2017 Behind the Scenes & What's to Come

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In my inbox today I received Laura Simm’s newsletter. Subject line was: Behind the scenes: My 2017 - I immediately clicked and read all Laura’s greatness and reflection from 2017 and honestly felt inspired to do the same for my first blog of 2018.

Before I go into my 2017 review, I need to take a moment and share how pivotal Laura Simms is to my journey. In late 2014, I enrolled in her signature class, “Your Career Homecoming” which resulted in the very early underpinnings of what you now know as The Wellness Bookkeeper.  Then in 2016, I was part of the very first 90 Day Business Launch Program - which she delivers with Michelle Ward from the When I Grow Up Coach - who is also freakin awesome!

So basically, Laura worked with me at the time when I was working at a 9-5 - longing to serve the world in a bigger way - longing to be an entrepreneur - and essentially guiding me through two tremendously large parts of my transition.

So basically she is fucking amazing.

Definitely get on her newsletter list and if you or anyone you know desires a career that feels like home OR if you need a swift kick in the pants to launch your business - make working with Laura (and Michelle) a priority for 2018.

So what happened for me in 2017?

  • I legally filed The Wellness Bookkeeper as an LLC.

  • I left my part-time job and went full-time with The Wellness Bookkeeper. In retrospect, this part-time job served as a bridge job and was the one thing holding me back from going all in with The Wellness Bookkeeper.  If this makes any sense, it was the easiest yet hardest decision I made as it meant The Wellness Bookkeeper had to be financially viable - no pressure!

  • Focused solely on building my 1:1 client portfolio. As someone who has lots of ideas and the desire to do all the things and be everything to everyone, doubling down on one offering was a challenge initially. But gosh, I’m so glad I did. I ended 2017 with 1000% growth in 1:1 clients. I know that % increase looks like bullshit - but that is the legit result.

  • Fully invested and believe wholeheartedly that the universe has my back. I’m an avid book reader and one of my all-time faves is “The Alchemist” by Paulo Coelho. The quote, “And, when you want something, all the universe conspires in helping you to achieve it,” is written numerous times in The Alchemist and honestly, I kept going back to this quote throughout 2017 - and I’m sure that reminder will continue in 2018.

  • Became a certified Profit First Professional. I first met Profit First author, Mike Michalowicz, in 2009 (I think!) - and he is such a likeable person - with his charismatic and funny personality. Back then, he was known as the author of “The Toilet Paper Entrepreneur” but since has written 4 other books, one being “Profit First”. I began my certification in July - attended ProfitCon - and met an unbelievable amazing group of accountants, bookkeepers and coaches. Plus, bonus, Mike’s team is fantastic. The Profit First certification takes work and includes a final exam - AND requires that you implement the Profit First system in your business. In fact, your first Profit First client is your business. I’m proud to say that I’m part of an elite group of 200 worldwide who together are working to eradicate entrepreneurial poverty. If you haven’t read Profit First - join The Wellness Bookkeeper newsletter list and receive the first 2 chapters from the book! And look out for Mike’s newest book, “Clockwork” in 2018. Having already heard the concepts in this book at ProfitCon - I’m excited for its big debut this year!  

And the result of all the aforementioned goodness - I have a profitable business! Boom!

So What’s Happening in 2018?

  • I’m turning 40 - HOLY SHIT!

  • Finish the Enrolled Agent certification exam. This is the IRS’ highest certification - I’ve studied for the exam through 2017 and will sit for the three-part exam throughout 2018. This is up there with the CPA exam - if that means anything - what that means to me is it's a big deal!

  • I’m launching an online course. Want to learn how to create a solid financial foundation for your business AND want to do it with someone who is part number nerd/part Pearl Jam rocker - then this is the course for you!

  • I’m capping my 1:1 bookkeeping client portfolio - and expect this will happen in early Q2. If you need bookkeeping services, let’s schedule time to chat sooner rather than later.

  • Expanding my Profitability offerings. If you want your business to reach ultimate profitability - then let’s schedule a time to chat.  Seriously, I’m 100% confident that you can have a profitable business AND eliminate debt AND pay yourself. The solution is Profit First. If you are interested, let’s schedule a time to chat.

  • Pearl Jam will go on tour and I will see them at least 3x. Yes, they have announced tour dates, Yes those dates are in South America and Europe. No, they haven’t announced dates in North America, but YES, the universe will flow dates for a North American tour later in 2018…

...Because the universe has my back - and yours in 2018.

Happy 2018!

Can I Write Off my Badass Minivan as a Business Expense?

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Badass minivan! –said no one EVER!

I have one and let me tell you - I do not feel anything close to a bad-ass when driving it! Ok, keeping with the year end crunch, let’s talk about a automobile deduction opportunities for us business owners, shall we?

The big question: 

"Can I write off my badass minivan as a business expense?"

The answer(s):

Quick answer, yes, if you have a business and you use that badass minivan for business purposes, you have a business expense.

But you cannot deduct your entire badass minivan. Sorry, not gonna happen, because that sweet ride is being used for personal purposes too.

To be clear, this is what the IRS says about it,”If you use your car in your job or business and you use it only for that purpose, you may deduct its entire cost of operation (subject to limits discussed later). However, if you use the car for both business and personal purposes, you may deduct only the cost of its business use.”

Quick side note: The IRS’s Website has a Tax Topics section that contains super helpful information. I acknowledge it's not super exciting for non-accountants, but nevertheless, there is great information to check out for all your burning tax questions.

But I digress...

So ok, how much can you deduct?

It varies. And guess what, there are 2 options for how you can deduct.

Option 1: Kitchen Sink Option (aka Actual Expense Option)

The kitchen sink option is where you track ALL your car expenses, like the following:

  • Gas
  • Oil changes and repairs
  • Insurance
  • Registration Fees
  • Vehicle Depreciation OR Lease payments (I didn’t say loan payments! You cannot deduct your auto loan payments and that includes any down payment!)

ADD those expenses up THEN multiply by the vehicle’s percentage used for business. Remember 100% is not an option - we call that lying - as your vehicle is used for personal  as well.

*Parking Fee and Toll expenses associated with business purposes, are legit fully deductible. Place those expenses aside and add them in after the total is calculated.

So how does one figure out the percentage of business use? Hold tight there my friend, I will explain in a moment.

Option 2: Standard Mileage Option

The Standard mileage deduction is where you simply calculate your total mileage driven for business purposes and multiply that by 53.5 cents (the 2017 Standard Mileage rate for 2017) and voila!  With the Standard Mileage option you can also add your Parking Fees and Tolls. So if you take the NYS Thruway to drive to a client meeting, make sure you capture your EZ Pass toll for that trip because it is 100% deductible! To reiterate, Parking Fees and Tolls are available expenses to deduct regardless of which method you choose.

Before I go any further, I need to point out one important thing about the Standard Mileage option. IF you want to use standard mileage, “you MUST choose to use it in the first year the car is available for use in your business…” This is a direct quote from the IRS. But note, after the first year, you can absolutely use the Actual Expense option OR the Standard Deduction option, but its first year is a Standard Mileage otherwise you are using Actual Expense for the lifecycle of the vehicle for business deduction purposes.

So, now that you have both options presented, you need to know how to calculate the % for the Actual Option OR the mileage total for the Standard Option?

This is where recordkeeping is imperative. I know, you are rolling your eyes, you have decided to just say ‘whatever’ and not bother.

I implore you not to do that because auto expenses are great for your business tax filing.

How do I record my mileage?

Its simple, you use a Mileage Log. And you have 3 options:

  • Pencil/Paper Method

Head to the Office Supplies store and pick up a Mileage Record Book, like this one. Or this one. Or this one.

Then head home and begin reviewing your calendar and record the date, destination, purpose and mileage to AND from the location.  

If this pencil to paper method sounds mind numbingly boring - (I totally agree!) here’s another two options.

  • Create an Excel/Google Sheet

Create column headers for the following: Date, Destination, Business Purpose, Mileage to Location, Mileage From Location

Similar to the Pencil/Paper Method, review your calendar, add your appointments then once completed create a formula based on the Actual Expense OR Standard Expense Option.

If this seems too complicated to create on your own but you want to use a spreadsheet, you can download my Mileage Tracker spreadsheet and enter your mileage for 2017.

But if you desire something that removes the majority of the manual process, let me present a free download of a spreadsheet you can use to track your miles!

nd here's your third option–

  • An App that will make Mileage Tracking so freakin easy…

MileIQ is an amazing app that will make this mileage tracking exercise easy peasy.

MileIQ runs on your phone (iOS and Android options available). Like most people, their phones are on them at all times, so when you are driving around MileIQ does the work of your Mileage Log and is able to track all your travel - no matter what. At the end of the day, when you are watching the latest episode of The Crown/Stranger Things/Jane the Virgin (would recommend them all), simply open MileIQ on your phone and review the trips for the day. If the trip was for Personal use, swipe left, if was for Business, swipe right. You can even indicate the purpose of the trip (i.e. Client meeting, Dr. appt., Volunteering (BTW, mileage for Dr. appts and Volunteering are deductible, check with your accountant to learn more!). Once you have swiped all your trips you are done. This will literally take you less than 3 minutes to do every night!

Then monthly, quarterly, annual basis, simple run your MileIQ reports and you have the information so you can calculate your mileage for the year. It’s really that easy.  

Here’s one more thing - if you want 20% off your MileIQ subscription you can use this link https://www.mileiq.com/invite/RWJSP OR use PromoCode: ALAL645A at checkout.

Are you sweating tax season? I offer comprehensive tax prep services that will get you ready to rock and roll come tax time! Schedule your free consultation today!

I hope this helps alleviate some year end tax stress. Be sure to subscribe to the newsletter below to get advice on how to make your business bookkeeping easier and get a bonus download, "Five Money Managing Apps to Transform your Business"!


Thanks for reading. Please keep in mind that The Wellness Bookkeeper, LLC and the information contained herein is not intended to be a source of advice with respect to the material presented, and the information and/or documents contained in this website do not constitute legal advice and is not be held liable.

5 Steps to Avoid a Year End Tax Headache -Vendor Edition -

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Easy, actionable advice for your biz tax prep!

As year end approaches, the stress of year end tax prep awaits. For many, January is known as a month of new beginnings, but for business owners it can bring feelings of dread. For some, business receipts have piled up, bank accounts haven’t been reconciled in months, inventory isn’t completed - it’s overwhelming! Regardless of your business size, trying to manage the day-to-day operations, coupled with the start of the year can keep you from doing the business work you love. So here are 5 easy steps you can take today to make things easier at year end!

STEP 1- Setting it up

Create a folder in your File Organizing System (I use Google Drive) and naming it “2017 Tax Prep.”

STEP 2- Creating your vendor list

Pull your business’ vendor list. This list would contain anyone your business has paid for services.

If you paid businesses or individuals for goods or materials, you DO NOT need to include them in the review.  

Vendors that SHOULD be included are: attorney, bookkeeper, CPA, landlord, business coach.

If you are using bookkeeping software, like Xero, pulling a vendor list is pretty straight forward, just click on the Contact Tab, click on Suppliers and export the list in Excel.

However, if you don’t have bookkeeping software, start creating a list of your business vendors in Excel.

These are the data fields you need in your spreadsheet:

  • Business Name
  • Business Contact
  • Address
  • City, State, Zip
  • Email
  • Phone number
  • Web site address
  • Tax ID Numbers (TIN or SSN)
  • Email Request Sent (Y/N)*
  • W-9 Form Received (Y/N)*
  • Follow-up Email Sent (Y/N)* (Only necessary if you haven't received their form)*

*No matter how you extract/create the spreadsheet, you will need to manually add these fields to your spreadsheet.  Be sure to save your Excel file in your 2017 Tax Prep Folder!

STEP 3- Sorting the information

Now, you pulled the list or created the Excel file, confirm you have the following key pieces of information:

  • Tax ID Numbers (EIN or SSN)
  • Mailing address
  • Email address
  • Phone Number

You need to collect this information for anyone that does not have this information. Any vendor with updated information can be removed from your list.

STEP 4- Collecting the information

Now, let’s collect the information. Draft an email requesting the vendor complete an IRS W-9 Form. Visit the IRS to download the form!

To make your life easier, download my sample email– from there, you can copy and paste and make any adjustments you need!

After sending your request emails to vendors–

As forms are returned, update your spreadsheet and if you use a bookkeeping software, add the TIN or SSN to their vendor record. By doing so, when you complete this next year, you already have that information on file.

Now that you made that initial request, update your “Email Request Sent (Y/N)*” on your spreadsheet. And as W-9 Forms are returned, update your spreadsheet “W-9 Form Received (Y/N)*”

After 3 weeks, if you haven’t received the form, send a friendly reminder email. It can be the same email you sent originally, only with an updated note requesting an immediate response. Once you send that follow-up email, be sure to update your spreadsheet.

STEP 5- Voila!

Ok, your tax prep work is done! Now enjoy the holidays! BTW, your bookkeeper and CPA will thank you for your hard work!

I hope this helps alleviate some year end tax stress. Be sure to subscribe to the newsletter below to get advice on how to make your business bookkeeping easier and get a bonus download, "Five Money Managing Apps to Transform your Business"!

And if you're ready for some one-on-one support, schedule a free fifteen minute consultation with me today!


Thanks for reading. Please keep in mind that The Wellness Bookkeeper, LLC and the information contained herein is not intended to be a source of advice with respect to the material presented, and the information and/or documents contained in this website do not constitute legal advice and is not be held liable.

How to Create A Paperless System for your Business

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Pre P.S.: Believe it or now, there are only 50 days left in 2017. My question to you: are you ready for tax season? If not, I have 1 spot remaining for my Shoebox Intervention Service. By the end of 2017 you can have a robust, organizized, paperless and streamlined books to deliver to your accountant for the 2018 tax season. I promise they will thank you! Go ahead, book a 15-minute free call to learn more my Shoebox Intervention Service.

Ok, let’s get to it...

Friends, I have a secret to share…

Piles of paper overwhelm me. 

Files containing paper that haven’t been reviewed in eons overwhelm me. 

Receipts bunched up in my wallet and purse overwhelm me. 

Perhaps it's my type-A personality, but in general, paper clutter to me is like wired hangers to Joan Crawford.


I know, it’s a bit dramatic, but with the technological capabilities available, the mounds of paper are really hindering businesses ability to focus on growth and delivery and mounds of paper prevent financials from being accurate and done in real time.

Let me guess how you are managing your statements and receipts right now…

You toss statements and receipts into a file or envelope and schedule an appointment each month to go through and record those. If you haven’t committed to an accounting software, I’m sure you are using Excel to track your expenses.

All in, I bet you are spending at least 3 hours a month on doing this.

It doesn’t have to be that way.

Let’s just agree that technology affords us the amazing opportunity to conquer paper clutter once and for all.

Here’s how:

I’m sure you have a fancy notebook - perhaps a Bullet Journal (my favorite!) - grab it and make a list of everything that you receive via paper. You can also open a Google doc and create the same exact list. Here is a starter list for you:

  • Cell Phone Bill

  • Internet Bill

  • Utilities Bill

  • Credit Card Statements

  • Bank Statements

  • Loan Statements

  • Retirement Statements

  • Purchases/Service Invoices

  • Point of Sale Receipts (urg - these are the worst, right?)

Then ask yourself - can I get paperless statements?

If yes, I want you to logon to each of these accounts and registered for paperless statements. These statements will flow directly into your inbox. If you want Bonus points, I want you to set up a filter so every time one of these statements comes into your inbox, you are sending it into a specific file.

If you use Google Apps, check out this tutorial

If you use Outlook, check out this tutorial

If you already have paperless statements, make sure you are using a filter in your email so everything remains nice and organized.

Those business receipts– grab that fancy smart phone of yours and start taking pictures of your business receipts.

Then go into Google Drive, create a new folder Business Receipts and nest another folder labeled 2017 and move all those receipts into the folder. Then delete those pics off your phone and toss those receipts.

Ok, congratulations, high five you are definitely cutting down on paper.

But honestly, that is easy peasy basic stuff -  if you want to go a step further, (and I know you do!) keep reading.

But before I go further, if you haven’t done so already, be sure to grab my Five Money Managing Apps to Transform your Business! While we are talking about paperless systems, those apps are highly recommended to leverage technology for your business finances and operations.

The app I recommend for keeping all those receipts (and those statements) organized in HubDoc. FYI, I reference HubDoc in the Five Money Managing Apps to Transform your Business report, but let me talk about it a little more here.

HubDoc is pretty incredible as it’s an online file cabinet that keeps all your business paper organized. You upload your receipt via scanner, email or using their app. For $20/month, it's worth every penny!

So let’s say you are traveling and you have a parking receipt, numerous meal receipts and taxi receipts. All you would do is take the receipt, open your HubDoc app, take a picture of the receipt - then throw the receipt in the garbage. Its really that easy. After you upload the receipt to HubDoc, its gets to work extracting the details from the receipt, including, vendor name, amount and date. And that’s it! From there, your bookkeeper can get to work finishing the recording of every transaction and then he/she will publish those receipts to your bookkeeping software of choice. At the time of this writing, HubDoc is compatible with Quickbooks Online, Xero, Sage and Freshbooks.

Imagine: A world when you, savvy business owner no longer deliver a pile of receipts to your bookkeeper...cue electric guitar riff.

Because let me tell you - that is a rockstar business owner move for sure!  

I should also mention that while I recommend HubDoc to all my clients, another app, Receipt Bank is a pretty great app for managing business receipts too. 

What’s great using an app like HubDoc or Receipt Bank gets you on the fast track towards automating your bookkeeping AND audit proofs your business.

Before I sign off, I want to circle back to that whole subtle mention of “audit proof”.

Using a cloud based filing system for all your business documents and receipts is honestly the best way to audit proof your business. If you receive a letter from the IRS and they want to examine your return - you need to provide proof that the amount reported is substantiated and the way you do that is with your receipts. If you are scanning receipts and they are filed in your cloud filing cabinet, the ink is not fading away, it won’t be lost in a random file and it won’t be destroyed via accidental shredding OR worse a fire, flood or some other tragic event. Come tax time, with a cloud based filing cabinet feeding those receipts into your cloud based accounting system, you can feel confident that the numbers you are reporting can be backed up.

If you ask me, that is some pretty awesome peace of mind.

So check out HubDoc and Receipt Bank and conquer that paper clutter!

Thanks for reading. Please keep in mind that The Wellness Bookkeeper, LLC and the information contained herein is not intended to be a source of advice with respect to the material presented, and the information and/or documents contained in this website do not constitute legal advice and is not be held liable.

Why You Should Embrace Paying Taxes

If you are paying taxes you are making money - HIGH FIVE!

Now just because you are making money and thus pay taxes on that money, doesn’t mean you shouldn’t exercise every tax deduction available to you. So while, yes, you make money, and you need to pay taxes, we will cover a few options on how you can lower that tax bill. But let’s start with what one thing you should not do...


I’m talking about increasing expenses to report a loss on your business.  The number of times small business owners talk or post on social media about going shopping so they can increase their expenses in order to lower their tax liability at year end...


Remember when I mentioned financial temptation in the “Why you need a budget” post? This temptation can be at its strongest at year end. Sure that new Apple product would be amazing to own, but do you need it for the vitality of the business?

Further, I’m sure you didn’t start your business so you could report a loss because we can agree the purpose of running a business is to drive and maximize profit?

That’s the goal here at The Wellness Bookkeeper.

Well, maximizing profit comes with paying taxes.

And I’m completely cool with that.

When you decide to make purchases at year end to report a loss, you are essentially spending a dollar (aka your Profit) to save a couple quarters (aka your Tax Liability).

And I want to urge you to work to change that mindset because it’s limiting and crippling and will ruin your business.

Instead,  prepare your business by placing money aside for taxes and in lieu of playing dodgeball with the tax man, let’s shift your focus towards building the healthiest, most profitable business.

You can achieve this by adopting Profit First principles in your business. I will delve deeper into those principles on a later post. If you can’t wait until then, I strongly recommend purchasing the book, “Profit First” by Mike Michalowicz. Here is the link on Amazon.

Now, I promised some tax advice and here are some recommendations:


If you have a thirst for learning and enrolled in any program/course at an IRS “eligible educational institution”, you may be eligible for the Lifetime Learning Credit. Providing a credit for up to $2,000/annually, it can be claimed for any courses taken to improve your job skills. As an added bonus, and at the time of this writing, there is no limit on the number of years you can claim the credit.  Learn more here.

529 PLANS:

529 Plan can be established for your children, which provides a saving opportunity for future education expenses. Now, there is no federal tax credit for contributing to a 529 Plan, however, the growth of these funds are not taxable AND when college comes, and you use those 529 Plan funds to pay for college, you do so without incurring a tax liability. Additionally, 30 States offer full or partial tax deductions for those contributions. Check out the specifics here.


Earlier this year, I read an article in Forbes that states 34% of entrepreneurs have no retirement savings plan. YIKES! Let’s work together to decrease that percentage. You can save for retirement by establishing a SOLO 401K; SEP IRA; or a SIMPLE IRA. A Solo 401K is an option for you the solo business owner and your spouse. A SEP stands for “Simplified Employee Pension” and allows business owners to contribution to Traditional IRAs for their employees and themselves. Here is the breakdown on SEP Plans.  Lastly a Simple IRA allows employers and employees to contribute to traditional IRAs. Business exercising Simple IRA must employee no more than 100 people. Here is how the IRS breaks down Simple IRAs.

S-CORP Election:

Check out my blog post “Should Your Business Be an LLC or an S Corp”  for more details. But if you are driving profit over $50K and your an LLC, the S Corp could be a great match for you.

If you’re ready to ensure your business’ financial health with The Wellness Bookkeeper, schedule a complimentary consultation or subscribe to the Newsletter!


Thanks for reading. Please keep in mind that The Wellness Bookkeeper, LLC and the information contained herein is not intended to be a source of advice with respect to the material presented, and the information and/or documents contained in this website do not constitute legal advice and is not be held liable.


Single Member LLC - How Do You Pay Yourself?

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Great news! As a single member LLC, this is so easy to do - simply write yourself a check (or via electronic transfer) and charge it to Owner’s Draw from your business account.

As a single member LLC you are not an employee of the company, but an owner so therefore you do not need to partner with a payroll service and worry about withholdings.

This is because, in the eyes of the IRS, single member LLCs are considered a disregarded entity. 

What exactly is a disregarded entity?

Basically, the IRS considers you, single member LLC owner, a sole proprietor. To explain further, your business’ profit (or loss) flows over to your personal tax return (via a Schedule C). The beauty of this is as you pay yourself you are not worrying about payroll, tax withholdings– you are just withdrawing from the company’s equity. Additionally, when you make periodic owners draws throughout the year, you are essentially taking profit distributions sooner than year end when profit distributions are typically made.  

In the most basic terms, owner’s draws made earlier in the year is an advance payment of expected year-end profits.

What’s important to mention is when you withdraw from the company’s equity, this is captured on your Balance Sheet and will not appear on your Profit and Loss Report.

Why is this important?

Because Profit and Loss is a report that takes your Revenue and minus Expenses.  As an owner, you are drawing from owner’s draw which is an Equity Account (that appears on your Balance Sheet). Therefore, your owner’s draw will not change your Profit and Loss Statement’s Bottom Line. The owner’s draws you make will show as decrease on the Equity on the Balance Sheet, but come year end close out, profits made will increase that capital account (also known as Retained Earnings).

But keep in mind, if you are making owner’s draws, you could impact your Cash Flow.

When I talk with prospective clients, the #1 thing they mention is this, “I’m profitable, but I have no cash.” This statement tells me that they are making owner’s draws and not factoring those draws into their statement of cash flows OR they have high Accounts Receivables (A/R)  and need to follow-up with clients to get the A/R level down and thus improve their cash flow.

But I digress– back to the question: How do you pay yourself?

Again, simply write a check (or electronic transfer) to yourself and post this withdraw to Owner’s Draw.

But, what about my tax liability?

Another great question.

So as we clarified above, you, single member LLC, are not a W-2 employee.

Instead, your tax withholdings are made via tax installment payments (typically this is done quarterly) to the IRS (federal) and your home state (in my case, it would be NY).

To file a quarterly estimated payment with the IRS, use Form 1040-ES. Here is the link: https://www.irs.gov/pub/irs-pdf/f1040es.pdf

To file a quarterly estimate payment with New York State, use Form IT-2105. Payments can be made online, but here is the link to a voucher form: https://www.tax.ny.gov/pdf/current_forms/it/it2105_fill_in.pdf

How much do I save?

I recommend to my clients with under $250K in annual revenue to set aside approximately 15% of their owner’s draw to cover their tax liability. I further recommend that they open a separate account so in between installment payments they have money saved to cover their tax liability.

Thanks for reading. Please keep in mind that The Wellness Bookkeeper, LLC and the information contained herein is not intended to be a source of advice with respect to the material presented, and the information and/or documents contained in this website do not constitute legal advice and is not be held liable.

Why You Need A Budget

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Maybe you’ve heard rags-to-riches business stories — a small candle company gets started in someone’s garage and becomes a six-figure success, or an app idea transforms technology (and a bank account!) overnight. Not every entrepreneur will experience that amazing mix of luck and hard work, but that doesn’t mean you can’t grow wealth in your business. It all begins with a budget. Here’s why you need a budget for your small business and how sticking to it can skyrocket your bottom line.

What is a budget?

Budgeting is a proposed income and spending plan for your business. And you know what they say: a failure to plan is a plan to fail. A budget places boundaries around your business and prevents financial mishaps. Without budgets, business owners run the risk of making uninformed decisions that could lead to mountains of credit card debt, loans you can barely pay interest on, and worst of all, discounting your products and services for a quick sale.

A budget serves as the compass for your business and its activities. For example, if you have income budgeted for one-on-one clients during August, but you are launching a group coaching offering, you are heading in the wrong direction and need to course correct. You may amend your budget to anticipate income from the appropriate product/service or reset and focus on building one-on-one client work as you previously outlined in your budget.

A budget is a great accountability partner, helping guide and shape your business growth.  

How should I budget for a small business?

Budgets should fit the cycle of your business. If you are a seasonal business, like a wedding photographer in New York, NY, your budgeted income in January, February and March is likely very different from your income in August, September, October. Conversely, your budgeted expenses are most likely not the same and should be modified accordingly.

I believe that every dollar earned in your business should be assigned a specific job. Here’s a few jobs you can assign your money:

  • Your salary: You should pay yourself each time you make a sale. By not paying yourself, you may be building resentment toward your business.

  • Your profit: I believe you should take quarterly profit disbursements.

  • Operating expenses: Based on the revenue in your business, expenses should be a certain percentage of your overall revenue.
  • Taxes: Yes, you should be putting money aside in an account for Uncle Sam. I recommend 15 percent of each sale should go into savings for tax time.

  • Cash reserves: I recommend building three months of expenses in this cash reserve. This can also be the place that you save money for those bigger investments, like salary for a new hire or a new website.

How to stick to your budget

We all face financial temptation, and it’s a big hurdle for any hustler. When faced with temptation, we’re more likely to create unrealistic budgets that are not aligned with the reality of our business’ current sales — both actual and projected.  

Some business owners believe they need to invest in high tickets items, thinking their sales will grow exponentially as a result. Think Field of Dreams – if you build it, they will come! But your business is not a movie starring Kevin Costner – it’s your livelihood. And if you have employees, it’s their livelihoods, too. Building budgets not based in reality and baked with temptation is known as silver bullet budgeting. You should never use silver bullet budgeting.

If you find yourself building a silver bullet budget or you have created a sound budget and are tempted to purchase something that is not already in your budget, call your bookkeeper. Don’t have a bookkeeper? Call your most financially responsible friend and share your desired high ticketed new budget item. Share all the details – what it would cost, how long it will take to create/implement, and what you know. Crunch the hard core numbers, and show the ROI on the high ticketed budget item.  

I’m willing to bet a few things:

  1. They will not give you a green light at the end of the conversation, for no other reason than the fact that they know that you are emotionally attached. Sound business decisions should never be solely made with emotion.

  2. If you can’t outline the ROI or how you will modify your operating expenses to absorb the cost of this high ticketed item – they will ask you to take some time to determine ROI and modification of budget and increased sales growth resulting. (P.S. Your bookkeeper could run those numbers for you.)

  3. They may outline why it may not be a sound investment and talk you out of it.

If your bookkeeper and friend can’t talk you out of it, hit ‘pause’ and do not commit for 72 hours. If you can’t seem to shake the idea of what this high-ticket investment will provide your business,  I want you to go back to your budget and begin considering areas where you can make operating expense cuts. Under no circumstances can you cut your paycheck, your profit or your taxes – these areas are totally off the table.  

The bottom line

Creating a budget that fits your current business is the only way to go. You can still invest in your business to initiate growth, but a solid budget will help you understand where to best put those investment dollars to maximize your profits and hard work.  


Thanks for reading. Please keep in mind that The Wellness Bookkeeper, LLC and the information contained herein is not intended to be a source of advice with respect to the material presented, and the information and/or documents contained in this website do not constitute legal advice and is not be held liable.

Should Your Business Be an LLC or an S Corp?

Congratulations! You’ve decided to start your own business. Whether you’re expanding a side hustle into a full-time gig or growing your team of employees, it’s wise to legally protect your business and your assets. But choosing a legal entity, or legal structure, for your business does more than CYA — it can save you money through tax breaks and exemptions. Here’s how to decide if your business should be an LLC or an S Corp.