Everything You Need To Know About Sole Trader Accounting

Trading as a sole trader means it’s just you and nobody else. You’re the one running the entire business and dealing with everything from inventory to sales, and even the accounting side of things. Trading as a sole trader is the simplest out of all the structures in Australia as it’s free to establish and has limited ongoing compliance costs associated with it. At Thornton & Associates, we can help set you up for sole trader accounting and help ensure your business thrives.

How Does Sole Trader Accounting Differ From Regular Accounting?

5 Common Mistakes Sole Traders Make When Doing Their Own Bookkeeping

While it can be tempting to do your own bookkeeping as a sole trader, it’s very easy to make mistakes. Here are a few common mistakes you can avoid by hiring an accountant for sole traders.

1. Leaving it until the last minute. Many sole traders leave their bookkeeping until the last minute because they think it’ll save them time, but they’re wrong. The Thornton & Associates team uses Xero; state-of-the-art accounting software that enables you to record invoices and expenses as you go, meaning you can spend less time worrying about accounts.

2. Not having a system. Having a sound system in place ensures that all of your numbers and transactions are in one place. Thornton & Associates, we can help get you started on Xero accounting software.

3. Throwing away your receipts. A lot of the time, sole traders throw away small value transactions receipts, but they will add up over the year. Make it a habit to keep all of your business-related receipts no matter the value of them. Xero allows you to record receipts as you go, so you can enjoy the benefits of going paperless.

4. Mixing business and personal finances. As a sole trader, most of your life and work are merged into one, so having one bank account might seem like the easiest way to go about things until reconciling your accounts to your bank statements. To simplify your life and ensure accurate bookkeeping, open a new account just for business transactions.

5. Not preparing a budget. Not preparing a budget is a common mistake, and yet one of the most crucial steps needed for any business. A budget helps you invest wisely in resources and assets that will pay off in the long-run. The Thornton & Associates team can help you create a dynamic, detailed budget that will help you work toward growing your business.

The 3 Best Tips Any Sole Trader Can Hear About Their Bookkeeping

Starting as a sole trader can be a bit daunting, but here are the three best tips any sole trader can hear about bookkeeping:

• Keep business and personal statements separate. Since you will be operating by yourself, it can be easy to mix your personal and business statements. A simple way to keep your business and personal expenses separate is by opening a business-only bank account, which will make it a lot easier at the end of the year when you lodge a tax return.

• Hire professionals to help. If you’re looking for ways to make your business processes easy and streamlined, enlist the help of qualified accountants for self-employed people. You’ll not only save time on bookkeeping, but you’ll also have peace of mind that your accounts will be well looked after.

• Meet with your accountants regularly. Many people only see their accountants for tax return lodgements. However, the team at Thornton & Associates can help you with so much more. We’re here to provide you with advice and guidance that will see your business grow and flourish.

Why Every Tradie Needs To See a Trade Accountant

As contractors, tradespeople in Australia have slightly different processes when it comes to their taxes. The nature of their work makes their tax lodgement and financial management a little more complicated than other industries, so they must seek the advice of a trade accountant. The team at Thornton & Associates are experienced at working within the construction and trades industries, and we understand the unique accounting needs of contract tradespeople in Australia. Here are a few reasons why we believe every tradie should see an accountant for tradesmen.

4 Things Tradies Might Not Know About Their Taxes and Finances

Unless you’ve already consulted with a professional tradie accountant, there are some things tradespeople may not know about their taxes and finances.

• You can claim back on your tools, equipment, and technical instruments. Not only can you claim back for purchases, but you can also claim deductions for leases and repairs.

• You’ll need to keep a logbook for your vehicle. Unlike other industries, tradies can claim a fair amount of car expenses at tax time, such as parking, tolls, running expenses, fuel, and KM driven. However, to prove your expenses, you’ll need to keep a detailed logbook so you can get the maximum amount back come tax time.

• What constitutes protective gear? When they hear ‘protective gear’, most people think of hard hats, steel cap boots, and safety glasses. While these items are tax-deductible, you can also claim several other safety items such as sunscreen, sunglasses, and UV-safe clothing if you work outdoors.

• You need to keep excellent records. If you want to maximise your tax return, you’ll need to keep detailed records including receipts and invoices. If you feel overwhelmed by lodging your tax return, leave it in the hands of Thornton & Associates.

How Hiring a Trade Accountant Can Benefit You Long-Term

There are several things a tradie accountant can do to set you up for long-term financial success.

• Avoid making mistakes. Claiming too little on your tax return will see you undercut yourself, whereas claiming too much could mean costly fines in the future. When you see an accountant for tradesmen, you’ll have your taxes taken care of correctly each year.

• They can help you create automated, streamlined processes. Keeping every single receipt and invoice creates a ton of paperwork. Unless you have an excellent system for organising it, this stack of documents can quickly become unbearable. At Thornton & Associates, we’re paperless. Instead, we rely on innovative, cutting edge accountancy software from Xero to help our clients log their invoices and receipts as they go, making tax time way less stressful.

• We’ll take care of sole traders. Most tradies are contract workers and therefore are considered sole traders for tax purposes. When you enlist the help of a trade accountant at Thornton & Associates, we can help you keep records, lodge your BAS and PAYG on time, and maximise your GST claims. We’ll take care of your bookkeeping for you so you can focus on getting jobs and growing your business.

How You Can Prepare For Your Appointment with a Trade Accountant

If you’re unsure what your tradie accountant at Thornton & Associates will need to get started, here’s a list of things to have ready at your first digital appointment.

• Your personal details. We’ll need to record your name, date of birth, address, occupation, and all the other essential information to begin.

• Your business details. Whether you’re a sole trader/contractor or employed by someone else, we’ll need information about your employer.

• Payslips/PAYG summary. If you’d like us to lodge your tax return, we’ll need information about how much you’ve earned, how much tax you’ve paid, and how much you’re claiming back.

• SMSF information. If you own a self-managed super fund, make sure you provide us with information that enables us to help you manage it effectively.

• Any other income streams or investments. Whether you have another business, large amounts of savings earning interest, a rental property, or shares, let us know so we can create comprehensive records for you.

• Invoices and receipts for deductions. Anything you’ve purchased throughout the year for work, hold onto the receipt, and we’ll look at claiming it back in your tax return. If you make any charitable contributions, either one-off or regularly, keep receipts to claim it back at tax time.

• Any insurance policies you have. If you have income protection insurance, sickness and accident insurance, or private health insurance, give your trade accountant your policy so they can deduct accordingly.

Engage Thornton & Associates for Sole Trader Accounting through accountedfor

At Thornton & Associates, we do things a little differently. Even though the world is changing, evolving, and becoming more digitised, we noticed that the accounting industry lagged. We decided to bring innovation to accounting and become one of the first completely paperless, Apple iOS and Android app-based practices in Sydney. We’re committed to using cutting edge technology and the latest accountancy software to provide our clients with practical, tailored accounting and business solutions. No matter what industry you’re in, Thornton & Associates can help you with all your finance management needs. If you’re trying to become a sole trader in Australia, engage Thornton & Associates as your accountant through accountedfor by visiting accountedfor.com.au now!

You can book an appoint with Thornton & Associates via the accountedfor app, or simply register for accountedfor directly and an accounting will be in touch!

Our Story

Thornton & Associates was established to address the severely under serviced needs of growing and mid-sized enterprises in Australia. These businesses were in need of two tiers of help, that typically only large and multinational corporates were able to avail themselves of: firstly, the automation of basic day-to-day accounting operations; and secondly the provision of timely business consulting and tax advisory that is enabled when the books are able to take care of themselves.

As this two-tiered service strategy permeated the market, clients of Thornton & Associates realised that the considerable time and effort spent keeping ahead of accounting work that our firm could automate, is overwhelmingly better spent leading and strategising the operations of their respective businesses — and resulted in enduring business success.

SEtup as a sole trader now

Thornton & Associates proudly partners with accountedfor to help you get started immediately as a Sole Trader in Australia. Thornton & Associates recommends accountedfor as the best accounting system for Sole Traders to manage their tax and keep their business running smoothly.

If you are a Sole Trader already or looking to become one soon, click the link below to get information about how to help your Sole Trader business succeed.