At Mobbs and Company, we offer a number of accounting solutions to assist you as a sole trader. Even though a sole trader is one of the simplest business structures to get started in business, there are many processes that need to be followed to maximise income and minimise your taxes.

Advantages of a Sole Trader:

• Easy and inexpensive to set up
• Full control and decision-making power
• Flexible and can adapt quickly to changes in the market

Disadvantages of a Sole Trader:

• Unlimited liability for business debts
• Limited access to funding
• Personal assets at risk
• Limited expertise and resources

If you’re looking for some assistance or recommendations with your accounting or tax as a Sole Trader, contact us below:

Tax basics for a sole trader

As a sole trader, it is recommended that you:

• Register for a Tax File Number (TFN) and an Australian Business Number (ABN)
• Keep accurate records of all business income and expenses
• Deduct all allowable business expenses to reduce your taxable income
• Pay your tax liabilities on time to avoid penalties
• Consider seeking professional advice from a tax accountant to ensure compliance and optimize tax savings.

To make accounting as simple as possible, sole traders should:

• Separate your personal and business finances to maintain clear records
• Use accounting software to track your income and expenses and generate financial reports
• Monitor your cash flow regularly to ensure you have enough funds to cover expenses and taxes
• Set aside money for tax payments and other business obligations
• Keep copies of receipts and invoices as evidence for tax deductions
• Reconcile your bank statements regularly to ensure accurate records
• Consider hiring an accountant or bookkeeper to manage your finances and provide guidance.

Starting a business as a Sole Trader

If you haven’t yet started your business, here’s how a sole trader should get started:

• Choose a business name and register it (if necessary)
• Register for an Australian Business Number (ABN) and a Tax File Number (TFN)
• Determine the legal structure and register for Goods and Services Tax (GST). GST registration is required if your business makes over $60,0000
• Obtain any necessary licenses and permits for your business
• Set up a separate business bank account and accounting system
• Determine your pricing strategy and develop a business plan
• Obtain any necessary insurance coverage for your business
• Market your business and attract customers.

It is also recommended to seek professional advice from an accountant to ensure compliance with legal and taxation requirements.

We offer a free consultation to help sole traders get started. Fill out the form to book yours!