How contractor accounting usually works
We start with a quick review of your current position: ABN and GST status, software, invoicing, bank feeds, BAS and tax history, any backlog, and immediate deadlines. We also identify industry specifics like TPAR for building and construction or labour hire, and any PSI considerations.
Work then splits into three stages:
- Immediate triage: clear overdue BAS, sort PAYG instalments, fix coding, and stabilise cash flow.
- Process design: implement receipt capture, job costing/WIP, progress claims, and monthly close.
- Ongoing review: quarterly or monthly check‑ins, tax planning, PSI tests, and structure reviews.
Australian context to keep in view
- GST registration is required once turnover reaches $75k (earlier for rideshare/taxi). Choose cash or accrual reporting carefully.
- PSI rules can limit deductions and income splitting. Test annually and align contracts and work practices.
- TPAR applies to building and construction, cleaning, courier, road freight, IT and security industries when you pay contractors.
- If you hire, you need STP, super, workers compensation, and possibly payroll tax depending on your state and size.
- Good software fit matters. Xero, MYOB or QuickBooks with bank feeds, receipt capture, and job tracking keeps admin low.
Common contractor scenarios we handle
- New contractor setup: ABN and GST registration, invoice template, chart of accounts, app stack and training.
- Quarterly rhythm: bank reconciliations, BAS preparation and lodgement, PAYG instalments, cash flow view.
- Job profitability: track labour, materials, subbies, retentions and variations; understand WIP and margins.
- TPAR and contractor payments: collect details, code correctly, and lodge on time.
- End‑of‑year wrap: stock and WIP adjustments, depreciation on tools and vehicles, logbook or cents‑per‑km, and tax planning.
What to compare before you commit
Scope
Confirm the proposal covers contractor‑specific needs: GST setup, BAS, PAYG, PSI tests, TPAR, job costing/WIP, EOFY and advisory—not just bookkeeping.
Software fit
Look for deep experience in your stack (e.g. Xero + Hubdoc/Dext + job tracking). Ask how they’ll streamline quoting, progress claims and retentions.
Turnaround and communication
Check monthly close dates, BAS lodgement timing, who you contact for urgent questions, and how often you’ll review results.
Commercial fit
Compare fixed fees versus hourly, inclusions/exclusions, tax planning cadence, and whether you need compliance‑only or advisory support too.
Best next steps
Write down the exact outcome you want: clear BAS, better cash flow, cleaner books, a switch in structure, or job profitability you can trust. Use that outcome as the brief.
Shortlist providers who explain their workflow, show how they’ll reduce your admin, and can speak clearly about PSI, TPAR and GST as they relate to your industry.
If you’re ready to move, send a short note with your situation and deadlines. We’ll match you to the right support pathway.
Frequently asked questions
What does an accountant do for contractors?
They set you up correctly, keep you compliant, and improve results. That includes ABN/GST, BAS and PAYG, TPAR if required, income tax, job costing/WIP, cash flow and structure reviews. They also guide PSI rules and deductions for tools, vehicles, insurances and home office.
Do contractors need to register for GST?
Yes once your GST turnover reaches $75k in a 12‑month period, or immediately if you drive rideshare/taxi. Registration affects invoicing and BAS. Your accountant will select cash vs accrual and align your software and invoice wording.
How are contractors taxed?
Most begin as sole traders and pay income tax (often via PAYG instalments). As profit and risk increase, many move to a company or trust for better tax planning and asset protection. The right structure depends on your earnings, industry risk and future plans.
What is PSI and why does it matter?
Personal Services Income applies when income is mainly from your personal effort or skills. If PSI applies, there can be limits on deductions and income splitting. An accountant tests PSI each year and helps you structure contracts and operations accordingly.