Beyond The Pass | The One Where He Moans About Money

“Graeme? Yeah, he’s really good with money.”

That’s literally the first time that sentence has ever been said. I am, in fact, absolutely terrible with the stuff.

From regularly spending my £2 a day lunch money on £2 worth of Twixes, to getting a credit card as soon as I turned 18 so I could buy beers (and probably a few more Twixes. If you’re reading this, Mars Inc, send me free stuff), to buying a sports car behind my wife’s back because I’m Vin Diesel (apparently), I have an abysmal track record when it comes to managing finances.

So it was only natural that I entered the world of business ownership where I’d have command over sums of money I’d only seen on pokie room grand prize displays.

And as you’ll see when you definitely click that ‘continue reading’ button below,

it’s a wonder I managed to stay afloat at all.

Let’s start with the setup costs. Ours was tiny compared with other cafes.

Thanks to my life of financial frivolity, securing a business loan with my name on it was nigh on impossible. World class comedians would kill for the amount of laughs I got when I asked the banks for money.

Instead, we managed to secure a personal loan with my name nowhere near it. This meant that we had to settle for less, but it also made us quite crafty with what we spent that money on.

First off, we decided that we weren’t going to buy anything huge outright, only things essential to our fitout like benches, and other workspaces. We sourced our furniture almost exclusively from our home, and all of our dishware and cutlery from Tempe Salvos.

Anything big (like the coffee machine) would be paid off in installments (shoutout Silverchef), leaving as much left over as possible for things like inventory.

But even with a bit of cash left over, I wasn’t prepared in the slightest for the sheer amount of outgoings coming my way.

Like I said, my place was tiny and relatively tucked away. On a good week we’d be lucky to pull in $5k. From that $5k, there was $500 straight out to rent, about $1.5k in wages, between $500-$1000 on inventory (depending on trade) and the big thorn-in-my-side, recurring nightmare that is tax.

Yep, this is a tax blog! Yay!

I could write a book on how much I hate tax. It would be my ‘magnum opus’; an instant classic to make Orwell look like Roald Dahl. Because whilst I know it’s necessary to the smooth running of a modern day society, I just couldn’t understand why they had to take so much?

To my knowledge (again, I’m terrible with this, so I could be wrong) I was paying three different types of tax: business income tax, personal income tax, and quarterly BAS. These were all deducted from the very top, and amounted to about $800 per week. After all of my other outgoings, it felt slightly unfair to me that before I could see any kind of income, the tax man took his cut three times. Pair this with the never-ending stream of news stories about Google, Facebook, and Amazon not paying a penny in taxes, and the politicians spouting off about how they back small business, and I was beginning to cut a very tired figure indeed.

So, what did I do to combat this? Did I write to my local MP, and lay out just how hard it was for small businesses to catch a tax break? No. Did I ramp up my marketing in an attempt to offset some of the costs with higher trade? Not likely. Did I ignore it completely until it became unavoidable?

Absolutely yes. I did this. I chose that last option.

In an almost signature move, I swept my problems under the rug, and hoped that they either went away completely (no idea how this could’ve happened), or that a solution magically presented itself just in time to save the day. Only, taxes don’t go away, ever. And the only real solution is more money, the irony here being that when you do get more money, you get taxed on that too.

But that didn’t bother me, I had other things to pay for, like rent on my home, and car payments, and groceries. 

And sure, I had an accountant, and a bookkeeper, but they weren’t calling me up just yet, so there was nothing to worry about. Until they did call.

It was on the same day, in fact. And these weren’t two blokes sitting next to each other in some office in the CBD, chatting casually about this idiot cafe owner who’s worse with money than the contestants of Squid Game (shoutout pop culture relevance). No, they were from separate companies, in very separate parts of Sydney.

Basically, I was told by each of them that if I didn’t start declaring more income, my accounts would almost certainly be flagged by the ATO for an audit, and with the amount of tax I owed (along with the amount of income I was currently declaring), I’d be lucky to keep the doors open.

Quite sobering to hear that twice in one day, but it was (kind of) what I needed.

I sat down with my accountant, and we set up a plan to pay my tax off weekly for the next year. It was a massive blow to an already very thin bottom line. And the thing about taxes is, they don’t just stop when you need to catch your breath. I’d also have to pay all of the new taxes I was accruing, on top of my repayments, or I’d be in the same boat all over again next year.

And the ATO doesn’t play around with their repayment plans either.

One time I was a bit short, and had to make the decision to either pay that week’s installment, or eat food. Naturally, I chose food and put a little hold on my repayments for (I can’t stress this enough) just one week. That’s all.

The ATO suddenly turned into the stingiest mate you can ever imagine. I was sent an email of default, and ordered to pay the remaining balance of my debt immediately, and for a guy who couldn’t afford food that week, finding a few grand to pay off the tax man was like asking me to admit black truffles are worth the hype; impossible, and downright laughable.

There was a panicked phone call to my accountant, who assured me that the ATO are exactly like your mate who gets his calculator out when the dinner bill comes in (nobody cares that you didn’t have any of the wine, just pay the extra two bucks already!), and that they were very serious about people never missing payments. He managed to sort things out for me, and I got to get back to handing most of my takings to the tax man.

At this point it was my biggest outgoing. This is not something that should be normal for a business as small as mine. But as it became clearer by the day that the ATO weren’t going to do anything about it, it was up to me to figure out how to make ends meet a little easier.

I’d realised pretty early on that if I was prepared to have a 30-45 minute spell each weekday where I’d get uncomfortably busy with the lunch rush, I could work those shifts on my own, and wouldn’t have to pay anybody for most of the week.

This cut down on my wage costs significantly, but did have the downside of cutting into my mental wellbeing too. As soon as it hit noon, I’d be on edge, waiting for the onslaught, my headspace salivating like one of Pavlov’s dogs waiting for the bell. The only thing getting through it each day was the thought of that extra money I’d be taking home.

And this wasn’t the only change I made to make my business more profitable. I upped my services with my bookkeepers too. Turns out paying the people who handle your finances the bare minimum is not a good idea. You quite quickly become an afterthought in their work week, your file being pushed to the end where they scan it, tell you everything that’s missing (no invoices, payroll data etc.), and then put it away until next week.

If they’d have told me that every BAS payment would be around the same amount that I was refunded in my first quarter, I could’ve squirrelled that refund away, and avoided some memorable headaches.

In case any of you budding future business owners missed the moral there, pay your bookkeepers well from day one, and guard that first BAS refund like it’s a damn horcrux, because the tax money will only flow your direction that once.

Same goes for your accountant. Find a good one, and pay them. Bookkeepers can only do so much, but a good accountant can work miracles.

Thankfully, those days are behind me.

I’ve since sold my cafe for a handsome profit that went towards paying my tax debt (and not much else, unfortunately), and I still recommend starting your own business, because even mine kept me & my family clothed and fed for 4 years. Just promise me you’ll be way, way smarter than I was (not too difficult, I can assure you) and you’ll be fine.