Most people start a business because they are skilled at something. It might be baking, building, design or trade work. Bookkeeping is rarely the reason. As a result, it often gets left until later. That usually creates extra work and stress at tax time.
Setting up your books early gives you a clear view of your finances. You can see what came in, what went out and what you owe the ATO. The system does not need to be complicated. It needs to be set up properly once and then checked a little each week.
The Essential Steps to Set Up Your Books
You do not need to finish everything in one day. But it helps to complete this list before your first sale.
- Choose a business structure.
The main options are sole trader, partnership, company and trust. Your choice affects how you pay tax and which records you keep. A sole trader is the simplest and cheapest to start, but you are personally responsible for business debts. A company is a separate legal entity, but it costs more to set up and run. An accountant can help if you are unsure.
- Apply for an ABN.
An Australian Business Number is free. You apply online through the Australian Business Register, and it appears on your invoices. Without one, some customers may withhold tax from what they pay you, so it is best to apply before you start trading.
- Confirm your tax file number.
Sole traders use their personal number and report business income in their personal tax return. Companies, partnerships and trusts need their own number, so apply for it when you set up the entity.
- Check if you need to register for GST.
You must register once your yearly sales reach $75,000. Taxi and ride-share drivers must register from the first day. Check your sales total each month, because you need to register within 21 days of reaching the limit. Once registered, you add GST to your prices and report it on your BAS.
- Open a separate business bank account.
This keeps business and personal money apart, which makes your records much clearer. Pay yourself from this account with a regular transfer, so personal spending never mixes with business costs.
- Choose your software.
The next section covers this. Pick it before you record your first sale, so every transaction goes in the right place from the start. Then connect your business bank account so transactions come in automatically.
- Set up your categories:
These are groups for your income and costs, such as sales, rent, fuel, insurance and wages. Most software gives you a starting list. Use the same categories every time, because your accountant relies on them to prepare your tax return. Keep the list short and add new ones only when you need them.
- Decide how to record income:
Most small businesses record money when it reaches the bank. This is called the cash method. Income counts when you are paid, and costs count when you pay them. Others record it when the invoice is sent, which gives a clearer picture if customers pay late. Your accountant can tell you which one fits, and once you choose, stay consistent.
- Set up a filing system:
Take a photo of each receipt on the day and save it in a labelled folder. Name files with the date and supplier so they are easy to find later. Paper receipts, especially the thermal kind, can fade, and you need to keep them for five years.
- Plan for staff:
If you hire someone, payroll and super need to be ready before their first pay. Choose a payroll tool, and ask the employee for their tax file number declaration and super fund details. You also need to be set up to withhold tax from their wages, and pay their super within 7 business days of each pay day.
Choosing Software That Fits
Good software saves a lot of time. Most Australian programs connect to your bank account and bring in your transactions. You check each one and assign a category. The software also tracks GST, which is useful when your BAS is due.
Choose based on the size of your business and what you sell. A freelancer needs less than a cafe with five staff. Most platforms offer a free trial, so it is worth testing one first. Some owners also ask a bookkeeper to handle the first setup, so the bank connection and categories are right from the beginning.
| Software | Suits | Worth knowing |
|---|---|---|
| Xero | Small and growing businesses | Strong bank connections and many add-ons |
| MYOB | Businesses with staff | Well known across Australia |
| QuickBooks | Sole traders and freelancers | Simple layout and invoicing |
| Reckon | Basic needs | Cloud and desktop versions |
Records You Need to Keep
The ATO requires proper business records. Estimates are not enough. Keep the following:
- Invoices you send and receipts you issue
- Bills and receipts for items you buy
- Bank and credit card statements
- Payslips and wage records
- Super payment records
- Copies of your BAS and tax returns
- Records of large purchases, such as vehicles and equipment
- Loan and lease documents
- A logbook if you use your car for work
Keep most records for five years. Some, such as records for large assets, may need to be kept longer. A cloud folder is enough for storage. Folder names like “2026 Receipts” and “2026 Invoices” keep things simple.
GST and BAS Explained Simply
GST is a 10% tax added to most sales. If you are registered, you charge it to your customers. You can also claim back the GST you paid on business costs. The difference goes to the ATO. In some periods, the ATO pays you instead.
You report this on a Business Activity Statement, known as a BAS. Most small businesses lodge one each quarter. A useful habit is to move the GST portion of each payment into a separate savings account. That way the money is ready when the BAS is due. If you have staff, you also report their wages through Single Touch Payroll. This is simply a way of telling the ATO about wages, and payroll software usually does it each pay day.
Key Dates for Your Calendar
Late lodgement can lead to penalties, so set reminders early. The Australian financial year runs from 1 July to 30 June.
| Quarter | Period | BAS Usually Due |
|---|---|---|
| Q1 | July to September | 28 October |
| Q2 | October to December | 28 February |
| Q3 | January to March | 28 May |
| Q4 | April to June | 28 July |
Super rules have also changed. Since 1 July 2026, employers pay super within 7 business days of each pay day, rather than once a quarter. The super rate is 12%. New employees may have a little longer for their first payment. Many owners pass payroll to a professional once they have a few staff, because the dates build up quickly.
Dates can move when they fall on a weekend, so check the ATO website each year. Before 30 June, it also helps to work through a year-end checklist so nothing is left to the final week.
Doing It Yourself or Getting Help
Many owners manage their own books at the start. This works well when there are only a few transactions. You save money and learn how your business runs. The main drawback is time. Bookkeeping can take up evenings, and small mistakes can build up without being noticed.
Other owners get help from the beginning. Some wait until the business gets busier. Both approaches are reasonable. A common middle path is to get help with the setup and then handle the daily tasks yourself. A bookkeeper can review the numbers each month and correct anything that was missed.
Common Bookkeeping Mistakes
Many new owners make a few of these. Spotting them early saves time and money.
- Using one bank account for everything
- Losing receipts or not keeping digital copies
- Leaving the books until tax time
- Spending the money set aside for GST and tax
- Putting expenses in the wrong category
- Skipping the monthly bank check
- Taking money out of the business with no record
- Missing BAS or super deadlines
- Sending invoices late, which affects cash flow more than many people expect
If you notice any of these in your own business, most can be fixed once you know about them.
Sort the Basics Now and Tax Time Gets Easier
Setting up your books does not need to be difficult. Get your ABN, open a business account, choose your software and keep your receipts. These four steps cover most of the work. The rest comes from a small weekly habit.
Some mistakes are likely along the way. What matters is finding them early and correcting them. If you would like someone to review your setup, or you want to talk it through, contact us and the Elite Plus Bookkeeping team will help you get started.
Frequently Asked Questions
Do I need a bookkeeper when I first start a business?
When do I need to register for GST in Australia?
Can I use my personal bank account for my business?
How long do I need to keep business records?
What is the difference between a bookkeeper and an accountant?
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