Have you ever wondered how much you’re supposed to be spending in your business?
Whether your spending is normal? Too much? Not investing enough back in?
Figuring out that sweet spot can be as frustrating as a flight delay after a long trip, but today, I bring you good news:
I’ve got a plan on exactly how to divide up your income so that your bills are paid, taxes are covered, and you actually get paid.
As an entrepreneur, cash is king. It not only helps keep the lights on in your business but also funds your life, from the roof over your head to your kids’ soccer camps to nights out with the girls. That cash is your lifeline, and the reason why I wanted to fill you in on the biggest mistakes I see clients make with their bookkeeping that is losing them money.
When it comes to managing the money in your business, you want to ensure that you are tracking your income and expenses like you once tracked down the name, age, and shoe size of the girl your ex started dating.
Because you want to have enough cash to fund your business AND pay yourself.
Know what service is making you the most money and what you should send packing.
See where you’re overspending.
You hustled, created a kicka$$ social media strategy, pitched to some clients, and now have money flowing into your business. But how much of that should you actually be funneling back to you?
Great question. But what most entrepreneurs don’t realize is that this isn’t just a matter of determining how much to pay yourself.
It’s also discussion on how to go about making those payments.
Struggling to determine which business taxes you have to pay, when those business taxes are due, and how to maximize your deductions to save the most come tax time?
I’m here to simplify it all for you.
Taxes can be confusing, but this post will help you understand the basics so that you ensure you a) stay legal and b) hopefully save some substantial money (tax-planning strategies are a real thing, lady! I use them every year to help keep more in my pocket and less in the government’s).
Taking the leap into starting your own business can be…well…scary. Intimidating. Nerve-wracking. All of the above.
I remember battling the, “Am I even good enough to do this?” negative voices in my head. Along with the, “Is this really what I want to do?” and “Will I even like being an entrepreneur?” questions because, you know, our mind clings to the comfortable and avoids anything unknown. We’re a species of survival, you know.
But it can also be exhilarating. And rewarding. And challenging in the best way possible.
While many entrepreneurs are simply focused on making enough money to support their biz and pay themselves, you have graduated to the point where you have more than you know what to do with.
Great problem, sister.
However, you want to ensure that all the work you put into earning those dollars isn’t for naught. Excess cash in the bank isn’t a free pass to start upgrading to first class or renting out office space you don’t need.
It’s a chance to start building even more financial freedom for you and an opportunity to scale your income to the next level.
You want to know something I probably shouldn’t tell you as someone who’s an “expert” in this field?
I waited WAY too long to form an LLC for my business.
I started my company as we all do, in a whirlwind of ideas and social media marketing, trying to figure out how to create a website and attract clients.
And once everything was up & running, I was also up. And RUNNING.
At the start of 2019, I officially got official – I put on my big girl pants, registered for LLCs, and opened my FIRST EVER business bank accounts for both my real estate business AND Britt & the Benjamins. I now have so many debit & credit cards, I need two wallets.
However, while I wrote a post a while back telling you WHY you need to get a business bank account, I didn’t divulge the HOW, i.e. the laundry list of items to look for when you decide your business is ready to put on its big girl pants, too.
I would say that 90% of the questions I receive from entrepreneurs center around one thing: taxes.
And I get it. They are confusing. And always changing. And sometimes extremely boring.
Trust me, I’ve done hundreds in my lifetime. I should know.
Which is why I hopped on Instagram to ask you what your biggest tax question is, and girl, here are your answers:
If you’re anything like me, your world seems to reside in a state of constant movement. I work 50 hours per week at my full-time job, spend my spare time renovating properties or working on my business, and somehow manage to squeeze in time to pop a Stouffeur’s in the oven for the Keithster and I while we drink wine on the couch & catch-up on our day.
It’s like being the child of Olivia Pope & Leslie Knope in the best & worst kinds of way.
Today, we’re tackling the last of those and diving into exactly how much money you should be taking out of your business to put back into your pocket. I mean, a girl’s got to eat. And pay rent. And afford her weekly Starbucks because GET ME OUT OF THE HOUSE.
Now, the two-word answer to how exactly you do that is this:
Girl, your website is GLAM.
And the clients are rolling in. Your social media campaigns are well-oiled machines, your services & products are really connecting with your followers, and you feel like you’ve finally got something here.
But you haven’t moved the needle on your money situation.
Your savings account has barely grown (if at all), you’re paying yourself less than what you did at your full-time job, and you’re working a schedule that may support a wardrobe of leggings & top knots but also is causing those bags under your eyes.
While it seems like 401(k)s are more popular than Instagram pics of Starbucks cups (oh, hey, Pumpkin Spice Latte…I see you’re back), the data shows otherwise. In fact, over 31% of American households don’t have access to a plan like a 401(k) to save for retirement. And a majority of those are most likely made up of people just like you.
The wild ones. Creatives. Risk takers. Uber successful entrepreneurs kicking a$$ and taking names.
But just because you’re rolling in the dough now doesn’t mean that you shouldn’t give thought to your own retirement. This still needs to be a priority for you just like it was back in your days when you played Corporate Barbie for 9 hours a day, 5 days a week.
I don’t know about you, but I have a very hard time making decisions that will affect me for a long period of time.
For instance, it’s been 5 years since I moved into my house, and I still don’t have anything hanging above my couch because I can’t quite decide what I want.
However, there are times when you have to have a tad bit more urgency in getting something done, and when you’re starting out your business or aren’t happy with your current bank, opening a new checking account is one of them.
6 years ago, I was preparing more tax returns in a period of 2 months than most people do in a lifetime.
Newsflash: not my most exciting years.
However, I am now down to one each year (my own), and love him or hate him, Trump’s new tax bill is definitely going to affect it.
Guys, it’s the post you’ve all been waiting for.
If you follow me on Instagram, then you know that Keith and I purchased our first official rental property back in September. And while I wanted to write this post MUCH sooner (you know, out of sheer personal excitement), I waited a few months to ensure at least a small level of success (and paid rent) prior to jumping the gun.
However, 3 months later, all is running smoothly (*knock on wood*), and I wanted to give you all the details behind how we got into this real estate game, the process we went through, and the numbers on our FIRST EVER rental property.
I actually found out about the Equifax data breach on Twitter (because, you know, that’s where I get all my news), and while many brushed this off as another case of potential identity theft in a time of many, I knew it was so much more than that. And it got even worse when I verified that I was one of the 143 million people who had had their information compromised. Oy vey.
Exactly 4 years ago around this time at the ripe old age of 26, I was smack dab in the middle of house-hunting. I had been saving for a down payment for a few years and had finally hit my goal, so off I went into the world of starter homes and cute bungalows to find a house for this single gal that would be mine and all mine. Well, mine and the bank’s. At least for 15 years.
Luckily I didn’t have to deal with some of the house-hunting nightmares that others have had to endure, and I found a cute little place in the area I wanted for a great price. We were still coming out of the recession so it was a buyer’s market, and with interest rates so low, I jumped at the deal.
I know most of you think your credit score isn’t a sexy topic, but did you know having a crappy one could potentially cost you a year’s salary?
When I bought my home in 2013, we were just beginning the incline out of the recession that had blindsided (most of) us in 2008. It was a buyer’s market, meaning homes were priced to sell and there were a lot of the market. On top of that, my credit score was sitting pretty in the high 700s, meaning I qualified for the lowest interest rate on my mortgage. Did I know prior to that point how much money that score saved me? Absolutely not. But when I started crunching the numbers on my house situation, I soon found it.
Complete honesty moment: saving money is second nature to me.
Even as a teenager, when you’re supposed to be a little reckless with your cash, I was hoarding the dollars I made in that amusement park ice cream stand like I’d never make another. In college, when my friends were complaining of bank accounts with less than $20 in them, I never went below $1,000. And in the past 3 years, I have managed to save $60,000 as a single lady all on her own, and that even excludes anything I contributed to retirement. Like I said, I’m a natural.
However, this isn’t the case for most millennials. In this 2016 GoBankingRates study, they found that 72% of young millennials (18-24) have less than $1,000 saved, and 31% have no savings at all. It doesn’t get much better for the older millennials (25-34) either: 67% have less than $1,000 and 34% have nothing saved.
One of the most heart-wrenching issues I have with our modern day education system is how little emphasis they place on money management. You’ll learn about the Baroque period, how to identify 50 different types of rocks (literally had to do this), and what Buddhism is all about, but money? Nah. We’ll skip it. And even if you do take a personal finance course, it’s all so academic that it’s hard to apply it to real life.
When I graduated from college and was in the midst of my first month at my “real” job, I remember heading to the movies and thinking how nice it was to not worry about buying a $5 Icee at the theater. The freedom! The liberation! The independence!
And then at the end of that month, reality smacked me in the face when I looked at my bank account and had no idea where all that money I had earned went. I thought I was making a killing, but I soon learned my salary didn’t get me as far as I thought it would. Cue a defeated 22 year-old and some sad, dramatic soundtrack.
It had been one of those harrying weeks at work – one where you feel like you have 10,000 things on your to-do list, 2 minutes to complete them all, and your stress levels are that of Russell Wilson right before he threw that pick and blew the Super Bowl this year. I was in the middle of trying to reconcile our monthly budget when I heard my phone vibrate and looked down to see a notification from Prism, a bill management app I use, alerting me that my electric bill was due tomorrow and I had yet to pay. With everything going on at work, it had completely slipped my frazzled mind that the due date was fast approaching, and as I took 30 seconds out of my day to pay the bill, I thanked my lucky stars that I had a reminder set up to avoid those annoying late fees.
I got two different reactions when I told people I had moved to a standing desk. The first was one of jealousy…the other extreme disbelief (and not in an encouraging way). I know, it’s a fairly new trend that is just in its baby phase, but when the fitness freak in me heard that it was an option at my workplace, I couldn’t help but jump at the chance. I had spent 5 years of my life sitting roughly 9 hours a day, and let me tell you, I was doing more squats than Arnold Schwarzenegger in his prime to make sure my butt didn’t turn into cellulite city. It was getting out of control.
Health insurance is not a sexy topic – that is one thing I know for sure. When I put on my big girl pants at the ripe old age of 22 and stepped through the office door of my first “real” job, figuring out how to cover my medical expenses wasn’t running through my mind. No, I, like many of you I’m sure, was full of excitement about how to decorate my new desk, meeting my co-workers, and finally getting started on my path to success. And to be honest, I was also mentally spending that first paycheck – hello, Pottery Barn bedspread and month’s supply of sauvignon blanc. So when I sat down at orientation and the health insurance paperwork was pushed across the table in front of me, all I could do was issue a blank stare. I had NO idea what was the best choice for me, and as you are all well aware, neither high school nor college truly prepare you to make these decisions.