Preparing for Tax Time as a Sole Trader

Like any self-employed person, independent providers generally have tax and record-keeping obligations. Preparing steadily through the year removes most of the stress that the end of the financial year can bring.

Get professional advice early

A registered tax agent or accountant can explain your obligations, whether you need an ABN or to register for GST, and which expenses may be deductible in your circumstances. Choose someone you feel comfortable speaking with openly and without judgement; many professionals work with clients in every kind of business.

Keep records as you go

Record income and expenses weekly rather than trying to reconstruct a whole year's activity in June. A spreadsheet or bookkeeping app is enough for most sole traders. Include dates, amounts and a brief description of each item.

Store receipts digitally

Photograph receipts as soon as you receive them and store them in a dedicated folder or app. Paper receipts fade, tear and go missing, and digital copies are far easier to hand to an adviser.

Set aside tax regularly

Put an agreed percentage of every payment into a separate savings account and treat it as untouchable. When your tax bill arrives, the money will already be there.

Understand what may be deductible

Advertising costs, a portion of phone expenses, some travel and certain supplies may be deductible, depending on your circumstances and how they relate to earning your income. Ask your adviser rather than guessing, and keep evidence for every claim.

Think about superannuation

Self-employed people are generally responsible for their own retirement savings. Your adviser can explain the options and any potential tax benefits of personal contributions.

Review after lodging

Once your return is lodged, take an hour to review what worked and set up better systems for the year ahead.

Good tax habits are simply good business habits, and they bring genuine peace of mind.