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Cash isn't profit: the tax trap that catches tradies
Short answer: the balance in your account looks like profit but a large slice is GST you're holding, tax you haven't paid, and deposits for work not done. Move that money out the day it lands and the tax bill stops being a shock.
The most dangerous number in your business is the one sitting in your bank account. It feels like profit, so it gets spent like profit. It isn't.
Why cash lies
- GST you're holding for the ATO
- Income tax not yet paid
- Super owing to your team
- Deposits for jobs you haven't started
The tax bill that 'came out of nowhere'
Every year I watch tradies get smashed by a tax bill they swear they didn't see coming. It was always coming. The money just felt like theirs, so they spent it.
The fix, boring and it works
- Open a separate account for tax and GST.
- The day money lands, move a set percentage across.
- Don't touch it. Pretend it doesn't exist.
- Pay yourself a set wage instead of dipping into the float.
- Keep personal spending out of the business so the numbers stay clean.
Common questions
How much should I put aside for tax and GST?
It depends on your structure and margin, so confirm the exact figure with your accountant, then move that percentage into a separate account automatically the day money comes in.
Why do I get a big tax bill every year?
Because the money owed for tax and GST sat in your main account and got spent. It was never really yours to spend.
Should I have a separate tax account?
Yes. It's the single simplest habit that stops the annual tax-bill panic.
Want to get off the tools?
Start with a free 30-minute strategy session. We work out why the job still runs through you, what to hand over first, and a realistic date you could be off the tools with the business still growing. You leave with that blueprint whether or not we ever work together. If you go further, our first paid session is guaranteed to find at least $100,000, or you get your money back.
“I’m not answering calls at night, I’m not working every Saturday and I can actually go away without the business falling over.”Tim C — custom home builderBook your free session