10th July, 2025
Tax time. Two words that can send even the most organised solopreneur into a cold sweat.
But here’s the thing, most of the stress comes from avoidable mistakes that pile up throughout the year.
You know the drill: receipts stuffed in drawers, personal and business expenses mixed together like a financial smoothie, and that nagging feeling you’ve forgotten something important.
Sound familiar? You’re not alone.
More than 1.6 million Australian sole traders are wrestling with these exact same challenges.
The great news? Most tax headaches are totally preventable with the right approach.
Let’s dive into the most common tax traps sole operators fall into — and more importantly, how to sidestep them completely.
Picture this: It’s October, your tax return is due, and you’re frantically searching through months of crumpled receipts, trying to piece together your financial year.
Not fun, right?
Poor record-keeping is the number one culprit behind tax time stress.
When your financial records are scattered across spreadsheets, shoeboxes, and that mysterious pile of papers on your desk, you’re setting yourself up for missed deductions and major headaches during tax time and beyond.
The fix: Get yourself a proper accounting system and stick to it,
Ditch the spreadsheet chaos and invest in an app like Solo that syncs to your bank.
It should help you simply and consistently update records to ensure all transactions in your business bank account are accounted for, enabling way easier tax prep and compliance.
The best systems also let you snap photos of receipts, automatically categorise expenses, and keep everything organised in one place.
Think of it like having a personal assistant who never sleeps and never loses a receipt.
Connect your bank feeds and snap photos of your receipts then let Solo pull your data automatically. AI smart-matching automatically categorises each transaction so all that’s left to do is review and approve them.
Here’s a classic mistake: using your personal account for business expenses because it’s “easier” or you “forgot” your business card.
This approach might feel convenient in the moment, but come tax time, you’ll be playing detective trying to figure out which coffee was a client meeting and which was just caffeine desperation.
The fix: Separate everything from day one.
By opening a dedicated business bank account, you can get crystal clear financial records and minimise the confusion around what’s deductible. Yes, it means carrying an extra card, but
your future self will thank you when tax preparation becomes that much simpler.
Solo makes this even easier by connecting directly to your bank accounts and using AI-powered smart-matching to automatically categorise your business transactions.
Currently available for just $6 for 12 months through our partnership with MYOB.
Two sides of the same coin here: claiming expenses you shouldn’t and missing out on legitimate deductions.
Both can cost you – either through penalties if the ATO comes knocking and wants to audit your biz and make you pay penalties, or lost money if you’re not claiming everything you’re entitled to.
The fix: Know your deductions inside out.
Familiarise yourself with what the ATO considers legitimate business expenses and ensure you’re only claiming actual business-related costs.
Home office costs, professional development, equipment, software subscriptions – they all add up.
For shared expenses like your home office or car, calculate the business-use percentage accurately and keep detailed records.
For example, if you use your car 40% for business, you can only claim 40% of its running costs.
When in doubt, consult the ATO guidelines or chat with a tax professional.
It’s better to be conservative than sorry.
With Solo, you can snap and track expenses as they occur. The app will automatically categorise the expense and keep track of GST, ensuring every legitimate deduction is recorded accordingly.
Hands up if you’ve ever realised the tax deadline is next week and you haven’t even started organising your paperwork. Yep, we’ve all been there!
But last-minute panic rarely leads to the best outcomes.
Rushed tax returns are more likely to miss deadlines and contain errors.
And you might miss opportunities to legitimately reduce your tax liability or even face penalties for lateness.
The fix: Make tax planning a year-round habit.
Mark key dates in your calendar – not just the 31 October tax return deadline, but quarterly check-ins to review your financial position.
Set reminders to gather documents, review expenses, and assess whether you need professional help.
Consider your tax position before making major business decisions.
Sometimes timing matters – purchasing equipment in June versus July could impact which financial year you claim the deduction.
Consulting with your chosen tax professional can help with strategising and optimising your tax position each year.
Treat tax as a year-round workflow. Solo by MYOB shows live GST/BAS positions and issues reminders ahead of due dates, so you file on time with confidence.
Nothing quite compares to the sinking feeling of getting your tax assessment and realising you owe money you don’t have.
When you’re a solopreneur, no one’s taking tax out of your pay automatically.
That responsibility falls squarely on your shoulders.
You don’t want to have cash flow issues when payments are due, so it’s important to reserve some funds to cover your tax liabilities, even if you have other things you’d rather put the money towards.
The fix: Plan and save for tax.
It helps to set up a separate “tax savings” account and transfer a percentage of every payment you receive into it.
If you regularly estimate your tax obligations and set aside a portion of your income to meet these liabilities, you won’t have so much stress come tax time.
You might like to consider entering into the ATO’s Pay As You Go (PAYGI) Instalment system. The ATO may enter you automatically, or you can voluntarily enter.
This will help you to manage your tax payments more effectively because it spreads your tax liability across quarterly payments.
This is much more manageable than one big annual hit.
Think of it as forced savings – except the money’s going to the Tax Office instead of your holiday fund.
Solo by MYOB gives you real-time insight into your income and spending, helps you track cash flow, and supports proactive planning so funds are ready when tax assessments arrive.
These mistakes might seem overwhelming when listed together but remember — you don’t have to fix everything at once.
Start with the basics: separate your finances, implement a simple record-keeping system, and begin setting aside tax money from your next payment.
Small, consistent actions throughout the year beat frantic activity at tax time every single time.
The goal isn’t perfection but progress.
Every receipt you categorise properly, every expense you track correctly, and every dollar you set aside for tax is a step towards financial clarity and confidence.
Tax time doesn’t have to be torture. With the right systems and habits in place, you can approach it with confidence instead of dread.
Your business — and your stress levels — will thank you for it.
Ready to simplify your solo business finances? MYOB’s Solo app handles invoicing, expense tracking, and ATO-ready record-keeping so you can focus on the work you love.
Get started for just $6 for 12 months, exclusively for Startup Network members. Click here to get the offer.
Information provided in this article is of a general nature and does not consider your personal situation. It does not constitute legal, financial, or other professional advice and should not be relied upon as a statement of law, policy or advice. You should consider whether this information is appropriate to your needs and, if necessary, seek independent advice. This information is only accurate at the time of publication. Although every effort has been made to verify the accuracy of the information contained on this webpage, MYOB disclaims, to the extent permitted by law, all liability for the information contained on this webpage or any loss or damage suffered by any person directly or indirectly through relying on this information.