What is it?
The first step to becoming an independent NDIS support worker is setting up your business structure and registering for your Australian Business Number (ABN). Your business structure will determine how your taxes are filed, the extent of your personal liability, and how your business grows.
You’ll choose between two common options:
- Sole trader: The simplest structure, where you’re the business. You’re in control but responsible for all business debts and obligations.
- Company: A separate legal entity from you. It can provide more liability protection but involves more paperwork and tax complexity. Directors can still have personal obligations and liabilities.
Why it matters
- Tax: Your structure will impact how your taxes are filed and your obligations to the ATO. Sole traders are taxed as individuals, while companies file as a separate entity.
- Liability: Sole traders are personally responsible for business debts. A company’s separate legal status changes how liability is handled.
- Growth: Think about whether you plan to work on your own or grow a team. Choose a structure that suits your circumstances, with professional advice where needed.
How to do it
1. Decide on your structure
If you want to keep things simple, a sole trader structure is often a useful starting point for independent workers who will manage everything themselves. Always assess your needs and whether you’re planning to grow the business.
Illustrative example: Mark started as a sole trader because he wanted to provide in-home support to two participants. After a year, he realised he wanted to expand, so he explored registering a company to manage growing staff.
2. Apply for your ABN
Go to the Australian Business Register (ABR) website and check your eligibility before applying. Be careful when entering your business activity and business details.
Tip: Applying directly through the ABR is free. You do not need to pay a third-party service to submit an application for you.
You’ll need your business details and identification information. Providing your Tax File Number (TFN) can help the ABR confirm your identity. Keep your ABN details on hand for invoicing participants and future registrations.
3. Check GST registration
GST registration and whether an individual service is GST-free are separate questions. Check the ATO’s turnover rules to decide when you need to register.
NDIS supports are GST-free only when the relevant conditions are met, including an eligible support under a current NDIS plan and an appropriate written agreement. Do not assume every service a support worker supplies is automatically GST-free. Your ability to claim GST credits also depends on your registration and the purchase.
Read the ATO’s NDIS GST guidance and discuss your circumstances with an accountant.
Common mistakes to avoid
- Choosing a structure without assessing your needs: A company is not automatically the best option for a small business. Consider cost, administration, liability and growth.
- Leaving registration until the last minute: Check your ABN eligibility and organise your invoicing details before taking on participants.
- Assuming GST-free means no registration obligations: Check both the registration rules and the treatment of the services you provide.
FAQs
What is the difference between a sole trader and a company?
As a sole trader, you run your business and are personally responsible for its profits, losses and debts. A company is a separate legal entity with additional administration and obligations.
Where should I apply for an ABN?
Use the official ABR website. Check your eligibility and keep your business details accurate and up to date.
Action steps
- Decide which business structure suits your circumstances.
- Apply for your ABN through the official ABR website if eligible.
- Check whether you need to register for GST.
- Keep track of your ABN details and GST registration, if applicable, for future reference.