It costs a lot to run a small business. But I love it.
I spent several hours this weekend prepping my 2021 tax stuff to send to my accountant, who will do the annual return. I keep very close track of my expenses and accounting throughout the year rather than outsourcing it, mainly because I like to have a sense for my finances including income, expenses, invoicing, trends, projections, month-to-month and year-to-year comparisons, etc.
Luckily I can do all of this in a single software: Quickbooks Self Employed (lmk if you want my referral code). At the start of the next calendar year, after I receive my various tax documents, I sit down to review everything and make it's accurately accounted for.
When I talk to people about running a small business, they often ask about the back-end financial stuff that most people dread. This includes paying estimated taxes (which I am not the best at doing on time), as well as the most important activity, sales. I actually like all of this stuff, even the detailed bookkeeping. This should be obvious given that I'm spending my Saturday evening writing a blog post about it while watching a longplay recording of Valheim for PC. 🤓 It also just occurred to me that I wrote a blog post about doing my taxes back in 2017, on my old blog, Anthropologizing.
What is wrong with me? Why am I the way that I am?
Anyway, I am also proud to say that I'm really good at selling my services and making money, partially because I've run a business on and off for several years, and also because I worked with a really great business coach. The back-end financial stuff is an extension of this, which gives me a sense of accomplishment over the course of the year. I love to see the bars on bar charts get taller and taller.
Mmm, give me that spicy, delicious, buffalo sauce flavored data.
To provide some insight on what it takes to effectively run a one-person coaching business and the costs involved, I'd like to share a breakdown of my main expenses and investments from 2020 and 2021. I identify expenses as what's needed to run the business, and investments as the things that I think are important to do it well and level it up to be more successful over time.
Taxes (federal, state, city and county) paid in quarterly estimates (if I'm following the rules)
Quickbooks accounting software
Payment processing fees (Paypal, Venmo, Quickbooks invoicing)
State of Oregon business registration and license
Google Drive storage
Tax preparation services
Health and dental insurance from the public exchange
Domain registration (GoDaddy)
Miscellaneous books and resources
1-day WeWork co-working space rental
LinkedIn Premium subscription
Wix Premium website hosting
Self-funded retirement investing
Business credit card membership fee
Legal services for creating and reviewing contracts
Bills that I can expense a portion of as part of my home office space: internet, renters insurance, gas, electric, rent
Stuff I already had from before I started coaching, that I purchased for my consulting business: Macbook Pro (from 2015) and accessories, a baller Brother laser printer, Steelcase ergonomic chair, webcam, all kinds of office supplies, and an Uplift standing desk
One major change to expenses is that I am no longer traveling for work as I did in years past when I was a consultant. I used to do that A LOT. Like tens of thousands of frequent flyer miles a lot. Like, 130,000 Alaska miles a lot (saving these for a rainy day). All over the US, and even to China (twice; both times I got food poisoning). So, no more spending on airfare, lodging, rental car/gas/parking, ride sharing, food, etc., all of which had to be factored into project costs. Though I do miss the fun of travel because would add some vacation days to see the sites, dine out, and hang with friends/family.
Another related change is that my work has so little overhead now because I am working with individual people and not with corporate clients and designing projects with a lot of moving pieces, sometimes waiting for 30 or 60 days to get paid (bullshit), and floating the costs of project-related services (e.g., research participant recruiting, transcription services, research assistants, videography, etc.) I do not miss any of that.
Now for the investments
These are my start-up costs, which only need to happen once. They cost a giant chunk of change but were crucial in accelerating and leveling up my business. For example, my website needs regular maintenance, but I don't plan to do an entire overhaul any time soon. I can tweak it as needed.
New website and branding (Puree Fantastico)
NYU Coaching Certificate program (3 semesters)
18 month business coaching engagement (Tara Butler Floch / Broadview Coaching)