Your First 90 Days Self-Employed in Australia
Week-by-week setup from ABN application to first BAS lodgement, covering GST registration, PAYG awareness, record-keeping habits, and the tax-shock trap that catches most first-year sole traders.
Your first 90 days as a sole trader in Australia follow a fixed sequence: ABN registration (free, usually instant), dedicated business bank account, GST registration decision at or before $75,000 turnover, and disciplined record-keeping from day one. The critical trap is the year-one tax shock, where no PAYG instalments fall due in your first year, then the ATO issues your entire first-year tax bill plus your first quarterly PAYG instalment in a single demand. Setting aside 25 to 30 per cent of net profit from the start is the only reliable defence.
Last reviewed:
Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact ATO. Read our editorial scope →
Week 1: get legit and separate
Three tasks in your first week set the foundation for everything that follows. Apply for an ABN through the Australian Business Register (free, most applications processed instantly). If you do not already have a Tax File Number, apply for one through the ATO to link your sole trader income to your personal tax return. Open a dedicated business bank account at any major bank or digital bank: this is not optional, it is the single most important audit-proofing step you can take.
Why a separate bank account matters
The ATO expects accurate records of all business income and expenses. A mixed personal and business account forces expensive manual reconciliation at tax time, typically adding $500 to $1,500 in accountant fees. During a review, commingled funds make it harder to demonstrate that claimed deductions are genuinely business expenses, increasing audit risk and adjustment likelihood.
Week 2: GST decision and accounting setup
GST registration is compulsory once your GST turnover reaches or is expected to reach $75,000 in a rolling 12-month period. Below that threshold, registration is voluntary. If you register, you charge 10 per cent GST on most taxable supplies, lodge Business Activity Statements (quarterly for most small businesses), and can claim GST credits on business purchases. Set up cloud accounting software (Xero, MYOB, QuickBooks, or a sole-trader app) with bank feeds from your business account, expense categories mapped to ATO deduction labels, and an invoice template that shows your ABN and GST status.
Weeks 3 to 4: record-keeping habits and PAYG awareness
PAYG instalments are quarterly prepayments of your expected income tax, based on your most recent lodged return. They do not start until after your first return shows sufficient tax payable (typically at least $1,000). This means your entire first year accumulates tax with no quarterly demands, creating the conditions for tax shock at first lodgement.
Building records discipline from day one
Keep all receipts digitally (phone scanner apps or emailed PDFs into your accounting system). If you use a car for business, start a 12-week logbook immediately to establish your business-use percentage. Set a weekly 15-minute reconciliation habit to categorise transactions and chase unpaid invoices.
The tax-shock timeline
Year one: no PAYG instalments, tax builds silently. At first return lodgement: the ATO issues your full-year tax liability plus your first quarterly PAYG instalment for year two in a single notice. For a sole trader netting $80,000 in year one, this combined hit can exceed $15,000.
Month 2: invoicing, GST on sales, and setting aside tax
Every invoice must show your name and ABN. If GST-registered, it must be a tax invoice showing the GST amount or stating the total is GST-inclusive. If not registered, you must not charge GST. Set up a second savings account labelled "Tax" and transfer a fixed percentage of every payment received.
Month 3: first BAS preparation and cash-flow review
If GST-registered, your first BAS is due 28 days after the end of your first complete quarter. Reconcile your bank accounts, verify all transactions are coded correctly for GST, and ensure every sale and purchase is captured. Even if your first quarter is short, lodge on time to avoid Failure to Lodge penalties.
90-day cash-flow check
At the 90-day mark, review your totals: income invoiced versus income collected, recurring expenses, and net profit. This is your first data point for deciding whether your pricing and hours are sustainable. If collected income is consistently below invoiced income, your payment terms or follow-up process needs tightening.
Common first-year mistakes and their cost
Five mistakes account for most of the financial damage in a sole trader's first year. Each is preventable with the setup work described above.
When to use a tax agent versus DIY
DIY lodgement through myTax (via myGov) works when your business is simple: few clients, few expense categories, under the GST threshold or straightforward GST, and you are willing to read ATO guidance. Consider a registered tax agent when you are GST-registered and lodging BAS regularly, when net profit exceeds $60,000 to $80,000, when you have fallen behind on BAS or returns, or when you start hiring staff or subcontractors (PAYG withholding, super, payroll). A registered tax agent also gives you extended lodgement deadlines, which provides a built-in buffer.
Statute references
- A New Tax System (Goods and Services Tax) Act 1999, Division 23 (GST registration threshold)
- Tax Administration Act 1953, Division 45 (PAYG instalments)
- Income Tax Assessment Act 1997, Subdivision 328-D (instant asset write-off for small business entities)
Frequently asked questions
Do I need a separate tax return for my sole trader business?+
Should I register for GST voluntarily if I am under $75,000?+
What is the year-one tax shock and how do I avoid it?+
When should I consider moving from sole trader to a company?+
Last reviewed: