What Is Turnover in Business? An Aussie Small Business Guide

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Ever heard the word ‘turnover’ thrown around and just nodded along, hoping nobody would ask you what it actually means? You’re not the only one, mate. It’s one of those bits of business jargon that can feel a bit confusing.

Let's clear it up. Put simply, turnover is the total amount of money your business brings in from sales over a certain time, like a year or a quarter. It's the big, top-line number before you take out a single dollar for materials, your ute's rego, or any other costs. It’s all the cash you invoiced for the actual work you did.

What Turnover Really Tells You (and What It Doesn't)

Think of your business like a bucket catching rain. Your turnover is the total amount of rain that lands in the bucket. It doesn't tell you about the leaks (your expenses) or how much water is actually left at the end of the day (your profit). It's purely a measure of how much you managed to collect in the first place.

For Aussie sole traders and small service businesses—like tradies, cleaners, and freelancers—getting a grip on this number is the first step to truly understanding your finances. It goes by a few other names, but they all mean the same thing:

Gross Revenue: This is what your accountant will probably call it.

Total Sales: Exactly what it sounds like – every dollar you've billed for your services.

Top-Line Revenue: It gets this name because it’s literally the top line on your profit and loss statement.

Knowing your turnover is a quick way to gauge the size of your operation. A sparkie with a 250,000. In Australia, your turnover is a key number for everything from tracking your growth to figuring out your tax obligations.

As the team at accounting software provider MYOB explains, many businesses use their annual turnover to benchmark performance, making it a vital part of planning ahead.

Key Takeaway: Turnover is a measure of business activity, not profitability. It shows how busy you are, but it tells you nothing about how much money you're actually banking.

But it’s a crucial starting point. For example, the Australian Taxation Office (ATO) uses your turnover to work out if you need to register for GST. The moment your annual turnover hits (or is likely to hit) $75,000, you’re required by law to register.

Here’s the trap, though: focusing only on turnover is dangerous. A high turnover might look impressive on paper, but if your costs are chewing up everything you earn, you could be working your guts out for next to nothing. That's why the next step is to understand the difference between this big number and what you actually get to keep.

Turnover vs. Profit: The Difference That Really Matters

Right, listen up. This is easily the most important lesson for any small business owner. Getting this wrong is the fastest way to burn yourself out for bugger all reward.

Let's get it straight: high turnover does not mean high profit.

Mixing them up is a common and costly mistake. Think of a landscaper who proudly tells their mate they turned over $200,000 last year. Sounds amazing, right? They must be rolling in it.

But hang on. That $200,000 is just the starting point—it's the total amount they invoiced. It doesn't account for the thousands spent on soil, plants, new tools, ute repayments, fuel, insurance, or their own super. Once all those costs are paid, their actual take-home profit might be a tiny fraction of that impressive-sounding figure.

Chasing a big turnover number without watching your profit is like trying to fill a leaky bucket by pouring water in faster. You’re working harder, but you’re not actually keeping any more.

This visual shows how your total sales figure is just the first piece of the puzzle.

As you can see, turnover is the broadest measure of your sales activity. But it’s a long way from the end of the story.

Gross Profit: The First Reality Check

The first step to understanding what you really made is figuring out your gross profit. This simple but powerful calculation shows you what’s left after paying for the direct costs of getting a specific job done.

Gross Profit = Turnover - Cost of Goods Sold (COGS)

For a service business, 'Cost of Goods Sold' might sound a bit weird. Just think of it as the direct costs of delivering your service—the stuff you had to buy specifically for that job.

For a Plumber: It’s the cost of the pipes, fittings, and any materials bought for that job.

For a Graphic Designer: It could be stock images or special fonts purchased for a client project.

For a Personal Trainer: There might not be many direct costs, so their gross profit on a single session could be very close to their turnover.

Gross profit tells you if the core service you're selling is profitable before you even consider your general business running costs.

Net Profit: What You Actually Get to Keep

Now we get to the most important number of all: net profit. This is the famous "bottom line," and it's what’s left after every single expense has been deducted from your turnover.

It’s the money you can actually pay yourself with, reinvest in the business, or save for a rainy day.

Net Profit = Turnover - All Business Expenses

Those expenses include everything:

Direct costs (your COGS)

Vehicle expenses (fuel, insurance, rego)

Public liability insurance

Marketing and website costs

Phone and internet bills

Accounting and software subscriptions (like Xero or MYOB)

Superannuation contributions

A business can have a massive turnover and a healthy gross profit but still have a tiny net profit if its overheads are out of control. Many sole traders forget about these hidden costs, which slowly eat away at their earnings.

The Big Idea: Turnover is what you bill. Profit is what you bank. Your goal isn't just to increase turnover; it's to increase the gap between your turnover and your total expenses.

Understanding this difference is the key to pricing your services correctly. If you only focus on the turnover from a job, you’re flying blind. You need to know what your actual profit will be.

How to Calculate Your Business Turnover

Right, enough theory. Let’s get our hands dirty and figure out your actual turnover. The good news? It’s usually much simpler than you think.

For a service business, it’s really just adding up the total value of your sales invoices over a specific period, like a financial year.

So, what do you include? Simple: only money from your direct business activities. This means every dollar you've billed for your services goes into the pot.

What you leave out are things like:

Loans from the bank

Personal money you've put into the business

Tax refunds

Government grants (unless they're specifically tied to sales)

These are all cash coming in, sure, but they aren't sales. That's the key difference.

For Sole Traders Not Registered for GST

If you’re not registered for GST, your calculation is dead simple. This applies to you if your annual turnover is below the $75,000 threshold set by the ATO.

In this case, your turnover is just the grand total of all your sales invoices.

Turnover = Total Sales

Example: A Cleaner Not Registered for GST

Let’s say Sarah runs a cleaning business. In the last financial year, she invoiced:

Regular home cleaning: $45,000

One-off bond cleans: $12,000

Small office cleans: $15,000

To get her turnover, she just adds them up:

12,000 + 72,000

Sarah’s annual turnover is $72,000. Because she’s under the GST threshold, the amount she charges is the exact amount she records as turnover. Easy.

For Businesses Registered for GST

Now, if you are registered for GST, you just need to be a little more careful. When you're registered, you charge your clients an extra 10% on top of your fee.

Here's the crucial bit: that 10% GST is not your money. You're just holding onto it for the tax office. Because of this, it should never be included in your turnover calculation.

Your turnover is the pre-GST amount, always.

Example: A Landscaper Registered for GST

Meet Tom, a landscaper who is GST-registered. He just finished a big garden makeover and sends an invoice for $5,500.

His invoice looks like this:

Landscaping Services: $5,000

GST (10%): $500

Total Invoice: $5,500

When Tom calculates his turnover for this job, he only includes the 500 is GST, which he'll set aside to pay the ATO with his next Business Activity Statement (BAS).

To find your turnover for the year, you'd add up the pre-GST amount from all your invoices.

Turnover = Total Sales (excluding GST)

If you use accounting software like Xero or MYOB, it usually does this for you. But if you’re crunching the numbers yourself, just make sure you subtract the GST before adding everything up.

Getting this right is vital. But while turnover is a great starting point, the real magic happens when you use this number to figure out your actual profitability on each job.

And if you're looking for an easy way to do that, a tool can make all the difference. Check out the free Profit Calculator to see how quickly you can turn your turnover into real profit insights.

Why Your Turnover Figure Actually Matters

So, you’ve wrangled your invoices and finally worked out your turnover. Great. But what does that number actually do? Think of it less as a final score and more as a vital sign for your business. It’s a number that unlocks doors, triggers responsibilities, and tells a story about where you’re heading.

The ATO and the GST Threshold

For many growing Aussie sole traders, this is the big one. The ATO has a specific rule tied directly to your turnover: the GST registration threshold.

Right now, if your annual turnover hits $75,000 or more (or you expect it to), you are legally required to register for GST. This isn't optional; it's a key tax obligation.

Here’s what that means in practice:

You must start adding 10% GST to all your invoices.

You’ll need to lodge Business Activity Statements (BAS), usually every quarter.

The upside? You can claim back GST credits for the tax included in your business purchases.

Hitting that $75,000 milestone is a great sign of growth, but it also adds a new layer of admin to your plate. It’s essential to watch your turnover so you can register at the right time and avoid penalties. As the ATO website explains, this applies to your ‘GST turnover’, which is basically your gross business income minus any GST you’ve collected.

Getting a Business Loan

Ever wondered how a bank decides if you’re a good bet for a loan for a new van or piece of equipment? Your turnover is one of the first things they’ll look at.

Lenders use it as a quick indicator of your business's size and health. A consistent or growing turnover shows them that there’s steady demand for your services and a reliable flow of cash. It proves you have a real, functioning business.

Key Insight: To a lender, turnover represents your business's ability to generate the cash needed to make repayments. A low or erratic turnover can be a major red flag, even if your profit margins are decent.

While they’ll definitely dig deeper into your profit and expenses later, a strong turnover gets your foot in the door.

Measuring Your Business Growth

How do you know if your business is actually growing? Tracking your turnover year-on-year is one of the simplest ways to find out.

Comparing your turnover from this financial year to the last gives you a clear measure of your progress.

Growing Turnover? Awesome! It shows you’re winning more work or you've successfully increased your prices.

Stagnant Turnover? This could mean you’ve hit a plateau. Maybe the market is tight, or you’ve simply run out of hours in the day.

Declining Turnover? This is an early warning sign. Are you losing clients? Are you not quoting enough?

This simple comparison helps you spot trends early and make proactive decisions.

The Foundation for Real Profitability

Finally, and most importantly, your turnover is the starting line for understanding your true profitability. You can’t know what you keep until you know what you made.

Once you have your turnover, you can start subtracting your costs to figure out your gross and net profit. This is where the real insights are hiding. It’s how you see just how much of every dollar of turnover is actually making it to your bank account.

This process separates the busy fools from smart business owners. It’s the difference between celebrating a 40,000 profit from it. Knowing this is the first step to avoid the common pricing mistakes small businesses make.

👉 Ready to see what your turnover means for your real profit? Use the Profit Calculator at profitcalculator.com.au to turn your sales figures into powerful insights.

The Hidden Dangers of Chasing High Turnover

It’s one of the most common traps in small business. You’re working flat out, the phone is ringing off the hook, and your turnover figure is soaring. On the surface, it feels amazing.

But when you finally check your bank account, the numbers don't add up. After all that work, there’s barely anything left. This is the danger of chasing high turnover at all costs. It’s a vanity metric that can hide serious problems just below the surface.

The 'Turnover at All Costs' Mindset

When you make turnover your number one goal, you start making bad decisions. You take on any job that comes your way, no matter how slim the profit, just to keep cash flowing and see that big number climb.

This usually leads to a few key mistakes:

Under-pricing your services: You throw in lowball quotes to win work, killing your profit margin before you start.

Accepting low-margin jobs: You say "yes" to projects that barely cover their own costs, leaving nothing for your business overheads or a decent wage for you.

Ignoring rising costs: More work means more expenses. More driving means more fuel. More admin means more of your unpaid time. These costs quietly eat away at your revenue.

Focusing only on that big, top-line number is a recipe for burnout. You end up working harder and feeling poorer.

A Real-World Example: The Freelancer's Trap

Let’s look at a freelance graphic designer named Chloe. In her first year, she hit a turnover of $80,000. She worked hard, had a decent work-life balance, and took home a solid profit.

Year two, she decided to grow. She dropped her prices to attract bigger clients and took on every project that landed in her inbox. Her turnover shot up to an impressive $150,000. On paper, she looked like a huge success.

But here’s what was really going on:

Her costs tripled: She had to pay for expensive software, stock photo subscriptions, and a virtual assistant just to keep up.

Her time vanished: She was pulling 60-hour weeks, dealing with demanding, low-margin clients who wanted endless changes.

Her effective hourly rate plummeted: When she finally crunched the numbers, she realised she was earning less per hour than she did in her first year.

Chloe almost doubled her turnover, but she halved her quality of life and her actual per-hour earnings. She was a classic ‘busy fool’—all activity, no real reward. Her story is a powerful reminder that understanding what is turnover in business is only useful when you also understand profitability.

The key is to shift your focus from simply increasing turnover to improving your profit margin on every single job.

From Turnover to True Profitability

Okay, we've covered the full story of turnover—what it is and why chasing that big number can lead you astray.

Now for the most important bit: turning that raw data into real business intelligence. Your turnover is the starting line, but the magic happens when you connect it to your costs to find out what you’re actually keeping.

This is how you move from just being busy to being genuinely profitable.

Bridging the Gap Between What You Bill and What You Bank

Knowing you turned over 35,000 in profit from it? That’s the kind of hard truth that forces you to make smarter decisions.

You need a simple way to connect the dots between the money coming in and all the money going out.

This is exactly why we built ProfitCalculator.com.au. It’s designed to be the bridge between your turnover and your real profit, helping you understand your numbers on a job-by-job basis before you even send the quote.

Instead of getting a nasty surprise at the end of the financial year, you can plug in the details for a single job—your charge rate, material costs, and even your travel time—and see your exact profit margin instantly.

Here’s what that clarity looks like inside the Profit Calculator.

This simple breakdown shows you exactly where every dollar from your turnover is going. It reveals your true profit margin and, most importantly, your Effective Hourly Rate (EHR).

Uncovering Your Real Hourly Rate

For any service business, your EHR is the ultimate measure of how well you're doing.

It tells you what you’re actually earning for every single hour you work, after all your business costs are taken out. This is the one number that tells you if a job is truly worth your time.

A tool like the Profit Calculator does the heavy lifting for you, revealing whether that high-turnover job you're quoting is secretly a low-profit trap.

For accountants and bookkeepers, this kind of insight is invaluable for your clients. Being able to show them their real job profitability helps you provide advice that goes way beyond just tax compliance. You can learn more by exploring our resources for advisors.

When you start focusing on profitability instead of just turnover, you can finally price your services with confidence.

👉 Ready to see what you're really earning? Try the Profit Calculator free at profitcalculator.com.au

Got Questions About Turnover? Let’s Clear Them Up

We’ve covered a fair bit, but it’s normal for a few questions to still be floating around. Here’s a quick rundown of the most common queries we hear from Aussie business owners.

Is Turnover the Same as Cash in the Bank?

Nope, not even close. Turnover is the total value of your invoices, but that doesn't mean the money has hit your account yet. If you have $5,000 in outstanding invoices, that counts towards your turnover, but it’s not cash you can use to pay the bills.

How Often Should I Calculate My Turnover?

While the ATO only really cares about your annual turnover for GST, you should be looking at it more often.

Calculating it monthly or quarterly gives you a real-time pulse on your business. It helps you spot trends early, see if you’re on track, and make changes before small issues become big problems.

What if My Turnover Dips Around the GST Threshold?

This is a super common scenario. If your turnover drops below the $75,000 threshold for a year, you can choose to cancel your GST registration. However, if you think it’s likely to pop back over the threshold again soon, it’s often less hassle to just stay registered. Constantly registering and de-registering creates a lot of extra paperwork. The ATO has clear guidelines to help you decide.

Can a Business With a Lower Turnover Be More Successful?

Absolutely. This is the single most important lesson.

A tradie turning over 30,000 in actual profit. They're in a much better spot than someone turning over 20,000 profit for twice the work.

Profit, not turnover, is the real measure of success. It’s what pays the bills and builds a better life. Understanding your true numbers is key, and if you're ready to see beyond the top-line figure and unlock deeper insights, you can always upgrade your toolkit.

ProfitCalculator.com.au helps you see beyond turnover and understand your real job profitability.

👉 Want to know your real hourly rate? Use the Profit Calculator free at profitcalculator.com.au