Consultancies, legal and medical practices, architects, agencies — the finance problems look different from a trading business, but they are just as specific.
The cash problem is timing, not amount
Practice income arrives in lumps: a large invoice settled in March, nothing much in April, two in May. Annual revenue can be entirely healthy while any given month is not.
Planning against average monthly income therefore does not work. What works is planning against collection timing, which requires knowing your actual pattern rather than your terms.
Two things fix most of it.
A buffer sized to your real gap. Not a generic three months — the actual longest gap between meaningful collections over the past two years, plus a margin. For most practices that number is larger than the rule of thumb and smaller than the anxiety.
Retainers where the work supports them. Converting even a third of income to recurring changes the planning problem fundamentally, and it is usually more available than practitioners assume.
The 26AS problem
Clients deduct TDS. That deduction should appear in your Form 26AS. Frequently it does not — or it appears against the wrong period, or the wrong PAN, or at the wrong value.
Discovering this at filing time means chasing a deductor months later, to correct a return they have already filed, for money you have already earned. It is a bad position.
Reconcile quarterly instead. Match what clients have deducted against what appears in 26AS, and chase the differences while the quarter is still open and the relationship is current. This is a one-hour exercise done four times a year that removes an entire category of annual pain.
Separate the accounts
Personal and practice expenses blurring together is nearly universal in small practices, and it has two costs.
The obvious one is tax: expenses that should have been claimed are not, because nobody could establish which were which.
The less obvious one is that you cannot see your own margin. If the practice’s costs include a share of household expenses that nobody has quantified, the profitability of the practice is a guess — and every pricing decision you make rests on that guess.
The GST question
Whether GST registration applies to a professional practice, and whether it has been set up correctly, is a question a surprising number of practitioners are not confident about.
It is worth getting a written answer once, rather than carrying the uncertainty. The answer depends on turnover, the nature of the service, and whether any of it crosses state lines — and getting it wrong in either direction is expensive.
