keep records and save for quiet months.
A buffer: savings to cover a few months while work builds up.

Many people start part-time alongside a job, then move across once work is steady. Check your employment contract for any restrictions first. See Changing careers.

Set up the business

Choose a structure. Most freelancers start as a sole trader. business.gov.au says it’s the simplest structure and relatively cheap to set up, but you’re legally responsible for all aspects of the business, including debts and losses. See Sole trader, partnership, company or trust?.
Apply for an ABN (Australian Business Number) through business.gov.au. See Registering a business.
Register a business name if you’ll trade under a name other than your own.
Open a separate bank account. It isn’t required for sole traders, but business.gov.au recommends it to keep track of income and expenses.
Keep records for at least 5 years. See Bookkeeping basics.
Get advice from an accountant on tax, GST and setting money aside. This guide doesn’t cover tax.

Super: business.gov.au says sole traders can choose whether to pay super to themselves. It isn’t compulsory, but it’s a good idea. Talk to a licensed adviser about your situation.

Find clients

Start with people who know your work: former employers, colleagues and clients.
Ask for referrals and testimonials after every job.
Show your work: a simple website or portfolio, and a LinkedIn profile. See Building a small business website.
Pick a niche. “Bookkeeping for tradies” is easier to market than “bookkeeping”.
Online freelance marketplaces can help you start, but fees and price competition can be high. See Selling on eBay, Amazon and other marketplaces.
Network at industry events and associations. See Networking and referrals.

Price your work

A freelance rate isn’t an employee’s hourly wage. Your rate also has to cover:

Unbillable time: admin, marketing, quotes, learning and gaps between jobs
Leave: holidays and sick days with no pay
Super, if you choose to pay it
Costs: equipment, software, insurance, phone, internet and accounting.

A simple method:

Decide the yearly income you want.
Add your yearly business costs.
Estimate the hours you can realistically bill in a year.
Divide the total by those hours.

Compare the result with market rates. Consider fixed-price quotes for well-defined work, so you’re paid for value, not time.

Agreements and getting paid

Use a written agreement for every job, even small ones:

Scope and deliverables
Timeline and milestones
Price, deposit and payment terms
How changes are requested and priced
Who owns the work, and when ownership transfers
Confidentiality
How either side can end the arrangement

Then:

Ask for a deposit on larger jobs.
Invoice promptly with clear due dates. See Getting paid.
Check big clients’ payment records. The Payment Times Reporting Scheme register shows how quickly large businesses pay small suppliers.

See Contracts and legal basics.

Contractor or employee?

If one client controls your hours, supplies your tools and treats you like staff, you may legally be an employee, whatever the agreement says. The Fair Work Ombudsman explains that the whole working relationship is considered, and holding an ABN doesn’t automatically make someone a contractor. If you’re unsure, check the Fair Work guidance and get advice.

Manage irregular income

Keep a buffer of several months’ expenses.
Pay yourself a regular amount from the business account, not whatever came in that week.
Set money aside for tax as you’re paid, as your accountant advises.
Avoid relying on one client. If one client is most of your income, you’re exposed if they leave.
Plan your pipeline: keep marketing even when you’re busy.

See Financial planning and cash flow.

Common questions

How do I start freelancing in Australia?

Most freelancers set up as a sole trader and apply for an ABN, which business.gov.au says is relatively simple and low-cost. Then build a portfolio, tell your network, set your prices and use a written agreement for each job. Get advice from an accountant on your tax and super.

Do freelancers have to pay themselves super?

business.gov.au says sole traders can choose whether to pay super to themselves. It isn’t required, but it’s a good idea as a way of saving for retirement. Talk to the ATO or a licensed adviser about your situation.

How much should I charge as a freelancer?

Work out your target yearly income, add business costs, leave and super, then divide by the hours you can realistically bill, which is usually far fewer than you work. Compare your result with market rates and adjust for your experience.

Am I a contractor or an employee?

The Fair Work Ombudsman says the whole working relationship is considered, not just what the agreement calls it. Factors include control over the work, financial risk, who supplies tools, whether you can delegate, and whether the work is ongoing. An ABN doesn’t automatically make you a contractor.