Business and Financial Management
The three statements that run a plumbing company
An income statement shows revenue minus direct job costs minus overhead equals net profit. A balance sheet shows assets, liabilities, and equity at a moment in time. A cash-flow statement tracks when money actually moves. Many profitable plumbing companies fail on cash, not on profit, because retainage and slow receivables tie up working capital.
Job costing, burden, and overhead
Direct costs are labor (wages plus burden: payroll taxes, workers' comp, general liability, typically 25–40% of base wage), material, equipment, and subcontractors. Overhead is everything else: office, trucks, permits, insurance, owner salary. Knowing true cost per hour is the foundation of every bid.
The markup-versus-margin trap
This is the single most common math error on licensing exams. Markup is applied to cost; margin is a percentage of the selling price. If a job costs $1,000 and you add 25% markup, you bill $1,250, which is only a 20% margin. To earn a 25% margin, divide by (1 − 0.25): $1,000 ÷ 0.75 = $1,333.33. Break-even sales volume equals annual overhead divided by gross margin percentage.
Getting paid and staying legal
Florida's Construction Lien Law (Chapter 713) governs private-work payment rights. A subcontractor or material supplier not in direct contract with the owner must serve a Notice to Owner within 45 days of first furnishing. A Claim of Lien must be recorded within 90 days of final furnishing, and suit to foreclose filed within one year. Public work uses bond claims instead of liens. Licensing and qualifying-agent duties live in Chapter 489.