Starting a Collaborative Economy business

If you provide a good or service though a Collaborative Economy platform you may have to establish yourself as a business. This will depend on whether you are undertaking this activity as a hobby, or if you have the intention of making a profit.

How do I know if it's a business or a hobby?

The ATO and business.gov.au provide information and examples to help you understand the differences between a hobby and a business, including a self-assessment tool.

When running a business you pay tax on the money you earn, can claim for deductions on your expenses and generally need an Australian Business Number (ABN)

Regulations, licences and permits

Depending on the service you are providing, you may need to hold a licence regardless of whether it is a hobby or a business. For example, if you are providing certain home maintenance or building services, you will need to be a licensed trader. Information on licences and permits is available here

Know your rights and obligations

What do I need to do?
  • Read the 'Business or Hobby?' page on the ATO website or call the ATO on 13 28 66  to determine whether you are running a business or a hobby.
  • Head to Starting a Business at business.gov.au. Here you will find comprehensive information on the steps you need to take to start a business, including a checklist.
  • Head to Service NSW to set up your business, and apply for and register all your business requirements.
  • For information on registrations and licences, use the Australian Business Licence and Information Service (ABLIS) search tool.
  • If you are unsure of anything, seek independent legal advice.

For startups and new platform developers

If you are planning to develop a new Collaborative Economy platform you will likely have to establish yourself as a business.

It is important to understand the regulatory environment you want to operate in. It is possible that your innovative business idea does not fall within existing laws, or provides a significant challenge. If this is the case, you could consider being part of NSW Government’s Regulatory Sandboxes program.

Find current laws:
NSW Legislation website
Commonwealth legislation

9 common pitfalls for entrepreneurs

  1. Failing to secure all intellectual property as early on in the process as possible 
  2. Not obtaining all the social media for the brand as soon as you are settled (as well as web addressesbusiness namesregistrationsTrademark, and patent advice
  3. Not dealing with the correct legal entities in all business contracts. Due diligence is essential 
  4. Not having legal agreements (such as terms and conditions, privacy policy and disclaimer) tailored to the business   
  5. Having an incorrect business structure for the objective 
  6. Not obtaining the right financial advice at the right time, including personal tax obligations  
  7. Inadequate business insurance that doesn't cover the activities or is not current
  8. Not incorporating soon enough and failing to register for GST
  9. Not maximising your gains if your business is bought out 
What do I need to do?