Whether you’re launching a side hustle or building the next big brand, one of the first legal questions you’ll face is simple but important: are you actually “carrying on a business” in Australia?
This matters because once your activities meet the threshold of a business, a range of legal and tax obligations kick in - from getting an ABN to complying with the Australian Consumer Law and (in many cases) having the right privacy and employment documents in place.
In this guide, we’ll explain what counts as a business activity in Australia, how regulators distinguish a business from a hobby, the consequences of being a “business”, and the practical steps to formalise your operations the right way.
What Does “Business Activity” Mean In Australia?
In Australia, “business activity” isn’t defined by a single tick‑box test. Regulators (including the ATO and ASIC) look at the overall picture of what you do and why you do it.
Broadly, you’re carrying on a business when your conduct shows a commercial intention to make a profit, and you’re operating in an organised, ongoing way - not just as a one‑off or purely for personal enjoyment.
This can cover many models: a freelance designer invoicing clients, an online store with regular orders, a food truck at weekend markets, or a consultancy working on retainer. The details differ, but the common thread is activity that “looks and feels” commercial.
A helpful question is: if a stranger looked at your branding, invoices, pricing, customer communication and record‑keeping, would they say you’re running a business rather than a pastime?
Business Vs Hobby: Key Indicators In Australia
No single factor decides it. Regulators consider a set of indicators and weigh them together. Below are common signs that point in each direction.
Indicators You’re Carrying On A Business
- Intent to make a profit: You set prices to cover costs and generate a surplus, even if you’re not profitable yet.
- Repetition and regularity: You take on clients or make sales on a recurring basis rather than one‑off or ad hoc.
- Businesslike systems: You issue invoices, keep records, maintain a website or store, and manage stock or work‑in‑progress.
- Commercial scale: The amount of time, equipment and marketing you invest indicates a serious operation.
- Branding and marketing: You advertise, use a trading name or logo, and promote your offering to the public.
- Structure and registrations: You’ve set up a structure, applied for an ABN, and secured any necessary licences or permits.
When It May Still Be A Hobby
- You create or sell things mostly for personal enjoyment with no real plan to turn a profit.
- There’s no consistent system (no regular sales, no record‑keeping, no pricing strategy).
- Activities are irregular, small in scale and not marketed to customers.
For example, selling a handful of handmade candles at a school fete once a year is likely a hobby. But if you set up an online store, advertise on social media, accept weekly orders and reinvest in stock, you’re much closer to a business.
Side Hustles And Gig Work
Part‑time work can still be a business. In some industries, compliance starts on day one. For instance, rideshare drivers generally have to register for GST regardless of turnover - a special rule that’s different from most other businesses. If that’s you, check the summary of GST requirements for Uber drivers.
Why It Matters If You’re Carrying On A Business
Once your activities amount to a business, you’ll generally have additional responsibilities. The exact requirements depend on your model, but here are the big ones to think about.
- ABN: You’ll usually need an Australian Business Number for invoicing and to avoid “no ABN” withholding on payments to you. If you’re weighing it up, see the advantages and disadvantages of having an ABN.
- Business structure: Decide whether to operate as a sole trader, partnership or company - each has different risk, tax and growth implications. If a company is on your radar, our team can support your company set up.
- Business name: If you trade under a name that isn’t your personal name (or your company’s exact legal name), you’ll likely need to register that name. Here’s how a business name vs company name works in practice.
- Licences and permits: Depending on your industry and location, local council or state approvals may apply (e.g. food, health, building, transport, professional registrations).
- Consumer law: When you sell goods or services, the Australian Consumer Law (ACL) applies - covering things like advertising, refunds and warranties.
- Privacy and data: If you collect personal information, you should handle it transparently and securely. Many businesses publish a clear Privacy Policy to set out what they collect, why and how it’s stored.
- Employment obligations: Hiring staff triggers Fair Work duties, including entitlements, safety, and using the right Employment Contract for each role.
Tax settings can also change. Most businesses have to register for GST when their GST turnover reaches $75,000 in a 12‑month period, while some (like rideshare drivers) must register regardless of turnover. It’s best to confirm the tax position with your accountant while we help with the legal setup.
If your side hustle is starting to look like a business - or you plan to grow into one - here’s a practical way to get set up properly.
1) Clarify Your Commercial Plan
Write a simple plan covering what you sell, who you sell to, how you’ll price, and how you’ll deliver. A one‑page outline is enough to guide structure, contracts and compliance decisions.
2) Choose Your Structure And Get An ABN
Most founders start with an ABN as a sole trader because it’s fast and low cost. If you want limited liability, to bring in co‑founders or to scale, consider a company and get help with your company set up. Revisit this decision as you grow - it’s normal to start simple and incorporate later.
3) Register Your Business Name (If Needed)
If you’re trading under a name other than your personal name (or your company’s exact name), register that trading name so you can use it on your website, invoices and signage. This sits alongside your structure - see the difference between a business name vs company name.
4) Protect Your Brand Early
Check whether your brand name and logo are available, and consider applying to register your trade mark so you can stop others using a confusingly similar brand. It’s usually easier and more cost‑effective to secure this before you scale.
5) Put Core Contracts And Policies In Place
Before you launch (or as you formalise), make sure your customer terms, privacy documents and supplier or contractor agreements are ready. Strong documents reduce disputes and support compliance. For many service or product businesses, clear Terms of Trade set expectations around pricing, delivery, risk allocation and refunds.
6) Confirm Licences, Insurance And Ongoing Compliance
Identify any local and state licences, industry accreditations, and insurance that apply to your activity. Build ongoing compliance into daily operations - such as record‑keeping, safety procedures and honest marketing. If you’re unsure what applies, a short chat with a lawyer can give you a tailored checklist.
Which Laws Apply When You’re “Carrying On A Business”?
Nearly every Australian business will have to consider the legal areas below. Your industry may add more requirements, but this is the core set for most ventures.
Australian Consumer Law (ACL)
If you sell goods or services, you must comply with the ACL - including rules on misleading or deceptive conduct, unfair contract terms, consumer guarantees and refunds. Customer‑facing terms (like Terms of Trade or online terms) should align with these obligations. This isn’t just compliance - it builds trust and reduces complaints.
Privacy And Data Handling
Handling personal information the right way is critical for customer trust. In Australia, the Privacy Act 1988 (Cth) generally applies to businesses with annual turnover of more than $3 million, and to some smaller businesses in specific categories (for example, health service providers, businesses that trade in personal information, or some government contractors).
If you’re under the $3 million threshold and not in an exception category, you may not be legally required to comply with the Privacy Act - but many small businesses still adopt a clear Privacy Policy and good data practices as a best‑practice standard, and because platforms and customers expect it. If you do fall into a category where the Privacy Act applies, you’ll need compliant collection notices, processes and security safeguards.
Employment And Contractors
Hiring staff brings Fair Work obligations: minimum pay and entitlements, leave, workplace health and safety, and accurate records. Put the right Employment Contract in place for each role (casual, part‑time or full‑time) and ensure contractors are genuinely contractors with appropriate agreements.
Intellectual Property (IP)
Protect your brand and content, and avoid using someone else’s IP without permission. Registering a trade mark for your brand name or logo gives you nationwide rights and makes enforcement more straightforward. Consider NDAs where you share confidential information, and make sure ownership of IP created by employees or contractors is clearly addressed in your contracts.
Business Names, Company And Records
If you operate through a company, ASIC requires you to keep details up to date and maintain proper records. If you trade under a name, keep that registration current and use the name consistently across invoices, your website and marketing.
Industry‑Specific Rules
Depending on what you do, sector‑specific laws may apply (e.g. food safety, professional registrations, road transport, building and construction). Build licence renewals and compliance checks into your calendar to avoid disruption.
Tax And GST
Most businesses must register for GST when GST turnover hits $75,000 in a rolling 12‑month window. Some industries (like rideshare and taxi) must register regardless of turnover. You’ll also need to consider PAYG withholding if you hire staff and keep adequate records for income tax. For the tax side, it’s best to check in with your accountant while we guide you on legal requirements.
What Legal Documents Should A Business Have?
You won’t necessarily need every document on day one, but most businesses will benefit from several of the following. Having the right terms in place from the start reduces risk and sets expectations with customers, suppliers and staff.
- Terms of Trade or Client Agreement: Sets the rules for pricing, scope, delivery, payment terms, liability and refunds. For many models, this will be your primary customer contract - consider tailored Terms of Trade.
- Website Terms and Conditions: If you operate online, set out acceptable use, IP ownership and limitations of liability for site or platform users.
- Privacy Policy: Explains how you collect, use and store personal information and cookies; increasingly expected by customers and third‑party platforms. A clear Privacy Policy supports compliance and trust.
- Employment Contracts and Policies: Cover duties, pay, termination, confidentiality and IP ownership for each role using the right Employment Contract. Add policies (e.g. leave, conduct, WHS) as you grow.
- Supplier or Contractor Agreements: Lock in pricing, timelines, quality standards, IP and confidentiality with key suppliers and independent contractors.
- Non‑Disclosure Agreement (NDA): Use NDAs when sharing sensitive information with manufacturers, partners or investors to protect your competitive advantage.
- Founders Documents: If you have co‑founders or plan to bring on investors, a Shareholders Agreement and a Company Constitution can clarify ownership, decision‑making and exit terms from day one.
- Trade Mark Registration: Registering your brand name or logo as a trade mark helps you stop others using similar branding and makes your brand a more valuable asset.
The documents you need depend on your model and risk profile. We can help you prioritise what to put in place now and what to add as you scale.
Common Questions About Business Activity Status
Do I Need An ABN If I’m Just Testing The Waters?
If you’re charging for goods or services with an intent to make a profit, you’ll generally need an ABN to invoice properly and avoid withholding by payers. If you’re unsure whether an ABN makes sense right now, weigh up the advantages and disadvantages of having an ABN and how soon you expect to make regular sales.
Do I Have To Register A Company To Be A Business?
No - plenty of businesses operate as sole traders. A company can be a good fit for limiting personal liability, splitting ownership or raising capital, but it’s not mandatory. If you do want the protections and flexibility of a company, we can handle your company set up end‑to‑end.
When Do I Need To Register For GST?
Most businesses must register when GST turnover reaches $75,000 in a 12‑month period. Some (like rideshare and taxi services) must register from the start, regardless of turnover - see the overview of GST for Uber drivers for that special rule. Speak with your accountant to confirm timing for your situation.
Does The Privacy Act Apply To My Small Business?
It depends. Many small businesses under $3 million annual turnover are exempt, but there are important exceptions (for example, health service providers and businesses that trade in personal information). Even if you’re exempt, it’s smart to adopt a clear Privacy Policy and sound data handling practices because customers and platforms expect it.
Do I Have To Register My Trading Name?
If you trade under anything other than your personal name or your company’s exact legal name, you’ll likely need to register that business name. This is separate from your company registration - see how a business name vs company name works.
Key Takeaways
- “Business activity” in Australia is about the whole picture: intent to profit, regular transactions, businesslike systems and commercial scale.
- If your side hustle looks and behaves like a business, treat it as one - get an ABN, choose a structure and register any trading name.
- Core laws to consider include the Australian Consumer Law, employment rules, and (where applicable) privacy obligations; strong contracts help you comply.
- Most businesses must register for GST once turnover reaches $75,000; rideshare and taxi services have to register regardless of turnover.
- Many small businesses are exempt from the Privacy Act’s formal rules, but publishing a clear Privacy Policy and using good data practices is still wise.
- Put the foundations in place early - customer terms, a suitable Employment Contract when you hire, and protect your brand with trade mark registration.
If you’d like a consultation on whether your activities amount to a business and how to set it up properly, you can reach us at 1800 730 617 or team@sprintlaw.com.au for a free, no‑obligations chat.
