By Cherish Strickland, Senior Copywriter at Collective
You have goals you want to achieve. And, if you’re reading this, you’ve probably achieved at least one – entrepreneurship. True commander-of-your-own future energy. For every barrier placed in your way, so far, you’ve overcome them. That’s simply what you do.
If your eyes are set on growth, you can look towards your finances this month to see what money moves you can make to help get you there. All it takes is a little tax and financial planning – and a few people in your corner lifting you up as you go!
This guide will help you get ready with tips that can be implemented in 30 days. Or longer if you need! Because, again, you’re the commander of your own future.
In week one, start learning about the possibilities for your business. One thing every dream requires is extra money. Even if you make the same revenue you made the previous year, you could still end up with more money in your pocket in the end if you start an S Corp.
An S Corp is a fancy way of saying you asked the IRS to switch up the way you’re taxed. Why go through all this trouble? Because it can help lower your tax bill – and, let’s be real, self-employed taxes can get pretty expensive!
Less money going out. More money in your pocket to invest back into the growth of your business. You become not only a commander, but a founder-of-your-own future, getting a paycheck on top of that. And this stuff matters. Your clients and potential clients will start to take notice that you’re giving founder energy.
But there’s somewhat of a catch. Your business has to be registered as an LLC before you can be like “hey, about those taxes I’m paying, how about we lower them?”. And honestly, it’s not a bad idea for your business anyways. When you form an LLC, in the eyes of the law, your business and personal assets are separate. This means, in most cases, if your business is sued or you have business debts, your personal stuff is protected.
Even if you’re not quite ready for the S Corp plunge, forming an LLC is something you can do now. If you haven’t already.
If you want to learn more about S Corps, what they are, and everything they can do for your business, we have a whole webinar on the subject that you can watch right here:
The first week we’re all about setting goals and learning about your options. You may not be giving LLC plus S Corp energy right now. But still do your research and see if it can save you any money. Try this Tax Calculator to see your estimated savings if you made the leap.
Then start writing down the milestone you want to reach before moving towards LLC and S Corp excellence.
Example. Let’s say you want to earn a certain amount of income from your creative pursuits. One of your milestones may be to increase your revenue by a certain percentage or dollar amount. That number could increase bit by bit on a monthly, quarterly, or even yearly basis. Because we’re no pressure vibes here.
Okay. “Bookkeeping” doesn't really trigger your creative response. When you’re looking for inspiration, it’s probably not found in a spreadsheet. But here’s the secret! If you’re looking to invest money towards your business growth, sometimes the numbers hold the answers! And a little bookkeeping work can help you make sense of it all.
Don’t stress. You don’t have to be a financial wiz or CPA to take a little peek at what’s going down within your business on the financial front.
Bookkeeping is recording the financial activity in your business – how much money you earn and spend (costs and expenses). Those costs to run your creative business, and the money you’re receiving for your efforts, are placed in categories that make sense.
So then, each week or month as you see how you’re doing based on the goals you set in week one, you’ll know what you need to shift around. And where a lot of your money was going at any given time.
How much did you spend last week? Or even today? Sometimes we don’t always keep track. But knowing the comings and goings of your money is an important part to all of the goals you wrote down in week one.
Say you’re looking to build your clientele. You’ll probably need to invest more money into your marketing efforts. But how much can you even afford to spend? Can you keep investing that amount for the next few months?
That’s where profit and cash flow comes in. Profit is based on your income and expenses. If you earned more than you spent, then you have profit! Cash flow is how much money is coming in, and going out, of your business at any given time. Knowing both of these helps you understand what you can afford and when it’s time to invest in the next level.
Giving your cash flow a good sizing up gives you the information you need to see where you should focus your attention. If you’re having trouble paying your bills; but you know you made a good bit of money that month, your issue isn’t needing more customers! Your issue isn’t profit. Your issue is of the cash flow sort!
Developing good money habits could also help ensure everything is in place if you decide to live your best S Corp life. After all, every good Founder knows where the money’s at – and can show you where it’s going.
The tracking part is pretty easy. You can kick it vintage style and carry a notebook around, use an app on your phone, or just keep a simple spreadsheet on your computer. Collective members get free access to Quickbooks and expert guidance on tracking their profit and cash flow.
The first three weeks of your 30-day plan you assessed yourself, your goals, your business, and financials. This week, you’ll start putting some of that to work, so you can move further and further along in your creative excellence.
You now know where your money is going and where it’s coming from. And you’re able to determine if you’re having the profit and cash flow to make important decisions in your business! If you find out you need to make changes, this week is the time to start. And look, Rome wasn’t built in a day. Take the time you need.
Feeling like you’re in a good place? You may want to consider taking things to the next level with an S Corp. And if your books aren’t in a good place. We can help.
If it all sounds overly complicated, don’t stress it at all. We help creatives just like you form their LLCs, request the S Corp election, clean up and catch up their books, and file taxes.
We can do the same for you. We’ll help you go from creative freelancer to Creative Founder. And start receiving an actual paycheck from your business.
Fill out our tax calculator to see if an S Corp makes sense based on where you are right now. Then schedule a free consultation with one of our business-of-one experts.
Collective is the first all-in-one financial platform designed to give self-employed people the technology, team and community they need to focus on their passion – not their paperwork. Our members save an average of $9,000 per year on taxes.