Why Does My Business Make Money But I'm Always Broke?

You had a great month. Jobs came in steadily, invoices went out, and your business account showed real numbers. Then you checked your personal account. Where did it all go?

This is one of the most common frustrations we hear from contractors, freelancers, and small business owners across Dallas-Fort Worth. The revenue looks healthy. The work is there. But somehow, you're still scrambling to cover bills or wondering if you can afford that truck repair.

You're not bad at business. You're experiencing a gap between revenue and actual profit that catches nearly every business owner at some point. Understanding why this happens is the first step toward fixing it.

Revenue Is Not Profit

This sounds obvious when stated plainly, but it's easy to forget in practice. When a $15,000 payment lands in your account after completing a roofing job or finishing a consulting project, your brain registers that number. Fifteen thousand dollars. That feels like money you made.

But you haven't made $15,000. You've received $15,000, which is different. From that number, you need to subtract materials, labor if you have employees or subcontractors, fuel, insurance, licensing fees, software subscriptions, and dozens of other expenses that made the job possible. What remains after all those subtractions is your actual profit.

Many business owners track their revenue carefully while letting expenses slip through the cracks. They know exactly what came in but only vaguely what went out. This creates a distorted picture where the business appears more profitable than it actually is.

The Cash Flow Timing Problem

Even if your business is genuinely profitable on paper, you can still be broke in practice. This comes down to timing.

Consider a Dallas plumbing contractor who completes a $20,000 commercial job. The client pays on net-30 terms, meaning the payment won't arrive for a month. But the contractor already paid for materials upfront, covered payroll last Friday, and the quarterly estimated tax payment is due next week.

For that entire month, the contractor has technically earned $20,000 in revenue but has zero of it in hand while expenses keep marching forward. This is the cash flow gap, and it has destroyed otherwise healthy businesses.

The situation gets worse when you factor in how work flows in many trades and service businesses. Projects cluster together, creating feast-or-famine cycles. You might complete three major jobs in April but not get paid until May and June. Meanwhile, May is slow, so you're covering two months of expenses with money that hasn't arrived yet.

Expenses You're Not Tracking

Most business owners know their big expenses. Rent, payroll, materials. But it's the accumulation of smaller expenses that often creates the gap between perceived and actual profit.

That monthly software subscription you signed up for two years ago and forgot about. The extra fuel costs when gas prices crept up. The annual renewals for certifications and licenses that hit your account automatically. The new tool you bought at Home Depot and paid for from your business account. The client lunch you picked up.

Individually, these are minor. Together, they can easily add up to hundreds or thousands of dollars per month. If you're not tracking them systematically, you're essentially flying blind. You think you know your expenses, but you're working with incomplete information.

One Fort Worth HVAC contractor we worked with was convinced his business generated about $8,000 per month in profit. When we actually categorized every expense for a quarter, the real number was closer to $3,500. The difference came almost entirely from untracked small purchases and subscriptions that had accumulated over the years.

The Tax Surprise

Here's a scenario that plays out every spring across Texas. A sole proprietor or LLC owner has a solid year. Revenue was up, business felt good. Then they meet with their accountant and discover they owe $15,000 in taxes.

Where is that money supposed to come from?

This happens because self-employed business owners are responsible for both income tax and self-employment tax, which covers Social Security and Medicare. Combined, this can easily reach 25-35% of your net profit depending on your total income. If you haven't been setting money aside throughout the year, tax season becomes a crisis.

The problem is psychological as much as financial. When you see money in your business account, it feels like your money. But a substantial portion of it was never yours to begin with. It belongs to the IRS. Treating it as available funds is borrowing against a bill that will come due.

Mixing Business and Personal Finances

Dallas-Fort Worth has a strong culture of small business ownership and independent contracting. Many of these business owners operate as sole proprietors or single-member LLCs. In these structures, there's no legal separation between you and your business.

This legal reality often translates into a practical habit: mixing business and personal finances. Using one bank account for everything. Paying for groceries with the same card you use for materials. Transferring money back and forth based on whichever account has funds at the moment.

This makes it nearly impossible to understand your actual business performance. Is your business profitable? You genuinely can't tell because business revenue and personal income have become tangled together. Every transfer between accounts muddies the water further.

When you can't see your business finances clearly, you can't make good decisions about pricing, expenses, or growth. You're making consequential choices based on feelings and bank balance checks rather than actual data.

Owner's Draw Versus Business Profit

Let's say your business generates $100,000 in revenue and has $70,000 in legitimate expenses. That leaves $30,000 in profit. Good news.

But you also need to live. You need to pay your mortgage, feed your family, handle personal expenses. So you pull money from the business throughout the year. Maybe $4,000 per month, totaling $48,000.

You just drew $18,000 more than the business actually produced in profit. That deficit has to come from somewhere. It might come from the tax reserve you were supposed to maintain. It might come from the account balance you accumulated during better months. It might come from a growing credit card balance. But it's coming from somewhere.

This is how a business can be technically profitable while the owner is personally broke. The owner is simply taking more than the business can support.

What This Looks Like in Practice

A solo contractor in Arlington has been in business for seven years. Revenue grew from $80,000 in year one to about $180,000 now. He should be doing well. Instead, he's constantly stressed about money.

Here's what we typically find in situations like this:

Revenue increased, but so did lifestyle. The truck got upgraded. The house payment got bigger. Vacations got nicer. The owner's draw crept up to match the revenue growth without checking whether profit actually grew proportionally.

Expenses also increased without deliberate tracking. More software tools. More subscriptions. More small purchases. More fuel costs with a larger vehicle. The expenses grew almost as fast as revenue, leaving profit relatively flat while personal spending increased.

Taxes caught up. Higher revenue means higher taxes. But without systematic quarterly payments, the tax liability accumulates as a nasty surprise.

Cash flow gaps widened. Bigger jobs mean bigger gaps between when you pay for materials and when you get paid. The timing mismatches that were manageable at $80,000 in revenue become painful at $180,000.

Moving From Confused to Clear

The solution isn't complicated, but it requires discipline. Separate your business and personal finances completely. Maintain separate bank accounts and never cross the streams outside of a deliberate, scheduled owner's draw.

Track every expense, not just the big ones. Use accounting software or work with a bookkeeper who categorizes each transaction. The goal is complete visibility into where money actually goes.

Establish a tax reserve. A common approach is setting aside 25-30% of profit in a separate account earmarked for taxes. This money is not available for spending because it was never yours.

Pay yourself a consistent amount. Rather than pulling money whenever you need it, establish a regular owner's draw that the business can actually support based on real profit numbers. This forces you to be honest about what the business produces.

Monitor cash flow, not just profit. Know when money comes in and when it goes out. Plan for gaps. Maintain a buffer for slow periods.

The Clarity You Need

Understanding why your business makes money while you're always broke is frustrating but solvable. The gap between revenue and personal wealth isn't mysterious once you look at the actual numbers. It's usually some combination of untracked expenses, tax obligations, cash flow timing, and taking more than the business produces.

The fix starts with visibility. When you can see exactly what's happening with your money, you can make informed decisions. When you're guessing, you're gambling.

Small businesses and contractors across the Dallas-Fort Worth area face these same challenges. The ones who thrive aren't necessarily smarter or luckier. They just have better information about their own finances. That clarity is available to anyone willing to build the systems that create it.