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

At TaxTank, we build features based on how our users actually work. If you’re already using Sole Tank now is the perfect time to explore the new tools.

Explore the new features in Sole Tank and see why it’s the preferred sole trader tax software. Start your free trial today.

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!

Managing tax as a sole trader in Australia can feel simple at first.

Track your income. Record your expenses. Stay organised.

But as things grow, it gets more complicated. Multiple income streams, GST, deductions, assets… and suddenly you’re relying on spreadsheets or software that doesn’t quite give you the full picture.

Most accounting software is built for businesses and companies.

But as a sole trader, your business isn’t separate. Everything flows into your personal tax return.

And that’s where most tools fall short.

In this guide, we’ll break down the best accounting software for sole traders in Australia, what they actually do, and why tracking your business isn’t the same as understanding your tax.

Most accounting software isn’t built for sole traders

Most tools on the market are designed for companies.

They track income and expenses, generate reports, and help with bookkeeping.

But they don’t calculate your personal tax.

And that’s the problem.

As a sole trader, your income, deductions, and decisions all feed directly into your individual tax return.

So while accounting software can show you what happened, it doesn’t tell you:

• your real tax position
• what you actually earn after tax
• how much you should be setting aside
• how decisions impact your numbers

Tracking transactions isn’t enough.

You need to understand the outcome.

Accounting software vs tax software (what’s the difference?)

This is where most sole traders get stuck.

Accounting software is built to:

• track transactions
• generate financial reports
• manage invoices and expenses

Tax-focused software goes further.

It:

• applies ATO tax rules
• calculates your tax position
• tracks deductions correctly
• shows what you actually owe

For sole traders, this difference is critical.

Because your tax isn’t calculated at the business level.

It’s calculated at the individual level.

So if your software doesn’t reflect that, you’re always working with incomplete information.

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 (Built for sole trader tax)

TaxTank takes a different approach.

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

• Shows your real tax position all year round
• Handles deductions like vehicle use, working from home, and depreciation
• Tracks GST and BAS alongside your tax outcome
• Combines all income sources including PAYG, property, and investments
• Built specifically for individuals, not just businesses

This means you’re not just recording your numbers.

You’re understanding them.

Is accounting software for sole traders enough?

For many sole traders, accounting software is where they start.

But it often leaves gaps.

Most tools:

• don’t calculate your tax in real time
• require manual tracking of deductions
• don’t connect all income sources
• rely on end-of-year adjustments

This creates a common problem.

You’re organised… but still unsure where you stand.

You might know your revenue.

But not your actual profit after tax.

That’s the difference between tracking and understanding.

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.

See your full financial picture

Most accounting software shows your business in isolation.

But your tax isn’t calculated that way.

Your business income, salary, property, investments, and other income all combine into one tax outcome.

TaxTank connects everything.

So you can:

• see your complete tax position
• understand how different income sources interact
• make better decisions with full visibility

Why spreadsheets and traditional tools fall short

Spreadsheets and manual systems might work early on.

But they don’t scale.

They quickly become:

• time-consuming
• error-prone
• disconnected
• difficult to maintain

They also rely on manual calculations, which means your tax position is always delayed or incomplete.

Modern sole traders need more than tracking.

They need clarity.

What to look for in accounting software for sole traders

When choosing software as a sole trader, look for:

• Real-time tax visibility
• ATO-aligned tax calculations
• Proper handling of deductions
• Support for GST and BAS
• Ability to combine multiple income sources
• Simple, intuitive interface

Because the goal isn’t just to stay organised.

It’s to understand your numbers.

What’s the best option?

The best accounting software for sole traders depends on what you need.

If you’re running a company or need full accounting workflows, tools like Xero or MYOB may suit.

But if you’re a sole trader who wants to:

• understand your real profit
• track deductions properly
• see your tax position in real time
• avoid year-end surprises

Then you need more than accounting software.

You need something built for sole trader tax.

That’s exactly what TaxTank is designed for.

Frequently asked questions

Final thought

Most tools help you record what happened.

Very few help you understand what it actually means.

For sole traders, that difference matters.

What is an ABN?

An ABN is a unique 11-digit number issued to businesses by the Australian Business Register (ABR). Sole traders must have an ABN to legally operate a business, issue invoices, and register for GST if required. Having an ABN also simplifies interactions with the Australian Taxation Office (ATO) when filing tax returns and claiming deductions.

To streamline these interactions, TaxTank offers features specifically designed for sole traders. From tracking income to instantly calculating deductions, TaxTank ensures you meet your tax obligations without the stress. TaxTank’s real-time ABN tax calculation feature helps sole traders stay on top of their tax obligations.

Key Taxes for ABN Holders

Income Tax for ABN Holders – How does it work?

Did you know that under one ABN, you can operate up to six different businesses, each requiring its own business schedule? Managing these businesses can be complicated, especially at tax time. But with TaxTank, it’s a breeze! TaxTank allows you to manage one or multiple businesses in a single account, automatically generating separate business schedules for each one, simplifying tax time and ensuring compliance.

Key Taxes for ABN Holders
As a sole trader, all income earned under your ABN must be reported as part of your individual income tax return. Taxable income is calculated by subtracting your allowable deductions from your total business revenue.

Example:
Let’s say you operate two businesses; a consulting firm and drive part-time for Uber under the same ABN. Here’s how TaxTank makes it easy:

• Your consulting business generates $100,000 in gross income, with $30,000 in deductions.
• Your Uber driving side gig brings in $20,000 in gross income, with $5,000 in deductions.

TaxTank will generate separate business schedules for each, allowing you to track your taxable income and projected tax liability in real-time through efficient ABN tax calculation tools.

Income Tax Calculation Example
Here’s how the numbers look:

Consulting business:

Gross income: $100,000
Deductions: $30,000
Taxable income: $70,000

Uber driving:

Gross income: $20,000
Deductions: $5,000
Taxable income: $15,000

For the 2023-24 financial year, your tax will be calculated based on Australian individual tax rates:

• The first $18,200 is tax-free (0%)
• $18,201 – $45,000 is taxed at 19%
• $45,001 – $120,000 is taxed at 32.5%

With TaxTank, this process is automated. The software calculates your tax liability based on real-time data, reducing the risk of errors and ensuring accuracy. So whether you have one business or six, TaxTank makes ABN tax calculation easy to stay on top of your taxes all year long!

Tip: Keep Up with Tax Rate Changes
Tax rates can change each financial year, and it’s essential to stay informed to ensure accurate tax planning. For the 2024/25 financial year, here are the updated tax brackets:

• The first $18,200 remains tax-free (0%)
• $18,201 – $50,000 is taxed at 19%
• $50,001 – $130,000 is taxed at 30%
• $130,001 – $200,000 is taxed at 37%
• $200,001 and above is taxed at 45%

With TaxTank, these changes are seamlessly incorporated into your tax calculations, ensuring you’re always up to date with the latest rates and prepared for the next tax season!

GST and ABN Holders – When do you need to register for GST?

If your annual turnover exceeds $75,000, the ATO requires you to register for Goods and Services Tax (GST) across all your businesses under the same ABN. Once registered, you must charge 10% GST on your goods and services and remit it to the ATO via Business Activity Statements (BAS). However, here’s the fun part; some industries, like rideshare driving for Uber, require GST registration regardless of turnover. Yes, even if you’re only earning $20,000 driving part-time, the ATO still insists you sign up for GST. Why? Because they can, apparently.

This rule applies to other industries too, such as taxi drivers and certain other service providers. So, if you’re an Uber driver, even if you don’t hit the $75,000 threshold, you’re still roped into GST reporting.

Example:
Let’s say your consulting business brings in $100,000 (GST-exclusive), and your Uber driving adds $20,000. Both must be accounted for under the same ABN. Here’s how GST would be calculated across your businesses:

• Total business turnover (Consulting + Uber): $120,000
• GST collected: 10% of $120,000 = $12,000
• GST credits (for business expenses): $3,000
• Net GST payable to ATO: $12,000 – $3,000 = $9,000

With TaxTank, managing this is easy. It automatically tracks your income and expenses across all businesses and generates the necessary BAS. You can track your GST credits and liabilities in real-time, avoiding any surprise bills at the end of the quarter. And hey, at least TaxTank’s spowerful ABN tax calculation features ensure full compliance with ATO requirements.

Deductions for ABN Holders

As a sole trader, you can claim deductions on a wide range of business expenses, reducing your taxable income and lowering your overall tax liability. With TaxTank, tracking and claiming deductions is made effortless, so you don’t miss out on potential savings.

Common Deductions Include:

Vehicle and Travel Expenses:
If you use your vehicle for work, whether it’s for Uber driving or meeting clients, you can claim a deduction. Choose between claiming based on the distance travelled (cents per kilometre) or by calculating actual vehicle operating costs, such as fuel, insurance, and maintenance. TaxTank tracks these automatically for you, making ABN Tax Calculation easier.

Business-Related Equipment:
The cost of items like laptops, software, and tools used for business purposes are deductible. Smaller items may qualify for the instant asset write-off, while larger purchases might need to be depreciated (more on that below).

Professional Services:
Fees paid to accountants, tax advisors, or legal professionals who assist with your business are deductible. So, when you pay someone to help you navigate the ATO’s ever-changing tax rules, those fees can lower your taxable income.

Home Office Expenses:

If you run your business from home, you can claim a portion of household bills based on your business usage. The eligible deductions include:

• Utilities: A percentage of your electricity, gas, and water bills can be claimed if you use a dedicated space in your home for business purposes. For example, if your home office takes up 10% of your home’s floor space, you can claim 10% of your utility costs.
• Internet and Phone: If you use your home internet or phone for business purposes, you can claim a proportion of the costs based on business usage. For instance, if 60% of your internet is used for business, you can claim 60% of the total cost.
• Cleaning and Maintenance: Expenses related to cleaning and maintaining your home office space are also deductible.

TaxTank helps you track these expenses and apply the correct percentage for business use, ensuring you don’t miss out on valuable deductions, helping to optimise ABN Tax Calculation.

Depreciation:

For larger purchases, you might need to claim depreciation over time rather than deducting the full cost in the year of purchase. TaxTank automatically calculates and tracks depreciation so you don’t have to worry about missing deductions.

Understanding Depreciation:

• Instant Asset Write-Off: For assets costing up to $20,000 (for 2023-24), you can claim the full cost in the year of purchase. This is ideal for items like laptops or office furniture.
• General Depreciation Pool: For higher-value assets that don’t qualify for the instant write-off, the ATO requires you to place them in the small business general pool. In the first year, assets are depreciated at 15%, and for subsequent years, they are depreciated at 30%. This applies to large purchases like vehicles or expensive machinery, and TaxTank tracks these assets year after year, ensuring maximum benefit.

Example of Claiming Deductions:

Let’s say you run a consulting business from home and drive part-time for Uber, operating both under the same ABN. Your expenses and deductions might look like this:

With TaxTank, all of these expenses are tracked, categorised, and the correct depreciation rates applied to eligible assets, ensuring no deduction is missed while managing your ABN Tax Calculation.

Business Concessions:

Don’t forget about small business concessions like the instant asset write-off and simplified depreciation rules. These can make a significant difference in reducing your taxable income. With TaxTank, you’ll always be kept up-to-date on changes to these rules, so you can make informed decisions and claim deductions at the right time.

Pro Tip: Depreciation on big-ticket items like vehicles can significantly reduce your tax liability. With TaxTank handling the details, you can maximise your deductions without having to navigate the ATO’s complex depreciation rules on your own.

Superannuation for ABN Holders

Sole traders are responsible for their own superannuation. Although it’s not compulsory to pay yourself super, it’s highly recommended for future financial security. Contributions to super are tax-deductible, reducing your taxable income. 

You can contribute up to the concessional (pre-tax) contributions cap, which is $27,500 for the 2023-24 financial year. Super contributions are taxed at 15%, which is generally lower than personal income tax rates.

Example of Super Contribution Deduction:

• Super contribution: $10,000
• Tax on contribution (15%): $1,500
• Deduction on taxable income: $10,000
• Tax saving (32.5% tax rate): $3,250 – $1,500 (super tax) = $1,750

By contributing to your super, not only are you investing in your future, but you’re also benefiting from an immediate tax deduction. With TaxTank, tracking your super contributions is easy, ensuring you maximise your entitlements and stay on top of your financial planning.

PAYG Instalments for ABN Holders

How PAYG Works:

Based on your previous tax returns or estimated income for the current year, the ATO will notify you if you’re required to make PAYG instalments. The amount is calculated based on your expected income, ensuring you are contributing toward your tax liability throughout the year, rather than paying it all in one lump sum at the end.

PAYG Instalment Example:

Let’s say your projected annual tax liability is $13,217. TaxTank will automatically calculate your quarterly PAYG instalments as approximately $3,304, breaking down your payments into more manageable chunks. By making these quarterly payments, you avoid any surprises or large tax bills at the end of the financial year.

Why PAYG is Important:

1. Cash Flow Management: Instead of dealing with one big tax bill at the end of the year, PAYG helps spread the cost across four payments. This keeps your cash flow smoother and reduces financial stress.
2. Avoid Interest and Penalties: If you don’t keep up with your PAYG obligations, the ATO may charge interest or penalties on unpaid amounts. Regular instalments ensure you stay compliant and avoid these extra costs.
3. Tax Planning: With TaxTank, tracking your income and estimated tax liabilities throughout the year is easy. You’ll know exactly how much to set aside for PAYG and can avoid overpaying for underpaying, ensuring your instalments are accurate.

Pro Tip: If your income or tax situation changes during the year, you can adjust your PAYG instalments to reflect your updated tax position. With TaxTank, you can keep on top of these changes and ensure you’re always paying the right amount.

ABN Tax Calculator

Use the below ABN Tax Calculator to estimate^* your sole trader tax obligations. This ABN tax calculator computes the estimated tax for sole traders and ABN holders based on your inputs.

*DISCLAIMER: This sole trader (ABN) tax calculator is provided for informational purposes only and should not be considered as financial or tax advice. The results generated by the calculator are estimates based on the information provided and the current tax rates. Tax laws and regulations are subject to change, and the actual amount you owe or receive may vary.

Final Thoughts on ABN Tax Calculation with TaxTank

As a sole trader with an ABN, mastering your tax obligations is crucial for maintaining healthy business finances. Understanding the deductions you’re eligible for, how GST applies, and the benefits of contributing to super can significantly reduce your tax liability and boost your financial outcomes.

Don’t Forget Substantiation

One essential aspect of claiming deductions is substantiation, keeping accurate records and receipts to support your claims. The ATO requires you to maintain records for at least five years. Without proper documentation, you risk having deductions denied or facing penalties. With TaxTank, you can effortlessly store and organise all your receipts and records digitally, ensuring you’re always prepared and compliant.

Navigating Tricky Claims Like Depreciation

Some deductions, like depreciation, can be complex. Miscalculations can lead to missed deductions or issues with the ATO. TaxTank simplifies this process by automatically calculating depreciation on your assets, whether they’re eligible for the instant asset write-off or need to be added to the general depreciation pool. This ensures you’re maximising your deductions without the hassle of manual ABN tax calculations.

Special Tip: Save Money with Accurate Record-Keeping

Accurate record-keeping isn’t just about staying compliant; it’s a smart way to save money. By diligently tracking your expenses and properly substantiating your claims, you’re less likely to miss out on eligible deductions. Every receipt captured and categorised in TaxTank is an opportunity to reduce your taxable income, ultimately keeping more money in your pocket.

With TaxTank, you gain full control over your business finances, tracking income, expenses, GST, and deductions in real-time. Tax time no longer needs to be a burden when you have the right tools at your disposal.

Ready to simplify your tax process and maximise your savings? Start your free trial with TaxTank today and experience the difference for yourself!

Your business profit forms part of your individual taxable income. Salary or wages, investment income, rental properties, deductions and capital gains may also contribute to the same final tax position.

The best tax app for sole traders should therefore do more than record business transactions. It should help you stay organised, understand your obligations and prepare for tax throughout the year.

We compared six popular options for Australian sole traders:

• TaxTank
• Hnry
• Xero
• QuickBooks Online
• Rounded
• Solo by MYOB

Each takes a different approach. Some focus on bookkeeping, some provide accounting services and others connect business activity with personal tax.

Here is how they compare.

Best tax app for sole traders: options at a glance

There is no single solution that will suit every business. Finding the best tax app for sole traders depends on whether you want accounting software, personal tax calculations or a service that handles lodgement for you.

*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
• Estimated tax calculations
• 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: The best tax app for sole traders to connect business accounting with personal tax

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.

Traditional accounting software usually calculates business profit and stops there. TaxTank brings your sole trader result into your estimated individual tax position alongside other supported income, deductions, properties and investments.

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

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.

What TaxTank does not do

TaxTank does not lodge tax returns or connect directly to the ATO (not yet anyway ).

Instead, it organises your records and produces reports that can help you prepare to self-lodge through myTax or provide the relevant information to your accountant.

It also does not provide payroll, inventory management or complex company reporting. Businesses requiring these features may be better suited to a traditional accounting platform.

TaxTank pricing

Sole Tank costs $108 per year, equivalent to $9 per month when paid annually.

A 14-day free trial is available without a credit card.

TaxTank is best for

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

• Manage their own business records
• Calculate an estimated 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

Choosing the best tax app for sole traders starts with deciding whether you want to manage your own records, work with your accountant or pay for a service that handles tax lodgement.

Choose TaxTank if you want the complete tax picture

TaxTank is the strongest option for sole traders who want accounting software that connects business activity with their broader individual tax position.

It is particularly useful if you:

• Also earn salary or wages
• Operate several sole trader businesses
• Own investment properties
• Invest in shares or cryptocurrency
• Want to monitor estimated tax throughout the year
• Prefer to self-manage your records or work with your own accountant

Choose Hnry if you want tax lodged for you

Hnry may be the better choice if your priority is outsourcing tax payments and return lodgement.

You pay more as your self-employed income increases, but the fee includes an accounting service rather than software alone.

Choose Xero or QuickBooks if you need traditional business accounting

Xero and QuickBooks are better suited to businesses requiring features such as payroll, inventory, advanced reporting or extensive integrations.

They are capable accounting platforms, but your individual tax position will generally need to be calculated elsewhere.

Choose Rounded if you mainly need freelance bookkeeping

Rounded provides a focused set of tools for freelancers and independent contractors who want invoicing, expense tracking and tax preparation without the complexity of larger accounting platforms.

Choose Solo by MYOB if you want a mobile-only app

Solo by MYOB is an accessible option for one-person businesses that want to manage invoices, expenses, payments and basic tax tracking from a phone.

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.