Recently, I have seen some new software players in the accounting software space. These developers have created software just for sole traders, freelancers and the self-employed. I think this is a great idea as some accounting software can be very overwhelming and complicated and contain many functions that sole operators just don’t require. This week I am reviewing 2 of these new software: Solo by MYOB and Sole.
Sole is an Australian accounting software that offers GST tracking, expense categorisation, invoicing, quotes, bank feeds customer reminders, tax reporting tools and financial reporting. There is both a web and mobile app. The user can invite their tax professional to connect to the file if required. The cost is reasonable as can be seen below. There is also a free forever option, however the features are somewhat limited. Sole does not offer payroll but has partnered with Clockon to assist with Single Touch Payroll reporting. Sole is not suitable if your business has advanced inventory management needs, relies heavily on external CRM systems or requires integration with several other platforms.
Solo is an MYOB product which launched in November 2024. It is a mobile app only, that is, it isn’t available on the web. Solo does not include payroll or inventory management. At the time of writing this blog, users cannot invite their tax professionals into the Sole file, however, reports can be downloaded and provided to bookkeepers etc. Solo is an app available on IOS and Android and offers expense tracking, record-keeping, tax and GST tracking, invoicing and in-person “Tap to Pay” payments, income snapshot reports and bank feeds. MYOB reports that more features will become available during 2025. The current price for Solo is $12 for 12 months and then $99 per year following the first year.Â
These two software tools could be very helpful for “solopreneurs”, especially startups. Any product that helps business owners get organized, manage record-keeping, and assist with reporting is valuable. While these tools are quite basic in functionality, they are a good starting point and help users understand bookkeeping and tax requirements. I believe these software tools will become very popular, and I’m sure more similar products will follow in their footsteps soon.
In our last blog, we covered whether or not a side hustle like selling items on eBay or being an influencer could be a business and how to tell when a side hustle turns from being hobby-like activity to a business activity. We looked at a list of questions the ATO may ask to help you determine your answer and we quoted the ATO’s definition of what constitutes a business:
“Typically, a business involves a series of continuous and repeated activities that you undertakewith the intention of generating a profit.Profit can take the form of money, but it can also be earned through other means, such as receiving goods or services (such as a barter deal). A one-time transaction may also qualify as a business if it is either:
intended to be repeated
the first step in starting a business.
You can operate one or multiple businesses simultaneously.“
So, given that you may have reviewed your situation and have ascertained that your side hustle is indeed a business, what do you need to do next?
There are several steps you need to take when beginning a business. These are listed below:
Make sure you have a tax file number.
Visit your accountant and ask for help regarding the best structure under which to operate your business. This may be a sole trader, company, trust or partnership or some variation of these structure types.
Register for GST if your GST turnover is or will be, $75,000 over the next 12 months. This can include products or services you’ve received instead of money. Note, if your side hustle is ride-sourcing, you need to register for GST from the day you start, regardless of how much you earn.
Register your business name. This can be done on the ASIC website.
Following on from #5, you will also need to get work cover insurance for your staff. This is state-based so you will need to access this information via your state’s workcover website.
If you intend to pay income tax instalments, register for Pay as you go instalments. You can do this voluntarily or wait for the ATO to tell you when you need to pay instalments.
Depending on the type of business you are running, you may also need to register for Fringe Benefits Tax, Fuel Tax Credits, Wine Equalisation Tax and/or Luxury Car Tax.
Again, depending on your industry, you may need specific state-based licences and council permits. Check with your small business department to find out what you may require.
If you’ve become a director of your company, then obtain a Director ID. Again, your accountant can help you decide if a company structure is appropriate for you.
These are just the basics when starting a new business. There is more to know and do. The best place to start is with your accountant or tax agent. He/she will help guide you through some of these tasks and may even do them for you. Another good place to start is the ATO website – they have a lot of great information to assist you when you are starting a business. Here is their “Before you start a Business” web page. It has loads of useful tips. The ATO also has a series of free courses you can access for new and established businesses – see here.
As the cost of living continues to rise, more individuals are seeking innovative ways to earn extra income on the side. These additional sources of revenue, commonly referred to as “side hustles,” can include anything from mowing lawns for friends and family to selling items on eBay, creating online content, drop-shipping, becoming an influencer, and more. While this supplementary income can be a welcome boost, it’s crucial to understand when you need to report your earnings from your side hustle for tax purposes.
The first step is to determine whether or not you are operating a business. The Australian Taxation Office (ATO) has provided a list of questions that can assist you in making this determination. These questions include:
Do you intend to operate a business?
Do you have the intention and prospect of earning a profit from your activities?
Is the size or scale of your activity sufficient to generate a profit?
Are your activities continuous and repeated?
Are your activities planned, organised, and conducted in a business-like manner? For example, do you:
Keep business records and maintain a separate business bank account?
Advertise and sell your goods and services to the public, rather than just to family or friends?
Operate from business premises?
Maintain any necessary licences or qualifications?
“Typically, a business involves a series of continuous and repeated activities that you undertakewith the intention of generating a profit.Profit can take the form of money, but it can also be earned through other means, such as receiving goods or services (such as a barter deal). A one-time transaction may also qualify as a business if it is either:
intended to be repeated
the first step in starting a business.
You can operate one or multiple businesses simultaneously.“
In essence, if you are attempting to earn a profit from your side hustle, rather than simply supplementing your overall income, there is a strong possibility that you are operating a business. If this applies to you, the next step is to seek advice on your obligations regarding reporting your income and whether or not you need to register for GST and obtain an ABN. We will cover this topic in our next blog.
The ATO has decided that small businesses with a history of non-payment, late or non-lodgement or incorrect reporting, will be moved from quarterly to monthly GST reporting i.e. a monthly BAS.
The ATO will begin this process from 1 April 2025 and will start with around 3,500 small businesses (and no, this is not an April’s Fool joke!). Those businesses affected will need to remain on the monthly cycle for a minimum of 12 months.
The ATO believes that this new protocol will help small businesses to comply with their tax obligations because they will need to be more organised in terms of bookkeeping to lodge a monthly BAS. The ATO also thinks that this will assist cash flow given business owners will need to pay smaller amounts more regularly.
If small business owners continue to ignore their tax debts and compliance obligations, it is not a question of “if” but “when” they will hear from the ATO. From the ATO Deputy Commissioner, Will Day:
‘We take our role seriously and are committed to supporting viable small businesses to comply with their ATO obligations, while also taking firmer action on those who are deliberately not complying to ensure they aren’t getting an unfair advantage. If you’re a small business who continues to deliberately disregard your obligations, you can expect the ATO to move you to more frequent GST reporting’.
The ATO will contact small business owners and their tax professionals if BAS reporting needs to move to a monthly cycle. There will be a review process in place for those small business owners who believe they do not have a history of non-compliance.
If you own a small business and are non-compliant, expect to move to monthly BAS lodgements soon. Contact your tax professional or the ATO ASAP to discuss, as the impact on your business finances and processes will be significant!
My Thoughts
I fully support the ATO’s efforts to recover long-standing tax debts and understand that non-compliance gives some an unfair advantage over those who follow the rules. However, this protocol might worsen the situation for some small business owners. Here are some issues I believe may arise from this ATO campaign:
Monthly BAS lodgers must lodge and pay by the 21st of each month, losing the extension given to quarterly online lodgers, who get an extra month. While this could encourage better organisation in bookkeeping and cash flow, it might also lead to more disorganisation and increased tax debt for some. A better idea perhaps, would be to allow business owners to remain on a quarterly cycle but disallow the lodgement extension. That way, they are still forced to be more organised and pay more regularly, but without the onerous task of doing so monthly.
Those business owners on a current ATO payment arrangement may need to re-negotiate if they are expected to pay a monthly BAS on top of other tax debt. This is because all current and future BAS must be paid on time in order to retain the payment arrangement. This may be quite difficult for some, but I guess this is what the ATO are trying to achieve – pulling in tax revenue more regularly and on time.
Businesses using tax professionals will face higher costs, paying for 12 BAS lodgements per year instead of 4. This increase in bookkeeping/accounting fees will add further financial stress. Some business owners might choose to handle it themselves to save money. While this works for those familiar with accounting, it could result in messy accounts and BAS reporting errors for others.
As a bookkeeper/BAS Agent, I’ve noticed that non-compliant clients are often not great business owners. They are disorganised and need constant reminders, which is already challenging on a quarterly cycle. Doing this monthly would be even more frustrating, likely leading to strained relationships and parting ways with clients.
I hope the ATO has considered these implications. While monthly reporting might help some, it could increase financial stress and non-compliance for others.
I do believe some business owners shouldn’t be in business, especially those who think they’re above the law. In my opinion, they should be closed down and made to repay their debts over time. This ATO measure might help, but perhaps more decisive action, like forced business closure (or the threat thereof), is needed.
The ATO has set up a website to help small business owners learn about running their businesses. It’s called Essentials to Strengthen your Small Business. The site covers the 5 stages of business life (from idea to exit) and offers 21 short courses across each stage. In this blog, I’ll walk you through this website so you can see if it’s right for you!
On the website, you’ll find courses linked to one of the 5 stages of your business: Idea, Start-up, Day to Day, Change, and Exit.
Idea: when you’re thinking about starting a business.
Start-up: when you’ve just begun and need guidance on what to do next.
Day to Day:Â when your business is running, and you want help with everyday management.
Change: when you plan to reshape or update your business.
Exit: when you’re retiring, selling, or closing down your business.
21 Courses
The 21 courses match the stage your business is in. They cover topics from starting a business to keeping records, closing down—and everything in between. For instance, clicking “Start-up” shows you 11 courses on GST, cash flow, record keeping, home-based business deductions, and more. You can filter by business structure and industry to find the most relevant courses.
Course Breakdown
Each course has an overview, a video, and modules you can do in any order. If some modules don’t apply to you, skip them. Every course has “fast facts” – key points from the lessons. There are also “quick links” for more info. After each course, take a knowledge check to see what you need to review. Plus, there’s an “action plan” – a checklist to guide your next steps based on your learning. You can download the fast facts and action plan as PDFs or Word Docs to share or keep.
Course Account
Create an account on the website to track your courses. With an account, you can create a learning path that fits you and your business. Add or remove courses anytime from the course list. You can also save notes and favourite pages to visit later from your dashboard.
Here’s the video from the website that shows you how everything works, for those who like watching instead of reading!
This learning hub is perfect for small business owners looking for guidance without spending much time or money. It’s one of the best ATO initiatives I’ve seen recently.
For those who use the Cash Flow Coaching Kit, please note that it will be moved to this new Essentials website on June 30 2024.
Over the last couple of years, I’ve moved away from written content to podcasts as my preferred choice of learning and research. Podcasts are great because you can listen to them at any time, doing anything, and privately, too, if you use earphones or earbuds. I usually walk daily and listen to a podcast at the same time – getting my exercise and racking up CPE points simultaneously – win-win!
I have many interests and there are podcasts for just about any topic you can imagine. Being a bookkeeper, I have found several podcasts about tax and bookkeeping, and over the years, have narrowed the list down to three podcasts that resonate with me the most. Here is my list:
Two Drunk Accountants: This podcast is hilarious! If you thought that accounting and tax topics could never be interesting or even funny, you are in for a big surprise! Tim Garth and Dan Osborne of CATS Accountants are the voices behind this thoroughly entertaining podcast. I find that I am laughing from beginning to end but am being educated at the same time. I enjoy this podcast and you will too! Here is the link to hear the boys bang on about their industry and their lives in general.
ICB News Channel: The Institute of Certified Bookkeepers has a podcast that is published monthly, based on topics from their newsletter. Rob Marshall, the Support and Resource Manager at ICB, runs the podcast which often includes interviews with current stakeholders involved in the bookkeeping industry. If you want to keep up with the changing face of bookkeeping and also top up your CPE points, this podcast is the one to choose. Find this podcast here.
Tax InVoice: This podcast is delivered by the ATO. Certainly not as entertaining as the Two Drunk Accountants (because let’s face it, “Two Drunk ATO Tax Specialists” doesn’t have the same ring!), the podcast will dot the i’s and cross the t’s so far as covering many tax issues and topics. Covering everything from working from home to crypto assets, Tax InVoice is a purely tax-based podcast but I find it is an easier platform to use to try and understand tax topics which can be difficult to do via written text only. You can find the 50-plus episodes of Tax InVoice here.
I’m sure if you search, you’ll find many other bookkeeping/tax podcasts. As I said earlier, I did follow about 6 or 7 back in the day but have slowly removed the ones that I didn’t find useful or enjoy. There aren’t too many Australian tax podcasts really, so if you do a search, you’ll probably find several American-based ones. These ones have their place, but if you’re after Australian tax information, you need to ensure you choose Australian podcasts. I hope you find this information useful and if you haven’t delved into the world of podcasts yet, perhaps you can start with one or two from my list.
Do you listen to a bookkeeping podcast that you think is great? Why not share it with other readers in the comments section below?
myGovID is an app that allows you to securely access ATO online services. It proves to the ATO that the person attempting to access a service/info is who they say they are – super important in this day and age of constant cyber attacks etc.
Setting up the app for the first time requires quite a few steps and can be slightly complicated. Sadly, if you buy a new mobile or tablet, or wish to use your myGovID on multiple devices, you will need to set up your myGovID again and re-verify your identity. You cannot just install the app on your new device and expect it to work. Below are the steps you need to follow to solve this issue.
How to set up myGovID on a new device
Firstly, you need to select “reset the app” within your myGovID app’s settings. Then, select “I am an existing user”. Then, follow the prompts to:
enter your latest myGovID email address – this is linked to the identity documents you previously verified. Setting up with a different email address will lock your myGovID on all devices and you’ll be unable to use it.
re-verify your identity – ATO recommends using the identity documents you previously used.
For security purposes, you’ll receive an email letting you know your myGovID is active on another device. You can view your myGovID setup history in your app.
Each time you set up your myGovID, its identity strength is unique to that device. This means if you set up your myGovID on multiple devices, the identity strength will only reflect what identity documents you’ve verified on that device. For example, you could have one device with a Strong identity strength and another device with a Standard identity strength. To access a service with your myGovID, that device needs to meet the minimum identity strength required of that service. Where you’re setting up on a new device, you need to take additional steps if you transferred your app.
eInvoicing is a new way to securely send and receive invoices between businesses via a secure global public network known as Peppol. The Australian Peppol Authority is the ATO. eInvoicing, despite being a popular and efficient method of transacting, is not mandatory.
A buyer and a supplier must both be registered with Peppol in order to use eInvoicing. This is done via your accounting software (if it offers eInvoicing functionality). Larger businesses may need to use alternative options in order to connect to the network.
Why eInvoicing?
eInvoicing is secure and time-efficient. It removes the need for using email or snail mail as methods of sending invoices and therefore, is more secure. It also removes the need to key in invoice data when an invoice is received and/or scan and attach PDF copies of the invoice. Data entry error is also heavily reduced when using eInvoicing due to little or no keying in of details required. When an invoice is received via eInvoicing, you would simply go through your normal approval process and then prepare to pay the invoice when ready. The below image is from the Institute of Certified Bookkeepers and explains the difference between the current invoicing process you probably use now, and the eInvoicing process which is much simpler.
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How do I know if my supplier or customer is eInvoicing-enabled?
When you or your supplier becomes eInvoice-enabled, you will be listed in the Peppol Directory. You can search the directory to see if your contact can receive or send eInvoices.
How do I know if my software product is eInvoicing-ready?
All software products that offer eInvoicing functionality are listed in this register on the ATO website. Some products are accounting packages and some offer online web portals for eInvoicing.
Below are 3 of the most popular online accounting packages which are eInvoicing-ready now. Each software link below will assist you to get started using eInvoicing and explain the process specific to that software. It’s important to note that MYOB and Xero do not charge anything extra to use eInvoicing which is excellent! Reckon has monthly packages including eInvoicing.
Not ready to commit to eInvoicing? Need more information?
eInvoicing is relatively new, although large companies and government departments have been using it for quite some time now. Small businesses are slowly engaging in this new method, with the uptake increasing continually. It is understandable that you may not be ready to make the jump to eInvoicing or even require it at this stage in your business development. If you would like to do some further research before moving forward, here are some useful links:
What you can do to help yourself and/or your business
During the past 2 years of the COVID-19 pandemic, the ATO deliberately halted tax and super debt collection in order to assist businesses and taxpayers affected by the pandemic’s consequences.
But now they are back on the bandwagon. Debt collection has recommenced!
The ATO is clear that if you engage with them as soon as possible, they will try to work with you to help you manage your debts. However, and I quote:
So the message is don’t hide under a rock. The debt won’t disappear and the ATO will chase you to recover it. Instead, contact the ATO immediately and work with them to resolve the issues. They can’t help you if you don’t communicate with them. Your tax or BAS agent can do this on your behalf if you would prefer not to call the ATO yourself.
It is important to note that from July 2022, any tax refunds or credits will be automatically applied to any tax/super debt you may have, meaning that you may not receive any refund or a smaller refund than expected.
The ATO has various avenues of help for businesses or taxpayers experiencing tax/super debt stress. Some of these are listed below:
Applications for a Director ID will close on 30th November 2022. Have you got yours yet? If not, why not? Is it because you lack the confidence to use a computer or smartphone or the technology required? Have you been told that you need to have a myGovID to apply for a Director ID and don’t know how to get one or even what it is? Never fear, there are other ways to apply for a Director ID and these are explained below.
What is a Director ID? Just quickly, before we go on, for those not in the know, a Director ID is a unique number identifier that identifies you as being a company director to government authorities, shareholders, employees, consumers, creditors, external administrators, and regulators. The reason behind obtaining a Director ID is to prevent the use of false or fraudulent director identities i.e. director identity fraud. Read more information about the Director ID here.
So, when you visit the Director ID information page via the Australian Business Registry Services (ABRS) to learn about how to apply for the ID number, it will immediately begin by explaining that you need to have a myGovID account. A myGovID account is a digital identity that helps you prove who you are online by participating government online services. This is a good thing to have but if you aren’t ready to go down that road or can’t for some reason, you can actually apply for a Director ID by phone or by sending in a paper application – yep, that’s right, you can do it old school style! Read on to find out how!
Apply by Phone
To apply by phone, have the below data at hand, then call 13 62 50. Wait for the automated system to ask you to make a selection from the following and select option 1. Tell the operator that you wish to apply for a Director ID number. Supply the operator with the below data and when he gives you the ID number, record it. A copy will also be sent to you by mail or email – your choice.Â
Documents Required:
your tax file number (TFN)
your full name
your date of birth
your residential address as held by the ATO
two Australian identity documents – one primary and one secondary
Primary documents
Australian full birth certificate
Australian passport
Australian citizenship certificate or extract from a Register of Citizenship by Descent
ImmiCard
Visa (if you are using a foreign passport but are still in Australia)
Secondary documents
Medicare card
Australian driver’s licence or learner’s permit
Apply by Paper
To make an application via a paper form, you will need to call the ABRS on the same phone number as above i.e. 13 62 50, and ask for the form to be mailed to you. In addition to completing the form, you will also need to send certified copies of:
one primary and 2 secondary identity documents, or
2 primary and one secondary identity document.
Primary documents
Australian full birth certificate (extracts and commemorative certificates are not acceptable)
Australian passport (including passports that have expired in the past 3 years)
Australian citizenship certificate or extract from a Register of Citizenship by Descent
Foreign passport
Secondary documents
Medicare card
Australian driver’s licence or Australian learner’s permit. This must show your photo, licence card number and signature, and the address on the card must match the details on your application.
If you have changed your name, you must provide another document showing the change, such as a
marriage certificate
deed poll
change of name certificate.
Certifying your Documents
Copies of documents you provide to support your application must be certified as true and correct copies of the original document by an authorised certifier. To certify your documents:
photocopy them
ensure the copy and any photograph is clear and identifiable
take the copies and originals to an authorised certifier.
Authorised certifiers
The following people can certify copies of your original identity documents as true and correct:
Barrister
Solicitor
Medical practitioner
Judge
Justice of the Peace (JP)
Minister of religion (who is authorised to celebrate marriage)
Police officer
Bank, building society or credit union officer with at least 5 years of service
Sheriff’s officer
Commissioner of Declarations (in Queensland only).
A certifier should never witness documents:
for their family, business, clients, employer or any other person where it could create a real or perceived conflict of interest
connected with matters in which they have an actual or perceived personal or financial interest.
So there you have it – you can apply for a Director ID without having to set up a myGovID account. Of the two old-school methods above, I think phoning is the easier option as long as you have all of the documents and information in front of you before you call.
PS – I’m not against getting a myGovID account and in fact, I do advise that you try to get one eventually. However, I do recognise that not everyone is tech-savvy or has a smartphone, or if they do, may not be sure how to navigate it – it is certainly a learning curve and not that easy for some. Luckily, the government understands this too and is providing alternative options to those who may require more time to transition to the digital world.
