I'm not going to lie: the idea for this post came about when I was straightening my hair in my bathroom this weekend (hey, a #boss has to look fierce, amiright?) and remembered that my first year in business, I left so much tax money on the table that it made me totally want to throw a tantrum in the middle of H&R Block.
Instead, I decided I'd share with you my most cringe-worthy mistakes in the hope that you will not in fact think that because you buy something on behalf of a client and they reimburse you does not mean you don't show that on your taxes. You have to. And that is a hard, hard, expensive lesson to learn (seriously. If I could do it all over again and marry a tax lawyer before I started a business...well, we'd all be in better shape right now).
1. When you buy something for a client, it's a business expense. When they reimburse you for it (assuming with no markup), it's business income. You have to report BOTH of those things. And while now that seems obvious, it was most definitely NOT obvious when I filed by 2013 taxes.
This also goes to all my contract laborers and freelancers out there as well. If you're working on behalf of someone else and you buy staples for them on the way to a job site and they reimburse you? The cost of the staples and the income you make don't just disappear, since your employer is definitely writing that reimbursement off on her taxes, which means you gotta write it off too.
If you're trying to stay below a specific income threshold...keep this in mind.
2. Business accounts are different from personal accounts. Unless you REALLY LOVE tracking all your receipts and manually accounting every expenditure that you have and have the mind of a freaking genie when it comes to remembering every $50 check you ever wrote...in which case, I'll pay you to grant me three wishes.
But otherwise, if you don't have separate business and personal accounts (both in the bank and different credit cards), I'm going to ask you this:
Why the eff not?
(Don't tell me "it's too hard to split everything up." It took me an hour and a half and I got as many free suckers as my heart pleased. If that's not customer service, I don't know what is.)
3. Repeat after me: Business Checking. Business Savings. Personal Checking. Personal Savings. These are AT MINIMUM the four accounts you need. I'm not going to be all nicey nice to you and say "well, you don't need a business savings account if you don't waaaaaant toooo" because do you know how hard it is to look at your business income sitting all pretty-like in one account and know that you can't spend thirty percent of what's in there?
REALLY FUCKING HARD. THAT'S HOW HARD.
4. Your personal brand does not have to be decided tomorrow. The biggest issue I have with personal branding advice is that it seems extremely committal that YOU ARE BUILDING A BUSINESS AROUND ONE IDEAL CUSTOMER!
But that customer can change from year-to-year, or even month-to-month.
My ideal customers have grown and shifted as my business has grown and shifted. So don't think that every new client you're going to serve is going to be the same as the one you wrote down in your handy "Discovering Your Brand" workbook. Let that shit change.
5. You're not charging enough. Seriously. You're not.
6. Just because it took you 3 hours to write a website does not mean you are only spending three hours on that client. This sort of goes with #5 because when I started my business, I was doing copywriting and email marketing for kind-of-big-deal companies. And at first I thought "oh, I'll just charge hourly and then it's all fairsies." Except for the one-hour intake call that I can't show on an invoice, or the thirty minutes I spend responding to emails every day or...
You get the picture. If you do charge hourly, make sure that your "hourly rate" is high enough so that it can cover all those little administrative tasks that you do all week. A good rule of thumb is that you only have enough space to actually perform your task (for me it was writing, but for you it may be coaching, graphic design, photography, etc.) for 10 - 15 hours a week, but you have to make a 40-hour a week salary. So if you want to make $50,000/year and your 40-hour/week hourly rate would be $25, but you're only working 10 hours/week...then your hourly rate needs to be close to $100/hour.
7. Hiring help can make all the difference. I'm still not the greatest at this, but in the past few years, I've hired two different graphic designers, a coach, two photographers, a shoot stylist, a bookkeeper, a CPA, and a lawyer.
I cannot imagine where I'd be if I didn't do any of those things (probably still working on a blogger.com blog with my mom as my only reader).
Seriously, get yourself some help. At least so you can sleep a little more at night.
8. If it's not coming naturally, stop doing it. This goes for almost everything: creating a Facebook page, trying to write a really content rich blog post, creating and editing YouTube videos every week...
Some stuff will be hard and will take effort and slowly get easier.
Some stuff will make you want to bang your pretty little head against a wall over and over and over again. That is when you must:
a) legit quit and move on.
b) hire someone else to do it for you (you'll be saving money on Advil at the very least)
As a little personal anecdote, I've never, ever, ever not finished something and then come back to it months later and said "Oh, THIS is why I'm not world famous by now." My best, most profitable things all came from idea to fruition in a few weeks.