Sole trader accounting in Australia: what you have to do, and when to get help

Sole trader accounting is the set of money-and-tax jobs you take on when you run a business in your own name: keeping records, working out your income and deductions, reporting GST and PAYG if they apply, and lodging your tax return. It is the simplest business structure in Australia, but "simple" does not mean there is nothing to do, and a few of the tasks have dates and thresholds attached.

This guide walks through those tasks in the order most sole traders meet them, using the ATO, business.gov.au, the Tax Practitioners Board (TPB) and Moneysmart as sources. It finishes with a plain-language guide to which situations are manageable on your own and which are worth paying for help with. If you are specifically trying to pick a professional, our companion piece, how to choose an accountant in Australia, covers the checks in detail.

What "sole trader" means for your tax

According to business.gov.au, the ATO treats the money you earn in a sole trader business as your individual income. You put your business income and expenses in your own tax return using a separate "Business and professional items" schedule, so you do not lodge a separate return for the business. The flip side is that you are personally liable for business and tax debts, with no division between business and personal assets (business.gov.au).

That structure shapes everything below. Your profit is taxed at individual rates, not a company rate. For 2026–27 the ATO's resident table is nil up to $18,200 and then 15c for each $1 over $18,200 up to $45,000, with higher brackets above that. The table excludes the Medicare levy (ATO tax rates). Nothing is withheld for you the way it is for an employee, which is why the instalment and savings habits covered later matter.

Step 1: Check you are actually in business, then get an ABN

Not everyone who earns money on the side is carrying on a business. The ATO says a business generally involves a set of continuous and repeated activities done for the purpose of making a profit, and it asks you to look at all your related activities together (ATO). The Australian Business Register lists features such as a significant commercial activity of reasonable size and scale, an intention to make a profit, repetition, a systematic and business-like approach with records kept, and relevant knowledge or skill. It says there is no single test (Australian Business Register).

If you are in business, an Australian Business Number (ABN) is the first registration. business.gov.au describes it as a unique 11-digit number that identifies your business, it is free to register through the Australian Business Register, and you can use it to invoice, claim GST credits and avoid pay as you go (PAYG) tax being withheld from payments you receive (business.gov.au).

Two cautions from the same sources:

• You are not entitled to an ABN for work you do as an employee, even if an employer calls it contracting, and an employer should not make an ABN a condition of employment (Australian Business Register).
• Applying for an ABN, registering for GST and claiming GST refunds when you are not entitled can lead to prosecution, and you can be asked for evidence that you started or took steps to start the business (Australian Business Register).

If you trade under a name other than your own, business.gov.au lists business name registration as a separate step, with fees at the time of writing of $47 for one year or $108 for three years. Fees change, so check before you apply.

Step 2: Work out whether you need to register for GST

GST is the first place sole traders are caught out, because the trigger is a number that creeps up on you.

The ATO says you must register for GST when your GST turnover is $75,000 or more. You also must register if you start a new business and expect your turnover to reach that threshold in the first year, and regardless of turnover if you provide taxi or limousine travel, including ride-sourcing. If none of those apply, registration is optional, but if you choose to register you generally must stay registered for at least 12 months (ATO).

Three details matter in practice:

• It is turnover, not profit. GST turnover is your total business income, minus GST included in sales and a few other items. Your expenses do not reduce it.
• It is measured on a rolling basis. You reach the threshold if your current turnover (this month plus the previous 11 months) is $75,000 or more, or your projected turnover (this month plus the next 11) is likely to be.
• You have 21 days. Once you are required to register, you must do so within 21 days. The ATO tells unregistered businesses to check each month (ATO).

Here is a simple, hypothetical example (not an ATO example) to show how the rolling test works. A freelance designer invoices $6,000 a month, with no GST charged because she is not registered. After 11 months her turnover is $66,000. In month 12 she lands a $12,000 project, so her current turnover is $78,000. That is over the threshold, so the 21-day clock to register starts running.

The cost of missing it is spelled out by the ATO: if you should have registered and did not, you may have to pay GST on sales made since the date you were required to register, even if you did not include GST in your prices, plus possible penalties and interest. A registration can be backdated, but only by up to 4 years (ATO).

Step 3: Understand your BAS

Once you are registered for GST, you report through a business activity statement (BAS). The ATO says a BAS reports and pays your GST, PAYG instalments, PAYG withholding and other taxes (ATO).

You can lodge online through myGov, through the ATO's business portal or through compatible software, by mail, or through a registered tax or BAS agent. The ATO notes that online lodgers may get an extra two weeks to lodge and pay, and that using an agent can also bring extra time (ATO).

Most small businesses report quarterly. The ATO's standard due dates are:

• July to September quarter: 28 October
• October to December quarter: 28 February
• January to March quarter: 28 April
• April to June quarter: 28 July

The ATO adds that the extra two weeks does not apply to the October–December quarter because that due date already includes a one-month extension. If a due date falls on a weekend or public holiday, you have until the next business day. Businesses that are voluntarily registered with GST turnover under $75,000 can report annually instead (ATO).

If you cannot lodge or pay on time, the ATO says to contact it or your registered tax professional before the due date to discuss support options.

Step 4: Plan for PAYG instalments

PAYG instalments are how the ATO spreads your income tax across the year instead of sending one large bill after you lodge your return. The ATO explains that the instalments you pay are offset against your tax when you lodge your return (ATO).

You can enter the system in two ways:

• Automatically. The ATO says an individual, including a sole trader, enters automatically if all three apply: instalment income of $4,000 or more on the latest tax return, tax payable of $1,000 or more on the latest notice of assessment, and estimated (notional) tax of $500 or more.
• Voluntarily. The ATO suggests this is a good idea if you are new to business or expect business income over the threshold, to smooth cash flow and avoid a large bill.

To budget for it, the ATO's worked example for a sole trader estimates annual business income and deductions, uses the PAYG instalments calculator to get a yearly figure, then divides by 52 to work out how much to put aside each week. You will find the same logic useful whatever the figures: estimate profit, ask the calculator what the tax is, and move that money out of your spending account as you are paid.

Super works differently from employment. The ATO says that as a sole trader you do not have to pay super guarantee for yourself, but you can choose to make personal super contributions, and most people can claim a deduction for them until they turn 75 (ATO).

Step 5: Keep records the ATO will accept

The ATO says you are legally required to keep records of all transactions relating to your tax, super and registration affairs. The minimum on a record is generally the date, amount and description of the transaction, the GST information if relevant, and the purpose. The ATO's rules also include keeping most records for 5 years, keeping clear documents that show the business portion when an expense is part business and part personal, and being able to reconstruct your original data if your system changes (ATO).

A workable set-up for a sole trader usually has four parts. This is our editorial suggestion, not an ATO requirement:

1. A separate bank account for business money, even though sole traders are not required to have one.
2. A single place where every invoice, receipt and statement goes, in a format that can be exported.
3. A regular routine, such as a monthly session, to match transactions to documents.
4. A note beside any mixed-use expense explaining how you worked out the business share.

Step 6: Claim deductions properly

The ATO's rule of thumb is three "golden rules" for a valid business deduction: the expense must be for your business and not private use, if it is mixed you can claim only the business portion, and you must have records to prove it. For example, the ATO notes that if you use a laptop 50% for business and 50% privately, you can claim only 50% of the repair cost. It also says you cannot claim the GST part of an expense as a deduction if you can claim it as a GST credit on your BAS (ATO).

Sole traders claim these deductions in their individual tax return, in the Business and professional items schedule, through myTax or a registered tax agent. Some expenses are not deductible at all, such as fines and entertainment (with limited exceptions). If you earn personal services income (PSI), the PSI rules can limit the deductions you can claim (ATO).

The cost of managing your tax affairs is itself deductible. The ATO lists lodging through a registered tax agent and getting tax advice from a recognised tax adviser, and says you cannot claim for tax advice from someone who is neither a TPB-registered tax agent nor a qualified provider registered with ASIC (ATO).

Which jobs can you do yourself, and when does an accountant earn their fee?

Moneysmart lists the tasks that come with working for yourself: BAS, PAYG instalments, claiming business expenses and super contributions. It says an accountant can help you stay organised and understand your obligations (Moneysmart). Nothing in the official guidance says every sole trader must hire one. What follows is our editorial view, based on those tasks, of when the answer tips.

You can reasonably start on your own if:

• you have one income stream and a short list of expenses
• you are well under the GST threshold and not projecting to cross it
• you keep a clean record of income and expenses and are comfortable using myTax

Consider help at these points:

• You are approaching $75,000 of turnover. Registering at the right time, setting up GST in your invoicing and understanding the first BAS are all easier with someone who has done it often.
• You are preparing your first BAS. The form is not long, but mistakes go to the ATO under your name.
• You will owe tax for the first time. An accountant can help you estimate PAYG instalments before the bill arrives.
• You have mixed use expenses. A home office, vehicle or phone needs a method you can defend and records to match.
• You are thinking of changing structure. business.gov.au sets out the differences between a sole trader and a company, including reporting obligations and director liability for some debts, and Moneysmart lists structure advice as something an accountant can provide.
• You have more than one income type. Moneysmart says a mix of jobs, investments and side work makes a return more complicated and can benefit from expert guidance.
• You are hiring your first employee. Payroll and super bring extra obligations that sit alongside your own.

One point that applies whichever route you take: Moneysmart says that even when an accountant prepares your return and other financials, you remain legally responsible for what is lodged.

If you do hire help, check what they are allowed to do

The TPB says that generally only registered tax and BAS agents can charge or receive a fee for tax agent services, BAS services or tax (financial) advice services, and it publishes a register you can search (TPB). In general that covers BAS services too, so a bookkeeper who prepares your BAS for a fee should be a registered BAS agent. The TPB also lists the risks of using an unregistered preparer, including losing "safe harbour" protection from ATO penalties in certain circumstances and having no appropriate professional indemnity insurance (TPB).

Moneysmart's questions for a first meeting are a good start: which qualifications they hold, whether they are TPB-registered, which professional bodies they belong to, how they charge, how documents are shared and whether they have experience in your industry (Moneysmart).

To compare options, you can browse sole trader accountants by state: New South Wales, Victoria, Queensland, Western Australia and South Australia. If GST and BAS are the main job, try BAS and GST accountants in NSW, Victoria or Queensland. If record-keeping is the gap, see bookkeepers in NSW.

Frequently asked questions

Do sole traders need an accountant?

No official guidance says every sole trader must use one. Moneysmart says an accountant can help you stay organised and understand your obligations. Whether you need one depends on your turnover, the complexity of your income and expenses, and how comfortable you are with the paperwork.

Do sole traders pay tax differently from employees?

Your business income is treated as your individual income and goes in your own tax return, with business items in a separate schedule. Unlike employees, nobody withholds tax from your business income, so PAYG instalments and your own savings are how you cover it.

When do I have to register for GST as a sole trader?

When your GST turnover is $75,000 or more, or is likely to be, within 21 days (taxi and ride-sourcing drivers must register regardless of turnover). The ATO says GST turnover is measured on a current and projected rolling 12-month basis. See Step 2 for details.

Do I need a separate bank account?

Sole traders are not required to have one. business.gov.au lists a separate business bank account as optional for a sole trader and mandatory for a company. Many people use one because it makes the records easier to keep and the business share of spending easier to show.

How long do I keep my records?

The ATO says most business records must be kept for 5 years, with some records kept longer. Check the ATO's record-keeping pages for your situation.

Can I claim my accountant's fees?

The ATO says you can claim the cost of lodging through a registered tax agent and tax advice from a recognised tax adviser, but not advice from someone who is not TPB-registered or an ASIC-registered qualified provider.

Do I have to pay myself super?

Not under the super guarantee. The ATO says sole traders do not have to pay super guarantee for themselves, but can make personal contributions.

Start your shortlist

Ready to compare firms? Browse the Fiscly accountant directory by state, region or speciality, then run the TPB check on your top two or three. If you would like a hand working out what kind of accountant fits your situation, and it will point you to relevant firms.

Are you an accountant? Claim or add your Fiscly profile so people searching in your area can find you.

General information only. This article is not financial, tax, legal or accounting advice and does not consider your personal circumstances. Rules and thresholds change, so check the linked ATO, business.gov.au, TPB and Moneysmart pages and speak to a registered tax practitioner about your situation. Fiscly does not recommend or endorse any individual accountant listed in the directory.