What does it take to turn a sketch on Instagram into a multi-million-dollar exit to a global tech giant like Linktree? If you ask Tim Lawrence, co-founder of the social media planning app Plann, it isn’t just about having a “brilliant idea.” It’s about surviving the “absolute panic rush” of the startup world, managing bone-deep financial stress, and having the right structure in place before the first dollar even hits your bank account.

In this episode of The Lat Chat, Tim sat down with his long-time accountant and mate, John from Latitude Accountants, to recount the raw, unfiltered journey of Plann—from its humble beginnings in Western Sydney to a successful acquisition.

1. The “Sole Trader” Trap: Why Structure is Your Foundation

Most entrepreneurs start exactly where Christy Lawrence did: as a sole trader. It’s cheap, easy, and requires almost no paperwork. However, if your goal is to build a scalable tech company, staying a sole trader is one of the biggest risks you can take.

The Shift to a Company Structure

Early in the journey, Tim and Christy made the difficult decision to move from a sole trader setup to a proprietary limited (Pty Ltd) company. While the setup costs felt massive at the time, it was essential for long-term success.

• Asset Protection: Separating personal risk from the business’s liabilities was crucial, especially when Christy later took on significant personal risk to save the company.
• Tax Efficiency: Moving to a company structure allowed them to access R&D tax incentives and proper tax structuring that isn’t available to sole traders.
• Investor Readiness: You cannot easily sell a business or achieve a “great exit” if the foundation isn’t codified as a company.

As Tim noted, “if we want to be a business, you need to be a company”.

2. Bootstrapping vs. VC: The Customer-Funded Reality

In the tech world, there is a “unicorn or die” culture fuelled by Venture Capital (VC). But Plann took a different route: they were completely customer-funded.

The Reinvestment Cycle

For years, Tim and Christy lived on a single salary, pumping every cent of profit back into the business. While their accountant was urging them to “take some money off the table,” they remained focused on growth.

This “balls of steel” approach allowed them to:

• Pivot from a one-off purchase model to a Software as a Service (SaaS) subscription model.
• Fund the massive leap from a mobile app to a comprehensive web platform.
• Maintain control and conviction until the final exit.

3. Cash Flow: The Number One Killer of Startups

Tim is candid about the “darkest stages” of the journey: “financial stress was easily the hardest thing”. At one point, the business was just one month away from destruction.

Managing the ATO and the “3-Month Hurdle”

In Australia, the Business Activity Statement (BAS) can be a silent killer. Many small business owners struggle to save enough revenue over three months to pay their GST and PAYG obligations.

One of the most tactical moves Latitude Accountants suggested was switching from quarterly to monthly BAS reporting.

• Why? It forces better cash flow discipline.
• The Result: Instead of a giant, terrifying bill every 12 weeks, the business managed its tax obligations in smaller, digestible chunks every 30 days.

Expert Tip: In Australia, taxes like Payroll Tax and Land Tax vary between states and territories. If you are hiring staff across different regions, ensure your accountant is tracking these different thresholds to avoid heavy penalties.

4. The Dirty Game of Due Diligence

Exiting a business isn’t as simple as signing a contract. Plann was approached roughly 10 times by potential acquirers. One deal got within two business days of signing before the buyer tried to change the terms.

Performance-Based Earnouts

The buyer tried to shift the deal to a purely performance-based earnout. In startup terms, this often means you only get paid the full sale price if you hit targets that are sometimes designed to be missed. Tim and Christy walked away from that deal, costing them $400,000 in the process, because they decided to “trust ourselves rather than trust you”.

This highlights why having an accountant on retainer is vital. You need someone who knows your numbers intimately to tell you when a deal doesn’t add up.

5. Why the “Right” Accountant Matters

Tim eventually chose Latitude Accountants over “top five” global firms. Why? Trust and Flexibility.

A giant firm might give you a flashy presentation, but a boutique firm “rides the experiences” with you. When Plann faced legal threats or cash flow crises, their accountant wasn’t just filing papers; he was “making funeral arrangements” for the business in the background, ready to protect the founders if everything collapsed.

Frequently Asked Questions

What is the best business structure for an Australian tech startup?

While a Sole Trader setup is low-cost, a Proprietary Limited (Pty Ltd) Company is generally best for startups. It provides asset protection, allows for R&D tax incentives, and is necessary if you plan to eventually exit or sell the business.

How do I manage GST and PAYG without getting hit by a huge bill?

Switching from quarterly to monthly BAS reporting can help. This forces you to manage your cash flow every single month, preventing the shock of trying to find a large sum of money every three months.

What is an “earnout” in a business sale?

An earnout is a part of a deal that can be time-based or performance-based. It means a portion of your payout is delayed and depends on the business meeting certain criteria after the acquisition is finalised.

Take Control of Your Business Future

Navigating the complexities of the Australian tax system should not feel like a solo fight. At Latitude Accountants, we believe in the power of production and the vital role of the small business owner. Whether you are struggling with GST cash flow, navigating superannuation requirements, or looking for a strategic tax structure that protects your hard-earned assets, we are here to help.

Contact the expert team at Latitude Accountants today for strategic accounting and business advice tailored to your specific situation. Let us move past the “grind” and start building your real Australian dream.

• Phone: 1300706597
• Email: info@latitudeaccountants.com.au
• Book online via our website.
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Disclaimer

The information provided in this post is general in nature and does not constitute personal financial or tax advice. Australian tax laws and policies, such as Stamp Duty, Payroll Tax, or Land Tax, can vary between states and territories. Readers should seek professional advice regarding their specific circumstances.