Accounting for sole traders

A sole trader is an individual who runs a business. They are the sole owner and are legally responsible for all decisions that the business makes. Debts and losses can't be shared with other people. You're responsible for paying super for your employees, and also for putting money aside for your own super. However, there are also several sole trader advantages. For one, it is the cheapest structure for running a business.

To operate your own personal business, all you need is your tax file number. If you are required to issue invoices and register for GST, you may also choose to register an ABN.

If you have exiting or projected revenue of more than $75,000 in a financial year, you'll need to register for GST. You’ll also need to lodge a quarterly Business Activity Statement with the tax office.

As a sole trader, you follow individual income tax rates and simply lodge your return under your personal tax file number. You’ll also need to complete a business schedule. It’s relatively straightforward, but it does make things more complex than your standard tax return.

No. If you are a sole trader, you can only operate under your own tax file number. To add business partners, you'd need to form a partnership, a unit trust or a company.

While it is not legally required for a sole trader to hire an accountant, having one can be highly beneficial. Our accountants can help manage financial records, ensure compliance with tax obligations and provide valuable business advice. We can assist with tasks such as preparing and lodging tax returns, managing GST if registered, and ensuring that all deductible expenses are correctly claimed. Our sole trader accountants can also offer strategic advice on business growth, financial planning, and tax minimisation strategies, which can be particularly valuable for sole traders who may not have extensive financial expertise.

Yes, as a sole trader, you can choose to manage your own accounting and financial affairs. Many sole traders handle their own bookkeeping and tax obligations, especially when the business is small and the financial transactions are straightforward. However, it's important to be aware of the complexities of tax laws and ensure that all records are accurate and up-to-date to avoid potential penalties. If your business grows or if you find the financial management overwhelming, seeking the help of a professional accountant may become a more viable and beneficial option​.