Handy Tax Time Tips for Sole Traders

Running your own business as a sole trader can be rewarding — but it also comes with the responsibility of getting your tax and super obligations right. The ATO has highlighted several common mistakes sole traders often make at tax time, and understanding them can save you stress, time, and money.

Common Mistakes to Avoid

• Not reporting all income – Remember to include everything, such as side hustles, cash jobs, and payments in kind (for example, goods or services received in exchange for your work).
• Over-claiming expenses – Be careful only to claim the business-related portion of expenses and ensure your figures for cost of goods sold are accurate.
• Incorrectly claiming business losses – Some losses from non-commercial activities can’t be offset against other income.
• Claiming PAYG refunds incorrectly – Mistakes here can delay your tax return or trigger ATO queries.
• Misreporting Personal Services Income (PSI) – Misunderstanding PSI rules can lead to compliance issues.
• Not registering for GST – If you’re in the taxi or ride-sourcing industry, or you’ve reached the GST threshold, registration is mandatory.
• Poor record keeping – Incomplete or inaccurate records are one of the biggest red flags for audits.

How to Stay on Track

The ATO’s Tax Time Toolkit for Small Business includes helpful guides on income, deductions, and record-keeping. You can also use the ATO app’s myDeductions tool to store receipts and expenses throughout the year.

For many sole traders, the simplest and most efficient way to manage everything is to use Xero. As a Xero Partner, TaxAssist can help set up and manage your Xero account — often at a discounted rate that isn’t available to everyone.

How TaxAssist Accountants Can Help

Our experienced team can make tax time simple and stress-free. We can:

• Review your income and expense records to ensure accurate reporting
• Identify every legitimate deduction you’re entitled to claim
• Advise on PSI, GST registration, and business loss rules
• Prepare and lodge your tax return on time
• Help you implement better record-keeping systems for the future

Whether you’re new to business or have been trading for years, having a registered Tax Agent on your side helps you stay compliant while maximising your tax position.

Contact your local TaxAssist Accountant today by clicking on the link here for tailored advice and hands-on support this tax time.

Published 29 Sep 2025

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