Contractor and Sole Trader Social Workers
If you work as a contractor or sole trader in social work, managing your finances goes beyond simply receiving a payslip.
You are responsible for invoicing clients, paying your own taxes, and managing superannuation. This page outlines key financial considerations for independent social workers, including tax obligations, GST, super, and deductible expenses
ABN & Business Structure
As an independent social worker, you’ll need an Australian Business Number (ABN) to operate as a sole trader or contractor. Some practitioners may consider setting up a company or trust, but most start as sole traders due to the simpler setup and lower costs.
Tax Obligations
Unlike employees, contractors and sole traders don’t have tax automatically deducted from their income. Instead, you must:
-
Pay Income Tax: Set aside money for tax, as you’ll need to lodge a tax return each year.
-
Make PAYG Instalments: If your income is high enough, the ATO may require you to pay tax in quarterly instalments.
-
Register for GST: If your annual turnover is $75,000 or more, you must register for Goods and Services Tax (GST) and add 10% to your service fees. You must also lodge a Business Activity Statement (BAS) regularly.
Superannuation for Contractors
As a sole trader, you are not entitled to employer-paid super but can make voluntary contributions to your super fund. If you contract to a business under conditions similar to an employee, that business may be required to pay superannuation on your behalf. Check with an accountant to determine your eligibility.
Invoicing & Record Keeping
Since you’re responsible for getting paid, ensure you:
-
Provide clear invoices that meet ATO requirements.
-
Track income and expenses using accounting software or a spreadsheet.
-
Keep receipts and records for at least five years in case of an audit.
Tax Deductions for Sole Traders
As a business owner, you can claim a range of deductions to reduce your taxable income, including:
-
Professional Memberships & Insurance: SPA membership, professional indemnity insurance.
-
Work-Related Equipment: Therapy tools, laptops, office furniture.
-
Home Office Expenses: If you work from home, you may claim a portion of rent, electricity, and internet.
-
Travel & Vehicle Costs: If you travel to clients, you can claim car expenses or public transport.
-
Marketing & Advertising: Website costs, business cards, online advertising.
Medicare, NDIS & Private Health Fund Considerations
-
Medicare & NDIS: You may need to register as a provider to bill under these systems.
-
Private Health Funds: Some funds require social workers to be AASW certified to allow clients to claim rebates.
Need Help Managing Your Finances?
Running your own business comes with financial responsibilities, but proper planning can make it easier.
We can help with tax planning, GST, and setting up a system that works for you.
The 5 Elements of a Business Framework
Starting a successful business takes hard work, dedication, and the right framework.
Over the years, and with trial and error, we've formulated a business framework. While it's suitable to all businesses, I've found that it's particularly suited to Allied Health Businesses because it gives a clear overview of the components that make up a business and that need to be functioning well for business success.
This framework focuses on five key elements that are essential to the success of any allied health business.
-
First, define your business values, vision, and goals. This sets the foundation for your Business DNA and guides all other decision-making.
-
Next, establish effective systems and processes to streamline your operations and ensure consistent delivery of services.
-
The people who make up your staff and support teams are a critical component of your business. Investing in the growth and development of your staff is essential for success. The other people vital to your success are your support teams, by that I mean people like your accountant, your bookkeeper, the doctors who refer clients to you, your supervisor, your lawyer etc.
-
Your clients are the lifeblood of your business, and understanding their needs and wants is key to providing them with the best possible experience.
-
Finally, pay close attention to your financials and numbers. Financial management is essential for the long-term success of your business, and having a clear understanding of your income, expenses, and cash flow is crucial.
Resources for Contractor & Sole Trader
Social Workers
Our Personal Finances Page also has a lot of useful information.
If you're thinking of setting up your own business as a contractor or self-employed social worker we have a whole lot of great resources for you here.
Do you have any questions about finances or something that you'd like to talk through?
We're here to support and advise you. Give us a call, send us an email or use our on-line form to book a time to chat.
Book a FREE no-obligation initial meeting
Book a free, no-obligation meeting with us today and experience the difference of working with a team who understands the finance side of social work.
Meet us
online
or if you're in Adelaide at our office
593 ANZAC Highway, Glenelg, South Australia.
We'll take the time to listen to your needs and work with you to build a path to success.
Let us help you reach your financial goals and focus on what you do best.
Please fill in the form
or
phone us on
(08) 8376 0455