Sales aren’t the same as profit

A payment arriving feels good. It does not mean the whole amount is available to spend.

Separate three questions

Sales: how much customers buy from you.

Profit: what remains after the relevant business costs.

Cash: money currently available in the business. Unpaid invoices and upcoming bills can make cash look very different from profit.

Try a simple example

Imagine four projects sold at 100 each. Sales are 400. Each project costs 10 directly, so direct costs total 40. Another 30 covers monthly tools. This simplified calculation leaves 330 before personal tax.

It excludes any other costs. Add payment fees, subcontractors, insurance, marketing, equipment or refunds if they apply. Do not count the same expense twice.

Keep costs in two groups

Fixed costs continue even when sales change, such as a monthly subscription. Costs per sale increase with work, such as materials, a contractor’s project fee or transaction charges.

For the income planner, enter recurring monthly costs separately from the cost of delivering each sale. It assumes the same price and costs for every sale, so mixed offers need separate calculations.

Watch the timing

An invoice you sent is not cash in your account. A deposit may arrive before you complete the work, while some bills fall due before the customer pays. Keep a record of expected payment dates and upcoming expenses.

Agree payment stages and due dates before delivery. Getting paid for your first project covers the practical steps.

Review time as well as money

A project can make a profit and still leave you earning very little per hour. Track all the time you spend, including messages, revisions and admin.

For products, include creation and support time. For recurring services, account for the work promised each month.

Make a monthly habit

Record money received, invoices waiting for payment, expenses, upcoming commitments and hours worked. Use those records to improve your offer and price.

This is a simplified planning view, not a tax return or a complete accounting method. For definitions and examples, Business Victoria explains break-even, margin and markup. Registration, accounting and tax requirements depend on your location and business structure.