You’re not alone.

Xero is one of the most popular accounting platforms in Australia, but many sole traders eventually realise it’s not built for the way they actually operate.

It’s powerful. It’s flexible.

But for a lot of sole traders… it’s more than you need.

In this guide, we’ll break down the best Xero alternatives for sole traders in Australia, what they offer, and how to choose the right option for your setup.

Why sole traders look for alternatives to Xero

Xero works well for businesses and companies.

But sole traders often run into the same issues:

• Paying for features they don’t use
• Still needing spreadsheets for tax
• No clear view of their tax position
• Doesn’t include other forms of income like PAYG and how it impacts their overall tax position
• Complexity that slows them down
• Relying on year-end adjustments

The biggest gap?

Xero tracks transactions.

But it doesn’t calculate your personal tax position.

And as a sole trader, that’s what actually matters.

What to look for in Xero alternatives for sole traders

Before switching, it’s worth understanding what you actually need.

The best Xero alternative for sole traders should:

• Be simple to use
• Handle income and expenses automatically
• Support GST and BAS if required
• Track deductions properly
• Show your real tax position
• Work with your personal tax return, not just your business

Because your goal isn’t just bookkeeping.

It’s understanding your numbers.

Best Xero alternatives for sole traders in Australia

1. TaxTank (Best for sole trader tax visibility)

TaxTank is built specifically for sole traders who still lodge an individual tax return.

Instead of just tracking transactions, it applies the correct ATO tax treatment in real time.

• Live tax position all year round
• Tracks deductions like vehicle use, WFH, and depreciation
• Handles GST and BAS alongside your tax outcome
• Combines all income sources (business, PAYG, property, investments)
• Built for individuals, not just businesses

This means you’re not just recording your income and expenses.

You’re seeing what they actually mean.

If your main frustration with Xero is not knowing how much tax you owe, TaxTank is one of the strongest alternatives available.

2. QuickBooks (Best for simple bookkeeping)

QuickBooks is a solid option if you want something simpler than Xero.

• Easy to use
• Good for invoicing and expense tracking
• Cheaper entry-level plans

However:

• Still focused on bookkeeping
• Limited tax visibility
• Requires manual interpretation at tax time

3. MYOB (Best for compliance-heavy setups)

MYOB is another established platform.

• Strong compliance features
• Good for businesses with more structure
• Handles payroll and reporting

But for sole traders:

• Can feel complex
• Built for businesses, not individuals
• Still doesn’t show real tax position

4. Spreadsheets (Common but limited)

Many sole traders go back to spreadsheets after leaving Xero.

• Low cost
• Flexible

But:

• Time-consuming
• Error-prone
• No automation
• No tax visibility

This usually becomes unsustainable as things grow.

Xero vs TaxTank for sole traders

Many people comparing Xero alternatives for sole traders don’t realise the key difference isn’t features.

It’s what the software is built to do.

Xero is built for accounting.

TaxTank is built for understanding your tax.

When should you switch from Xero?

You should consider switching from Xero if:

• you’re paying for features you don’t use
• you still rely on spreadsheets for tax
• you don’t know your tax position
• you want a simpler setup
• you’re a sole trader, not a company

Most sole traders don’t need full accounting software.

They need clarity.

Xero vs alternatives: what’s the real difference?

The real difference isn’t just features.

It’s what the software is designed to do.

Most Xero alternatives for sole traders still behave like traditional accounting tools.

They track transactions but leave the tax interpretation to you.

That means:

• you still don’t know your tax position
• you rely on end-of-year adjustments
• you make decisions without full visibility

The best alternatives change this.

They show you what your numbers actually mean.Do you actually need Xero as a sole trader?

In many cases, no.

You may not need:

• complex accounting workflows
• advanced reporting
• company-level features

What you likely need is:

• clarity on your tax
• visibility on your profit
• confidence in your numbers

That’s where many sole traders outgrow Xero.

What’s the best Xero alternative for sole traders?

The best alternative depends on what you’re trying to solve.

If you want:

• simpler bookkeeping → QuickBooks
• traditional accounting → MYOB
• flexibility → spreadsheets

But if you want:

• to understand your real tax position
• to see your profit after tax
• to track deductions properly
• to avoid tax-time surprises

Then you need something built specifically for sole trader tax.

That’s where TaxTank stands out.

Frequently asked questions

Final thought

Xero is a powerful tool.

But it’s not built for everyone.

For sole traders, the real challenge isn’t tracking transactions.

It’s understanding what those transactions actually mean.

That’s the difference between bookkeeping… and clarity.

If you’re a sole trader or running a simple Pty Ltd company, chances are someone has told you that you need Xero.

It’s become one of those default pieces of business advice.

Starting a business? Get Xero.
Registered for GST? Get Xero.
Set up a company? Definitely get Xero.

But here’s the simple truth.

You might not need it at all.

For many sole traders and simple micro companies, complex accounting software can end up being an expensive extra layer that adds more admin than value.

While Xero is an excellent platform for payroll, advanced bookkeeping, and larger business workflows, it is not automatically the right fit for every business structure.

The myth: every business needs complex accounting software

There’s a long-standing assumption that if you have an ABN or Pty Ltd company, you need full accounting software.

That advice often comes from old bookkeeping habits rather than what your business actually needs today.

Platforms like Xero are fantastic when you need:

• payroll and STP reporting
• multiple employees
• bookkeeper or accountant workflows
• chart of accounts and ledger reporting
• multi-user approvals
• inventory or project tracking
• deeper financial statements

These are all valid use cases.

But that does not apply to everyone.

The old-school advice: keep personal and business separate

For years, the standard advice has been simple:

Keep your business finances separate from your personal finances.

And to be clear, that advice is still important from a legal and operational perspective.

Separate bank accounts, separate records, and clean reporting absolutely matter.

But where the advice becomes outdated is when people assume that means they need completely separate software ecosystems as well.

As we talk about in our article Why Self Employed Accounting Software Should Do It All, the traditional approach was built around the limitations of older software.

Back then, business tools and personal finance tools lived in separate worlds.

So people were told to use one platform for business, another for personal budgeting, and then manually piece everything together.

That might have made sense years ago.

Today, it often just creates extra cost and admin.

Because your money does not actually live in silos.

Your business income affects what you can safely spend personally.
Your GST and tax obligations affect your savings and cash flow.
Director drawings, salary, and distributions all flow back into your personal position.

This is where the old-school model starts to break down.

There is a big difference between:

Keeping finances legally separate
and
Paying for multiple software subscriptions

Modern software can now keep the business activity correctly separated for reporting and tax purposes while still giving you one complete view of your financial life.

That is a much smarter way to manage money for many sole traders and simple companies.

For sole traders, it’s often overkill

If you’re a sole trader, what you often need is much simpler:

• income and expense tracking
• invoices and quotes
• bank feeds
• GST and BAS visibility
• deduction tracking
• real-time tax position
• cash flow clarity

That’s very different from needing enterprise-style accounting software.

Many sole traders end up paying a monthly subscription for features they never use, while still not having a clear view of what they actually owe.

The same goes for simple Pty Ltd companies

This is where the misconception gets even stronger.

A simple Pty Ltd company does not automatically mean you need Xero.

If your company is:

• one director
• no staff
• no payroll
• straightforward business income and expenses
• standard quarterly BAS
• no complex bookkeeping needs

then a large accounting platform may be more than you need.

For many simple companies, the real need is to:

• keep business cash flow visible
• track GST
• prepare BAS
• understand what can be paid out
• keep tax obligations clear

That doesn’t always require a full bookkeeping stack.

TaxTank’s recent updates even specifically support small companies without payroll or inventory, which is exactly this use case.

The hidden cost nobody talks about

The biggest cost is often not the subscription itself.

It’s the stack that builds around it.

Business owners end up paying for:

• accounting software
• bookkeeping support
• accountant fees
• payroll add-ons
• integrations they never use

For a simple business, that can quickly become unnecessary overhead.

When does Xero make sense vs when does TaxTank make sense?

The right software depends on what your business actually needs, not just your structure.

The biggest difference is this:

Xero is excellent for traditional business accounting workflows.

TaxTank is built to help individuals, sole traders, and simple companies understand their real financial position in real time, including what that means for their tax obligations and personal cash flow.

Frequently asked questions

Still paying for software that’s more complex than your business?

If you’re a sole trader or running a simple Pty Ltd company, you may not need to pay for software built for payroll teams, bookkeepers, and larger business workflows.

What you need is clarity.

A clear view of:

• what money is coming in
• what needs to be set aside for GST and tax
• what is available to spend or pay yourself
• where your business and personal position actually sits

TaxTank is built to help you manage your money and tax obligations in one place, without paying for features you don’t need.

Whether you’re a sole trader, side hustler, consultant, contractor, or running a simple company, you can track income, expenses, BAS, and your live tax position all in one platform.

Start your 14-day free trial today and see your full financial position in real time.

But we’ve seen many users apply Sole Tank to other business activities too, including:

• Simple trusts and partnerships
• Small companies without payroll or inventory
• Commercial property activities that require BAS
• Side ventures that still need proper financial tracking

So we’ve added powerful Sole Tank updates to make TaxTank even more flexible – while keeping the simplicity you love.

Learn more about Sole Tank and how it works.

1. Exclude Businesses from your personal Tax Summary

Previously, every business in Sole Tank was automatically treated as sole trader income. That worked great for solo operators, but not for other entity types.

Now you can mark a business as excluded from your personal tax summary. That means:

• The business won’t count as sole trader income
• It won’t appear in your individual tax summary calculations
• You can still track transactions and run reports

This makes Sole Tank perfect sole traders who also manage trusts, companies, commercial property, or other business structures.

If you’ve previously set up a business that isn’t actually a sole trader activity, you can easily update the setting and switch it over.

See our step-by-step guide on excluding a business from your personal tax summary.

2. Brand new Profit & Loss (P&L) Report

Get a clear view of your business performance with the new Profit & Loss report:

• View income and expenses across one or multiple businesses
• Compare results to prior periods
• Toggle between Cash or Accrual reporting
• Export for accountants or advisors

Because your transactions are already allocated, the P&L report is ready whenever you need it. Keeping Sole Tank as simple and powerful.

3. BAS Reporting Made Easier

Managing multiple GST-registered activities? The updated BAS report now lets you:

• Include one or more businesses in the report
• Track BAS for multiple ABNs in one place
• Save time during lodgment

Whether it’s a company, trust, or commercial property entity, you can manage everything inside Sole Tank, without losing simplicity.

Why Sole Tank is Now More Powerful

These Sole Tank updates make TaxTank more flexible for anyone managing multiple business activities. You can now:

• Track different business entities
• Run professional-grade reports
• Prepare BAS information quickly
• Keep your personal tax summary clean and accurate

Already using Sole Tank? Explore the updated business settings, Profit & Loss reports and BAS reporting tools in your account.

New to TaxTank? Explore Sole Tank to see how its business tools connect with your individual tax position.

FAQs

Sound familiar? For too many sole traders, this is tax time. And it’s not just messy, it’s risky. The ATO’s data-matching tools are sharper than ever, lenders want crystal-clear records, and your accountant is secretly adding up how much extra they’ll bill you for sorting the chaos.

The fix? A simple, separate business bank account. Here’s why it changes everything.

The Myth: “Business accounts are expensive”

Once upon a time, yes. Today, no. Banks now offer free or low-fee accounts designed for sole traders. Many plug straight into accounting software, so your finances flow seamlessly. Think of it this way: if you can justify Netflix, you can justify a business account, except this one pays for itself in clarity, time saved, and tax sanity.

Here’s why it matters;

Stay Out of the ATO’s Spotlight

Here’s how it works: if the ATO’s data-matching bots think your tax return doesn’t line up, you get flagged. And when that happens, guess what’s next? A friendly request for your bank statements, where suddenly every deposit, every transfer, every tap at Bunnings is up for inspection.

In 2025, the ATO’s system cross-references everything: bank interest, gig income (Uber, Airtasker, Airbnb), PayPal and Stripe transactions, property sales, payroll, even crypto. Last tax season alone, the ATO adjusted nearly 500,000 returns because the numbers didn’t match. And this is exactly where sole traders trip up:

Mystery deposits look like hidden income
When personal transfers or family money land in the same account as your business revenue, the ATO’s systems can easily mistake them for undeclared income.

Personal spending gets claimed as business
Groceries, Netflix, or fuel for the family car in a mixed account, it’s far too easy for personal costs to slip in as “deductions,” while genuine business expenses risk being overlooked.

Your figures don’t match industry benchmarks
The ATO uses cost-to-turnover and expense ratios from over two million small businesses across 100 industries. If your margins look off because of messy or misclassified records, you’ll stand out for all the wrong reasons.

With all these red flags in play, a separate business bank account is your best defence. It keeps income and expenses cleanly segmented, your reporting benchmark-friendly, and your deductions defensible. No mix-ups, no awkward justifications, and far less chance of landing in the dreaded “please explain” pile triggered by an ATO algorithm.

You Look the Part

Imagine sending an invoice that says “Please pay into Sally’s Everyday Saver.” Not exactly confidence-inspiring, right? A business account under your trading name instantly elevates your professionalism and avoids those awkward explanations.

And it’s more than just optics: research shows 88% of consumers say trust is a deciding factor when choosing between brands, and in professional services (where most sole traders sit) trust is even more critical. Put simply, a proper business account isn’t just a bank detail, it’s a trust signal that reassures clients, earns suppliers’ respect, and shows your business is every bit as real and professional as you are.

Keep the Door Open with Lenders

Whether you’re looking to finance a new vehicle, upgrade your business equipment, or expand into property, sooner or later you’ll need access to credit. And here’s the truth: lenders don’t just lend, they look for clarity.

A dedicated business account gives lenders exactly what they want: clean, credible data. No mix of groceries, Spotify bills, or those “was that work or play?” transactions muddying the picture. Just crisp income and expense records that prove you mean business.

Save Time, Save Money, See the Truth

Mixing business and personal transactions is a nightmare at tax time, costly for you and your accountant won’t thank you for it. A dedicated business account cuts through the chaos, separating the two worlds automatically.

Pair it with software like TaxTank and you take it a step further. Thanks to Open Banking, you can link both your personal and business accounts into the one platform, giving you total clarity. Business transactions flow into your tanks automatically, while personal spending stays personal. You still get the clean separation the ATO, your accountant, and lenders want, without juggling spreadsheets or multiple logins.

The Bottom Line

Running your sole trader business from a personal account might feel convenient today, but it’s costing you in credibility, cash flow clarity, and compliance. The ATO is watching more closely than ever, lenders are demanding cleaner records, and your accountant has better things to do than play forensic detective with your grocery bill.

A dedicated business account isn’t red tape, it’s a growth tool. It protects you from the “please explain” pile, shows clients and suppliers you’re serious, and gives you the clear financial picture you need to make smarter decisions. Pair it with the right digital tools like TaxTank, and suddenly tax time stops being a panic attack and starts being just another task ticked off.

So draw the line today. Separate work from play, put your business on its own footing, and give yourself the clarity and confidence to grow. Your clients will notice, your lender will thank you, the ATO will leave you alone, and future-you will wonder why you didn’t do it sooner.

Ready to make tax time easy? Start your free trial with TaxTank today and see how effortless it is to keep your business and personal finances crystal clear.

How to stay one step ahead of the ATO bots:

Segregate your accounts – Keeping business and personal finances separate isn’t just tidy, it’s smart. The ATO sees a mixed account as a red flag waving in neon lights, making your deductions harder to prove and your audit risk higher. Plus, lenders love clean, organised books: it’s way easier to show your true income and snag better loan deals when your finances aren’t partying together in one account. Keep things clear, keep things compliant, and keep the bots guessing.

Track every home office hour and actual expense – Fixed rate or actual, you need a daily log. The upside? If you track both, you can pick the bigger deduction at tax time, there’s no law against being smart. Hustlers with a space used exclusively for business can also claim a portion of occupancy expenses (like rent, mortgage interest, rates, insurance) based on its square meterage. Just remember: claiming occupancy can chip away at your CGT exemption when you sell, so weigh today’s tax saving against tomorrow’s bill.

Claim it all, claim it clean – Tools, travel, subscriptions, phone bills, claim every cent you’re entitled to, but only with clear, traceable records. Use digital tools that pull transactions from live bank feeds, match them to permanently stored receipts, and automate depreciation so every asset is tracked accurately year after year. The right tools will even apply small business concessions, like the current $20k instant asset write-off automatically, making sure nothing slips through the cracks

Manage losses like a pro – If you’re one of the 40% of sole traders juggling a side gig (or two) on top of a day job, you may be able to use business losses to reduce your overall tax bill, but only if they’re tracked properly. A smart digital tool will keep separate schedules for each business, rolls losses forward when they can’t be claimed, and applies them against other taxable income when the rules allow. Done right, it’s more money in your pocket and less for the ATO.

Know your tax position year-round – Side hustlers shouldn’t fly blind. Use smart software built for you (not big business) to track your hustle alongside all your other income and investments in real time. You’ll know exactly where you stand any day of the year, set money aside before the bill lands, and make smarter spend-or-invest decisions. Plus, your accountant can jump in while there’s still time to make a difference. If the ATO’s bots know your numbers 24/7, you should too.

TaxTank advantage: One platform to run your hustle like a pro! We’re talking live bank feeds keep transactions flowing in, auto-classification sorts them instantly, permanent receipt storage locks down your proof, and automated depreciation ensures every asset and instant asset write-off is claimed without lifting a finger. Track multiple businesses, roll losses forward, apply them when the rules allow, and see your real-time tax position alongside all your other income and investments – year-round, audit-ready, and bot-proof.

Ready to run your hustle like a pro and keep the ATO bots at bay? Try TaxTank today for effortless tracking, automated deductions, and real-time tax insights tailored for sole traders and side hustlers. Get started now and take control of your tax game!

1. Failing to Keep Accurate and Complete Records

The Australian Taxation Office (ATO) requires sole traders to maintain financial records for at least five years. Many fail to do so, leading to incorrect claims and penalties.

How to avoid this mistake:

• Use cloud-based software like TaxTank to automate record-keeping and ensure accurate financial tracking.
• Keep digital copies of receipts to prevent loss.
• Maintain separate business and personal accounts or use TaxTank to correctly allocate transactions.

2. Claiming Ineligible or Exaggerated Deductions

Overclaiming or missing out on deductions is one of the most common mistakes in sole trader tax returns. The ATO closely scrutinises unusually high claims.

How to avoid this mistake:

• Understand what’s deductible: Business-related expenses like internet, office supplies, and equipment qualify, but personal expenses do not.
• Use TaxTank’s home office diary to track and justify home office deductions accurately.
• Claim only the business-related portion of mixed-use expenses like car and phone costs.

3. Forgetting to Declare All Income

All income, including cash payments, must be reported. Failing to do so can trigger an ATO audit.

How to avoid this mistake:

• Track all income sources, whether received via cash, bank transfers, or online platforms.
• Use TaxTank’s automatic bank feed integration to ensure every transaction is captured.
• Cross-check invoices and deposits to confirm no income is omitted.

4. Misreporting GST (If Registered)

If your business turnover exceeds $75,000, GST registration is mandatory. Many sole traders either fail to register or report GST incorrectly.

How to avoid this mistake:

• Register for GST as soon as your turnover reaches $75,000.
• Use TaxTank to track GST on invoices and ensure compliance.
• Submit Business Activity Statements (BAS) on time to avoid penalties.

5. Not Paying Superannuation for Yourself

Sole traders aren’t required to pay super, but neglecting contributions can impact retirement savings.

How to avoid this mistake:

• Make voluntary contributions and claim tax deductions where eligible.
• Take advantage of government co-contributions if earning under $58,445 (2023-24).
• Consider setting up a Self-Managed Super Fund (SMSF) for greater control.

6. Incorrectly Reporting Vehicle and Travel Expenses

Car expenses are often misreported, with many sole traders either overclaiming or underclaiming their business use.

How to avoid this mistake:

• Use the correct ATO-approved method:
  • Cents per kilometre method: Claim up to 5,000 business kilometres per year at 85 cents per km.
  • Logbook method: Maintain a 12-week logbook to claim actual business use percentage.
• TaxTank’s vehicle logbook ensures you claim only what you’re entitled to.

7. Ignoring Tax Deadlines and Failing to Lodge on Time

Late lodgements attract fines and interest charges. Many sole traders procrastinate and struggle to meet tax deadlines.

How to avoid this mistake:

• Mark key dates: Sole traders must lodge tax returns by 31 October unless using a registered tax agent.
• Use TaxTank‘s simple BAS reports to say in top of deadlines.
• Engage a tax agent for deadline extensions if needed.

8. Not Planning for Tax Payments

Since tax isn’t withheld from sole trader income, failing to set aside money can lead to financial stress when tax bills arrive.

How to avoid this mistake:

• Set aside 30-35% of your income for tax, GST, and PAYG instalments.
• Use TaxTank’s live tax position tracking to always know how much you owe.
• Prepay deductible expenses before June 30 to reduce taxable income.

9. Overlooking the Instant Asset Write-Off

The instant asset write-off allows immediate deductions for eligible business purchases, yet many sole traders miss out.

How to avoid this mistake:

• Check the current write-off threshold (in 2024-25, it’s $20,000 per asset).
• Ensure assets are installed and in use by June 30 to qualify.
• Use smart tax planning to time large purchases for maximum deductions.

10. Not Seeking Professional Advice

Managing tax alone can lead to errors, missed deductions, and audits.

How to avoid this mistake:

• Use a registered tax agent to ensure compliance and maximise deductions.
• Regularly review finances to stay on top of obligations.
• Automate compliance using TaxTank, which keeps your tax position up to date.

Final Thoughts

Avoiding these common mistakes in sole trader tax returns will save you money, reduce stress, and keep you compliant with the ATO. With TaxTank, you can track expenses, automate tax calculations, and ensure you never miss a deduction.

Ready to take control of your sole trader tax return? Sign up for TaxTank today and make tax time a breeze!

Sole Tank brings together income and expense tracking, quotes, invoices, business assets, Profit & Loss reports and supported GST and BAS information. With additional Tanks, you can include employment income, rental properties and investments in the same personal tax calculation.

The right software also depends on how your business operates. Payroll, inventory, reporting requirements and your accountant’s workflow may influence your choice.

This guide compares TaxTank, Xero, MYOB and QuickBooks, explaining what to look for and when each type of software may suit your business.

Sole trader accounting software should cover more than transactions

Good accounting software helps you record income, track expenses, send invoices and understand business performance.

For sole traders, there is another consideration: business profit contributes to your individual taxable income. Your salary, other income and eligible deductions can also affect the final tax result.

When comparing software, check whether it calculates business profit only or also helps calculate your overall personal tax position. TaxTank connects those calculations using the information recorded in your account and the relevant Tanks.

What to look for in accounting software for sole traders

Start with the tasks you need to manage each week, then consider reporting and tax preparation.

TaxTank suits sole traders who want business records and personal tax calculations together. Businesses needing payroll, inventory or more complex accounting workflows should compare platforms and plans that support those requirements.

Popular accounting software for sole traders in Australia

Xero

One of the most popular accounting platforms in Australia.

• Strong invoicing and reporting
• Built primarily for businesses and companies
• Can be overkill for simple sole trader setups
• Tracks transactions, but doesn’t calculate your tax position

Xero works well if you need full accounting functionality, but many sole traders find it more complex than necessary.

MYOB

A long-standing accounting solution.

• Comprehensive compliance tools
• Designed for businesses with more complex needs
• Can feel heavy for simple sole trader setups
• Requires manual interpretation of tax outcomes

MYOB is powerful, but often better suited to structured businesses rather than individual sole traders.

QuickBooks

A global accounting platform with solid features.

• Easy to use with good expense tracking
• Strong invoicing functionality
• Limited visibility into your actual tax position
• Still relies on year-end adjustments

It’s a solid tool for bookkeeping, but doesn’t provide clarity on your actual tax position.

TaxTank: Sole trader accounting, personal tax and simple business reporting

TaxTank combines everyday business tools with live individual tax calculations. Track income, expenses, invoices and assets while seeing how your sole trader activity affects your calculated tax position.

• Manage up to six sole trader businesses under your ABN.
• Track vehicle use, working-from-home deductions and depreciation.
• Prepare supported GST and BAS reports.
• Generate cash or accrual Profit & Loss reports.
• Add the relevant Tanks to include employment income, property and investments in your personal tax calculation.

Useful for simple companies and other business activities too

TaxTank also suits one-person companies, simple trusts, partnerships and commercial property activities that need income and expense tracking, GST, BAS information and financial reports.

You can add these activities outside the six-business sole trader allowance and exclude them from your personal tax summary. Their records and reports remain available without treating their results as your individual income.

Looking for a simpler alternative to Xero?

Many sole traders start with Xero.

But over time, they realise:

• they’re paying for features they don’t use
• they still need spreadsheets for tax
• they don’t have a clear tax position

If you:

• don’t run a company
• don’t need complex accounting workflows
• want clarity on your real numbers

Then a simpler, tax-focused solution like TaxTank may be a better fit.

Choose accounting software that fits the person behind the business

TaxTank is our recommendation for sole traders who want business accounting tools and live personal tax calculations in one platform.

Manage your invoices, income, expenses and business records in Sole Tank. Add other Tanks where relevant to connect your employment, property or investment income with your overall tax position.

Sole Tank costs the equivalent of $9 per month, paid annually at $108. Try TaxTank free for 14 days, with no credit card required.

Explore Sole Tank.

Frequently asked questions

There is no separate ABN tax rate. Whether you freelance full-time, run several businesses or earn extra income alongside a job, your sole trader income forms part of your individual tax return.

Work out how your ABN income affects your tax, including income from your job. The examples below show how business deductions, salary and tax already paid fit into the calculation, so you can understand what to put aside.

This guide explains the calculation using the 2026–27 financial year, from 1 July 2026 to 30 June 2027.

Want to calculate your own numbers?

Use our free ABN tax calculator below for a calculation based on your inputs. Check the financial year and what the tool includes before interpreting the result.

If you also have a job, read the salary-plus-ABN example below first. It shows why business profit needs to be considered alongside your salary and why tax already withheld matters.

Example: calculating tax on salary plus ABN income

Priya earns an $80,000 salary and also does freelance work through her ABN. Her freelance business earns $30,000, with $10,000 in eligible deductions.

Her business profit is $20,000. Combined with her salary, her taxable income is $100,000, assuming no other income or deductions.

In this simplified example, the extra $20,000 of business profit increases income tax and Medicare levy by $6,400, or 32% of that profit.

Priya does not receive a second tax-free threshold for her business. Her business profit sits on top of her salary in the annual calculation.

The example assumes full-year adult Australian tax residency and the full Medicare levy. It excludes offsets, study loan repayments, any Medicare levy surcharge and other adjustments. Employment tax withheld and PAYG instalments reduce the amount remaining payable.

This is why calculating tax on the $20,000 business profit by itself would give Priya a misleading picture.

Keep both income sources in view

As your salary or freelance earnings change, the amount you need to put aside can change too. TaxTank brings the employment information recorded in Work Tank and business activity recorded in Sole Tank into one live individual tax summary.

Explore TaxTank for employment and sole trader income

How to calculate ABN tax step by step

1. Work out your business income

Start with the assessable income from your sole trader activities for the financial year. This may include client payments, sales, commissions and other business earnings.

If you are registered for GST, GST collected on sales is generally excluded from your income tax calculation. The timing of when income is recognised also depends on the accounting method appropriate for your business.

2. Subtract eligible business deductions

Deduct the expenses you are entitled to claim for earning that business income. For costs that serve both business and personal purposes, claim only the eligible business portion.

Buying an asset does not always mean its full cost is immediately deductible. Depreciation or an available write-off may determine the amount you can claim that year.

Business income − eligible business deductions = net business profit

Keep records of how you calculated deductions, including receipts and evidence of business use.

3. Include your other income and deductions

Combine your net business profit with other assessable income, such as salary, bank interest or investment income. Allow for any other eligible deductions to arrive at your total taxable income.

If you make a business loss, special rules may affect whether you can offset it against salary or other income. Do not automatically subtract every business loss from your wages.

4. Calculate tax and relevant adjustments

Apply the individual income tax rates for your financial year and residency status. Then account for relevant tax offsets, the Medicare levy, any Medicare levy surcharge and compulsory study loan repayments.

Eligible sole traders may qualify for the small business income tax offset. It can reduce income tax by up to $1,000, subject to the ATO’s eligibility and calculation rules. It is not a flat $1,000 reduction for every ABN holder.

5. Account for tax already paid

Your total annual tax calculation is different from the amount you still need to pay.

Tax withheld from your salary and PAYG instalments already paid are credited when your return is assessed. After those credits and other adjustments, the result may be an amount payable or a refund.

ABN tax rates for 2026–27

Sole traders who are Australian residents for tax purposes use the following individual income tax rates for 2026–27.

These rates exclude the Medicare levy, generally 2%, and other adjustments. Medicare levy reductions and exemptions can apply. Different rates apply to foreign residents, working holiday makers and some people under 18. Source: Moneysmart’s Australian income tax rates.

Example: calculating tax when ABN income is your only income

Alex earns $100,000 from a consulting business and has $25,000 in eligible business deductions. With no other income or deductions, Alex’s taxable income is $75,000.

This example assumes Alex is an adult Australian tax resident for the full year and pays the full Medicare levy. Business amounts exclude GST where applicable.

It excludes tax offsets, including any small business income tax offset, study loan repayments and any Medicare levy surcharge. It also excludes PAYG instalments already paid. Alex’s final amount payable may therefore differ from $14,520.

How much should you put aside for ABN tax?

There is no single percentage that works for every sole trader. The amount depends on your total income, deductible expenses, offsets, study loan obligations and tax already paid.

In Priya’s example, 32% of business profit covers the additional income tax and Medicare levy before other adjustments. Someone with different income or circumstances could need a different amount.

To plan your cash flow, review your expected annual tax position, subtract payments and withholding already accounted for, and consider how much more income you expect before year-end. Update the calculation as your circumstances change.

If you collect GST, keep money for GST obligations separate from your income tax provision.

Is GST included in ABN tax?

GST and income tax are separate obligations. Having an ABN does not automatically mean you must register for GST.

Generally, registration is required when your GST turnover reaches $75,000 or more, or you expect to reach that threshold under the applicable turnover rules. Taxi and ride-sourcing services require registration regardless of turnover.

GST turnover generally combines relevant business activities carried on by the same entity. It is based on turnover, not profit.

If registered, you generally charge GST on taxable sales and may claim credits for GST included in eligible purchases. Some sales are GST-free or input taxed, so GST is not simply 10% of every receipt.

Read the ATO’s GST registration guidance.

Which deductions can reduce your sole trader tax?

Eligible deductions may include software subscriptions, business insurance, advertising, professional fees, vehicle use, home-based business expenses and depreciation on business assets.

The amount depends on the expense, its tax treatment and how it is used. A laptop used partly for personal purposes requires apportionment. Vehicle claims need appropriate records and a method that applies to the vehicle and business.

For home-based business expenses, use a reasonable, supported calculation of business use. Floor area alone is not a universal method for calculating utilities. Occupancy expenses have additional eligibility requirements and may have capital gains tax implications.

See the ATO’s home-based business expense guide.

For asset purchases, check the depreciation and write-off rules applying to the relevant year and the date the asset is first used or installed ready for use.

How do PAYG instalments affect ABN tax?

PAYG instalments are prepayments towards tax on business and investment income. They are different from PAYG withholding, which your employer deducts from your salary.

The ATO may enter you into the instalment system after you lodge a return showing business or investment income. Payments are credited towards your annual assessment.

Dividing an annual tax calculation by four can help with budgeting, but it does not determine your official instalment amount. Follow the ATO notice and applicable rules if considering a variation.

Does superannuation affect the calculation?

Eligible personal super contributions can reduce taxable income when you claim a deduction. Conditions apply, including contribution caps and generally providing a valid notice of intent to your fund and receiving its acknowledgement.

If you also have employment income, employer and salary-sacrifice contributions count towards the same concessional cap.

Having an ABN does not automatically remove a payer’s obligation to pay super. Some contractors are entitled to super depending on their work arrangement.

Keep your ABN tax calculation current with TaxTank

A one-off calculation can show how the numbers work. Keeping it current means recording income, deductions and tax payments as the year progresses.

TaxTank’s Sole Tank helps you organise business income and expenses, supporting documents, assets and GST reporting. Add Work Tank if you also want to manage employment income, PAYG withholding and work-related deductions. The information recorded in your Tanks contributes to one calculated individual tax position.

If you operate multiple businesses, you can keep their records separate while viewing their contribution to your individual tax summary.

Explore Sole Tank or start your free 14-day trial. No credit card required.

ABN tax calculation FAQs

Sole Tank brings together income, expenses, invoices, business assets and supported GST and BAS information. Add the relevant Tanks to include employment income, rental properties or investments in the same personal tax calculation.

Choosing a sole trader tax app also means deciding how you want to manage your finances. You might want software you control yourself, a managed tax service or accounting tools with payroll and other business features.

This guide compares TaxTank, Hnry, Xero, QuickBooks Online, Rounded and Solo by MYOB, explaining who each option suits and what to consider before subscribing.

Best tax app for sole traders: options at a glance

For connected business records and live personal tax calculations, TaxTank is our recommendation. Other options may suit you better if you want managed tax payments and lodgement, payroll or a different bookkeeping workflow.

Compare the scope of each product as well as its price. A software subscription and a service that includes accountant support and lodgement are different purchases.

*Pricing was checked in August 2026 and may change. Introductory discounts, payment fees and optional add-ons are excluded unless stated.

What should a tax app for sole traders do?

As a sole trader, the net income you earn from carrying on your business forms part of your assessable income. The Australian Taxation Office explains how business income is reported as part of your individual tax return.

Depending on your circumstances, useful features may include:

• Income and expense tracking
• Quotes and invoicing
• Bank feeds
• Receipt and document storage
• GST tracking
• BAS information
• Business asset and depreciation records
• Profit and Loss reports
• Tax calculations and clarity about which income sources are included
• Support for multiple business activities
• Access for your accountant
• Tax-time reports

The right choice also depends on whether you want software to manage yourself or a service that handles tax obligations and lodgement for you.

1. TaxTank: Best for sole trader accounting and live personal tax calculations

TaxTank is Australian tax software for sole traders designed specifically around accounting and individual tax.

It includes the everyday tools needed to manage a sole trader business, including:

• Income and expense tracking
• Quotes and invoices
• Australian bank feeds via Open Banking
• GST and BAS information
• Cash and accrual Profit and Loss reports
• Business assets and depreciation calculation
• Personal services income records
• Business and non-commercial loss tracking
• Business loans
• Receipt and document storage
• Accountant collaboration

The key difference is what TaxTank does with that information.

Business profit and personal tax are different calculations. Your sole trader result contributes to your individual tax position alongside other relevant income and deductions.

TaxTank connects these calculations using the information recorded in your account. With the relevant Tanks, you can see how business activity, employment income, properties and investments contribute to your overall calculated tax position.

This gives you access to an ongoing sole trader tax calculator that updates as your income, expenses and other financial information change.

Why your other income matters

Imagine you earn a salary and also run a freelance business. Your business profit is not taxed separately from your employment income. Both contribute to your individual tax calculation, alongside relevant deductions and other tax factors.

Using Sole Tank with Work Tank helps you track both activities and see their combined effect on your calculated tax position. Add Property or Holdings Tank if those income sources also apply to you.

Manage multiple businesses

TaxTank allows you to manage up to six sole trader businesses under your ABN.

Learn more about how ABN tax is calculated for sole traders

Income, expenses and reports can be kept separate for each business, while their combined results are included in your total calculated individual tax position.

You can also add companies or other business activities and exclude them from your personal tax calculation. This lets you retain separate records and reports without treating company profit as personal income.

Access, reporting and lodgement

TaxTank is browser-based and works best on a desktop or larger screen. You can also access it through a mobile browser.

The platform prepares records and reports to help you self-lodge through myTax or work with your accountant. It does not directly lodge your return with the ATO.

TaxTank supports cash and accrual Profit & Loss reporting. Businesses needing payroll, inventory or complex company reporting should assess software that includes those features.

TaxTank pricing

Sole Tank costs the equivalent of $9 per month, paid annually at $108. Additional Tanks are available for other parts of your financial life.

Try TaxTank free for 14 days. No credit card required.

TaxTank is best for

TaxTank is a strong choice for sole traders who want to:

• Manage their own business records
• See your calculated tax position throughout the year
• Account for employment and self-employed income together
• Include properties or investments in their broader tax position
• Manage several businesses from one account
• Collaborate with an accountant
• Pay a predictable annual subscription

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2. Hnry: best for sole traders who want tax handled for them

Hnry combines software with an accounting and tax service for sole traders.

Instead of charging a fixed subscription, Hnry deducts a percentage from self-employed income paid into a dedicated Hnry account that must be opened separately from your other bank accounts. It then calculates and pays amounts for tax, GST, Medicare levy and student loan repayments where applicable.

The service also includes invoicing, expense claims, tax return preparation and lodgement.

Hnry pricing

Hnry charges 1% plus GST of self-employed income, capped at $1,500 plus GST per financial year.

This percentage-based model can be attractive when income is low or irregular. As income grows, however, the annual cost can become considerably higher than a fixed-price software subscription.

Hnry is best for

Hnry may suit sole traders who:

• Want someone else to handle tax payments and lodgement
• Are comfortable receiving business income through a dedicated account
• Prefer a service rather than managing their own tax records
• Have relatively straightforward sole trader circumstances

It may be less suitable if you want direct control over tax planning, have several businesses or need to connect your sole trader activity with other income types, properties, investments and other parts of your financial life.

If you are comparing the two platforms more closely, see our full TaxTank and Hnry comparison.

3. Xero: best for traditional business accounting and growth

Xero is one of Australia’s best-known cloud accounting platforms.

It provides established business accounting features such as:

• Invoicing and quotes
• Bank reconciliation
• Bills and supplier management
• GST tracking and BAS preparation
• Financial reports
• Payroll on eligible plans
• Inventory and project tools on selected plans
• Accountant and bookkeeper access
• A broad app integration marketplace

Xero is designed around the accounting records of a business. This makes it a capable option for sole traders who need traditional bookkeeping features or expect to employ staff and expand their operations.

It does not calculate your complete individual tax position. Your sole trader profit generally needs to be combined with salary, deductions, investments and other personal tax information elsewhere.

Xero pricing

Xero’s Ignite plan starts from $37 per month at standard pricing. Higher plans provide additional invoicing, payroll, reporting and business-management features.

Promotional discounts are frequently available to new customers, but the subscription generally returns to the standard monthly price when the offer ends.

Xero is best for

Xero may suit sole traders who:

• Need traditional double-entry accounting
• Employ staff or require payroll
• Want extensive integrations
• Work closely with an accountant already using Xero
• Expect to grow into a larger business structure

It may provide more functionality than a sole operator needs, particularly when personal tax calculations must still be managed separately.

You can also compare the best Xero alternatives for Australian sole traders.

4. QuickBooks Online: best for established cloud bookkeeping tools

QuickBooks Online is another established business accounting platform.

Its features vary by plan but can include:

• Income and expense tracking
• Invoicing
• Bank feeds
• GST tracking
• Cash flow tools
• Receipt capture
• Financial reports
• Project and inventory features on higher plans
• Accountant access

Like Xero, QuickBooks is designed primarily to manage the accounting records of a business.

It can calculate business profit and organise GST information, but it does not bring your business result together with your complete Australian individual tax position.

QuickBooks pricing

QuickBooks Online starts from approximately $35 per month at standard pricing, although introductory offers can reduce the initial cost.

Check the inclusions carefully, as features such as bills, inventory, projects and multiple users may require a higher plan.

QuickBooks is best for

QuickBooks may suit sole traders who:

• Want an established bookkeeping platform
• Need detailed business reporting
• May require inventory or project tools
• Have an accountant familiar with QuickBooks
• Do not need personal tax calculations within the same platform

5. Rounded: best for straightforward freelance bookkeeping

Rounded is Australian accounting software created for freelancers, contractors and sole traders.

It focuses on simplifying the regular administrative tasks of running a solo business, including:

• Quotes and invoicing
• Expense tracking
• Bank feeds
• Receipt capture
• GST and tax tracking
• Time tracking
• Profit and Loss reporting
• Accountant access

Its interface and feature set are designed to be more approachable than traditional small-business accounting platforms.

Rounded can help users set aside and prepare for tax, but it does not calculate a complete individual tax position that incorporates employment income, properties, shares, cryptocurrency and capital gains.

Rounded pricing

Rounded Pro starts from $29.95 per month. Its pricing is fixed rather than based on business income.

Rounded is best for

Rounded may suit sole traders who:

• Primarily need invoicing and expense tracking
• Work as freelancers or independent contractors
• Want straightforward bookkeeping without payroll or inventory
• Prefer a platform designed around a solo business
• Manage their broader individual tax position separately

6. Solo by MYOB: best for mobile-first business administration

Solo by MYOB is a mobile accounting app designed for sole operators.

It includes:

• Unlimited quotes and invoices
• Income and expense tracking
• Receipt capture
• Tax and GST tracking
• Simple cash flow graphs
• Connections for up to two existing bank accounts
• An optional Solo Money business account
• Online and in-person payment options
• Accountant or tax agent access

Solo is entirely app-based and is designed for one user. It does not offer the broader accounting functionality found in MYOB Business Lite, Pro or AccountRight.

See how the features compare in our guide to TaxTank as an alternative to Solo by MYOB.

Solo by MYOB pricing

The standard annual price is $99 after the introductory offer period.

Payment processing and other premium features may attract additional fees.

Solo by MYOB is best for

Solo may suit sole traders who:

• Prefer to manage their business from a phone
• Need simple invoicing and expense tracking
• Want integrated payment options
• Operate one relatively straightforward business
• Do not need desktop access, payroll or advanced accounting

How to choose the best tax app for sole traders

Choose TaxTank if you want everyday business tools connected with your live personal tax position. Sole Tank combines income and expense tracking, invoicing, assets and supported GST and BAS information.

TaxTank is particularly useful if you:

• Want to see your calculated tax position throughout the year
• Operate several sole trader businesses
• Also earn salary or wages
• Own investment properties or invest in shares or crypto
• Prefer to manage your records yourself or collaborate with your accountant

Add the relevant Tanks to include employment income, properties and investments alongside your sole trader activity.

If your priority is managed tax payments and lodgement, assess a service that includes those tasks. If you need payroll, inventory or extensive integrations, compare accounting platforms and their specific plans. If you mainly work from your phone, check that your preferred app supports the tasks you need on mobile.

Compare included features, service scope and total ongoing cost before subscribing.

Explore TaxTank’s sole trader accounting and tax tools.

Tax app, accounting software or accounting service?

These terms are often used interchangeably, but they describe different types of products.

Tax app

A tax app helps you track information relevant to tax and may calculate an estimated tax position.

TaxTank fits within this category because it applies Australian individual tax calculations to the information recorded in your account.

Accounting software

Accounting software records and reports financial activity.

TaxTank, Xero, QuickBooks, Rounded and Solo by MYOB all provide accounting functions, although their intended users and reporting capabilities differ.

Accounting service

An accounting service includes professional help with tax obligations or lodgement.

Hnry combines its software with an accounting service. TaxTank does not provide tax return lodgement, but it allows you to invite your own accountant to collaborate.

Understanding this distinction can prevent you from choosing an app that handles only one part of what you need.

Frequently asked questions

Find the tax app that fits your financial life

The best tax app for sole traders should reflect how your business and personal tax actually work together.

A basic accounting app can show what your business earned and spent. For a sole trader, that is not always enough.

Your business result may be only one part of your individual tax position. Salary, deductions, properties, investments and capital gains can all change the final outcome.

TaxTank brings these areas together so you can manage your business records and monitor your estimated tax position throughout the year.

You don’t need to know every tax rule. TaxTank applies the relevant calculations for you.

Read verified TaxTank reviews from Australians already using the platform to manage their tax and finances.

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1. Understanding your tax status

As an Uber driver, the Australian Taxation Office (ATO) considers you an independent contractor. This means you’re running your own business, and therefore, responsible for reporting your income and managing your taxes.

2. Registering for GST

One of the first things you need to do is register for the Goods and Services Tax (GST). Unlike other businesses that only need to register once they reach a certain income threshold, Uber drivers must register for GST regardless of their earnings. This needs to be done from the very first dollar you earn.

3. Lodging quarterly BAS

Once registered for GST, you’re required to lodge a Business Activity Statement (BAS) quarterly. The BAS is where you report your earnings and the GST collected on fares, along with any GST credits from expenses related to your Uber activities.

4. Tracking your income and expenses

Accurate record-keeping is vital. Track all your Uber earnings and associated expenses. Expenses can include fuel, car maintenance, insurance, and any other costs directly related to your driving services. Apps and digital tools like TaxTank can be invaluable for this purpose, offering an easy way to keep your financial records in order.

5. Claiming deductions

You can claim various expenses as tax deductions. These might include a portion of your phone bills, car expenses (using the logbook method or the cents per kilometre method), and any other costs directly related to your driving services. Remember, the expenses must be business-related to be deductible.

6. Understanding the income tax implications

Your Uber earnings are part of your taxable income. It’s crucial to set aside a portion of your earnings for tax purposes. Depending on your total income, this could affect your tax bracket and overall tax liability.

7. Seeking professional advice

Tax laws can be complex, and seeking advice from a tax professional is often a wise decision. They can help ensure you’re claiming all your entitled deductions and complying with all ATO requirements.

Final thoughts

Driving for Uber can be a fantastic way to earn extra income, but it comes with tax responsibilities. By staying informed, keeping accurate records, and possibly seeking professional advice, you can successfully manage your tax obligations and make your Uber side hustle a smooth ride.

Remember, staying on top of your tax obligations not only keeps you compliant but also helps maximise your earnings from this flexible and rewarding venture.

TaxTank’s innovative sole trader tax platform has made it so easy manage your additional income through Uber. From just $9 per month go beyond spreadsheets or business apps to keep your sole trader business finances in order with TaxTank. Make smarter allocations of business expenses via live bank feeds and store your receipts in the cloud to give you greater surety over your tax affairs. Get started today and keep your income tax and sole trader business finances in top shape, with our 14 day free trial.