Taxes, Cashflow, and Money Confidence
Today I’m talking all things Taxes, Cashflow, and Money Confidence. All just a little important for business owners, #amiright?!
But before we dive in to today’s topic here’s a quick refresher of one of the biggest bookkeeping mistakes I see people making:
They start out as a hobby and don’t separate business and personal transactions (or having separate bank accounts). This is important in case you were to ever be audited, but it also makes bookkeeping SO MUCH EASIER.
Tax Tips
Look ahead now and make sure you have someone lined up to prepare your taxes. Maybe before you had a W2 and were able to use Turbo Tax. It worked but now you are a business owner and need and expert to help you with your taxes. I always recommend working with a CPA!
Another tip is to, you guessed it, make sure your bookkeeping is up to date! Go through and make sure your income and deductions are recorded and separated out, because they’re deducted differently. Whether you use QuickBooks, Xero, or a spreadsheet.
Another thing to check for is 1099s. Go through the people that you’ve paid (whether through check, card, PayPal, Stripe): vendors, freelancers, a VA, web designer, photographer, etc. and see if you need to send them a 1099. If you’ve paid someone over $600 in a year, they need to receive a 1099 from you.
As we near the end of the year, if you’re thinking of investing in a coach or program, see if you can prepay those expenses because you can write it off as a deduction on your tax return. But don't get too crazy and just spend because it's a "tax deduction." Make sure it's a wise move for your business.
Cash Flow
It can be overwhelming to have a 10k month, then realize that what you actually took home after all your expenses… was not nearly that much. Here’s some tips to keep things in order so you’re not struggling paying bills and you’re able to have that financial freedom you want.
First, have a plan. When is your money coming in, and when is it going out? Let’s say you offer a recurring monthly service. Have everyone pay the same day each month so you know what’s coming in on that day, and that it's (hopefully) enough to pay your bills. That way you don’t have to worry, because you have that structure in place.
Second, pay yourself first. That’s why you went into business, and you can probably run your business for less than you think. More on paying yourself first in this post.
Once you have your numbers in QuickBooks or Xero, every month I pull a detailed Profit and Loss statement. It shows where all your money came in from, and you can use that to project for the next month (you can also look at your P&L from the last quarter to project for the next quarter).
I also like to look at each month and compare my trends. Maybe March was a lower sales month than April. Why was that? It’s a great clue in for you as a business owner to evaluate why things were (or were not) consistent. If you’re not tracking your numbers… it’ll be really difficult to see those trends.
It’s so empowering to see your numbers for the year - you know how much you can outsource, how much you can invest, if you can do a rebrand, etc. It gives you so much peace of mind to know your numbers!
Money Confidence
As you’re starting out, you’re going to have expenses. And here’s what I want you to know: You’re not failing because you have to invest in your business, ESPECIALLY at the beginning. Of course you want to work towards your business running itself, to where you don’t have to invest in it anymore. If you’re looking into something like Kajabi, it might seem like a big investment at first. But it might be the thing that helps you set up your systems and free up brain space for you to find your clients.
What money you invest, should come back to you (as long as it's a wise investment). Just make sure you’re tracking and recording those investments so you can pay yourself back. With different types of income, track those separately (same with expenses) so you have a clear picture of what’s going on in your business. When you look at these numbers, don’t feel like you’re behind. Building your business is not linear, there are going to be some ups and downs. And it feels SO GOOD when that money starts coming back.
Keeping up with your books and having detailed records gives you confidence in your business. Over time you’ll be able to really see your growth! Especially when you pull that Profit & Loss for the whole year. If money still feels scary or overwhelming, reach out to a professional for help (here’s how you can work with us if you’re interested).
I’ve had clients who were able to pay off thousands in debt they didn’t think they’d be able to pay off. Simply because THEY KNEW THEIR NUMBERS and could make informed decisions to support their goals. You got this! Feel free to email us or send a DM on Instagram with any questions you have!
