As soon as you hire employees, you’re responsible for paying them wages on a regular basis. It’s the bedrock of the employer-employee exchange.

And it’s the law.

Processing payroll can’t be an afterthought.

But it can be clunky. Time-consuming. Infuriating. Especially if you’re using spreadsheets instead of proper accounting software.

Avoid frustrating your team and attracting ATO’s wrath by learning how to process payroll correctly.

How Payroll Affects Your Cash Flow.

The talent and hard work of employees can be a huge driver of profitability, but the flip side is that wages and entitlements can make up a major chunk of your business expenses.

That means you’ll always need cash reserves set aside for payroll and associated taxes.

Keeping an eye on your liquidity ratios and cash flow statements is essential.

Understanding your cash flow helps you:

Struggling to afford payroll isn’t a good sign for remaining solvent long-term.

If you need to run payroll weekly or fortnightly, you may need to find ways to improve cash flow, such as shortening customer payment terms or incentivising early payments with a discount.

What Payroll Regulations Must SMBs Be Aware Of?

When you become a boss, you’ll find yourself under the scrutiny of regulators such as the Fair Work Ombudsman (FWO) and the Australian Tax Office (ATO).

The Fair Work Act 2009 sets out employment standards that all Aussie workers are entitled to, including pay rates such as the minimum wage and modern awards.

Obviously you need to pay people the correct base salary, but you also need to understand when other entitlements – such as paid leave or overtime – actually apply and how to remunerate people accordingly.

The ATO regulates a number of obligations related to payroll processing, including:

There are also state-based payroll taxes.

You’ll be liable to pay taxes in any state where you have employees, if your annual taxable wages exceed tax-free thresholds.

As a guide, the threshold is $1.3 million in Queensland, $1.2 million in NSW, and $1 million in Victoria.

Recently, Coles and Woolworths have been in the press for underpaying staff for overtime worked.

Poor payroll management and record-keeping led to a lengthy legal case for the supermarket giants, who may be forced to repay hundreds of millions to staff, and may also face huge penalties.

Plenty of smaller businesses regularly face litigation and penalties from the Fair Work Ombudsman for underpayment and record-keeping contraventions. 

Can You Manually Process Payroll In Australia?

It’s impractical to manually work out wages via a spreadsheet, given the Australian Government’s adoption of Single Touch Payroll (STP) reporting.

Using software can also simplify paying employees through electronic transfers direct to their bank accounts.

You can opt for payroll-specific tools or payroll functionality integrated with accounting software, with some popular choices for Aussie SMBs being MYOB, Xero and QuickBooks.

Get Ready To Process A Pay Run: Your 5-Step Guide.

If you’re ready to expand your team and become an employer but you’re not sure where to start when it comes to processing payroll, follow these steps.

1. Collect Information From Your Employee/s.

You can’t pay someone until you’ve got the correct details squared away with the ATO and set-up within your payroll software. New employees need to complete:

But you’ll need to give them relevant details about your business, including your ABN.

2. Ensure Your Systems Are Set Up Correctly.

Having a solid handle on payroll processing requires:

You (or your tax agent) will need to input all your PAYG withholding, FBT and super info into your payroll software before you can process a pay run.

It’s also wise to sit down and create a payroll policy, documenting the procedures and reporting deadlines involved.

Be clear about who has responsibility for what, what records need to be kept and how they’ll be managed and updated (rules and reporting thresholds change!).

3. Calculate Pays And Send Your STP Report.

How you do a pay run will vary somewhat between different payroll software.

But generally speaking, once you’ve navigated to the pay run section, you’ll have options to:

Before you confirm your pay run in your software, take a closer look. Get into the habit of double, or triple-checking pay run details every time to avoid errors.

If it all looks good, process the pay run. Then send your payroll report to the ATO via the software.

4. Send Payslips To Employees.

You can’t skip this step. You’re obligated by law to send pay slips (either in hard copy or electronically) within 1 working day of pay day, even if an employee is on leave.

It should be straightforward to email payslips to your team via your payroll software once you’ve finalised a pay run.

5. Make Payments Via Your Bank And Reconcile Your Statement.

If you’ve allowed for electronic payments in the settings, your payroll software will let you generate a bank file (aka ABA files) based on each pay run.

By uploading the bank file into your online banking account, the bank has the information needed to make payments to each of your employees.

Each bank’s process for submitting a bank file looks a bit different, so check their help resources first.

Improve Your Payroll Processing.

You might be obsessed with raising your business’ profit margins, but your employees have no incentive to share your vision and drive if they’re not getting paid.

Sloppy payroll processing is a turnover risk in an inflation-riddled economy where one in eight Aussie workers don’t think they’re earning enough to cover their costs.

You can’t keep your team focused on business growth if you can’t pay wages accurately or on time. And you also risk severe penalties from regulators.

Investing in payroll software that helps automate payroll calculations, reporting and payments is a no-brainer. Especially since payroll complexity can increase the more your business grows.

Jody

What’s the #1 finance myth that trips up small business owners? That profits increase as you rake in more revenue. Unfortunately, the opposite is often true.

Your income statement helps you see warning signs – before they snowball into unmanageable issues.

It reveals how well you’re managing expenses alongside the revenue you’re generating.

Are you turning over a lot of money – but not keeping much? Your income statement will give you a brutal reality check.

It’s one of the first places you must look if you want to effectively analyse your SMB’s business model, as well as your resourcing, pricing, sales and marketing strategies.

(Related: How To Calculate Your Return On Equity).

What Is An Income Statement?

An income statement is a useful financial report that shows your business’ profits and losses over a period of time.

Your expenses over a specific timeframe, typically a year, are subtracted from all your sources of revenue over the same period, across both operating and non-operating activities.

An income statement lists:

Your P&L statement will also usually provide a calculation of:

Other specific line items you might see in a typical small business income statement include:

If you’re using accounting software for SMBs, it’s also common for your income statement to include profit margin calculations.

We’ve also broken down how to calculate profit margins and what they mean.

How To Read An Income Statement (Real-Life Example).

Australian publicly-listed data centre company Megaport has around 500 employees.

It runs a global network of service providers across over 1,000 data centre locations globally.

Its income statement is below.

Above: Megaport’s income statement provides few details about revenue sources, as it’s all derived from billing other businesses for data and network connectivity.

‘Cost of revenue’ lines include expenses related to running its network (power, space, network fees and maintenance) and paying commissions to its partnering data centre operators and other resellers.

The income statement reveals that employee payroll is one of Megaport’s main operating expenses.

It also lists ‘Equity-settled employee costs and related tax costs,’ which include costs of employee shares, restricted stock and deferred share plans issued.

The final lines show how, by adding in unrealised gains from foreign currency translations, the company’s total comprehensive income for the year is in the black.

How Can The Income Statement Help You Grow The Business?

An income statement is one of the best ‘at-a-glance’ tools for managing your business:

You can improve the viability of your business model by reviewing your income statement.

For instance, a high-level view of income streams can reveal ones that contribute most to overall revenue – and help you decide where to reinvest more heavily.

How To Analyse Your Income Statement.

Whether you manually build an income statement in a spreadsheet (here’s a template you can use) or generate the report via your accounting software, here are some tips:

Which Financial Reports Are Related To The Income Statement?

For true confidence in your small business’ health, you must get in the habit of reviewing these three interdependent reports together:

An income statement shows profitability over time, but you need to consider that in the context of your balance sheet and cash flow to see:

For instance, maybe you used profits from previous years to invest in new equipment for your business, steadily growing your assets (without adding to liabilities) on the balance sheet, which improves the net worth of your business.

(Related: Australian SMB’s Guide To Capital Expenditure).

How To Make Your P&L Statement More Effective.

How well you wield your bookkeeping tools can affect the value of your income statement as a source of useful insights about your SMB’s performance.

Opaque P&L reports are usually as a result of the profits and losses you record being poorly defined. For instance:

Depending on the complexity of your operation, your financial analysis could be hampered if you don’t construct a meaningful chart of accounts or set up accurate project and inventory tracking.

In other words, it’s smart to choose accounting tools that do what you need them to, and get professional advice if your income statement feels lacking in insight.

Jody

Are you running a tight ship – or just burning resources? ROE reveals how much profit your business squeezes out of every dollar available (e.g., retained earnings, shareholder capital, equipment and property).

It’s expressed as a percentage (e.g., 15%). The higher it is, the more attractive your business is to investors and buyers.

What Is Return On Equity?

Return on equity (ROE) is a measure of how much profit you make from every dollar of equity in your business.

To find your ROE ratio, divide your total profits by your equity in the business.

Here’s the ROE formula to use:

Equity is essentially the true worth of your business, once you have subtracted all your obligations.

Underpinning the ROE measurement are two other metrics that can be calculated separately: Return on Assets (ROA), and Financial leverage.

ROE can also be derived by multiplying ROA by Financial leverage.

Why Is ROE An Important Metric?

ROE is irrelevant for most mom and pop business owners.

For them, the business (e.g., local chicken shop) is a full-time job that pays them a wage. They never grow it into a separate, sellable entity. In that sense, it isn’t really an asset.

Eventually, it’s either passed down to children or wound up.

The sale itself often represents the biggest financial outcome – far more substantial than the wages you drew along the way.

The Sher family, for example, sold Chargrill Charlies, a chain of chicken shops, to a PE firm in 2023. The amount was undisclosed, but likely exceeded $50 million.

Above: ROE would have played a key part in Chargrill Charile’s valuation.

Why?

Because it allows investors to compare companies within the same industry. Specifically, how effectively a company is leveraging investors’ money to grow its profits.

That’s a big deal – because it ensures dividends get paid out.

It also allows for reinvestment in the business to keep it on a successful trajectory (and its valuation or share price rising).

(Related: Liquidity Ratios Guide For SMBs).

If you’re consistently growing your ROE, potential investors, buyers or shareholders will view you as a commercially astute SMB operator who is delivering a lot of shareholder value.

If you’re holding onto more of what you own but still growing your profitability at a pace, it’s a positive sign that you’re using equity wisely and running an efficient operation.

A good ROE indicates that:

You’ll be better prepared to attract investment or sell your business for a decent price if you increase your ROE over time. 

(Related: Best Crypto Exchanges In Australia).

Return On Equity Calculation Example.

Let’s take the example of a small food manufacturing and distribution business that owns a fully equipped property.

It owns a range of equipment, including a commercial kitchen, industrial appliances and cool rooms.

(Related: The Ultimate Guide to Capex For SMBs.)

What Is A Good ROE Ratio?

A ROE of around 20% can be considered good, but it depends a great deal on what kind of business you’re in and who you’re comparing yourself to.

Business Queensland suggests:

Of course, success in some industries is only possible through significant investment in physical plant or equipment, and high operating costs.

Both of which will dampen ROE, even if the company is doing well.

A higher ROE is desirable. But as with most financial metrics, an exceptionally high or variable ROE ratio could be suspect.

If we use the same food manufacturer from our earlier example, but we add $500,000 extra in liabilities through multiple borrowings, the company’s equity shrinks to $1.1 million.

That’s considerably higher than 25%.

But taking on so much debt adds risk — if cashflow dries up, highly leveraged companies can fall behind on repayments and things can quickly spiral.

(Related: Ultimate Guide To Payroll Processing).

How To (Safely) Improve Your Return On Equity.

So, if your ROE is below 10%, what can you do to lift it back into respectable territory?

The two major levers to pull are raising profits or reducing equity.

So, for example, a company with shareholders could quickly improve its ROE through a share buyback that lowers shareholder equity — but that doesn’t reflect a higher performing business.

Going into more debt will also decrease equity, and has the potential to fuel growth that drives profitability.

You’ll need to carefully do your sums to make sure the cost of servicing debt doesn’t eat into your returns too much.

Some strategies you should look into:

Ultimately, improving your ROE while enabling sustainable, long-term and low-risk growth requires honing your competitive advantages and running a cost-efficient operation.

Jody

Not being able to pay your business’ bills on time is a bad look. You’ll lose credibility with vendors. Your credit score will suffer. How do you prevent this? You start by knowing your liquidity ratios.

A recent review by the Reserve Bank of Australia has identified “an extended period of cashflow difficulty, leading to an inability to repay debts” as a common denominator behind company insolvencies.

Yes, times are tough for business.

But the RBA notes that:

The good news? You can tackle underlying issues that could lead to a cash flow crisis.

Above: Inadequate cash flow is the #1 killer of Australian businesses.

What Is A Liquidity Ratio?

Can you cover your business’ debts in the short-term, using cash and other liquid assets on hand?

A liquidity ratio helps you answer this question.

If you’ve got more liquid assets than payments due in the coming year, that’s a healthy sign for your cash flow.

Liquidity Ratio Calculation Example:

You must be able to trust the current assets and current liabilities listed on your balance sheet report.

This is why using top-tier accounting software to accurately record your assets, income, payroll, inventory, and accounts payable/receivable is critical.

What Is A Good Liquidity Ratio?

Do your liabilities match your assets? That’s a 1:1 relationship.

A liquidity ratio above 1 reflects that your available assets exceed your financial obligations.

This means you’re in a better financial position to handle your known operational expenses.

If your liquidity ratio is below 1, you could be caught short and miss payments.

You are at risk of seriously damaging your relationships with vendors or employees, or potentially running up further costs from penalties, fines or interest.

(Unless you can find emergency cash or negotiate terms).

(Related: How To Calculate And Improve Your Net Profit Margin).

If it’s a momentary blip, that’s one thing. It’s quite another if your ratio is regularly below 1, because it means you literally can’t afford to stay in business.

Types Of Liquidity Ratios.

There are three main ways to calculate a liquidity ratio.

The calculations differ based on what you include in ‘current assets’:

Current ratio is the broadest, and easiest calculation.

But knowing your assets-to-liabilities ratio in the context of a narrower set of assets can be useful.

(Because not all assets are equal in terms of their liquidity).

Think worst-case scenario.

Let’s say you get an illness that puts you out of action long-term, or another global pandemic hits and the demand for all the products sitting in your warehouse dries up overnight.

If your current ratio looks healthy, but your quick ratio falls below 1, you might be too reliant on future sales that may not eventuate.

Liquidity Quick Ratio Calculation Example:

Why Does Your Liquidity Ratio Matter?

Ongoing price inflation, reasonably high interest rates (although easing), and a somewhat rocky global economic outlook mean that SMB owners need to be prepared in case of downturns in demand.

If anything goes wrong, your cash reserves can dry up quickly.

A recent survey of over 700 Australian small-to-medium enterprises with revenues of between $1-$20 million found that one in five businesses believe the loss of just one key client or supplier would tip their business into failure.

Over 75% said they’d lose an average of around 22% in revenues if a major client departed.

Also, a higher liquidity ratio is one of the indicators of financial health that will put you in a better position to secure a business loan.

(Related: The Ultimate Guide To CapEx For SMBs).

How To Improve Your Liquidity.

Here are some tips for improving liquidity in your SMB:

Improving your liquidity will reduce your stress, but it’s also critical to being able to jump on business opportunities as they arise.

For example, being able to fund the development or purchase of new product lines, or run marketing campaigns that extend your market share and long-term success.

Jody

Online invoicing software is an invisible employee that helps your business run more efficiently. MYOB and QuickBooks are two of the most trusted names in accounting software for small businesses – but which one deserves your hard-earned bucks?

I’ve done a deep dive into MYOB Business and QuickBooks Online plans aimed squarely at small-to-medium businesses (SMBs), including:

MYOB vs QuickBooks: At A Glance.

Ease-of-use and flexibility for different business types are the major draws of MYOB Business plans.

Especially if your headcount is expanding — as payroll processing comes built-in.

QuickBooks Online (QBO) is also a solid option.

It’s got a broad feature set, a healthy integrations ecosystem of over 800 third-party apps, and a useful mobile app for on-the-go admin.

Both platforms digitise and automate a bunch of repetitive tasks you’d rather not be doing.

In particular, they simplify bank transaction reconciliations, sending invoices, paying bills/suppliers, categorising expenses, and performance and tax reporting. 

So, what really separates one from the other?

Differences in what’s included on each plan could be a deciding factor for you. For instance:

For me, user experience is the decider. QBO is more awkward and effortful — both visually and functionality-wise.

It looks professional, but it’s less appealing to use than MYOB.

I was also unimpressed with QBO’s online help: many searches returned irrelevant results or broken links.

Based on online chatter, its customer support via chat and phone is also hit-and-miss. 

(Related: How To Calculate Your Return On Equity (ROE).

1. Ease Of Use.

QuickBooks has a reputation with its fans for being a solid platform that rarely glitches.

But it has put a number of long-term users offside in recent years with user interface (UI) changes that are less than intuitive.

For example, there were multiple times I updated a setting or made a change — like adding a new ‘service’ category when doing an invoice — and it wasn’t immediately reflected on-screen, making me wonder,

Nope, just had to refresh.

Another example: when you’re viewing a report, you can’t vertically scroll down from anywhere on-screen.

You’re forced to awkwardly hover your cursor over reports to scroll instead. I’ve seen loyal users dub this a “flow state spoiler” and “bane of my existence”.

MYOB offers a more attractive and easy-to-navigate online experience.

Its screens are less cluttered and its menus less convoluted. I had to use QBO’s help function far more often. 

For the small business owner focused on streamlining everyday admin, MYOB is a winner for simplicity.

But QBO does have its perks.

You can also immediately create a new invoice or add payment by clicking on shortcuts on the QBO dashboard, whereas MYOB hides these core actions behind an icon.

The ability to customise, and take quick actions from the home screen, is carried through to QBO’s mobile app, so you can easily handle core tasks and check your cashflow on-the-run.

QBO’s native app comes with stripped down features, but it’s convenient.

There’s a cohort of 1-star reviewers that say it’s too buggy to bother with, but it’s still considered more reliable than MYOB’s apps.

MYOB is also primarily browser-based.

Its highest tiers, AccountRight Plus and Premier, require an additional download, although the majority of features can be accessed online so you won’t be tied to your desktop computer.

2. Invoicing And Payments.

You’ll be sending branded invoices that let customers quickly pay online within minutes in both platforms.

MYOB also lets you surcharge this fee when customers pay by digital wallet or PayPal, so you can claw back some costs while still catering to more customers’ preferences.

In terms of truly shaving time off your invoicing admin, they both have pros and cons. It depends on your workflows and volumes.

As an example:

Side note: I was annoyed that QBO doesn’t include the option to attach a PDF version of the invoice to emails by default.

You can switch it on, but I struggled to work out how, even after reading the ‘help’ article.

When you create a new customer in QBO, you can specify their usual payment method and payment terms.

You can also opt to ‘remember terms’ for a specific customer while creating an invoice in MYOB, when you select the due date.

And rather than simply providing a calendar for you to select a due date, MYOB gives you a number of more precise options that are useful if your terms aren’t a neat net 30.

Linking invoices (and expenses) to a project is also straightforward in MYOB.

Tracking transactions against a project is only available in QBO’s Plus and Advanced plans – and I couldn’t use the feature during my trial.

I love that you can add your own custom fields to any standard form in QuickBooks.

For instance, I created a field on my invoices that lets me indicate the date range when the work would be delivered.

3. Payroll And Inventory Management.

Being able to add payroll to any accounting software plan, as it’s needed, is a smart feature.

You shouldn’t have to advance to a whole new tier just to do a pay run — especially if the number of pays you process varies month-to-month.

MYOB and QBO both let you pay per-person for payroll:

QuickBooks Online is 46% more expensive than MYOB Business based on the scenario of adding payroll for 5 team members on a mid-tier plan.

Not only is QBO’s standard payroll integration more expensive, if you you want to take advantage of advanced features like modern award interpretation, rostering, or time and attendance tracking, you’ll pay even more:

Being able to manage rosters and pay based on employee timesheets is included in MYOB’s plans.

If you need more control over different wage arrangements for different employees, you can create wage categories on MYOB’s AccountRight Plus or Premier plans.

For basic inventory management — being able to track your transactions and revenue by product/service, and gathering data to support regular stocktakes and reordering — both MYOB and QBO get the job done.

All plans include inventory tracking, with an unlimited number of products tracked in AccountRight Plus/Premier.

QBO’s form for adding products and services doesn’t allow for multiple units of measure (e.g., box, case, hour, pair) in the way MYOB does.

And if you’ve got multiple warehouses or facilities holding stock, you’ll be out of luck with QBO — whereas MYOB’s Premier plan comes with multiple location support.

4. Reporting And Tax Management.

Neither MYOB nor QBE will give you major headaches if you’re looking to generate reports on your earnings, expenses, and GST you’ve collected.

Filtering information and customising reports felt slightly easier to grasp in QBO.

But MYOB gives you the same kinds of options to adjust your date range and included data, as well as save your custom reports.

Clear descriptions of what each report covers on the main listing are also a plus for MYOB (don’t have to guess what you’re clicking into).

Both platforms let you build out snazzy management reports and other ‘packaged’ PDFs with your choice of financial data that you can share with others, or keep for your own records.

QBO offers four design templates.

You can make the layout landscape, apply a logo or other graphic to the footer of each page (and even specify its size), add a watermark, and apply custom colours using HTML colour codes.

5. Price.

Leading accounting tools seem to always be running introductory offers with a heavily discounted price.

It’s in their interests to get you hooked, because they know that switching accounting software down the track isn’t anyone’s idea of fun.

When the honeymoon is over, there are a few differences between the full-price plans from MYOB and QBO to be aware of:

Of course, it’s not a apples-to-apples comparison.

For example, QBO’s lowest tier includes features MYOB doesn’t, such as multi-currency and mileage tracking.

And MYOB’s lowest plan differs from QBO in that it includes inventory and orders, and the ability to track jobs. 

On MYOB’s $150/month plan, you wouldn’t pay a cent extra to process a pay run for 250 people.

Once I’ve committed to tools for my business, I prefer to pay annually to save money.

It’s nice to see both platforms offer a discount for paying 12-months upfront: QBO slashes fees by 10% while MYOB gives you a hefty 25% discount.

MYOB vs QuickBooks: My Verdict.

There’s no major chasm dividing MYOB Business and QuickBooks Online in terms of features and value-for-money.

But QuickBooks is the inferior choice if inventory management and payroll processing for a growing team are must-haves in order for your business to scale.

Neither of those factors affect my business, but I still preferred MYOB: because life’s too short for bad UX.

I will always lean towards tools that deliver functions in a user-friendly way that keep me productive and unruffled.

Jody

Both Reckon and MYOB are longstanding Australian-based accounting software companies that launched around the same time (back in the early 1990s).

Today, Reckon’s user base is significantly smaller than MYOB’s. 

Both feature in my roundup of the best accounting software in Australia, with MYOB beating Reckon as convincingly as Sinner beat Djokovic at Wimbledon this year.

Why?

Every gory detail is in the autopsy below, dear reader. I tested the platforms personally, and have a lot to say about both.

MYOB is clearly the superior choice. But this isn’t to say it’s perfect.

I identified a few “opportunities for improvement” that I discuss below, and hope the company addresses in the near future.

By the way, I explored the following plans:

MYOB vs Reckon: At A Glance.

You can’t deny that Reckon One is a decent online accounting tool, and less expensive than MYOB.

Its lowest tier is cheaper than MYOB’s lowest SMB offering (but not cheaper than MYOB’s app for sole operators).

And if you select Reckon One’s highest plans for accounting and payroll, the most you’ll pay is $95 per month.

While at the higher end of MYOB’s plans, AccountRight Plus is significantly dearer at $150 per month.

More features doesn’t automatically equal to better. Especially if you don’t need those features.

But in a head-to-head comparison, I found Reckon One’s interfaces clunkier and my time-to-value longer.

That matters — because switching providers down the track is a pain in the rear end.

Reckon and MYOB both allow for unlimited users, unlimited invoicing, expense management, bank transaction reconciliations, and reporting for both tax and performance management purposes.

While MYOB has always developed its own solutions, Reckon initially began as a reseller of QuickBooks, before developing and launching its own Reckon One cloud-based plans in 2014.

There’s more scope to scale up your online accounting needs over the four SMB plans offered by MYOB Business.

Let’s say you expand into exporting.

You can use AccountRight Premier to access multi-currency transactions and reporting, or even add another business and manage them both from a single online account (and one subscription).

Neither of which is possible with Reckon One’s plans.

The difference in maturity also shows when you compare available integrations and partner networks:

A clear area of weakness for MYOB is its mobile app functionality.

Reckon One’s native apps are better, but there’s only an app for invoicing and payroll — not a full-fledged mobile accounting solution.

1. Ease Of Use.

Simplicity is the name of the game in MYOB Business.

It’s easy to find what you need, and I also appreciated its detailed help articles that are formatted beautifully — more legible than most help content.

Confusing fields with little to no in-app explanatory text also made Reckon more perplexing.

Here’s an example: I created a few specific income categories to add to my Chart of Accounts in both platforms, to provide more granular details for performance reporting.

You’ll have to download a dedicated desktop-based app if you opt for its AccountRight Plus or AccountRight Premier plans.

Although you’ll be able to do the vast majority of everyday accounting through any browser. 

Reckon lets you drag-and-drop the modules on your online dashboard to reorganise what you see upon signing-in, and offers quick links to common tasks like creating a new invoice or bill.

Those would both be ‘nice-to-haves’ on MYOB.

It clearly shows outstanding amounts broken up by how overdue the invoices are (e.g., 1-15 days overdue, 16-30 days overdue).

You can click from here to go straight to your list of overdue invoices so you can take action.

Reckon One’s native mobile app for invoicing on-the-go is much higher-rated by users than MYOB’s invoicing app.

And having tried them both, I can say MYOB’s app is clearly worse from a usability standpoint.

You can’t use a calendar to select the invoice due date. There was no on-screen message to say my invoice had been sent successfully.

One plus is that the MYOB Invoice app also lets you create and send quotes via your phone.

And MYOB also offers a convenient native app for snapping pics of receipts for business expenses on-the-go, which is lacking in Reckon One.

2. Invoicing And Payments.

Invoicing in MYOB fits the bill.

Reckon’s invoicing interface isn’t hard to use exactly, but it is confusing. I wasted too much time getting the hang of it.

Some things I found exceptionally annoying about invoicing in Reckon (that aren’t a problem in MYOB):

Adding ‘items’ in Reckon isn’t difficult — but sometimes I want to just dash off a quick invoice for ad hoc work charged by the hour.

The links to actually send your invoice via email, or save it as a recurring invoice, aren’t as obvious in Reckon One as they are in MYOB.

In fact, you can’t even see the option to make the invoice a recurring one in Reckon until you’ve saved it.

As well as being more flexible, MYOB also makes it easy to adjust payment options and email reminder settings while you’re creating an invoice.

Reckon does offer automated payment reminder emails that can be applied under settings.

The new layout looks better and simplifies how you customise the fields/columns included on your invoice. But the other frustrations remain.

One nifty feature: Reckon lets your create your own ‘category’ of payment terms.

But you can’t save default terms for individual customers, which is a real time-saving benefit of using MYOB.

I didn’t like that the email customers receive when you send an invoice from Reckon One is plain text. It looks a lot less professional than MYOB’s neatly formatted message.

If you’re keen to add online payments to invoices so customers can immediately settle their bill using credit/debit card, that’s possible on both platforms.

MYOB has a more extensive range of payment options, including BPAY and a QR code link that’s added to the invoice PDF.

You can also set-up online payments within your MYOB account, while Reckon One requires connecting an account from a third-party provider: either PayPal or Braintree.

3. Payroll And Inventory Management.

Of the major accounting tools I’ve used, MYOB has been the best for inventory management, with the essential functionality you need to:

With all your stock tracked and minimum stock levels defined, you can regularly run a reorder report that alerts you to what goods are getting low.

You can then select items from the report and with a click generate a purchase order with the relevant supplier to ensure you won’t run out.

I could only find a couple of third-party Reckon integrations that handle inventory — ranging in price from $300 to over $1,000 annually.

MYOB and Reckon One are more on par when it comes to payroll features, although Reckon has the edge in terms of value, because its three payroll plans are optional.

For example, you can stay on Reckon One’s lowest-tier base plan (Accounting Plus) but scale up to the highest tier payroll plan (Payroll Premium) if your team expands rapidly and you need unlimited payroll.

MYOB includes payroll in all its SMB plans, but gives you the freedom to process pay runs for people as needed at a reasonable per-head cost.

Except on the highest tier (AccountRight Plus) where you don’t pay anything extra for unlimited payroll.

Importantly, you won’t hit a ceiling on how many people you can pay on either platform (and need to switch to a third-party solution) if headcount growth underpins your success.

Employees can track when they worked, or took leave, via Timesheets within Reckon One (Plus and Premium plans only) that you can approve/deny and then use to generate pay runs.

MYOB also enables time tracking for timesheet-based pays on its Pro and AccountRight Plus plans.

A flaw with Reckon One: no mobile time tracking.

MYOB has the advantage on this point, because it does have a dedicated mobile app for employees to track time.

A nice little bonus: MYOB gives you free access to a workplace benefits app, powered by Flare HR, which entitles your team to retail discounts, cash back offers, and financial wellbeing and mental health resources.

4. Reporting & Tax Management.

There will be less woe around taxes if you choose MYOB Business over Reckon One, because MYOB generates a pre-filled business activity statement (BAS) report you can lodge with the ATO straight from your account.

Of course, you can definitely calculate the GST/PAYG your business owes using Reckon One’s reports, to help you prepare your forms.

But a more automated process is appealing.

For budgets and performance reporting, both platforms do a credible job of generating the key reports:

But adjusting the data included to build out your own custom reports that you can save isn’t possible in Reckon One.

That would frustrate me no end if I had a particular view I wanted to return to over and over again.

5. Price.

Beyond the (generous) discounts that both platforms offer for first-time users, based on regular pricing Reckon One’s two tiers (without payroll) are cheaper than MYOB’s plans.

Reckon One is good value if you only need essential bookkeeping tools — and don’t expect to scale your operations or hire people in future.

Its lowest plan is just $22 per month, which is $12 cheaper than MYOB’s comparable plan aimed at SMBs.

Even if you only need to pay up to two employees, MYOB’s Business Lite plan is still more than the cost of combining Reckon One’s lowest plan and cheapest payroll plan (which lets you pay up to four people).

You’d pay $38 per month with MYOB vs $36/m on Reckon One.

Let’s compare the plan costs for an SMB with more advanced accounting requirements and the need to pay 12 people each month. You’ll pay:

As soon as you need to pay more than 16 people, MYOB becomes the more expensive option but its higher tiers are also more feature-rich for an organisation that’s increasing in complexity, which makes it good value for what you get.

My Conclusion.

Reckon One might be smart if you’re price sensitive and you find it ticks all your boxes.

But MYOB’s user experience is more effortless and I trust the company more to continue making improvements to modernise its product.

Here’s the sticking point.

There’s a reason that MYOB is still one of the largest and best-rated tools for small businesses, while Reckon is less prominent and seems to be in decline.

It comes down to being easier to wrangle and more elegant to engage with day-to-day. And I’d pay good money for that.

Jody

Australian business owners are spoiled for choice when deciding between accounting software packages.

But savvy business owners will likely choose one of two industry titans: Xero and MYOB.

Both feature prominently in my roundup of the best accounting software in Australia, with MYOB clinching the #1 spot.

Their popularity means you won’t have trouble finding a bookkeeper or accountant familiar with the software.

But which is the best pick for a growing business with bold plans for the future? I took a closer look at their plans aimed at SMBs:

MYOB vs Xero: At A Glance.

Honestly, MYOB and Xero are neck-and-neck across core features like invoicing, managing expenses, and standard reporting.

Both platforms give you the ability to:

But MYOB is better out-of-the-box for some industries and situations:

Having said that, Xero’s offering is strong, and it’s typically viewed as the more integration-friendly platform.

You get access to a huge library of 1,000+ third-party apps. Everything from CRMs, credit card payments, and direct debit management is on the menu.

So, while Xero’s inventory management features are weaker than MYOB’s, you can easily link a purpose-built inventory app like Cin7 (inventory management with a built-in POS & EDI).

But the focus on integrations can also be a pain point, because:

Xero’s support is also less accessible and responsive than I’d expect from such a large player.

Its online support is available 24/7, and the advice you get is generally solid, but waiting for a response can be frustrating.

MYOB’s support includes online resources/chat and a phone number that’s manned Mon-Fri during business hours.

And you’ll spend even less time on hold if you opt for the highest tiers, which come with priority support and tailored 30-minute ‘ask an expert’ sessions that you can even invite your bookkeeper along to.

(Related: How To Calculate Your Return On Equity (ROE).

1. Ease Of Use.

It’s fair to say, user-friendliness isn’t a major drawback of either software.

As you’d expect, both feature intuitive dashboards that put essential cashflow data at your fingertips and alert you to outstanding invoices.

I find Xero’s terminology more confusing and its navigation somewhat labyrinthian.

Too many clicks to find things makes managing your books more of a chore than it should be. MYOB’s menus and interfaces felt cleaner and more logical.

And its ‘Xero Accounting for business’ native mobile app is intuitive and gives you access to all the basics you’ll need on the go.

You can check your balances and P&L, send invoices, reconcile bank transactions, and track receipts and expenses.

On the other hand, MYOB offers multiple native apps for different purposes, and they’re somewhat buggy and restricted.

Its app for capturing receipt info on-the-go is handy, but two of its other apps (for invoicing/payments and time tracking for employees) have user ratings below 2 stars.

A downside if you need advanced features: MYOB’s highest plans – AccountRight Plus and Premier – require downloading software to your desktop, in addition to an online account.

It’s not a deal breaker, but does add complexity.

That could limit your flexibility once your business has expanded to the point where you’re trading internationally or have complicated supply chains.

Data can be presented differently via desktop too, which might take some getting used to.

Moreover, AccountRight only runs on desktops with a Windows operating system.

Mac users will need to either switch to PC, use a tool like Boot Camp, or use a virtual machine.

The latter is easy enough to install and use, but does create another layer of onboarding and training complexity in your business. And added cost.

2. Invoicing And Payments.

Xero and MYOB both do a decent job of streamlining invoicing, so you can issue professional, branded invoices.

You can also automatically remind people to pay on time. Both platforms let you customise how many reminders are sent, how often and what the emails say.

But the devil is in the details.

People complain about Xero’s invoicing experience being less intuitive, and slower to load, resulting in slower workflows.

And more restrictive too, like a limit on the number of line items that can be added.

Personally, I found quoting and invoicing through Xero very similar to MYOB. And it has some nifty features like:

Here’s what stood out about MYOB’s invoicing:

Annoyingly, neither platform lets you easily ask for a deposit payment, or break the invoice total into multiple progress payments.

You can simply ask for, and record partial payments – which adjusts the amount outstanding on an invoice.

You’ll be able to add your bank details to any invoice you send if you mainly accept direct deposits, but enabling online payments is a simple process on both platforms. 

In addition to debit/credit cards, digital wallets and PayPal (which Xero enables), MYOB also makes it easy to offer BPAY and automatically include a QR code on invoices that are exported as a PDF or printed – so people can scan and pay online. 

However, if you’re regularly meeting customers face-to-face, you might appreciate that Xero’s native mobile app supports Tap to Pay for in-person payments by card or digital wallet.

3. Payroll & Inventory Management.

To be clear, neither MYOB nor Xero offers advanced stock control features.

But for less complex operations that want to be able to do a simple stocktake and reordering on the regular, MYOB ekes out the win compared to Xero.

In Xero, you can add item/product details to pre-fill invoices, and track basic transaction details for up to 4,000 items.

For instance, you can specify the unit of measure for an item, and indicate how many items are included in one unit sold, e.g., perhaps you always sell a particular product as a set of three.

It’s a more flexible option for growing businesses that don’t want to step up to a full-featured inventory app or add-on.

You’ll get access to single-touch payroll (STP) with both Xero and MYOB, so you can comply with the Australian Tax Office’s (ATO) phase 2 reporting requirements.

But MYOB is clearly better value and more scalable, if growing your headcount or contractor network is important in your business.

(Related: 7 Best Crypto Exchanges In Australia).

Xero did a rejig of its plans in 2024 and cut payroll from its lowest plans. The backlash from customers was swift and severe.

On Xero’s $75/m Grow plan, you can currently pay two people and process automated super payments. MYOB’s comparable Lite plan also limits pay runs to two people.

Whereas if you step up to MYOB’s mid-tier ‘Pro’ plan you can pay extra ($2/month per person) to process pay for an unlimited number of employees.

The simplifies life and saves you money assuming your accounting needs don’t become more complex as you add team members.

Of course, Xero lets you upgrade your plan, complete the pay run, and then downgrade again after 30 days – but that’s a hassle.

It makes life difficult if you ever face edge cases where you only need to process a larger pay run temporarily, such as:

If you opt for MYOB’s AccountRight Plus plan, you can process payroll for an unlimited number of people, at no extra cost.

You’ll pay an extra $2 per employee above 100 people, and the maximum number of people you can pay is 200.

If you’re a growing SMB with that’s regularly processing pay for over 200 people each month, that means you’ll need to switch a payroll add-on.

4. Reporting & Tax Management.

No matter which platform you choose, you’ll be equipped to track GST, lodge your BAS, and stay on good terms with the tax man.

Day-to-day insights into cashflow, P&L, and general ledger come as standard, and both Xero and MYOB help you create a budgets and do financial forecasting. 

Its advanced analytics are included in both its Comprehensive and Ultimate plans, which give you AI-powered predictions around cash flow and other business variables.

That’s valuable for more confident decision-making.

5. Price.

Based on the platform’s regular pricing, the MYOB Business Lite plan is more than 50% cheaper than the comparable offer from Xero — the Grow plan.

At the higher end, you’ll pay $20/m less for Xero’s Ultimate 10 plan than MYOB’s AccountRight Plus.

But if you need to process payroll for more than 10 people, the price difference is negated – because you’d be forced to upgrade to the pricier Ultimate 20 plan on Xero ($12 more per month than AccountRight Plus).

And in fact, AccountRight Plus works out $210 cheaper than Xero’s Ultimate 10 if you pay annually – because MYOB discounts its plan if you pay for 12 months upfront.

MYOB’s most expensive plan, AccountRight Premier, is $195/m for comprehensive features including payroll for a large staff base.

Xero’s top plan, Ultimate 100, is 39% more expensive, without the same payroll advantages.

Xero vs MYOB: My Verdict.

Both MYOB and Xero are easy to get up and running with. You can connect bank accounts and start recording transactions without reading a manual.

But both have a reasonably steep learning curve if you want to become proficient with the platforms’ full functionality.

If you plan to pad out Xero with several add-ons, you’ll be adding to the said learning curve.

And you’ll need to train on more tools.

And you’ll need to keep a close eye on your spend – the bloat can be real.

MYOB is the better all-in-one offer.

Its user interface is friendlier, and it makes a strong case for growing with your business as you scale, given its unlimited payroll and inventory tracking in the top tiers.

I’m not convinced the expense is justified unless you’re unwilling to compromise on specific use cases or features where Xero outperforms MYOB.

Jody

A rising profit margin means your earnings are growing faster than your business costs – a great feat in an economy that’s struggling with high inflation.

Director of Australian accounting firm Mahler Advisory, Simon Madziar, said:

Learn how to calculate your profit margin and the best ways to improve profitability and reduce costs to lift your margins.

(Related: Best Accounting Software For Aussie SMBs).

How To Calculate Your Profit Margin.

Net profit margin is a financial metric that indicates the percentage of your total revenue that is profit.

In other words, for every dollar earned, what percentage do you keep (as opposed to spending on the business)?

To calculate your profit margin, divide total income by net profit:

Net profit margin doesn’t reflect the amount of your profits — just the proportion of profit compared to total revenue.

(Related: MYOB vs QuickBooks: Which Is Best For Aussie SMBs?)

How Does It Differ From Gross And Operating Profit Margins?

There are two other ways that finance pros and analysts commonly measure profit margin:

To calculate gross profit margin:

To calculate operating profit margin:

Above and beyond the cost of goods sold and OpEx required to keep your business running, net profit includes costs like interest payments and taxes.

That makes net profit margin the most comprehensive view of profit margin.

(Related: MYOB vs Xero: The Ultimate Showdown).

Limitations To Profit Margin Ratios.

There are limitations to the calculation to be aware of:

(Related: Ultimate Guide To Capital Expenditure For SMBs.)

How to Interpret Profit Margins.

Profit margin ratios can tell you more about a business’ long-term resilience than dollar figure profits.

A firm with millions in turnover, but a very small profit margin, could be on shaky ground if business conditions change.

A mid-sized manufacturing business might have excellent cash flow, but a relatively low profit margin due to unavoidable input costs.

(Related: Ultimate Guide To Payroll Processing).

A micro business with low revenue can have a higher profit margin than a much more successful operation, simply because it operates with fewer overheads.

For example:

This is why businesses of all sizes are always looking for ways to either:

The trouble is, ramping up your revenue-generating capacity, such as by investing in new equipment, advertising, or hiring extra team members, usually adds costs.

If you don’t end up selling or earning more, and you can’t pass costs onto your customers, your profit margin will shrink.

Deciding whether an expense or capex investment will help you achieve exceptional revenue growth is an ongoing challenge for small-to-medium business owners.

(Related: How To Calculate The Liquidity Ratio?)

What’s A Good Profit Margin?

A good profit margin is around 10%, while below 5% is the danger zone. A 20% profit margin is a strong sign of financial health.

Industries in Australia with high profit margins include:

Some sectors have higher profit margins because what they sell is rare, in-demand and hard to access.

But these businesses often come with higher costs and complexity due the infrastructure, processes, personnel, and licences/compliance needed.

(Related: 7 Best Crypto Exchanges In Australia).

Creatives, consultants and other professionals are positioned to achieve high profit margins because their main asset is their skill or knowledge, meaning overheads are low.

But they have to stand apart in crowded market to earn the big bucks.

Using The Metric To Improve Your Business.

Regularly reviewing profit margins can help you understand how your business is travelling. Profit margins:

As well as highlighting that you might be spending too much on your business, a falling profit margin might indicate you’re not charging enough for your products and services or doing enough to satisfy the customers you have.

Should You Set A Profit Margin Target?

Sarah Pyke from Altus Financial said a consistent profit margin over time is often a sign of a stable business. She warns,

Beware basing business decisions on striving to meet a specific, lofty profit margin, such as pushing for an increase from 10% to 20%.

You want to avoid mistakes like:

Australians trust local and small business businesses more than big corporates – but you’ll still turn people off if there’s a whiff of price gouging, or your products seem cheap and nasty.

(Related: How To Calculate Your Return On Equity (ROE).

How SMBs Can Increase Profit Margins.

A higher net profit margin is usually the result of some combination of these three factors:

Maximising all three facets may require: searching for better deals or different vendors.

Taking a hard look at your processes and the bottlenecks that slow you down; and doing more to avoid customer churn and enhance your offerings to sell/earn more.

For instance, you might:

It’s also important to be clear about how your business model impacts your potential profit margin. For instance:

Finally, getting professional advice could be helpful. Look for a switched-on accountant, business adviser, coach, or marketing pro, depending on where you need to improve.   

Jody

Does your business need money to purchase assets or expand into new markets? Access to capital at the right time is often the deciding factor between growth and stagnation.

Your business is likely to stagnate unless you regularly reinvest in physical assets, which is known as capital expenditure (capex).

Understanding capex is important for business owners because it affects how you manage your books and taxes.

It can also impact how your business is valued – if you hope to attract investors or sell it in future.

(Related: MYOB vs Xero: The Ultimate Showdown).

What Is Capital Expenditure?

Capital expenditure is a term that covers spending on assets used to generate income long-term within your business.

Typically, capex relates to investments in physical items of property, plant, and equipment (PP&E) that lose value through ‘wear and tear’ over time (depreciate).

For example:

According to the Australian Tax Office (ATO), in addition to depreciating assets and their installation, a capital expense can include money spent on:

This doesn’t include general maintenance or repairs.

Ed Chan from Nash Advisory said routine activities like fixing a broken machine or getting a work car serviced need to be expensed.

Whereas improvements that provide an “enduring benefit” to the business of at least 12 months or more – like replacing a fence or building renovations – can be capitalised.

(Related: Best Accounting Software For Australian SMBs).

Why Is Capex Beneficial To Business Growth?

Capitalising an expense means you’ll be able to claim tax deductions based on the asset’s decline in value over time, which is called depreciation.

Head of Tax at Melbourne-based Liston Newton Advisory, Stewart Lane, explains:

Being able to write off the total costs of a large asset can be an important strategy for:

Example:

Let’s say you’re running an e-commerce site selling beauty products, but you need more space to store and manage inventory.

You’re confident your business has legs, so you take out a loan to fund the purchase a storage facility. 

That means you can:

(Related: MYOB vs Reckon: Which Is Best For Aussie SMBs?)

When To Capitalise Vs Expense?

Businesses can capitalise an expense when it has an “effective life” of more than a year.

The nitty gritty of exactly what can be capitalised and claimed at tax time is a question for your accountant, as there are eligibility rules.

Capex is different from business purchases that might form part of your everyday expenses (operational expenditure, or opex).

If you capitalise an expense, you can claim a smaller portion of the costs of an asset over multiple years, which:

Example:

Let’s say you refurbish offices used in your business, spending $300K on furniture, desks, computers, printers and scanners.

If you claim those expenses in full in the same year, your annual profits will be down by $300K. But this doesn’t reflect your true operating costs, which makes it harder to analyse performance and plan budgets. 

(Related: 7 Best Crypto Exchanges In Australia).

How Does CapEx Get Recorded?

Whether you do your books yourself or use an accountant, you’ll need to keep supplier invoices and receipts, and maintain accurate records, to ensure you can manage capex well.

You’ll need to determine the depreciation method you’ll use. Two common methods used are:

If your annual business turnover is less than $10 million, you may be eligible to use the ATO’s simplified depreciation rules, which include:

(Related: How To Calculate The Liquidity Ratio?)

How Does Capex Get Reported?

When reviewing your financial reports, capex is found:

If you’re looking to sell, get acquired or merge with another business, capex is also an important component in measuring:

(Related: Ultimate Guide To Payroll Processing).

4 Tips For Planning Capex In Your Small Business Budget.

If you’re certain a large capital expenditure makes sense for your business, follow these four tips for budgeting:

(Related: How To Calculate Your Return On Equity (ROE).

Final Word On Capex: Take A Long-Term View.

Decisions around capital expenditure are complicated by the fact that they require a strategic view of your business.

You can’t confidently plan for CapEx unless you’ve thought about:

It’s not always easy to gauge the usefulness of an asset looking forward. Market trends change, business models change, technologies evolve, and macroeconomic conditions vary. But with the right preparation, investing in your business through CapEX can be a smart move.

Jody

No matter how small your business is, you don’t want to look like an amateur, lose sight of whether you’re actually making a profit, or mess up your taxes.

I’ve been running my freelance business — using FreshBooks for invoicing and expense management — for over 10 years. I’ve learnt a lot that time, but there’s always room to refine how I operate.

So I was curious about the ‘new kid on the block’ that’s targeted squarely at sole traders — Solo by MYOB.

MYOB Solo vs FreshBooks: My Quick & Dirty Verdict.

MYOB (the fully featured product) has always had the edge over FreshBooks – if you have more than ~5 staff and/or complex accounting needs.

And now, with the launch of Solo in late 2024, MYOB offers a purely sole trader-focused product.

FreshBooks, meanwhile, is more comprehensive than Solo – but won’t overwhelm you if you don’t have bookkeeping experience.

It offers a web-based version plus a native app.

(Related: Best Accounting Software For Small Businesses).

The entry-level tier includes a depth of features that Solo doesn’t have. They aren’t critical, but definitely useful — like time tracking, estimates, recurring invoices, and the ability to accept deposits.

But it could be overkill for some sole traders. And the lowest tier of FreshBooks is still more than double the price of Solo ($24 vs $11 per month).

It comes down to your required functionality and budget. If you need:

1. Set-Up Speed.

Both products offer a standard kind of sign-up experience you’d expect from modern software-as-a-service companies.

You can either pay immediately for FreshBooks or do a 30-day free trial without providing your credit/debit card details. You can also sign up using your Google or Apple credentials if you’d prefer not to create a new login.

You’ll get complete access to all of its features in that time, and no unexpected bill.

FreshBooks asks for details about your earnings, your industry, how you operate and deliver services — it feels onerous just to get access to a trial.

(Related: Solo vs Quickbooks: Which Is Best For Sole Traders)?

Signing up for Solo is easier.

You start with a 14-day free trial period, but you will need to add your payment information (and remember to cancel if you don’t want to keep using it).

Then you’re prompted to download the Solo mobile app (iOS or Android) and log-in using the account details you just created.

With Solo’s app, only one user can access the account, while you can add additional team members in FreshBooks (at $16 per user per month).

(Related: MYOB vs Xero: The Ultimate Showdown).

2. Usability And Mobile App.

It’s clear from the online reviews of FreshBooks that people love the look and feel of its interface.

Personally, I find it a breath of fresh air compared to many other apps I’m forced to interact with to run my business.

The mobile app is also intuitive to use and has all the core functionality. It’s handy for being able to mark invoices as paid as soon as I’m alerted by my bank that funds have hit my account. 

A favourite element of the FreshBooks UI: the first dashboard you see upon signing in shows your outstanding revenue:

If you ever get stuck, there’s Help Centre content, a chatbot, and email support tickets.

Solo is a mobile-first application — minimising the need for any extra hardware and meaning you can update your records in real-time from wherever you work.

On the plus side, it’s easy to find what you need, because the features are pared down compared to full stack accounting software.

It takes this mobile-first convenience a step further with the ability to securely take in-person payments using your phone.

Customers can easily tap their card or mobile wallet to your phone — no need for a separate EFTPOS machine or payment terminal.  

I’m an unusual millennial in that I don’t like texting.

But I don’t think I’m alone in finding it fiddly to fill in forms via mobile — so adding client details in the Solo app wasn’t fun.

If you’re keen to professionalise your approach, yet do minimal admin and you’re rarely chained to a desk, Solo can meet your needs.

I can see it’d be perfect for sole traders who:

Solo has an attractively designed user interface, with the essentials on the home screen — capture expenses, create invoice, or add a customer/supplier.

Plus, you can see cashflow and overdue invoices at a glance.

(Related: 7 Best Crypto Exchanges In Australia).

3. Invoicing And Payments.

Creating a new invoice is a breeze in both apps, and you can create unlimited invoices.

You select your customer, add a due date, describe what you delivered, add the fee (with or without GST), and hit send.

Critically, both apps help you automate sending payment reminders to customers: 

Accepting payments by bank deposit is straightforward in both apps — but what if you want to offer a variety of payment methods?

That’s reinforced by one of Solo’s unique features — the ability to ‘share’ invoices with people via other apps, in addition to sending via email. For instance, through text, Messenger, or WhatsApp.

You can connect your bank account within both apps to automatically track any business income (and capture online/card purchases as expenses).

4. Reporting And Tax Management.

Again, Solo isn’t designed to be an accounting solution like FreshBooks — so it’s naturally less focused on reports.

Solo also offers profit and loss reporting and a general ledger (list of all transactions).

FreshBooks offers all that too.

And depending on the subscription tier you choose, you can also get more detailed break-downs of spending and income, double-entry accounting, bank reconciliation, and filter reports by client.

Both apps let you download reports to review yourself, or share with others like your accountant.

5. Value For Money.

Solo is in front by a huge margin with its sharp introductory pricing. You’ll pay $12 for the first 12 months, including 2 bank feeds and unlimited invoices.

The pricing will roll over to $11/month after the initial 12 month period is up.

FreshBook’s cheapest plan (Lite), meanwhile, is $24 per month, with the next tier (Plus) setting you back $36 per month.

The company will sweeten the deal by discouning your first 3 months by 50%. This is nice, but nowhere near as aggressive as Solo’s pricing.

Moverover, on FreshBook’s Lite plan, you can only create up to five clients.

Realistically, most sole operators looking to build a network of regular, paying clients — like a consultant, tradie, or beautician — will need to upgrade to a $36 per month plan on FreshBooks.

Clearly, Solo is a smarter choice if you have a narrow focus on digitising invoicing and keeping track of business payments and receipts.

MYOB Solo vs FreshBooks: My Conclusion.

Solo by MYOB neatly provides the essentials for invoicing and managing physical receipts.

FreshBooks has more to offer, but is more complex – and its higher price point reflects that.  

With the backing of MYOB, you can be confident that more functionality will become available in Solo soon.

If and when advanced features come to fruition, it could make Solo harder to overlook.

Another factor that could sway some business owners is that MYOB is an Australian company, whereas FreshBooks is based in North America.  

I’m a freelancer who spends my days WFH.

Having experienced the more granular control and extended features within FreshBooks — and not having any major complaints — I’d be unlikely to switch to Solo.

But if I was a sole trader who is usually on-the-run, a less expensive and less complex invoicing tool like Solo by MYOB would definitely be at the top of my list. 

Jody