When starting your ecommerce store, one of your first decisions is how to source your inventory. After all, you need something on the shelf to sell.
Businesses use two main product strategies.
The first is dropshipping, where customers place an order and the supplier ships the product directly to the customer.
The alternative is wholesale, where you buy your stock in bulk (usually importing from overseas), store it somewhere and resell it with a mark-up.
Each option will work for a different business and marketing strategy. Are you a high-volume, low-margin store competing on price? Or are you marketing premium products, willing to pay more for greater control over design, packaging and fulfilment?
This guide equips ecommerce business owners with the information they need to select or update their product strategy.
Your sourcing model determines how much working capital you require up front- before you even make a sale. This is the cash available to meet the business’s short-term operational needs.
| Dropshipping | Wholesale |
Minimal working capital is required. Once your dropshipping supplier is integrated with your store, you only pay the supplier once the customer has paid you, since you’re not purchasing stock up front. This is advantageous for business owners prioritising speed to set up and go to market. | Cash goes out to pay for stock, before it comes back in as sales revenue. You require more greater working capital up front to cover the cost per unit and the freight cost of your initial inventory. This timing issue makes ongoing cashflow management critical. |
Per unit cost and mark-up potential will be important for businesses competing on slim margins.
| Dropshipping | Wholesale |
Your supplier may charge a premium for holding, packing and shipping each order, so your per-unit cost can be higher than wholesale. Dropshipping products are less likely to be differentiated or of high quality and therefore are more likely to be sold at a lower final price. | Without the fulfilment mark up, you may pay a lower cost per unit, but you must meet a minimum order quantity (MOQ) for each SKU (stock keeping unit) and pay freight up front. If you have a differentiated or premium product, this will cost more to produce, but will justify a higher mark-up for the price sold to consumers. |
Inventory management covers three key areas.
– Physical stock – damage, theft, storage and the cost of storing products.
– Obsolescence – stock you buy and cannot sell, which may end up discounted or written down.
– Fulfilment – how you make sure every order that comes in is picked, packed and shipped.
| Dropshipping | Wholesale |
Inventory management is outsourced, so you hold no physical stock and carry no obsolescence risk. The risk is that your suppliers fail to fulfil all customer orders correctly. Therefore, it’s ideal to have clear channels to communicate with suppliers to resolve stock issues. | You are responsible for physical stock, storage and obsolescence. Conduct regular stocktakes or perpetually track your inventory. To manage obsolescence, review your data to identify your best sellers and slow moving items and restock accordingly. To outsource storage fulfilment as your store grows, you may choose to use a third-party logistics (3PL) provider. |
Key elements of quality control include inspecting product consistency, testing products and maintaining customer satisfaction.
| Dropshipping | Wholesale |
You never physically inspect the product before it ships to the customer, so you are placing full reliance on the dropshipping supplier. Therefore, you should vet suppliers carefully, check certifications and reviews, set clear expectations with them for product, packaging and labelling. Order samples of every product before you launch to test them. | You have more control over quality management- because you pick and pack the stock before it is sent. Communicate clearly with suppliers up front and then develop a process to inspect stock before it is shipped. As volume grows, you may need more formal quality processes and a dedicated team. |
Lead time is how long stock takes to reach the point of sale.
Delivery time is the time between an order being placed and delivered to the customer.
| Dropshipping | Wholesale |
You have no lead time- as stock ships straight from the supplier to the customer, skipping your warehouse. Delivery time is usually slower, especially where suppliers ship internationally to domestic customers. | Lead times will be longer, because imported stock has to reach you first. Once it is in the country, domestic delivery is fast and within your control. |
Every ecommerce store carries four key risks.
Dropshipping pushes risk onto the supplier who holds and ships your stock, while wholesale keeps it in-house.
| Dropshipping | Wholesale |
· Operational risk – fulfilment sits with a third party, so orders may arrive late, arrive with the wrong products, or not arrive at all. · Supplier risk – you depend on your supplier to hold stock, meet quality standards and ship on time. | · Financial risk – capital is tied up in stock, and you must manage lead times so inventory is sufficient to meet demand. · Inventory risk – you carry the cost of overstocking, damage, theft and obsolescence. |
Dropshipping suits business owners looking to set up and launch quickly. It allows you to instantly test products without significant amounts of working capital, or building a fulfilment process.
Wholesale is best for established stores, best for customisation and branding. This method supports stronger quality control and faster delivery once demand is stable enough to support bulk purchasing.
For new stores, start with dropshipping products in your chosen category to validate demand. After identifying strong performers, move to a wholesale strategy and refine your product line.
An underperforming recruiter is one of the most expensive problems a recruitment business can have. Owners may delay addressing this because it doesn’t show up immediately in the business numbers.
Your staff member looks busy and puts forward reasonable explanations for not closing deals. However, a closer look shows that there has been no improvement in their deal acquisition and conversions over time.
Left unchecked, underperformance quietly slows growth, erodes profitability, and consumes leadership time that should be spent scaling the business.
This guide is written to support recruitment business owners who want a practical framework for identifying, managing, and resolving staff underperformance, before it becomes a real hit to your bottom line.
An underperforming recruiter is not defined by effort or intent. They are defined by outcomes.
In simple terms, an underperforming recruiter consistently fails to:
Crucially, many underperforming recruiters are ‘busy’. They may interview lots of candidates, speak to many clients, and work long hours. However, their failure to place candidates for clients often means they are unprofitable for your business.
Most recruitment business owners focus on lost revenue when a recruiter underperforms. That’s only part of the picture.
The true cost of an underperforming recruiter includes:
Every recruiter has a ramp-up period, but when performance doesn’t improve over time, that investment stops being temporary and becomes a sunk cost.
Roles that aren’t filled efficiently represent lost fees.
Founders and managers step in to support, review, coach, and troubleshoot. This pulls focus away from growth, strategy, and top performers.
Stronger members of your team may have to absorb extra workload to compensate, increasing burnout risk for those individuals.
An underperforming recruiter doesn’t just affect revenue today. They delay pipeline, repeat business, and future hiring capacity.
One of the most common mistakes recruitment business owners make is confusing underperformance with ramp-up.
The ramp-up period refers to the time it takes for a new recruiter to become fully productive, which can commonly last 3–6 months. During this time, new hires typically do not generate enough revenue to cover their costs.
A recruiter in the first 3–6 months should show progress in:
An underperforming recruiter, by contrast, shows little improvement over time. The same issues persist month after month, often explained by external factors rather than corrected through action.
you want to identify an underperforming recruiter early, you need reliable data across four indicators: time to first placement, revenue trend over time, pipeline value and conversion rates, and repeat business from clients.
The easiest way to capture these consistently is through an ATS/CRM with strong reporting and analytics, where every job, candidate stage, placement, and client interaction is timestamped and attributed to the right recruiter.
Time to first placement is a key ramp metric: how long it takes a recruiter to deliver their first hire.
Revenue trend over time ties placements to actual fees so you can spot declines early.
Pipeline value and conversion rates reveal the health of your sales funnel: the value each recruiter carries and how effectively they move candidates from submit to offer to placement.
Repeat business from clients signals long-term effectiveness.
Step 1: Intervene early Your staff certainly don’t like to be surprised. If you need to have a tough performance-based conversation, have it sooner rather than later. The longer underperformance continues, the harder it is to address.
Step 2: Be specific about the problem Avoid vague feedback. Clearly identify:
Step 3: Set measurable improvement goals Define what improvement looks like in commercial terms, using key performance indicators:
Step 4: Support judgement, not just effort Focus coaching on:
Step 5: Make the decision on time If results don’t lift after clear expectations, proper support, and a fair timeframe, it’s no longer a “development gap” — it’s a fit issue.
Dragging it out usually costs more than the replacement: lost revenue, distracted leadership time, weaker standards across the team, and avoidable client risk.
Written records of every performance conversation, including dates, what was discussed, what was agreed, and any follow-up actions, are essential for managing underperformance fairly and lawfully. This protects both you and your employee if the situation escalates.
Fair Work Australia provides free templates and guidance to help employers manage underperformance in line with their obligations, including warning letter templates, performance improvement plan guides, and termination checklists. You can access these at fairwork.gov.au/tools-and-resources/templates.
When dealing with an underperforming recruiter, it’s important to review the system as well as the individual. Ask yourself:
Strong recruitment businesses use underperformance as a signal to tighten systems, not just replace people. That way, you can slowly develop a better people strategy for your business.
If the process results in termination, there are several payroll obligations to work through before the employee’s final pay is processed:
It is strongly recommended to engage your accountant or a payroll specialist before processing a termination payment to ensure full compliance.
An underperforming recruiter in your business is both a leadership and commercial issue. Handled early, underperformance can be corrected.
For recruitment business owners, knowing how to identify and manage an underperforming recruiter from your numbers is not just good management, it’s essential for sustainable growth.
Cash flow is one of the biggest ongoing challenges for recruitment businesses. Even agencies with steady activity and regular placements often operate under constant financial pressure due to long revenue cycles, delayed payments, and operational inefficiencies.
In practice, this pressure shows up quickly. Delayed cash receipts limit an agency’s ability to meet payroll, manage tax obligations, and invest in growth. Many recruitment firms look profitable on paper yet struggle day-to-day simply because the cash hasn’t arrived yet.
Working with an accountant who specialises in recruitment businesses can help you stay on top of these pressures and maintain control across the natural volatility of the industry.
At the core of most recruitment cash flow challenges is how the business model works. In this case, it’s the structure of the revenue cycle.
Agencies are typically only paid after:
Only a small number of agencies have predictable, recurring monthly revenue. Most experience irregular cash inflows, influenced by factors largely outside their control, including:
The result is a familiar mismatch: agencies invest significant time and cost upfront, long before any income is realised.
Delayed revenue becomes even more challenging when placements don’t progress as planned.
If a candidate resigns or is terminated during the guarantee period, agencies may:
For many agencies, this uncertainty makes it difficult to confidently cover fixed costs or invest ahead of growth.
| Challenge | Description |
|---|---|
| Payment delays | Fees collected only after placement and guarantee periods |
| Client dependency | Revenue tied to fluctuating hiring demand |
| Candidate resignation | Fee loss during guarantee periods |
Internal processes can also impact the speed of receiving cash.
Inefficient workflows across screening, interview coordination, client follow-ups, and placement documentation can push invoicing out further.
Common bottlenecks include:
Over time, these small inefficiencies add up and significantly reduce cash flow predictability.
Recruitment outcomes are tightly linked to the quality of client engagement.
Fragmented or outdated communication slows decision-making and extends hiring timelines. According to the SHRM Talent Access Report, the median time-to-fill is 44 days, and 54 days for non-executive roles. Every additional day delays agency revenue while costs continue to accrue.
Poor client engagement typically results in:
When communication breaks down, cash flow stress usually follows.
Cash flow forecasting is one of the most effective tools recruitment businesses can use to improve visibility and reduce uncertainty. In our experience, agencies that forecast cash make better resourcing decisions and avoid overcommitting based on revenue that has not landed yet. For more information about how cash flow forecasting helps you succeed, we have pulled together a guide.
Most recruitment business owners have good visibility on activity (open roles, candidates, interviews) but much weaker visibility on timing. Forecasting bridges this gap by translating pipeline activity into expected cash dates, considering:
This turns work in progress into a realistic view of when cash is likely to arrive.
Candidate fall-offs and guarantee failures are a normal part of recruitment revenue. Forecasting allows agencies to plan for this by modelling scenarios such as:
Even simple scenario planning reduces the risk of making decisions based solely on best-case assumptions.
Forecasting becomes most powerful when cash timing is viewed alongside costs. Agencies can pressure-test whether they can comfortably cover:
At this point, forecasting stops being finance admin and becomes a genuine operational decision-making tool.
Late payments are another strain on your cash flow. A regular forecasting cadence (weekly or fortnightly) highlights missed or delayed payments early, enabling:
Forecasting only works if it is kept current. A practical cadence might include:
Accuracy improves over time as forecasts are refined against actual results.
Cash flow pressure is a fact of life in recruitment. Long revenue cycles, placement risk, and inconsistent payment behaviour create structural delays between doing the work and getting paid.
While you can’t remove these dynamics entirely, you can reduce uncertainty and regain control by forecasting cash flow properly, based on how revenue ends up as cash.
At JD Scott + Co, we help recruitment businesses build practical, decision-ready forecasts that bring clarity to timing, risk, and runway. If you’d like support putting this in place, get in touch, we would love to help.
Growing a recruitment agency is not just about billing more, it’s about building a business that’s profitable and has the right people and systems in place to scale.
Many recruitment firms can increase revenue quickly, but struggle with cash flow issues, margin compression, or hiring the right people into the business.
If you want to grow your recruitment agency sustainably, you must focus on profit first, then scale over time.
Here are three proven strategies to grow your business.
The first step to growing your recruitment agency profitably is understanding what you’re actually measuring.
Revenue is the total income generated from your recruitment agency’s operations before expenses are deducted. This includes placement fees, retained search income, contract margins, and any additional service revenue. Revenue growth means you are billing more.
Profit, however, is what remains after expenses.
There are two key profit metrics every recruitment agency owner should track.
Gross profit is calculated by subtracting the direct costs of delivering your services (primarily recruiter salaries and commissions), from revenue. It measures how efficiently your recruitment engine operates.
Net profit is what remains after all operating costs are deducted, including leadership salaries, admin costs, marketing spend, office expenses, software subscriptions, and tax. This reflects the true financial health of your recruitment business.
Most recruitment agencies price their services by looking at their competitors or defaulting to industry standards (typically 15-25% of first-year salary depending on sector and seniority).
The more strategic approach is to price based on what you need to grow profitably.
A common pricing model in recruitment is the percentage of salary approach. For example, if you place a candidate earning $100,000 and your fee is 20%, you generate $20,000 in revenue.
But does that 20% support profitable growth?
To answer that, you need to understand your cost structure and required margins:
If your pricing is too low (say 15% when your cost structure requires 20%) you’ll grow revenue but erode profit. If you’re discounting to win business, you’re compounding the problem.
The growth strategy here is simple: protect your pricing. Charge fees that support your target margins. Resist the urge to discount unless you’ve modeled the impact on net profit. When recruitment agencies underprice their services, they reduce their ability to:
Growing revenue profitably starts with understanding the difference between revenue and profit — and pricing accordingly.
At some stage, growing your recruitment agency requires a strategic decision: do you add capacity by hiring more people, or do you increase the productivity of your existing team?
The answer is often both, but the sequence and balance matter.
There are fundamentally two ways to increase output: more people (headcount growth) or better productivity per person (efficiency gains). The most successful recruitment agencies pursue both strategically, keeping fixed costs stable while increasing revenue per consultant.
If your current consultants are operating at or near full productivity and demand is consistent, hiring becomes a logical next step.
However, hiring is one of the biggest financial decisions a recruitment business owner can make.
Before expanding, calculate the full annual cost of a new recruiter. This includes salary, commission, benefits, desk costs, and allocated overhead.
For example, if the total annual cost is $100,000, that becomes your baseline investment.
If you aim to break even within six months, the consultant must generate $50,000 in gross profit during that ramp-up period.
But ramp-up rarely happens instantly.
New recruiters typically operate at 30–50% productivity in their early months while building pipelines and relationships. That means early performance may range between $15,000 and $25,000 in gross profit.
This gap must be funded by existing profit. Without strong margin and cash flow planning, scaling headcount can create financial strain in the short-medium term.
Before hiring, ask:
Increasing revenue doesn’t always require increasing headcount. If each recruiter becomes more productive (generating more revenue without increasing fixed costs), profitability improves immediately. This is a form of leverage.
High-performing recruitment agencies typically build a stack that reduces administrative drag and increases selling time:
The goal is simple: reduce low-value tasks and increase high-value activity.
Every hour saved from manual admin can be reinvested into business development, client nurturing, or candidate engagement. Agencies that use systems well often lift revenue per consultant materially without lifting salary costs.
This approach keeps your fixed cost base stable while revenue climbs — one of the most profitable growth strategies available.
For established recruitment agency owners, acquisition can become a serious growth strategy.
Buying another recruitment firm can accelerate revenue growth overnight. It can provide access to new markets, new clients and increased headcount.
However, acquisition requires serious capital ($$$).
It also introduces complexity.
Beyond the financial investment, culture becomes a critical concern. Recruitment is a people-driven business. Differences in performance standards, compensation structures, leadership style, or client positioning can create friction among your existing team if not managed carefully.
Before acquiring another recruitment agency, consider:
Acquisition can be the fastest path to growing your firm but it magnifies leadership responsibility and operational risk.
If you want to grow your recruitment agency sustainably, focus on profit-led revenue growth: protect your pricing and margins, hire with clear break-even targets, address underperformance early, and lift output through smarter systems and technology.
So, if you’re ready to take the next step, read our cash flow and underperforming consultant guides and apply the framework to your business today.
Many developers make the mistake of thinking that if a project shows a profit on paper, the cash will take care of itself. In property development, timing is everything and poor cashflow management can turn a profitable project into a financial nightmare.
At JD Scott + Co, we’ve seen excellent developments falter simply because developers underestimated holding costs, delayed progress payments, or misaligned revenue timing. With support from an accountant specialising in property development, you can maintain control of your project cashflow from start to finish.
Cashflow makes or breaks a development. At JD Scott + Co, we’ve seen profitable projects falter simply because the timing of funds was misaligned. With clear visibility and structured planning, you can take control of your property development cashflow from day one.
The cashflow cycle usually follows four key stages:Deposits, stamp duty, feasibility and due diligence.
Consultant fees, reports, council lodgements, accrued interest.
Progress claims, project management, holding costs, variations.
Final claims, marketing, commissions, GST and legal settlements.
Key idea: once you can see the whole cashflow cycle laid out, you can proactively plan funding and buffers instead of reacting to crunch points.
Delays between lender drawdowns and contractor payment deadlines create short-term stress and reputational risk.
Unexpected variations and rising build costs erode margin and soak up your contingency buffer.
Income gets pushed out while interest, marketing and holding costs continue.
JD Scott + Co tip: map where each of these could appear on your timeline and pre-commit how you’ll fund each scenario.
Line of sight over when cash hits and leaves the bank.
Avoid surprise GST and tax-driven cash dips.
Understand how funding costs grow across the project.
Dedicated room for delays and cost shocks.
Key idea: your feasibility model and your cashflow forecast should be integrated, not competing spreadsheets.
With Xero tracking categories per project, each development becomes a live dashboard of profitability and cashflow health inside your accounting system.
Cashflow is a key consideration for your project, even before you draw up the plans.
So drawdowns are approved without unnecessary delay.
Clear, lender-ready views of what is spent and remaining.
Invoices, contracts, variations and approvals in order.
Flagging timing gaps between approval and payment early.
Outcome: fewer funding surprises, fewer urgent phone calls, and smoother drawdown timing.
Our approach ensures:
Avoid the crunch: many profitable projects experience temporary cash crises purely because GST timing was not modelled properly.
JD Scott + Co takeaway: a disciplined financial structure eliminates most of these issues before they appear.
Good systems make good decisions possible — and create lender and investor confidence.
At least 10% of project costs held as accessible cash or equivalents.
Overdrafts and lines of credit ready before you need them.
So unexpected spend is visible, not buried in other line items.
Delays, cost shocks, sales timing — model them before they hit.
Resilience: a robust contingency plan turns a potential crisis into a manageable variation.
Managing property development cashflow isn’t about predicting the future, it’s about having the systems, visibility and buffers that allow a project to stay on track even when the unexpected happens.
With the right structure and support, your cashflow becomes a strategic tool — one that keeps your project moving confidently from acquisition to settlement.
GST is one of the most misunderstood and overlooked elements of property development tax. Many developers treat GST as a simple 10% added to costs and recovered later, until settlement day arrives and the rules tell a different story.
The reality is that GST interacts with every phase of a development: land acquisition, progress claims, pre-sales, settlement adjustments, and final reporting. When misunderstood, GST can quietly erode your margin or create a large, unexpected tax bill. When managed properly, it becomes a tool that improves cashflow, protects profitability, and reduces compliance risk.
This guide breaks down the essentials of GST for Australian developers, including:
If you are carrying on a business or enterprise of property development, you will generally need to register for GST once your turnover reaches or is expected to reach $75,000 within a financial year.
For developers, this turnover includes:
Even a single development project can satisfy the definition of an enterprise. Many first-time developers don’t realise they are required to register until well after contracts have been signed, an issue that complicates everything from your BAS to your settlement calculations.
Registering early ensures you can correctly claim input tax credits, structure your contracts appropriately, and avoid penalties or correctional activity from the ATO.
The GST Margin Scheme allows property developers to calculate GST only on the margin — the difference between the sale price and the property’s original purchase price or an approved valuation. This can significantly reduce GST payable on new residential sales and improve overall project feasibility.
You may be able to apply the Margin Scheme if:
Important: The Margin Scheme must be agreed to in writing before settlement. It cannot be applied retrospectively.
By applying GST only to the margin rather than the full sale price, developers can reduce the amount of GST payable per dwelling. Across multi-unit projects, these reductions can accumulate into substantial improvements in cashflow and profitability.
Sale price: $800,000
Land cost allocated to this dwelling: $200,000
| Full GST method | Margin scheme | |
|---|---|---|
| Calculation | $800,000 ÷ 11 | ($800,000 − $200,000) ÷ 11 |
| GST payable | $72,727 | $54,545 |
| Difference | ~$18,000 saving per unit | |
As seen in the example above, using the GST Margin Scheme across multiple dwellings can result in six-figure improvements to the project margin.
Developers registered for GST can generally claim credits for GST paid on:
These credits help recoup the GST portion of your inputs, improving overall project cashflow.
However, some GST credits cannot be claimed, including:
Maintaining a strong invoice approval process and project-specific bookkeeping ensures that
GST credits are accurately claimed and defensible in the event of an ATO review.
The timing of GST is a critical factor that can cause discrepancies if not handled correctly. Most developers report using accrual accounting, meaning GST is recognised when an invoice is issued, not when it is paid.
For construction contracts, GST becomes claimable when the builder issues a progress claim. For off-the-plan sales, GST is generally brought to account at settlement, even if the contract was exchanged months earlier.
Since July 2018, purchasers of new residential premises are required to withhold GST at settlement and pay it directly to the ATO. Developers then report the sale in their BAS and receive a credit for the amount withheld.
Accurate reconciliation between settlement statements, GST withheld amounts, and BAS lodgements is essential to avoid ATO mismatches.
Developments that include both taxable and input-taxed components — such as residential apartments combined with commercial space — require GST apportionment.
Common methods include:
The key is applying a reasonable and consistent method and documenting the rationale. Poor or unsupported apportionment calculations are one of the most common GST issues flagged in reviews.
These mistakes are avoidable and often costly.
Handled properly, GST becomes a strategic tool rather than a compliance burden. Developers who plan for GST from the feasibility stage are far better protected against surprises, better positioned to maximise credits, and far less likely to trigger an ATO review.
Handled poorly, GST can wipe out margins, complicate settlements, and create long-lasting tax problems.
Property development can be one of the most rewarding and profitable ventures in Australia, but it’s also one of the riskiest. How you structure your development entity before you even sign a contract determines how profits are taxed, how liability is handled, and how easily you can finance future projects.
At JD Scott + Co, we often meet developers who come to us after purchasing land, only to discover that the wrong structure is costing them tens or hundreds of thousands in unnecessary tax or exposure. The good news: with the right accounting and tax advice, property developers can build their projects on a solid legal and financial foundation.
Every development from a small duplex to a $20 million mixed-use project needs a structure that matches its risk, funding, and exit strategy.
The right entity can:
| Structure | Pros | Cons | Best suited for |
|---|---|---|---|
| Company (Pty Ltd) Separate legal entity. Flat 25% company tax rate. |
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Ongoing developer businesses and special purpose vehicles for single projects. |
| Trust Discretionary or unit trust. Flexible distributions. |
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Family developers, groups of investors, or long-term holding structures. |
| Partnership A simple arrangement between two or more parties to carry on business together. |
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Small-scale developments between individuals who know each other well. |
| Joint Venture (JV) Allows multiple parties to collaborate while keeping ownership separate. |
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Developers combining capital, land, or expertise for a single one-off project. |
| Special Purpose Vehicle (SPV) A dedicated entity created solely for one project. |
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Developers running multiple concurrent projects or investor syndicates. |
Whether small or large, choosing the right structure for your property development project is crucial.
When we advise our property developer clients at JD Scott + Co, we start with a few key questions.
The answers to the above are likely to determine the appropriate structure requirements for the development business.
Result:
We see Property Developers make a few key mistakes when structuring their business. The following are most common:
Getting business structure or tax advice BEFORE you acquire land or sign contracts is valuable, to avoid monetary or legal consequences down the track.
Review when projects increase in size or complexity, you introduce investors, hold completed projects, or expand across multiple developments.
It’s important to note that the ATO is reviewing contrived property development arrangements, through structures they deem to be used to defer tax. This may be useful to consider when reviewing, or setting up a new structure.
Our experienced team at JD Scott + Co can help review your structure. Get in contact today.
Paying yourself as a small business owner can be surprisingly complex. Many entrepreneurs focus on the foundation, building their brand, generating sales, and growing a loyal customer base. However, when it comes to paying yourself a reward for effort, there are a few key considerations. Whether you’ve just launched your first venture or are considering buying an existing business, understanding how and when to pay yourself is crucial to maintaining both your business’s cash flow and your personal financial wellbeing.
This guide from JD Scott & Co breaks down the process, step-by-step, explaining how different business structures affect your income, what to consider for superannuation and tax, and how to make informed financial decisions that sustain long-term growth.
Getting paid as a business owner isn’t just about taking money from your business bank account. It’s about ensuring your business remains healthy, compliant, and sustainable. Many owners opt to reinvest every dollar back into the business, while others can overdraw without considering future tax or cash flow obligations.
A clear payment structure helps you:
The way you pay yourself depends almost entirely on your business structure. Here’s how it works in practice:
Sole Trader
As a sole trader, you and your business are legally the same entity. You don’t receive a “salary”, instead you can take what’s known as drawings from your business profits. This means you can transfer funds directly from your business account to your personal account as needed.
However, with that flexibility comes responsibility. You’ll need to ensure you set aside enough money for GST, tax, and business expenses. A good rule of thumb is to keep at least 30% of your profits aside for tax obligations and avoid dipping into this buffer for personal spending.
💡 Tip: It’s best practice to separate your business and personal bank accounts from day one. It simplifies your bookkeeping, helps with tax time and gives you clarity over how your business is truly performing.
Company Structure
If you operate under a company structure, you have more options, and more rules. You can pay yourself:
The salary option provides regular, predictable income and keeps you compliant with superannuation obligations. The dividend option can be more tax-efficient, but it requires the business to have retained profits available.
It’s common for directors to use a hybrid approach, paying themselves a reasonable salary for day-to-day income and topping up with dividends when profits allow.
Watch: Paying Yourself from Your Business: Salary vs Dividends Explained (JD Scott + Co video)
A common mistake new business owners make is paying themselves “whatever’s left over.” A more strategic approach is to determine what a professional in your position would earn.
For example, if you’re the managing director of a small accounting firm or a creative agency, you might reasonably expect a salary of around $150,000–$200,000 per year. Paying yourself this amount creates structure, helps you budget and ensures that if you ever need to step back, someone else could take your place without disrupting operations.
Next, company profits excluding the salaried amount could be paid to the business owner through using dividends. This approach is helpful, as it distinguishes the income you would generate as an employee, from your return on effort as a business owner
Superannuation is one of the most powerful wealth-building tools available to Australian business owners, yet it’s often overlooked.
Think of super not as an expense but as a long-term investment. Regular contributions compound, reducing your future tax burden and setting you up for financial independence.
🔗 Related reading: ATO: Work out if you have to pay super
Cash flow is the lifeblood of every business. The key is consistency and foresight. Ideally, you should maintain at least three to six months of cash flow reserves to cover wages, expenses, and operating costs.
Large corporations like Microsoft famously maintain up to 12 months of reserves, ensuring they can continue operations even during market downturns. While that’s not always realistic for small businesses, building your own buffer provides peace of mind and protects your livelihood.
Dividends can only be paid from retained profits, so check your balance sheet regularly. If your company hasn’t generated sufficient profit, paying a dividend may not be legally permitted.
💡 Tip: Use accounting software such as Xero or QuickBooks to monitor real-time cash flow reports and forecast upcoming obligations.
Tax planning shouldn’t be an afterthought. A proactive accountant can help you:
Book in an annual tax planning session with your accountant — ideally around March or April. This allows time to implement adjustments before the end of the financial year.
🔗 Learn more: JD Scott & Co Tax Planning Services
Paying yourself as a business owner is about balance — rewarding your effort while safeguarding your company’s future. The right approach depends on your structure, goals, and financial position, but one principle remains constant: treat yourself like an employee, and your business like a business.
By setting up structured payments, contributing to superannuation, and engaging in regular tax planning, you create a foundation for sustainable growth — and a business that works for you, not the other way around.
If you’re unsure about how to structure your pay as a business owner or new director, reach out to the JD Scott & Co team for tailored guidance.
We specialise in accounting and tax for ecommerce businesses.
Contact us today to discuss how we can help.
Running an ecommerce store today isn’t just about sales — it’s about knowing the numbers behind them. The most successful online businesses track more than revenue. They monitor profitability, efficiency, and customer behaviour to make smarter, faster decisions.
At JD Scott + Co, our accountants help ecommernce business owners across Australia understand their numbers and turn data into strategy.
Here’s your practical guide to the key financial and performance metrics every online store should track — and how they connect directly to your growth and cash flow. Each metrics is carefully selected to help you build and run a profitable ecommerce business. They start with the key drivers of sales and then focuses on the main profit drivers.
These are the 10 key metrics that every ecommerce business should track.
They are broken down into metrics that track sales, financial and common website metrics.
The sales metrics drive financial metrics, while the techincal website metrics support the overall site.
Sales Metrics: Measures how successful you are at attracting customers. This will be a key driver of how profitable your ecommerce business is.
Financial Metrics: Are you profitable? Are you generating enough cash? How much capital does your business require?
Website Metrics: A technically well built site will imporve conversion rates and hence sales.
Definition: The percentage of visitors who complete a purchase.
Formula: (Number of purchases ÷ total visitors) × 100
Benchmark: 2–3% for many ecommerce niches.
How to improve:
Pro tip: Track conversion rates separately for desktop and mobile. If mobile is lagging, that’s where your revenue is leaking.
Formula: (Returned items ÷ total items sold) × 100
Why it matters: Returns directly impact profit and GST reporting. High return rates might point to poor product descriptions, sizing errors, or fulfilment issues.
Reduce returns by:
Accountant’s insight: Returns affect both revenue and input tax credits. Ensure your BAS reporting reflects accurate refund adjustments.
Formula: Total revenue ÷ total number of orders
Why it matters: Your AOV helps you understand customer spending behaviour and how well your upsell and cross-sell strategies are working.
Ways to increase AOV:
• Offer free shipping for orders over a certain amount
• Bundle complementary products
• Suggest add-ons during checkout
Accountant’s note: Don’t just focus on getting AOV up — make sure your gross profit per order also grows. A higher AOV with thin margins won’t help your bottom line.
Formula: Revenue from ads ÷ cost of ads
Why it matters: ROAS shows how effective your ad campaigns are. If you’re spending $1,000 and earning $4,000 in sales, your ROAS is 4:1 — a strong result.
Target: Most ecommerce stores aim for 3–5× ROAS, but it depends on margins.
Accountants tip!
Combine ROAS with CAC and CLV for a complete profitability view.
Formula: Total marketing spend ÷ number of new customers acquired
Why it matters: Your CAC tells you how much it costs to win a new customer. If your CAC rises faster than your sales, your marketing spend might be inefficient — or your retention strategy needs work.
Watch: Common Ecommerce Mistakes and What They Cost You (JD Scott + Co video)
Use it with: Customer Lifetime Value (CLV) for a full view of customer profitability.
Pro tip: Include all marketing costs in CAC — ads, agency fees, influencer payments, and even discounts or referral rewards — for a true picture of acquisition efficiency.
Formula: Average order value × purchase frequency × customer lifespan
Why it matters: CLV tells you how much total revenue you can expect from one customer over time. It’s the long-term view of your marketing ROI.
Rule of thumb: Your CLV should be at least three times higher than CAC. If not, focus on retention — loyalty programs, email remarketing, and customer experience improvements often lift CLV fastest.
Pro insight: Your accountant can model CLV in Xero or your ecommerce dashboard by tracking repeat purchases and customer cohorts over time.
What it is: Your gross profit margin shows how much profit you make on each sale after subtracting the cost of goods sold (COGS).
Formula: (Revenue – COGS) ÷ Revenue × 100
Why it matters: It’s the best measure of your store’s core profitability before you factor in marketing, admin, or tax costs. If it’s shrinking, your product pricing or supplier costs might need attention.
Pro tip: Use your accounting software (like Xero) to track your gross margin automatically and compare it to previous months. If your margins fluctuate wildly, your pricing strategy or freight costs might need a closer look.
Formula: COGS ÷ average inventory value
Why it matters: This metric shows how fast you’re selling through your stock. A high turnover rate means products move quickly; a low rate might suggest overstocking or stale inventory tying up cash.
Target range: Most ecommerce stores aim for 8–12 turns per year, but it varies by industry.
Tip: Use integrated inventory tools with Xero for real-time tracking.
Why it matters: Profit is important, but cash flow is survival. This metric shows whether your day-to-day operations are bringing in enough cash to cover costs and reinvest.
Focus on:
Pro tip: Review your cash flow statement monthly. Your accountant can automate this through Xero dashboards so you can forecast upcoming dips before they happen.
Your website’s speed and stability directly affect conversions — and even SEO ranking. Shopify’s Core Web Vitals show how smooth and stable your customer experience is.
Largest Contentful Paint (LCP): How fast your main content loads. Good: under 2.5 seconds. Fixes: optimise hero images, enable lazy loading, reduce app load times.
First Input Delay (FID) / Interaction to Next Paint (INP): How responsive your site feels when users click or tap. Good: under 100 ms. Fixes: simplify JavaScript and reduce third-party scripts.
Cumulative Layout Shift (CLS): Measures how much elements shift while your page loads. Good: ≤ 0.1. Fixes: set width/height for all images, preload fonts, avoid pop-ups above content.
Shopify Performance Checklist:
Why it matters: Even a small improvement in your CLS or load speed can lift conversion rates noticeably.
Tracking these numbers isn’t about vanity metrics, it’s about running a stronger, more profitable business. When you know your CAC, CLV, margins, and performance data, you can make smarter calls about pricing, marketing, and inventory.
At JD Scott + Co, we help ecommerce business owners across Australia turn their numbers into clear strategy, from tax planning to Shopify integration.
We specialise in accounting and tax for ecommerce businesses.
Contact us today to discuss how we can help.
So, you’re a business owner with your first few employees. How the heck can you keep them motivated and create an environment where people actually want to show up and produce high quality work. A motivated team delivers stronger results, adapts faster, and pushes the company forward.
For the first time in history, many businesses are managing teams that span four different generations: Baby Boomers, Gen X, Millennials, and Gen Z. Each group bring different expectations, working styles, and motivators to the workplace.
For example, Baby Boomers often value stability, loyalty, and recognition of long service. Gen X typically prizes independence, efficiency, and the ability to uphold both career and family commitments. Millennials (seniors) are usually motivated by purpose, collaboration, and opportunities for growth. Gen Z (the juniors) are digital natives who expect flexibility, continuous learning, and regular feedback as standard.
To get the best from your team, it is important to use a combination of strategies that cater to different needs and build a culture of accountability and trust.
Employees thrive when they clearly understand their responsibilities and see how their contributions drive the success of the business. This begins with well-defined role descriptions that outline specific duties and empower individuals to take ownership of key business operations. For example, a Client Manager is accountable for overseeing production and maintaining all communication with their clients.
Once roles are established, managers and leaders can set individual goals that align directly with broader business objectives. Regular performance reviews and progress check-ins not only reinforce accountability but also build a sense of commitment and ownership.
By clearly understanding what’s expected and seeing how their work makes a difference, employees become more motivated and engaged. You as a business owner can also understand when standards or the role are slipping, or being exceeded.
Financial incentives are powerful motivators when they are tied to measurable outcomes. Programs such as profit sharing, KPI-based bonuses, or other performance-driven rewards encourage employees to think like business owners and align their daily efforts with the broader success of the organisation.
For example, a profit-share program might allocate a percentage of business profits to the team, distributed based on everyone’s contribution or role. When employees see a direct link between their performance and financial rewards, it strengthens engagement and drives collective results.
Equally important is transparency. Clearly explaining how incentives are calculated (e.g. profit share percentages) fosters trust and reinforces fairness across the team.
Pairing new staff with an experienced manager or mentor is one of the most effective ways to accelerate learning, build confidence, and create a supportive work culture. Mentorship provides employees with regular guidance, helping them adapt to their roles more quickly while avoiding common pitfalls.
Beyond skills development, mentorship also strengthens team relationships, fostering trust and collaboration across the organisation. It signals a genuine investment in employee growth beyond trivial cultural perks.
Flexibility is now one of the most valued benefits in the modern workplace. Options such as part-time roles, adjusted hours, remote work, or hybrid models allow businesses to attract and retain talent that might otherwise be unavailable.
By offering flexible arrangements, employers demonstrate trust and respect for their employees’ circumstances. In turn, businesses often see higher levels of motivation and productivity, as staff can manage their time in a way that supports both professional performance and personal commitments. This moves beyond a desire for ‘work-life balance’, flexible working arrangements ensure highly skilled employees can contribute value to your organisation.
No one likes a surprise. Consistent communication between managers and employees is critical for maintaining motivation and avoiding feeling left behind. Regular one-on-one meetings provide opportunities to give feedback, address challenges and recognise when things are going well.
They also allow managers to better understand what drives each employee and adjust their approach accordingly. This ongoing dialogue fosters trust ensures alignment with business goals, and reinforces engagement.
Ongoing training and development are essential to maintaining a skilled, adaptable, and motivated workforce. By providing structured opportunities for learning, whether through online courses or in-house training, employees can continuously grow their capabilities and stay ahead of industry changes.
When training is integrated into the work week rather than treated as an afterthought, employees feel supported in their professional journey. At JD Scott + Co, we set aside 2 hours every Tuesday for a firmwide training session, where questions and curiosity are encouraged.
Ultimately, a culture of continuous learning ensures the business remains innovative, resilient, and prepared for long-term success.
There is no one-size-fits-all approach to motivating your employees. However, creating a workplace environment where individuals feel valued, supported, and connected to business goals.
By establishing accountability, offering fair performance incentives, providing mentorship, embracing flexibility, maintaining regular communication, and investing in recognition and development, businesses can foster a motivated and high-performing workforce.
If you’re stuck, contact JD Scott + Co today to chat about your business strategy.
ABN 46 634 220 625
JD Scott + Co is one of Sydney’s leading Chartered Accounting firms, we aim to help build your business and wealth, empowering you to reach your goals.
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