Yes, you need an ABN to invoice as a fractional executive, and yes, you'll need to decide fairly early on whether you're operating as a sole trader or through a Pty Ltd company. This isn't financial, tax or legal advice, it's what the admin actually looks like once you're the one signing the invoices, so you can walk into a conversation with your accountant already knowing what questions to ask. Every situation is different. Confirm your specific numbers and structure with a registered tax agent or accountant before you act on anything here.
When I started out fractional, I didn't know any of this either. I registered an ABN, sent an invoice, and figured the rest out as it came at me. It came at me a lot faster than I expected. Here's what I wish someone had laid out plainly on day one.
Do you need an ABN?
If you're invoicing a client for your time instead of being on their payroll, yes. An Australian Business Number is what lets you issue a legitimate invoice. Without one, a client is required to withhold tax from what they pay you at the top marginal rate, which is a painful way to find out you needed one. You apply through the Australian Business Register, it's free, and it's usually issued the same day if your details check out.
Once you've got an ABN, your invoices need to include it, your business name (or your own name if you're not trading under one), a clear description of the work, the amount, and the date. If you're not registered for GST, your invoice should say so or simply not show a GST component, don't add 10% you're not entitled to charge. Keep every invoice and get paid into a bank account you can reconcile easily. This sounds obvious until you're three clients deep and your personal account is a mess of consulting income, groceries and your kid's swimming lessons.
Sole trader or Pty Ltd company?
This is the first real structuring decision and most people either overthink it or ignore it entirely. Neither is right.
Sole trader means you and the business are the same legal entity. It's the fastest and cheapest way to start, there's no separate company to register or wind up later, and your accounting is simpler because business income is just added to your personal tax return. The tradeoff is liability. If something goes badly wrong with a client, contractually or otherwise, your personal assets are exposed. There's no wall between you and the business.
A Pty Ltd company is a separate legal entity. It has its own ABN and its own tax file number, it can hold its own bank account, and it puts a liability wall between the company's obligations and your personal assets (though that wall isn't absolute, directors can still be personally liable in specific circumstances, particularly around insolvent trading or personal guarantees). Companies pay tax at the company tax rate rather than your personal marginal rate, which can be an advantage once your fractional income is meaningfully above what you need to draw out to live on, because you can leave profit in the company rather than pushing it all through as personal income in the year you earned it. The tradeoff is admin. A company needs an ASIC registration and annual review fee, proper company accounting, and generally a bookkeeper or accountant doing more than a once-a-year tax return.
| Factor | Sole trader | Pty Ltd company |
|---|---|---|
| Setup cost and speed | Free, same day | ASIC registration fee, usually set up within a day or two via an accountant |
| Liability | None, you are personally exposed | Separate legal entity, some protection (not absolute) |
| Tax treatment | Income taxed at your personal marginal rate | Company tax rate, profit can be retained in the company |
| Ongoing admin | Simple, folds into your personal tax return | ASIC annual review, separate company accounts and return |
| Best fit | Testing the waters, one or two engagements, low risk exposure | Multiple concurrent clients, meaningful income, wanting the liability separation |
My own pattern, and what I see across the Fractional Exec Community: start as a sole trader if you're testing whether fractional work is even viable for you. Once you've got two or more paying clients and you can see this is a real business, not a side project, that's the trigger to talk to an accountant about setting up a company. The switch isn't dramatic, but it's not something to do on a whim either, get advice on the timing so you're not caught mid-financial-year in a way that creates extra complexity.
Do you need to register for GST?
GST registration becomes compulsory once your business turnover crosses a threshold set by the ATO. That figure changes and I'm not going to quote it here as gospel, check the current threshold on the ATO website or ask your accountant, because getting it wrong in either direction causes real problems. If you're under the threshold, registration is optional, some fractionals register anyway because it looks more established to certain clients and lets you claim GST credits on your own business expenses (software, laptop, travel). Once you're registered, you charge GST on your invoices, you lodge a Business Activity Statement on whatever cycle the ATO has you on, and you remit what you've collected minus what you've paid on legitimate business expenses. The mechanics aren't hard once you've done one or two cycles, but don't wing your first BAS, get your accountant to walk you through it once.
Superannuation, now that nobody's doing it for you
This is the one that catches people off guard. When you were employed, super was paid on top of your salary without you thinking about it. As a sole trader or a company director paying yourself, that stops happening automatically. Nobody is required to pay it for you unless you set it up yourself.
Practically, this means you need to decide how much you're contributing to your own super and actually do it, ideally on a schedule rather than as an afterthought at tax time. If you're running through a company and paying yourself a wage, the company may be required to pay super guarantee on that wage the same way any employer would for any employee, so this isn't purely optional once you've structured that way. If you're a sole trader or taking distributions rather than a wage, it's entirely on you to make the contribution happen. I've watched fractionals get five years into a successful practice and realise they've barely built any super compared to where they'd be on a normal payroll. Build it into your monthly numbers, not your end-of-year scramble.
PAYG instalments
Once the ATO can see you're earning consistent business or investment income, they'll typically move you onto PAYG instalments, which is essentially prepaying your income tax in quarterly chunks based on an estimate of what you'll owe, rather than facing one enormous bill at tax time. It's not an extra tax, it's the same tax you'd owe anyway, just spread out. The instalment amount is usually based on your prior year's income, and you can vary it if your income has genuinely changed. The trap is treating the PAYG instalment notices as optional or confusing and letting them pile up. They're not optional once you're in the system, and ignoring them just moves the pain to a bigger bill later.
Deductions worth understanding
Running your own fractional practice means legitimate business expenses reduce your taxable income, but the word doing the work in that sentence is legitimate. Common ones for fractionals include a portion of home office costs if you genuinely work from a dedicated space, software and subscriptions you use for client work, professional development directly related to your practice, and travel costs for client meetings that aren't just your regular commute. The ATO has specific methods and record-keeping requirements for things like home office claims, and they change from time to time, so don't guess at the method, confirm it with your accountant or the ATO's current guidance. Keep receipts and a simple log as you go. Reconstructing twelve months of expenses in June is miserable and you'll miss things you were entitled to claim.
Set money aside for tax as you go
The single biggest mistake I see in fractionals who came from a PAYG employee background: spending like the whole invoice amount is theirs. It isn't. A meaningful chunk of every payment that lands is money you're holding for the ATO, not money you've earned to spend. The habit that works: the moment an invoice is paid, move a set percentage straight into a separate account you don't touch for anything else. Pick a percentage with your accountant based on your actual structure and income level, and treat that transfer as non-negotiable, the same day the invoice clears, not at the end of the month when it's easier to talk yourself out of it. Combined with GST (if you're registered), PAYG instalments and super, this is genuinely the difference between a calm tax time and a horrible one.
None of this replaces proper advice. Structuring decisions, GST registration, super contributions and deduction claims all depend on your specific income, assets and circumstances, and the rules and thresholds move over time. Sit down with a registered accountant or tax agent before you lock in a structure, and revisit it with them once a year as your fractional practice grows. If you're still working out what your practice actually looks like before you get to the tax admin, start with 6 steps to becoming a fractional executive, and once you've got clients, get the pricing right first with how to price your fractional engagement, because your structure only matters once there's real income flowing through it. If you want to compare notes with other Australian fractionals who've already been through this exact admin, that's what Fractional Exec Community membership is for.