Consultants and contractors, AustraliaA dedicated, university-qualified graduate accountant keeps your books current every week: day-rate invoices sent and followed up, accounts reconciled, GST and tax set aside, and the personal services income records your tax agent needs at year end. Your bookkeeper works in your Xero, MYOB or QuickBooks file during Australian business hours.
The short answer
Bookkeeping for consultants is the weekly record of a business that sells one person’s time and judgement, which adds eight points to the usual work. Most of the income is personal services income (PSI), so the books must show which contracts pass the ATO’s results test. GST registration is compulsory from $75,000 of GST turnover. Invoices go out on a day rate or a milestone and are chased until paid. The ATO moves you onto PAYG instalments once you have a tax bill. Home office and travel are claimed from records kept through the year. Nobody pays super for you unless you arrange it. Company or sole trader changes how money comes out. A separate business account keeps it all clean.
Each point is covered below as the ATO publishes it, then how a dedicated bookkeeper keeps it current every month. See also the sole trader bookkeeping guide, and the guide to bookkeeping for contractors for those who subcontract on site.
Personal services income
Personal services income is income that is mainly (more than 50%) a reward for your own effort or skill, whether earned as a sole trader or through your own company or trust; the ATO’s examples include IT consultants and engineers (ATO, Income that is PSI, as at 1 October 2026). The rules apply unless you self-assess as a personal services business (PSB) for the year: the results test for at least 75% of your PSI, or one of the other three tests plus the 80% rule (ATO).
| Test | What you have to show | Why consultants often fail it |
|---|---|---|
| Results test | Paid for a specific result, supplying any tools needed, and liable to fix mistakes at your own cost, for at least 75% of your PSI. | An hourly or daily rate is unlikely to meet the first condition: it pays for time, not a result (ATO). |
| Unrelated clients test | PSI from two or more unrelated clients, each won through offers to the public: a website, advertising, a public tender. | Word-of-mouth referrals, labour hire firms and recruitment websites do not count (ATO). |
| Employment test | Others do at least 20% of the principal work by market value, or an apprentice is employed for at least 6 months of the year. | Admin or bookkeeping done by a relative is not principal work (ATO). |
| Business premises test | Premises you own or lease, used mainly for the work and only by you, separate from your home and your clients’ premises, all year. | A home study or a desk at the client’s office fails (ATO). |
| The 80% rule | Less than 80% of your PSI from one client and its associates. Needed with the three tests above, not the results test. | One long engagement, or two contracts in the same corporate group, fails it. |
Tests as published on the ATO pages linked, read 1 October 2026. Whether your contracts pass is a question for your registered tax agent.
When the PSI rules apply, deductions are limited to what an employee could claim: no rent, mortgage interest, rates or land tax on your home, and no wages or super for a spouse or relative doing non-principal work such as bookkeeping or invoicing (ATO, Claiming deductions when receiving PSI). Income earned through a company or trust is attributed to you personally; a sole trader has nothing to attribute (ATO).
Company or sole trader. A sole trader and the business are one taxpayer: income goes in your own return, you draw from the business account, and a separate business account is recommended rather than required (business.gov.au). A Pty Ltd company is a separate legal entity with its own account, file and return, and pays you wages or directors’ fees that carry PAYG withholding and super; it does not get around the PSI rules. The choice is your accountant’s advice; your bookkeeper records it.
What the books have to cover
Beyond PSI, the points that decide whether July is calm or chaotic.
Compulsory within 21 days of GST turnover reaching $75,000, counted on the current month plus the previous 11 or the next 11 (ATO). Below that it is optional. Quarterly BAS figures are due 28 October, 28 February, 28 April and 28 July (ATO).
Day-rate invoices raised from approved timesheets, milestone invoices the day the deliverable is accepted, each carrying the purchase order number and terms. Overdue accounts followed up on a set schedule, because one slow corporate payer can hold up a quarter’s cash.
An individual enters automatically once the latest return shows instalment income of $4,000 or more, tax payable of $1,000 or more and notional tax of $500 or more; a company at notional tax of $500 or more (ATO). Most then pay quarterly.
Running expenses by actual cost, a fixed rate per hour at home (70 cents for 2024-25 and 2025-26, ATO) or floor area; occupancy expenses only for a genuine place of business (ATO). Travel claims cover airfares, accommodation, fares and overnight meals, business portion only, with a travel diary compulsory for a sole trader away six or more nights (ATO).
A sole trader need not pay super guarantee for themselves and can make personal contributions, deductible for most people until age 75 (ATO). A company director is an employee for super, so a company pays 12% on the director’s wages (ATO). The concessional cap is $32,500 from 1 July 2026 (ATO).
Reconciled accounts, a PSI summary by contract, the hours log, the travel diary and asset purchases assembled for your registered tax agent, who prepares and lodges the return. Records are kept for at least 5 years (ATO).
Get in touch
Tell us a little about your business and what you need looked after. We reply within one business day, Australia-wide, and fifteen minutes on the phone is enough to say whether a dedicated bookkeeper suits you and what it would cost.
Prefer to talk? 1300 66 88 14
Who does what
| Task | Your FreeMyCloud bookkeeper | Your registered tax or BAS agent |
|---|---|---|
| Weekly books | Codes the bank feed, enters receipts, reconciles every account | Not involved week to week |
| Invoicing | Raises invoices from your timesheets and follows up overdue accounts | Not involved |
| PSI records | Tags income by contract, keeps the hours log and travel diary current | Decides which PSB test is met and reports PSI in the return |
| GST and BAS | Records GST and prepares the BAS figures and workpapers | Reviews and lodges the BAS |
| Instalments and super | Shows the amounts set aside; prepares pay runs where the company pays you wages | Advises on instalment variations and super contributions |
| Tax return | Closes the year and assembles the year-end file | Prepares and lodges the return and gives tax advice |
Only a registered BAS agent or tax agent can provide BAS or tax agent services for a fee (Tax Practitioners Board). FreeMyCloud is not a registered tax or BAS agent and lodges nothing: your bookkeeper prepares the figures and your registered agent reviews and lodges them. See our guide to BAS preparation and the ATO.
What is handled
One person in your accounting software, to a routine you agree at the start.
Timesheets turned into invoices on your billing day, payments matched, overdue clients followed up on a schedule you set.
Bank and card feeds coded weekly and every account reconciled, private spending marked for you to confirm.
Airfares, hotels and subscriptions filed against each entry, business portion recorded, hours log kept current.
Each engagement tagged as the contract starts, so the year-end PSI summary by client already exists.
BAS figures and workpapers prepared each quarter for your registered agent to review and lodge.
Profit and loss, aged receivables, and the amounts set aside for GST, tax and super.
Software
FreeMyCloud bookkeepers are able to work with Xero, MYOB, QuickBooks and Reckon. There is no need to change platforms, and you decide what access your bookkeeper has.
Xero, MYOB, QuickBooks or Reckon, whichever you already use.
Harvest, Toggl or a spreadsheet: approved hours become the invoice.
Dext, Hubdoc or a photo from your phone, filed against the right entry.
User permissions set by you, removable by you, with a signed NDA in place.
Your bookkeeper is a university-qualified graduate accountant with Australian experience, employed by FreeMyCloud and based in our Manila office. The same person works on your file and is ready to start within three business days.
FreeMyCloud is Australian owned and was founded in 2010, with offices in Melbourne and Manila. Clients range from individual consultants and sole traders to ASX-listed companies.
A dedicated FreeMyCloud bookkeeper typically costs 50 to 70% less than a local equivalent. A single consultant usually needs a few hours a week, and the cost follows the hours and transaction volume.
Getting started
Four steps, with no change to your software or your accountant.
You describe your engagements, your software and what is behind.
We match a graduate accountant to your software and workload.
The NDA is signed and you invite your bookkeeper into your accounting file.
Invoices on billing day, books every week, reports every month, BAS figures every quarter.
Guides and related pages
FreeMyCloud provides bookkeeping for consultants and contractors in every state and territory. The work is done inside your cloud accounting file, so it makes no difference whether you are at a client site in Sydney or a home office in Perth.
Most consultants do their own books until the first strong year, when GST registration, a PAYG instalment letter and a tax agent asking for a PSI breakdown arrive in the same quarter. One person doing it every week means the figures already exist when the question is asked.
Frequently asked questions
Personal services income (PSI) is income that is mainly (more than 50%) a reward for your personal effort or skill, earned directly or through your own company or trust. The ATO's examples include IT consultants, engineers and financial professionals (ATO, as at 1 October 2026). Most consulting income is PSI; whether the rules then apply depends on passing a PSB test for the year.
Rarely. The test needs all three conditions: paid for a specific result, supplying your own tools where needed, and liable to fix mistakes at your own cost. The ATO states that an hourly or daily rate is unlikely to meet the first condition (ATO, Results test). A day-rate consultant usually looks to the unrelated clients test and the 80% rule instead. Your registered tax agent makes the call.
When GST turnover, which is gross income excluding GST and not profit, reaches $75,000 on either the current month plus the previous 11 or the current month plus the next 11. Registration must happen within 21 days. Below that it is optional, and a voluntary registration generally stays for at least 12 months (ATO, as at 1 October 2026).
Because your latest return showed instalment income of $4,000 or more, tax payable of $1,000 or more and notional tax of $500 or more; together those enter an individual, including a sole trader, automatically (ATO). Most people then pay quarterly, and the payments are credited against the tax on the next return.
Not as a sole trader: the ATO states that a self-employed sole trader does not have to pay super guarantee for themselves and can make personal contributions, deductible for most people until age 75 (ATO). Wages paid through your own company carry super guarantee at 12%, because a company director is an employee for super (ATO; rate table).
No. Only a registered BAS agent or tax agent can provide those services for a fee (Tax Practitioners Board). Your FreeMyCloud bookkeeper keeps the records and prepares the figures and workpapers; your registered agent reviews and lodges them. The Board keeps a public register if you need one.
This page is general information about Australian bookkeeping and reporting obligations for consultants, current as at 1 October 2026. It is not tax, financial or legal advice. FreeMyCloud is not a registered tax or BAS agent and does not lodge returns or activity statements. Whether the PSI rules apply to your contracts is a question for your registered tax agent. Rates, thresholds and dates change. Confirm your own position with your registered tax or BAS agent.
Fifteen minutes on the phone is enough to tell you whether a dedicated bookkeeper suits your consulting practice and what it would cost.
