You’ve been doing everything yourself. The admin, the client work, the invoicing, the coffee runs. And lately, you’ve noticed something: there simply aren’t enough hours in the day.

So the thought crosses your mind—maybe it’s time to hire someone.

But hiring your first employee is a big deal. It’s exciting, yes, but it also comes with real financial commitments and responsibilities. Get the timing right, and it can be the best decision you ever make for your business. Get it wrong, and you might find yourself in a cash flow pickle.

Let’s break down how to know when you’re actually ready.

Signs You Might Be Ready to Hire

Before we talk numbers, let’s look at some of the telltale signs that your business might be crying out for help.

You’re Turning Down Work

If you’re saying no to new clients or projects because you simply don’t have the capacity, that’s lost revenue walking out the door. An extra pair of hands could help you capture that growth.

You’re Stuck in the Weeds

Are you spending your days on tasks that don’t actually need your expertise? If you’re a tradie quoting jobs but also doing all your own bookkeeping and scheduling, you might be better off delegating so you can focus on the money-making work.

Quality Is Starting to Slip

When you’re stretched too thin, things fall through the cracks. If you’re noticing more mistakes, slower turnaround times, or unhappy customers, it might be a sign that you need support.

You Haven’t Had a Proper Break in Months

Burnout is real. And it’s not sustainable. If taking a single day off feels impossible, that’s your business telling you something needs to change.

The Financial Side of Hiring

Okay, so you’re feeling the squeeze. But can you actually afford to bring someone on? Here’s what you need to think through.

It’s Not Just the Salary

When you hire an employee in Australia, you’re not just paying their wage. You also need to factor in:

• Superannuation (currently 11.5% on top of wages)
• WorkCover insurance
• Payroll tax (if applicable in your state)
• Leave entitlements—annual leave, sick leave, public holidays
• Equipment, training, and onboarding costs

As a rough guide, the true cost of an employee is often 20-30% more than their base salary. Make sure you’re budgeting for the full picture.

Can Your Cash Flow Handle It?

Employees need to be paid regularly, whether your clients pay you on time or not. Before hiring, take a hard look at your cash flow. Do you have enough consistent income to cover wages every fortnight or month? Do you have a buffer for quieter periods?

If your income is lumpy or unpredictable, you might need to build up a cash reserve first, or consider starting with a contractor or part-time role.

Will This Person Generate Revenue?

Sometimes hiring is about freeing up your time so you can earn more. Other times, the new hire will directly bring in revenue—like a sales rep or another service provider.

Either way, think about the return on investment. If hiring someone at $60,000 a year allows you to take on an extra $150,000 in projects, that’s a pretty solid business case.

Alternatives to a Full-Time Employee

Not quite ready for a permanent hire? You’ve got options.

Contractors and Freelancers

Contractors can be a great way to get help without the long-term commitment. You pay for specific work, and you don’t have to worry about super, leave, or payroll tax. Just make sure you’re classifying them correctly—the ATO keeps a close eye on sham contracting.

Part-Time or Casual Staff

A part-time employee gives you flexibility while still building your team. Casual staff can be handy for busy periods, though keep in mind they’re entitled to a casual loading in lieu of leave entitlements.

Outsourcing

Some tasks—like bookkeeping, marketing, or IT support—can be outsourced to specialists. This way, you get expert help without adding to your headcount.

Getting Your Books in Order First

Before you hire anyone, make sure your financial foundations are solid. You’ll need to:

• Set up payroll properly (Single Touch Payroll is mandatory in Australia)
• Understand your tax and super obligations
• Have clear records of your income and expenses
• Know your numbers—profit margins, cash flow, break-even point

If any of that sounds overwhelming, that’s exactly where a good accountant comes in handy.

Ready to Take the Next Step?

Hiring your first employee is a milestone moment. It means your business is growing, and that’s worth celebrating. But it’s also a decision that deserves careful thought and solid financial planning.

If you’re wondering whether you’re ready to hire—or you need help getting your books sorted before you do—the team at Empire Accounting & Finance is here to help.

Book a chat with us today and let’s make sure your next big move is a smart one.

Let’s be honest – most small business owners receive their profit and loss statement, give it a quick glance, and file it away somewhere never to be seen again. Sound familiar?

We get it. Financial reports can feel about as exciting as watching paint dry. But here’s the thing: your profit and loss statement (or P&L) is actually one of the most powerful tools you have for understanding how your business is really performing.

Once you know how to read it, you’ll wonder how you ever ran your business without it.

What Exactly Is a Profit and Loss Statement?

Think of your P&L as a financial story of your business over a specific period – usually a month, quarter, or financial year. It shows you three essential things:

1. How much money came in (revenue)
2. How much money went out (expenses)
3. What’s left over (profit or loss)

Simple as that. No fancy finance degree required.

Breaking Down the Key Sections

Revenue (The Good Stuff)

This is the total income your business earned from selling products or services. It’s the top line of your P&L, which is why you’ll sometimes hear people talk about ‘top-line growth.’

Keep an eye on trends here. Is your revenue growing month-on-month? Are certain products or services performing better than others? This section tells you what’s working.

Cost of Goods Sold (COGS)

These are the direct costs involved in delivering your products or services. If you’re a retailer, it’s what you paid for the stock you sold. If you’re a tradie, it might be materials for a job.

Your revenue minus COGS gives you your gross profit – a crucial number that shows how efficiently you’re producing or delivering what you sell.

Operating Expenses

This is where you’ll find all the other costs of running your business: rent, utilities, wages, insurance, marketing, software subscriptions, and yes – accounting fees (worth every cent, we promise).

These expenses don’t directly create your product or service, but you can’t operate without them. The key is keeping them in check without cutting corners that hurt your business.

Net Profit (The Bottom Line)

After you subtract all your expenses from your revenue, you’re left with your net profit. This is the famous ‘bottom line’ everyone talks about.

A positive number means you’re profitable. A negative number means you’ve made a loss. Neither result is permanent – it’s just information that helps you make better decisions.

What Your P&L Is Really Telling You

Your Margins Matter

Calculating your gross profit margin (gross profit divided by revenue) shows you how much you keep from each dollar of sales. If your margin is shrinking, you might need to review your pricing or find more cost-effective suppliers.

Expense Creep Is Real

Comparing your P&L month-to-month helps you spot expenses that are quietly growing. That software subscription that seemed cheap at first? Those ‘small’ costs add up fast.

Seasonality Shows Up

Looking at your P&L over several periods reveals patterns. Maybe your business booms in summer and slows in winter. Knowing this helps you plan your cash flow and staffing accordingly.

Common Mistakes to Avoid

Don’t just look at revenue and ignore everything else. High revenue means nothing if your expenses are eating it all up.

Don’t panic over one bad month. Business has ups and downs. Look at trends over time rather than reacting to every fluctuation.

Don’t confuse profit with cash in the bank. Your P&L shows profitability, but it doesn’t account for when money actually hits your account. That’s where cash flow management comes in – but that’s a story for another day.

Make Your P&L Work Harder for You

The real magic happens when you use your P&L to make decisions. Should you hire another team member? Your P&L can tell you if you can afford it. Thinking about dropping a service that’s not performing? Check your P&L to see its true impact.

Review your P&L monthly, ask questions about what you’re seeing, and don’t be afraid to dig deeper into the numbers.

Let’s Make Sense of Your Numbers Together

Reading your P&L shouldn’t feel like deciphering ancient hieroglyphics. At Empire Accounting & Finance, we love helping Melbourne small business owners understand their finances in plain English – no jargon, no judgement.

If you’d like someone to walk you through your profit and loss statement and show you exactly how to use it to grow your business, we’re here to help.

Book a chat with the Empire team today and let’s get your numbers working for you.

If you’ve ever looked at your accounting software and felt completely lost by all those account names and numbers, you’re not alone. Many small business owners set up their finances without really understanding their chart of accounts – and it can cause headaches down the track.

Let’s break down what a chart of accounts actually is, why it matters, and how to set one up properly for your Australian small business.

What Is a Chart of Accounts?

Think of your chart of accounts as a filing system for every dollar that flows through your business. It’s essentially a complete list of all the categories where your financial transactions get recorded.

Every time you make a sale, pay a bill, or transfer money, that transaction gets assigned to a specific account. When tax time rolls around or you want to see how your business is actually performing, these accounts tell the story.

The Five Main Account Types

Every chart of accounts is built around five main categories:

Assets – What your business owns. This includes your bank accounts, accounts receivable (money owed to you), equipment, and inventory.

Liabilities – What your business owes. Think credit cards, loans, superannuation payable, and accounts payable (money you owe suppliers).

Equity – The owner’s stake in the business. This includes your initial investment and retained earnings.

Income – Money coming in from your business activities. Sales revenue, interest income, and any other earnings.

Expenses – Money going out to run your business. Rent, wages, utilities, marketing costs, and everything else you spend money on.

Why Getting It Right Matters

A messy chart of accounts creates problems you might not notice until it’s too late. Here’s why it’s worth setting up properly from the start.

Accurate Financial Reports

When your accounts are well-organised, your profit and loss statements and balance sheets actually make sense. You can see exactly where your money is going and make smarter decisions about your business.

Easier BAS and Tax Time

Come BAS lodgement or end of financial year, a clean chart of accounts saves hours of sorting through transactions. Your accountant will thank you – and you’ll likely pay less in accounting fees too.

Better Business Insights

Want to know if your marketing spend is paying off? Curious whether your cost of goods sold is creeping up? With properly categorised accounts, you can answer these questions in minutes instead of guessing.

How to Set Up Your Chart of Accounts

Most accounting software like Xero or MYOB comes with a default chart of accounts. That’s a good starting point, but you’ll want to customise it for your specific business.

Keep It Simple

One of the biggest mistakes we see is overcomplicating things. You don’t need 50 different expense categories. Start with broad accounts and only add more specific ones when you actually need the detail.

For example, you might start with a single ‘Marketing’ expense account. If marketing becomes a significant spend and you want to track different channels, then you can break it into ‘Online Advertising’, ‘Print Marketing’, and so on.

Think About What You Want to Track

Before setting up accounts, ask yourself what information you’ll actually want to see in your reports. If you don’t care about separating phone expenses from internet expenses, keep them together as ‘Telecommunications’.

Use Clear, Consistent Naming

Make your account names obvious. ‘Office Supplies’ is much clearer than ‘Sundry Expenses’. Future you (and your accountant) will appreciate being able to understand what each account is for at a glance.

Consider GST Requirements

In Australia, you’ll need accounts that help you track GST correctly. Make sure your income and expense accounts are set up with the right GST codes so your BAS calculations are accurate.

Common Chart of Accounts Mistakes

We’ve seen plenty of small business owners trip up in similar ways. Here are some things to avoid.

Too many accounts – Creates confusion and makes reporting messy.

Inconsistent categorisation – Putting similar expenses in different accounts each time makes tracking impossible.

Ignoring the setup – Using whatever default accounts exist without checking if they suit your business.

Mixing personal and business – Always keep separate accounts for personal transactions.

Need Help Getting Organised?

Setting up your chart of accounts properly is one of those foundational tasks that pays off for years to come. But we get it – accounting setup isn’t exactly thrilling, and it’s easy to make mistakes if you’re not sure what you’re doing.

At Empire Accounting & Finance, we help Melbourne small business owners get their finances sorted from the ground up. Whether you’re starting fresh or need to clean up an existing mess, we’re here to help.

Book a chat with our team today and let’s get your accounts working for you, not against you.