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October 2016

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COMMENTS

Online Income: $8,050 in September 2016 + How I Save for Taxes

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I'm tackling a reader question this month about how I save for taxes, as well as sharing my online income and expenses from running my business.September was a crazy, crazy month. I worked like a mad woman before FinCon so I wouldn’t have much to do while I was attending the conference.

It mostly paid off. I took my computer but I only used it once or twice for a few minutes during the conference.

After FinCon, Erin, Chonce, and I stayed in San Diego for a couple of extra days. We even had fun recording a “sleepover edition” of our podcast. 🙂

We stayed at an AirBnb which was a learning experience to say the least. I do think I’ll try AirBnb again, but I will definitely have a better idea of what to look for before booking next time. I’ll likely turn this into a post in the future, so be looking for that.

During those days after the conference, my urge to work was strong. I had tons of emails to catch up on and even some clients who were making it almost impossible for me to NOT think about work.

While I’ve been very happy with my income growth over the past year, I might have to make some changes to my business structure in order to ease the pressure a little bit. Currently it’s very hard for me to have time away and I had to have some stern conversations with some clients about boundaries.

Have any of you who freelance ever struggled with this? I’m curious to know…

Anyhow, here’s a deeper look into how I made money, and spent money, with my business last month.

Income

VA/Blog Management Services – $5,560.46

Freelance and Ghost Writing – $2,130.00

Advertising on Shoeaholicnomore.com and FinancialConversation.com – $360.00

Bonuses, Tips, etc. $0.00

Total– $8,050.46

If you are interested in hiring me, you can find out more about the services I offer here. Or you can pick my brain if you are interested in starting your own online business!

Expenses

One thing I think makes my reports more realistic than some out there is that I share my expenses with you, not just my income. I do this because I think it’s important that you know the costs involved in running my online business. I do not get to keep every cent that I earn and I want those who are just starting out to know that as their income grows, so will their business expenses.

At the beginning of my freelance business, I spent NOTHING. I did everything myself and didn’t buy any tools, training, etc. But as my business grew and my goals and streams of income grew, I had to start outsourcing some things in my business to a VA and I started paying for some time saving tools.

The expenses listed below are only what I paid out of my business account this month.

You won’t see a line for internet in the expenses below because that is something I would pay for even if I didn’t have an online business. (But yes, I do get to deduct most of it now that I have an online business.) So keep that in mind. 🙂

VAs and Tech Services – $3,238.47

Headshots – $140.00

PayPal and Other Fees – $44.77

Business Tools – $9.95

Facebook Ads – $15.07

Office Equipment and Supplies – $16.65

Travel (FinCon16) – $769.41

New Computer – $100.00

Total Expenses: $4,334.32

Income less Expenses: $3,716.14

Reflections

Ouch! It was definitely an expensive month for my business.

My PayPal fees would be significantly higher if I didn’t use FreshBooks for invoicing my clients. I can’t recommend FreshBooks enough if you are a freelancer who is primarily paid by PayPal. It saves me a lot of money on invoicing fees every month.

I started a new Pinterest strategy in August. Board Booster is one of the business tools I paid for above. Last month I paid yearly for my subscription to Tailwind, so that is paid up until next August. I also paid for wifi at the airport in San Diego on the way home. Gasp! But it more than paid for itself in just a few minutes.

I spent more on contractors in September because some of my assistants did extra work while I was at FinCon.

Another big chunk of my spending was for travel. That $769 was spent on the hotel, Uber in San Diego, food, and parking at the airport. About half of that is just the hotel.

It’s also important to remember that my online income has not yet been taxed. This means that about 30% of what I make is going to be taken by Uncle Sam. That “expense” is not included in the net figure listed above, and September is when I had to make a painful quarterly tax payment too. 🙁

If income reports get you jazzed, you can see all of my online income reports on this page!

Just to see how far I’ve come, I averaged my monthly online income for the 27 months I’ve been freelancing. Even with the smaller months at the beginning, my average monthly online income (gross) is $3,631.75. My 12 month (gross) average is $6,282.24.

Reader Question: How do you save for taxes when your budget for the month was as much as your business income after expenses?

If you're self employed, you need to be saving for taxes. Here's how freelancers can save for taxes.Something new I’m going to start trying out is answering a reader question from a previous month’s income report. On July’s report, Gina asked:

“I think you did a great job this month! I do have a question, though. Since after business expenses you made $3k, and your budget for July was around $3K, how do you save for taxes?”

I think this is a great question since this month’s business income after expenses is also pretty close to the amount I budget and spend on my personal expenses each month.

Sometimes when my income drops, like it did in July, I use some of my “buffer” to live off of. This is why it’s super important to have an emergency fund and other savings as a freelancer or entrepreneur of any type.

But another part of the picture which isn’t shown very well is that I save a lot of income each month for future business expenses and expansion projects. So when I pay for business training, travel, or something else outside the “norm”, chances are that I have money already set aside in my business saving for those expenses.

This is kind of like how you should save money out of your personal income for expenses that don’t occur monthly, like Christmas gifts, taxes on your car, annual medical exams, etc. I hope that makes sense!

So while it might look like I’m not earning enough to save for taxes, I actually am when you consider that some of the expenses shown in this report are things I’ve been saving up for for a long time.

Did you make any online income in September? Is there anything else you’d like to know about how I run my business or make income online? Let me know in the comments and your question could be featured on my next income report!

I'm tackling a reader question this month about how I save for taxes, as well as sharing my online income and expenses from running my business.
If you're self employed, you need to be saving for taxes. Here's how freelancers can save for taxes.

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Kayla

Kayla is a mid-20s single girl living in the Midwest, USA. She is focused on paying off her consumer and student loans, while simplifying her life and closet. You can join her on her journey at ShoeaholicNoMore or follow her on Twitter.

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