Self Managed vs Xero for micro-businesses in Australia
A practical guide for solo contractors and micro-business owners.
Bottom line: If you are a solo contractor or micro-business with a handful of invoices, Self Managed is built for the “too big for a spreadsheet, too small for Xero” stage. When you add employees, payroll complexity, or larger volumes, Xero becomes the right upgrade.
Self Managed is the Xero on-ramp: keep records clean now, then hand over structured data when you are ready to scale.
Quick decision guide
| Situation | Best fit | Why |
|---|---|---|
| Less than 10 invoices per month | Self Managed | Simple workflow and lower overhead than a full accounting suite |
| Solo operator, no payroll | Self Managed | Designed for micro-business tax prep and BAS readiness |
| Employees or complex payroll | Xero | Stronger payroll and multi-user workflows at scale |
| Inventory or multi-location operations | Xero | Broader integrations and advanced reporting |
| Need clean records before hiring an accountant | Self Managed | Track and categorise now, export clean data later |
The migration path (the Xero on-ramp)
If you are too small for Xero today, start with Self Managed to keep records clean. When you hit a growth trigger, you can export to a Xero-compatible CSV and migrate quickly.
- Trigger 1: You hire your first employee or start payroll.
- Trigger 2: Turnover consistently exceeds $200k.
- Trigger 3: You need multi-user approvals or complex reporting.
Why Xero is the gold standard at scale
Xero is designed for established businesses that need payroll, team permissions, and deep integrations. If your business is growing quickly or you already have staff, Xero is a great fit.
- Payroll and STP: Built for teams and frequent pay runs
- Integrations: Large ecosystem of add-ons
- Advanced reporting: Suits multi-entity and multi-user workflows
Why Self Managed wins for micro-business
For sole traders and micro-businesses, the biggest risk is not having clean records. Self Managed focuses on the essentials so you can stay compliant without paying for features you do not need yet.
- Spreadsheet replacement: Import CSV bank feeds and categorise quickly
- BAS readiness: Track GST and prepare activity data with less effort
- Micro-business focus: Built for low volume and clear compliance steps
- Structured records: Keep data clean so moving up-market is easy later
If you are unsure, start with Self Managed and upgrade only when your business complexity demands it.
How to transition from spreadsheets to a full accounting system
Use Self Managed as the pre-accounting layer so your records are structured before you move up-market.
- Import your bank CSV: Upload bank feeds and match categories.
- Tag business vs personal: Keep your records clean and audit friendly.
- Generate BAS-ready summaries: Review GST and sales totals.
- Prepare clean summaries: Hand structured data to an accountant or new system.
- Hand over to an accountant: Provide structured data for faster onboarding.
Is Xero worth it for a sole trader?
If you are lodging a small number of invoices and have no payroll, you may be paying for complexity you do not use. Self Managed helps you stay compliant now and switch later when it makes financial sense.
Frequently asked questions
No. You can keep structured records and move when you are ready.
It is built for micro-business and DIY trustees, but many users keep it as a low-cost system of record while they scale.
Yes. Clean records reduce their time and your fees, whether you stay on Self Managed or switch to Xero.
About the author
Written by the Self Managed team based on first-hand experience helping micro-businesses keep BAS-ready records.
Last updated
January 2026