Your Skills, Your Side Income: Legally Freelancing in Australia While Employed Full-Time

Freelancing alongside a full-time job in Australia can help you earn extra income, explore new career paths, and build skills - but it’s crucial to do it legally. Here’s what you need to know:

• Potential Earnings: Just 10 freelance hours a week at $52.60/hour could add $27,352 annually.
• Legal Requirements:
  • Review your employment contract for non-compete and confidentiality clauses.
  • Register for an ABN (Australian Business Number) to operate as a sole trader.
  • Understand tax obligations like GST registration (if earning over $75,000) and PAYG installments.
• Balancing Work: Use time management tools, set clear boundaries, and avoid burnout by limiting projects.
• Tax Planning: Track business expenses (e.g., internet, software) and set aside income for taxes.

Quick Steps to Start Freelancing:

1. Check your employment contract for restrictions.
2. Register for an ABN.
3. Keep detailed records of income and expenses.
4. Use tools for time tracking and project management.
5. Focus on projects that fit your skills and schedule.

Freelancing can be rewarding, but it requires careful planning to stay compliant and manage your workload effectively.

How to Freelance in Australia Step-by-Step

Legal Requirements for Side Freelancing

Freelancing while employed requires careful attention to legal rules. Here's what you need to know.

Freelancer Status Requirements

In Australia, freelancers are considered self-employed, meaning they run their own business. This classification impacts taxes and other responsibilities. The key is maintaining independence in your work arrangements.

A major benefit of freelancing is the ability to work with multiple clients. However, this comes with specific requirements:

Be sure your employment contract allows for this kind of independent work.

Employment Contract Review

It's crucial to review your employment contract. Many Australian companies include clauses that limit outside work activities. These may include:

• Non-compete agreements
• Confidentiality clauses
• Intellectual property rights
• Conflict of interest rules

"Without an ABN, businesses must withhold 46.5% of payments from a freelancer's invoices", according to the Australian Taxation Office [3].

Once you're clear on any restrictions, you can move forward with legally setting up your freelance business.

Business Registration Steps

To start freelancing, you'll need to register for an ABN (Australian Business Number). Use the Australian Government's Business Registration Service, providing proof of identity and business details.

Remember to update your ABN details within 28 days if your business information changes [2].

After securing your ABN, you'll need to handle tax obligations.

Tax Rules and Requirements

Freelancing comes with its own set of tax rules, which differ from regular employment. Here's a quick breakdown:

Key points to consider:

• Income tax rates can go up to 45%, depending on your bracket [3]
• PAYG instalments are required for regular tax payments
• Annual tax returns are due by October 31 [3]
• Detailed business records must be kept for at least five years

Managing Full-Time Work and Freelancing

Time and Task Management

Balancing a full-time job with freelancing requires careful planning. Use clear boundaries and allocate specific time blocks to stay productive throughout the day.

"From an employer's point of view, the main thing is how that [second job] will impact your performance." [5]

Once your schedule is set, it’s equally important to focus on avoiding burnout.

Preventing Work Overload

Avoid taking on too much by setting limits and allowing yourself recovery time. Dr. Shaw highlights the importance of balancing responsibilities to maintain health and productivity [5].

Here are some key tips to help:

• Set achievable goals: Only accept freelance projects you can handle without affecting your full-time job.
• Build in buffer time: Leave room in your schedule for unexpected delays or challenges.
• Take care of yourself: Prioritise rest, exercise, and personal relationships to recharge.

Work Management Tools

Using the right tools can make juggling two roles much easier. They help you stay organized and save time on repetitive tasks.

Here are some helpful tool categories:

"A platform that takes away the long hours of managing freelancers so that you can spend the time on doing more strategic tasks." [6]

Money and Tax Planning

Tax-Deductible Expenses

The Australian Taxation Office (ATO) has clear rules for claiming tax deductions. You can only claim expenses directly related to your business, and for items used for both personal and business purposes, only the business portion can be deducted. Keeping detailed records is essential [9].

Tax Return Preparation

Once you've set up your legal structure and balanced your work commitments, it's time to focus on managing taxes and financial planning. Proper planning ensures you can handle tax payments from all income sources without surprises.

"To avoid a nasty bill shock at the end of the financial year, we recommend you plan in advance and set aside the right amount of money every month to cover your tax bill." - Liz Russell, Senior Tax Agent [11]

Here’s how to stay on top of your taxes:

• Add up all income from salary and freelance work to determine your tax bracket.
• Claim the tax-free threshold from your highest-paying job [8].
• Track all expenses using the ATO's myDeductions tool [10].
• Set aside a portion of freelance income specifically for taxes [11].

Once your tax payments are on track, consider aligning your retirement contributions for a more secure financial future.

Retirement Fund Planning

As a freelancer, you’ll need to handle your own superannuation contributions in addition to any employer contributions from a full-time or part-time job. Combining tax payments with voluntary super contributions can help you establish a well-rounded financial plan.

If your freelance income significantly increases your taxable earnings, the ATO might require you to make quarterly tax payments [11].

For instance, Pierre earned $30,000 from a taxable pension (with the tax-free threshold applied) and another $30,000 from a part-time job (without the tax-free threshold applied). With $9,428 already withheld, his final tax bill was just $139 - showing how careful planning can help avoid unexpected financial stress [7].

Starting Your Freelance Work

Choosing a Business Structure

Pick a business structure that helps you manage taxes, liability, and compliance with ease [12].

For those freelancing alongside a full-time job, operating as a sole trader is often the simplest choice. This option allows you to:

• Use your personal tax file number for business purposes
• Report business income on your individual tax return
• Keep administrative tasks to a minimum
• Get started quickly with low setup costs

Once your structure is in place, you can shift your attention to finding projects.

Finding Projects

With your business structure sorted, the next step is securing projects that fit your schedule and skills. Platforms like Talentblocks offer tools like skill validation and flexible bookings, making it easier to balance freelancing with your main job.

"My main reason for starting to consult independently was to test the market and compare my skills." – Fred, Expert360 consultant, Strategy Manager at Telstra [4]

To ensure your freelance work fits seamlessly into your life, consider these tips:

• Clearly define your availability
• Start small to build credibility and trust
• Use scheduling tools to stay organized
• Focus on projects that align with your expertise

A study by Intuit found that 63% of freelancers take on side projects to supplement their regular income [4].

Building a Professional Profile

Your profile is your first impression - make it count. Highlight your transferable skills and past achievements to attract the right clients.

Key elements of a strong profile include:

• Specific technical skills and certifications
• Notable projects and measurable successes
• Industry knowledge and areas of specialization
• Clear availability and expected response times

"I was quite new to independent consulting, so I didn't know what the standards or expectations were. I just took guidance from Expert360 and that seemed to be in line with market rates." – Hannah, Expert360 consultant [4]

Lastly, keep track of your combined income to understand when GST obligations may apply.

Summary and Next Steps

Freelancing full-time requires thoughtful planning. Here's a quick guide to help you manage your responsibilities effectively:

• Register for an ABN (Australian Business Number): This 11-digit number is required for freelancing in Australia [1].
• Track your freelance income carefully: If you earn less than A$75,000 annually, you don’t need to register for GST [1].
• Use a reliable time tracker: This helps you keep tabs on your hours and manage your time better.
• Keep separate records for expenses: Distinguish between freelance and employment-related costs to make tax reporting easier.
• Focus on quality work: Protect your performance in your main job by taking on freelance projects that align with it [13].

Be mindful of burnout. If you notice signs like missed deadlines or feeling overwhelmed, adjust your workload quickly [13].

Start applying these steps today and fine-tune your approach as you go.