Sole trader accounting costs: a worked yearly example with three set-ups
A worked example of what a year of accounting costs an Australian sole trader under three set-ups, from DIY with software to full outsourcing, with the arithmetic shown.
For an Australian sole trader, a year of accounting usually comes down to four jobs: keeping records, BAS if registered for GST, the individual tax return with a business schedule, and PAYG instalments once the ATO issues them. The yearly cost depends mainly on who does the bookkeeping and how clean it is. In the illustrative example below, the same business costs a few hundred dollars a year when the owner keeps clean books and only outsources the return, and several thousand when everything, including catch-up bookkeeping, is outsourced. The tax deduction for the fees then reduces the real cost further.
This guide is part of the checklist for choosing an accountant. All figures are illustrative.
The example business
- A self-employed electrician working alone, trading as a sole trader under their own ABN.
- Turnover around $180,000 a year, so registered for GST and reporting quarterly.
- Around 60 business bank transactions a month, a work vehicle used partly privately, tools and equipment.
- No employees.
- Pays PAYG instalments quarterly.
What needs to happen each year
| Job | Frequency | Notes |
|---|---|---|
| Record income and expenses | Ongoing | Bank feeds, receipts, invoices |
| Vehicle records | Logbook for a representative period, or cents per kilometre | Logbook method needs a 12-week logbook kept every five years |
| BAS | 4 a year | GST and PAYG instalments |
| Individual tax return with business schedule | Yearly | Includes small business income tax offset if eligible |
| Asset purchases | As they happen | Instant asset write-off for eligible assets under $20,000 |
| Super for self | Optional | Sole traders are not required to pay super for themselves; contributions may be deductible if a notice of intent is lodged with the fund |
Three set-ups compared
Set-up A: owner does books and BAS, tax agent does the return
| Item | Calculation | Cost |
|---|---|---|
| Accounting software | $40 a month (illustrative) × 12 | $480 |
| Tax agent: individual return with business schedule | Fixed fee (illustrative) | $900 |
| Owner's time | 3 hours a month × $0 cash | $0 cash |
| Cash cost | $1,380 |
Set-up B: bookkeeper monthly, BAS agent quarterly, tax agent yearly
| Item | Calculation | Cost |
|---|---|---|
| Software | $480 | $480 |
| Bookkeeper | 2 hours a month × $65 × 12 | $1,560 |
| BAS agent | 4 × 1.5 hours × $110 | $660 |
| Tax agent | Fixed fee | $900 |
| Cash cost | $3,600 |
Set-up C: one firm does everything, books often behind
| Item | Calculation | Cost |
|---|---|---|
| Monthly package including software | $280 × 12 | $3,360 |
| Catch-up bookkeeping before each BAS | 4 × 3 hours × $90 | $1,080 |
| Cash cost | $4,440 |
Adjusting for tax
The fees are generally deductible. For a sole trader registered for GST, the GST in each fee is claimed back on the BAS, and the GST-exclusive amount is deductible at the person's marginal rate. If the illustrative marginal rate including Medicare levy is 32% + 2% = 34%:
| Set-up | Cash cost (GST-exclusive, approx.) | Tax saved at 34% | After-tax cost |
|---|---|---|---|
| A | $1,255 | $427 | $828 |
| B | $3,273 | $1,113 | $2,160 |
| C | $4,036 | $1,372 | $2,664 |
GST-exclusive amounts are the cash cost divided by 1.1, rounded. Check the current individual tax rates on the ATO website; see are accountant fees deductible and try the after-tax cost calculator.
Valuing the owner's time
Set-up A looks cheapest only because the owner's 36 hours a year are not paid. If the electrician could bill those hours at $90, they are worth $3,240, which makes set-up A comparable with B. If those hours would otherwise be evenings, the trade-off is personal. The DIY vs accountant break-even guide works through this.
Where the costs creep up
- Vehicle claims without a logbook: accountants often need extra time to work out a defensible method.
- Mixed personal and business spending in one account.
- Late BAS that attracts penalties; see ATO penalties.
- Missed PAYG instalment variations in a quieter year, tying up cash.
- Asset purchases without invoices, making the write-off harder to support.
How GST registration changes the bill
GST registration is compulsory once GST turnover reaches $75,000, and optional below that. For a sole trader near the threshold, the decision changes accounting costs as well as prices:
| Not registered | Registered | |
|---|---|---|
| BAS lodgements | None for GST (PAYG instalments may still need an instalment notice) | Quarterly in most cases, or annual GST reporting if voluntarily registered under the threshold |
| Bookkeeping | Simpler: no GST coding | Every transaction needs the right GST code |
| Prices to customers | No GST added | GST added; may matter if customers are consumers |
| Credits on purchases | None; GST is part of your cost | GST credits claimed on business purchases |
In the example above, the four BAS lodgements in set-up B cost $660 a year. A sole trader below the threshold who registers voluntarily should weigh that cost, or the time to do it, against the GST credits gained. If your turnover is rising towards $75,000, monitor it monthly: you must register within 21 days of becoming required to.
When a sole trader should consider a company
As profits grow, some sole traders consider a company or trust for tax rate, asset protection or succession reasons. The extra compliance cost is significant: see the company and trust worked example. Get specific advice; also note that the 2026–27 Budget announced changes to discretionary trust taxation from 1 July 2028, which may affect the comparison if legislated.
Frequently asked questions
Do I need an accountant as a sole trader?
No. You can lodge your own BAS and individual return. Many sole traders use a tax agent at least for the return because of business schedule items, vehicle and home office claims, and later lodgement dates under an agent's program.
What does a sole trader tax return include?
An individual return with business income and expenses reported in a business schedule, plus any other income. You may also be eligible for the small business income tax offset.
Can I claim my accountant's fee?
Generally yes; see the deductibility guide linked above.
Do I need software?
Not legally, but with GST and around 60 transactions a month it usually saves time and reduces the accountant's work.
Sources and where to check
- Australian Taxation Office — sole trader obligations, vehicle expense methods, small business income tax offset, PAYG instalments
- business.gov.au — sole trader structure and obligations
- Tax Practitioners Board — check your tax or BAS agent is registered
- Australian Business Register — ABN details and GST registration
