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How to Get Your Finances in Order as an Entrepreneur

As business owners and creative entrepreneurs, do you want to take charge of your finances and have the power in knowing your numbers? Knowing your taxes, how to budget and all that financing entails? 

Things like taxes, budgeting, and financing can all sound daunting enough that it leads you to neglect them completely.  We are going to cover what it entails to get your business finances in check!

Carly Hardin is an expert in helping creative entrepreneurs through finances, social media, and marketing. She and her husband John are wedding videographers and after seven years of running a business have a ton to share about finances and running a business that does not rely at all on Instagram. 

They’ve built a six-figure photo/video business, traveled internationally and domestically shooting destination allotments, and have gotten the pleasure of teaching business owners how they can transform their business through coaching and courses.

Where do you start when budgeting or making a financial plan?

Budgeting is really hard to do when you have no idea what your numbers are. That’s where Carly always has people start because if you want to know how much you can spend, you need to know how much you’re already spending, you need to know how much is coming in.  

Though it’s not fun work, it’s important to lay it all out on the table. The first thing is just getting your monthly personal finances all out: your business finances and expenses, and what percentage of taxes are you paying. Twenty-five percent is a safe number to assume for your taxes and then adding that all up and seeing that, this is what’s already going out and what’s coming in. 

As business owners, one can get a little bit confident in the numbers that someone is charging because that seems like a high number. You may feel people are paying you high prices. But when you come back when you’re paying taxes, you look at your finances and realize that you are not making what you thought you were. You are probably breaking even. 

There was a time when Carly and her husband John broke even because their expense for their business was high.  They made 70,000 but when it came to doing their taxes they wondered where it went. Their business expenses were high and they had to put it all out on the table to figure out what makes sense. Knowing your numbers is a great place to start!

Lay it all out for your bills

An easy way to do this is using Excel sheets or Google spreadsheets. It doesn’t have to be anything fancy. If you’re a pen and paper person then go ahead and open up a notebook and just list everything you could think of: Spotify, electricity, car payments, insurance. 

Then for business, the expenses. The website hosting you use, your camera, memory cards, just anything you can think of. Create an expense dump list. List out all of your fixed expenses and see what it looks like. 

 It is powerful to know your numbers and just to know where you stand in your finances. Knowing your numbers can give you confidence in what you charge because you know how much you want to take home. 

It helps your confidence to not fluctuate and you do not change your prices. After all, you need to make the money because you know what you are turning out and know what you need to take home at the end of the day. 

Knowing what’s going out and what coming in makes you more confident as a business owner in general because you become certain about your prices. 

Framework to layout when budgeting

Have a formula you would like to use to help you be more specific other than knowing your expenses and your income. For Carly, she has formulas she uses that help her know her numbers, how to price herself per service, wedding, or whatever field you’re in. 

Take a pen and paper, make a list of all your personal expenses, rent, internet, groceries, Netflix, insurance, literally anything that makes it to the list of all your personal expenses. 

Most of those will be monthly, and if it’s not, figure out how to break it up into a monthly expense. Next, you go into your business. You’re going to want to break it down monthly.

If it’s not monthly subscriptions, if it’s a yearly subscription, divide it by 12 and you’ll get your monthly expense. But if it’s a camera, you’re not going to be buying a new camera every month.Most likely you’re not even going to be buying one every year. 

A safe bet is to take the price of your camera that you paid divided by five and you think this camera will probably last you five years or however long you think. But for those big expenses, divide the price by the number of years that you think that it’ll last and then from there, you can divide it by monthly, add in your big assets just because that’s a business expense. It’s not just a one-time thing because you’re going to continuously be buying and upgrading. 

Calculating expenses

You have your personal expenses and your business, and from there you have now your bottom line, although you have to add in 25% for taxes, as 25 is a safe number. Add 25% and now this is the absolute lowest you can make and that’s living paycheck-to-paycheck scraping pennies out of the couch that’s what you have to meet. 

Then, add in what you would like to take home at the end of the day and put into savings to spend on the fun stuff. Say your number with your expenses and taxes is 50,000. To be modest, say you wanted to take home 10,000. You arrive at 60,000; that’s what you have to make. 

Sixty thousand is the goal and from there you can then say okay, using wedding photographers as an example, as a safe bet, how many weddings would you shoot per year? Say you want to shoot 12. Take 60,000 divided by 12 weddings. That means you have to charge 5000 per wedding. 

Can you charge more?

If you look at that number and say you cannot charge 5000 per week, you probably can charge more than you think. But if you’re sure you cannot charge that number, that means you have to shoot more, supplement it with shoots throughout the year and supplement it with some passive income like digital downloads. Whatever you can do to supplement that and make that 60,000 goal, do it!

This formula, Carly’s formula, makes your pricing make sense. You can justify it! Don’t feel the need to give discounts or price yourself down, as you can justify why you are charging that amount. 

You also have to keep coming back to your numbers because they will constantly change as life changes with you. It is okay to constantly look at your numbers and change your prices as you feel the need to. 

For the Hardins, when they had their baby, their numbers changed and their numbers went up. You are free to change your numbers as they will change too as life changes with you. Creative entrepreneurs kind of shy away from the money and the budgeting and the back end stuff, because they’re so creative and want to go shoot and do the fun creative stuff. 

This can be a struggle for a lot of people but knowing your framework and your spreadsheets becomes a fun game to figure out. It’s not fun when you begin learning about your numbers, but it’s worth it. Then, you know what is going on in your business behind the scenes and up front.

Organizing your business

There are three things one can do to make sure your business is set up for success. One, separate your personal and business bank account. Open up a separate checking account for your business, and separate your money so you know at the end of the year when you’re going to pay taxes. 

You don’t have to sift through all your Madewell and DoorDash transactions to get to the Amazon ones, etc. You are just sure that everything on this card is business; everything on this card is personal. Open a business banking account, it’s super easy! Most of the time, you can do it from your phone, or on your banking app. 

Hire an accountant or CPA

Second, hire an accountant or CPA.  Hiring someone to handle all the financial hard stuff for your business helps and they’re not as expensive as people think they are. The first accountant Carly had, she paid $325 for the entire year. 

A CPA is going to be more expensive, but also when you’re at that point when you need a CPA, you would know it’s not going to break the bank.  So hire a CPA or accountant, ask around, and get some recommendations. Hire an accountant or CPA who has worked with people in your industry and can help you save money, and bring more funds home. 

The third is just to get something that would be helpful: an app or an account like QuickBooks or Honeybook to help organize your finances. If you have none of the CRM tools, you can use Excel sheets and have a file full of whatever you need, all your receipts and everything to organize your bills. 

These are the three things that will make your financial life easy. Becoming an expert in taxes is not going to grow your business but it helps you know your numbers and how the revenue you make for yourself is spent. Hiring an expert to help you manage your finance is very important while you focus on growing your revenue and managing your craft well. 

Prioritizing a little late

If you’ve gone far in your business and you discovered taking care of your finances a bit late, hearing these words taxes, budgeting, and Excel sheet now can feel overwhelming. You know you are not doing that and you’ve not done this. There’s no shame in that.  

You can take small baby steps, you don’t have to do it all today. Open up a separate checking account for your business. You can do it from your phone and start there.  Hire a CPA and be honest with them so they know the stage you’re at and can help you better. 

Find someone local to you so you can get face to face and put it all out there and figure out how you can make your finances right again and then from there. You can start from square one. Don’t be too hard on yourself, you will get there. 

Finance hacks 

First things first, on your banking apps on your phone there are things that you can automate. If it’s not on the apps, you can go to the website and login and set up this automation. 

Set up savings automation in your bank account app, so you don’t even know that money’s moving around. It just drops into your savings account. You can also have an autosave feature where it just saves a certain amount every single day. It could be $25 every day or more. 

Carly has 10% of every single deposit automation on her banking app; every 10% of every deposit goes into her savings account, which takes the pressure off of savings. You never see it, you don’t realize the amount of savings you even have at the end of the day and this helps you a lot with money. 

It also helps when you’re not a good saver, as it saves automatically. Carly set another automation on her business account and she saved into another savings account named taxes. At the end of the year, she makes her quarterly payments. There’s another account that has 25% of all the deposits. That’s the closest business owners can get to having a paycheck. The automation helps you not to see where the money is going. You just take it out when you need it and that helps. 

Keep your taxes in mind

The last one, for people who have busy and slow seasons in business, take a look at what you made last year after taxes and after business expenses, not personal expenses. Take a look at the number you are left with; the profit. 

Keep your taxes in mind. See what you can predict for the coming year and divide that by 12. That’s your monthly paycheck.  For example; after taxes and business expenses. You made 40,000, divide it by 12 and that’s 3333 and that’s what you pay yourself on the first of every month. 

Your personal expenses will come out of the paycheck that’s going into your personal account. You can use that and pay for movies, rent, or anything personal to you. This helps you because your high seasons or busy seasons are making up for your slow season.  

In those slow seasons, you’re not bringing in the same as you did in your busy seasons. Reassess that number a few times per year and make sure you are on track to making either the same as the last year or more. 

If you’re making higher, raise your monthly paycheck amount so that your business account isn’t profiting more than it should. If you’re making less, definitely reassess and pay yourself a little bit less per month. 

This is a hack for those that don’t like the unpredictability of being a small business owner.  Getting your paycheck is similar to setting your salary and continuing content. It is also helpful for people who desire stability and enjoy having paychecks. 

Final thoughts on wanting more financial freedom

You need to educate yourself. Lean into the uncomfortable money breeze and understand that it is only sounding scarier than it is. Carly believes our relationship with money is closely tied to how our parents were with money when we were younger. 

Ask your parents questions about money to just understand why you feel about money the way you do. Also, take courses, be mentored by people in your industry, and Google everything you don’t know. There’s so much free education and information on the internet. Just soak it all in and invest in mentorships or coaching courses.

The second is to make sure that you’re not so focused on the ends of your business that you’re not making a profit.  Prioritize profit! Before you get any new equipment make sure that you need that new one. Is that new lens or equipment that is 85 millimeters going to translate into more sales? Or are you going to raise your prices to justify that profit? 

You could just wait it out and save for it. All those business expenses are important but you should not focus on new expenses or other things in the business that you forget about profit. Carly and her husband John had just $20 to their name a few years back and now they have about $70,000 in their checking account because they prioritized their profits. The number one thing is just to prioritize profit and investing in your business. No, profit percent is not necessary 100% of the time but profit is necessary 100% of the time. 

Be sure to check out more Gold Biz Podcast episodes here!

how to get your finances in order as an entrepreneur

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