Tradies - Unlock new growth opportunities!
We get it—being a tradie is rewarding, and there is nothing quite like being your own boss and working your own hours.
But the reality of today’s economy can be brutal. Struggling to find and retain good labour, dealing with clients who constantly want lower prices, or facing a lack of work opportunities are common issues many you may face.
Then there is all the admin, the quoting, the invoicing, the sourcing of materials, and then fitting the work in to actually get the job done. One major concern can be cash flow. As we all know, poor cash flow can create a mountain of stress.
Understanding your cash flow
Wondering why you have great months and bad months with cash is common with most tradies, and this is usually due to various reasons.
Nothing is worse than running low on funds when you must pay subbies, staff or suppliers. The stress can keep you awake for hours, cause you to be a little grumpy, and sometimes make you wonder if it is all worth it.
There are many reasons why cash flow can be inconsistent;
1. Not charging enough is one major issue, as costs can blow out sometimes, especially with larger jobs where material prices increase during the job. You need to ensure that when quoting, you allow room for such price increases and inform customers of any variations applicable upon completion.
2. Bad debtors who take months to pay, even after they raved about how amazing you were. Collecting a 30% or even 50% deposit from clients is one way to cover costs and take most of the final payment before completion. Most customers understand the nature of the industry and how hard it is to find a quality tradie, so they will be more likely to accept your terms and conditions.
3. Owner drawings can also be a huge contributor to poor cash flow. Aside from all the tax implications, spending company money on personal items can be damaging. A few beers here and there, McDonald’s twice a week, a short weekend away and next thing you know… the coffers are bare. Having monthly cash flow reports on where your money is going each month can help alleviate this and identify where some habits may require changing. Working to a budget is also a great way to establish some good habits.
4. Not managing tax obligations carefully will also lead to issues. Ensuring you are putting money away every month for tax ensures you do not end up with a nasty lump sum payment that surprises you. Many businesses that experience issues managing cash flow will lodge their BAS monthly, and this helps them keep up with obligations more easily due to the lower amount coming out monthly, not quarterly.
These are just a few reasons why cash flow is a problem and what you can do to help alleviate them.
Understanding tax compliance and management
Maybe you are overwhelmed by the ever-changing landscape of tax laws, GST requirements, and BAS lodgements.
It’s easy to feel uncertain about your tax obligations and stressed about possibly paying more than your industry peers. This confusion can hold you back, making it hard to plan strategically or manage your taxes effectively. You might feel trapped, unable to invest in growth or make the decisions that could take your business to the next level.
We offer monthly updates directly from the ATO that will ensure you are kept abreast of any relevant changes to you and your business. Sure, it is not always riveting stuff, but the more you stay informed, the better you manage your finances and avoid nasty tax surprises.
On top of that, you can always ring us, as we pride ourselves on being available when required. When you ring our office, you will get someone answering and not a suggestion to “head to our website” and submit an enquiry!
How can your business structure impact your business growth?
Suppose you’re uncertain about scaling your operations—including whether to hire more employees or subcontractors—or how to manage your profits effectively. In that case, we can provide expert guidance from a tax advisory stance.
Maybe you are seeking a transition from sole trader to company or trust structure, which can open a toolbox full of other implications and concerns.
Many tradies hesitate to shift from sole trader to company due to fears about the unknown—wondering about the possible tax implications, costs, and potential liabilities, not to mention the natural fear of failure.
These are very normal fears, but burying the head doesn’t make them go away.
If you’re feeling anxious about the financial implications of your decisions or the risks involved, know that our team is here to guide you through every step of the process confidently.
We will assess the turnover, your assets, the nature of your growth, the tax implications of staying a sole trader and the implications of becoming a company. What will you want to be paying yourself, who will be the directors, how many staff will you be looking at hiring and what impact will that have on your finances and tax obligations?
At Sphere, we’ve got your back; when you reach out, we’ll be ready to help.
Together, we can simplify the complexities of your business and ensure your needs are met at every step.
Let’s take your business to the next level!
