Self-employment

Being your own boss comes with freedoms – and responsibilities. Find out how to make the right start.

Manage your cash flow

If you’re self-employed you’re in good company. More than 62% of businesses in Australia are sole traders, with no employees. However, sole traders also have lower survival rates than larger businesses. Since 2019/20, more than half of new sole traders did not survive beyond three years. So planning for longevity means planning your money stuff. 

Cash flow means the money coming in and going out of your business. Many self-employed people earn a good living but the flow of money is not always regular. Sometimes you’ll have more going out than coming in, and invoices might not get paid on time.

To help with your cash flow, have a business plan and a budget to help you look ahead and prepare for the unexpected. Keep a close eye on your income and expenses, and make tweaks along the way. For example, consider only making larger purchases once you’ve paid yourself and covered regular bills.

Keep some money aside for the unexpected, as being self-employed means you won’t have the benefit of paid holidays or sick leave. Regularly saving a little extra will help you manage during quiet periods, as well as funding a well-deserved break.

Separate your wages and business money

Make a clear division between ‘your money’ and what belongs to the business. Pay yourself a wage, and keep separate bank accounts so that business spending doesn’t get mixed up with your own.

This makes it clear what the business has earned and paid out. It’s also easier to see the financial state (the ‘profit and loss’) of the business at any time.

Nathan stays on top of a variable income

Nathan runs his own business as a landscaper.

Nathan’s income and expenses go up and down through the year. At first, he found this hard to manage. So he added up his monthly expenses to work out an amount to pay himself each month.

Next, he worked out his monthly cash flow by looking at what he earned across the whole year, then dividing it by 12 to get a monthly average. This tells him whether he’s earned extra or not.

When Nathan earns more than usual, he now puts the extra into savings to get him through the leaner months. This means he has funds to cover unexpected business costs, such as an urgent repair.

Think about tax early

It’s important to think about tax throughout the year, not only at tax time. Get advice from an accountant and plan for what’s coming.

Income tax

If you’re self-employed, you need to pay your own income tax.

Put money aside as you earn it, rather than waiting to receive a big tax bill. Open a savings account and transfer a percentage each time you get paid. Make this account for tax payments only, and off limits for other spending.

If your business grows, the Australian Taxation Office may require you to pay income tax in quarterly instalments. This is known as pay as you go (PAYG). Get an idea of how much you might have to pay with their PAYG instalment calculator.

Goods and services tax (GST)

Businesses that earn over $75,000 per year must register for GST. Once you’ve registered, you must lodge a regular Business Activity Statement (BAS) to report how much GST your business has collected and is claiming. This may be quarterly or annually.

You can use our GST calculator to calculate the amount of GST you have to charge your customers or pay your suppliers.

Use the GST calculator

Tax deductions

You may be able to claim some of your business costs against your income, meaning you pay less tax. Speak to your accountant and keep all your receipts in case you need them.

Make your super count

Superannuation may not be at the top of your list when you’re starting out by yourself. But getting on top of it early can help you save for the future. Super is a tax-efficient way of saving money to live on when you stop working.

Since you won’t get regular super contributions from an employer, it’s up to you to make them yourself. As well as investing for your future, you can generally claim your super contributions as a tax deduction.

Protect your income — and your business

Without sick leave, getting sick or injured can mean financial difficulties. Income protection insurance can help you pay your bills if you can’t work.

If you have a super fund, find out whether they offer income protection insurance as part of the package. 

If you’re moving from employee to self-employed, check if this affects the insurance cover through your super. Insurance terms and conditions vary from fund to fund. 

Consider other types of insurance that can protect you and your business. Like public liability insurance and workers compensation insurance. 

Know the legal stuff

Setting yourself up properly – legally and financially – is key when you start a small business.

If you own and run your business as a director under a company structure, you will need to apply for a director ID.

Many small businesses form part of the value chain of larger businesses, who have reporting obligations to the Australian government related to climate change. If you deal with larger businesses, keep in mind that at times you may be asked for information about your business to help them fulfil their obligations.  

Get help if you need it

Help from a financial professional  

If you need help with your business finances, consider seeking out a licensed financial professional.   

• We can help with your BAS (business activity statement) and PAYG (Pay as you go) instalments.

• A bookkeeper can help keep track of day-to-day financial transactions.  

• We can help you with tax and preparing your BAS.

Source:
Reproduced with the permission of ASIC’s MoneySmart Team. This article was originally published at https://moneysmart.gov.au/work-and-tax/self-employment
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Prepare for an SMSF shake-up in 2026

Self-managed superannuation fund (SMSF) trustees always have a lot on their to-do lists but the first few months of 2026 are likely to be busier than usual.

Topping the list is preparing for the introduction of Payday Super and the Better Targeted Superannuation Concessions on 1 July 2026.

Payday Super is a change to when you make your employees’ Superannuation Guarantee (SG) payment. From 1 July 2026, the SG must be paid to an employee’s super fund on payday and be received by the fund within seven business days. If you are taking on new employees or paying to a new super fund, these funds must be received within 20 business days.ⁱ

Employers are considered to have made a contribution when the fund receives it, not when they pay it, so SMSFs need to have the necessary systems set up and in place from 1 July.

Who’s affected?

The ATO has warned SMSF trustees that Payday Super should not be ignored.

If you are a business owner and pay contributions for yourself or your employees into an SMSF, the fund will be receiving more contributions and there will be increased administration requirements to deal with payment timing and record keeping.

The strict timing rules also come with tougher penalties and any delay may incur a Super Guarantee Charge, which is not tax deductible.

New clearing house partners

SMSFs also need to be prepared for closure of the ATO’s Small Business Superannuation Clearing House (SBSCH) from 1 July 2026.ⁱⁱ

Employers currently using the SBSCH should take immediate action to find an alternative. You could check your accounting software and payroll packages, which may already include super functions, or look at the options offered by commercial clearing houses or other software providers.

Failing to prepare for the SBSCH closure means you may risk a fine.

SuperStream updates

Payday Super’s 1 July start date will also usher in changes to contributions messaging within the SuperStream system, the electronic standardised format employers must use to make super contributions.ⁱⁱⁱ

Changes include clearer error messaging and are designed to reduce employee contributions being rejected by the receiving super fund.

SMSF trustees need to ensure their internal systems are updated and ready to cope with the SuperStream changes, as timely and correct contribution payments are a key goal of the new rules.

According to ATO deputy commissioner Emma  Rosenzweig, one of the most common SMSF errors in this area is where the Electronic Service Address (ESA) was never activated with the provider or is no longer active.

This error means the employer receives a SuperStream error message but does not receive the matching refunded super contribution.

Prepare for earlier contributions

The ATO is encouraging employers not to wait until 1 July to start making Payday Super contributions to help improve the transition.

SMSFs should also ensure they are able to receive contributions via the New Payments Platform (NPP), as employers who currently use direct debit are being encouraged to move to faster payment methods such as EFT and NPP.

With contributions flowing in more regularly – rather than quarterly – it may also be timely to reassess your SMSF’s investment strategy and portfolio allocation to ensure it remains suitable for the shift in contribution flows.

High balance tax changes

Another thing to be mindful of is from 1 July 2026, SMSFs will need to be prepared for the commencement of the government’s much delayed Better Targeted Superannuation Concessions.^iv

These new rules are intended to reduce tax concessions for individuals with a Total Super Balance (TSB) above $3 million.

Under the new rules, people with higher super account balances will face a higher 30 per cent concessional tax rate on the proportion of earnings corresponding to their TSB between $3 million and $10 million.

With a higher TBC in place for 2025-26, SMSFs should consider the implications of the new tax regime prior to making any pre-30 June contributions and potentially breaching the indexed thresholds in future financial years.

If you need help preparing your SMSF for the upcoming changes, contact our office today.

i Spotlight on… Payday Super | Australian Taxation Office

ii The Small Business Superannuation Clearing House is closing | Australian Taxation Office

iii SuperStream for employers | Australian Taxation Office

iv Better targeted superannuation concessions | Australian Taxation Office

RBA Announcement – February 2026

At its latest meeting, the Reserve Bank Board announced it was increasing the cash rate to 3.85 per cent.

Please click here to view the Statement by the Monetary Policy Board: Monetary Policy Decision.

We’re watching closely what the banks do with their rates, as some of Australia’s biggest lenders may make changes to their rates.

Please get in touch if you would like to discuss recent rate movements or if you would like to review your finance options.