From the beginning of my photography business I have filed my taxes as a sole proprietor because the sales, even in the best years, have not been enough to justify the cost of separating the two. Up until early 2023 my main goal was to build up my savings and since my day job covered all of my expenses any bit I made with photographs went directly to savings. The rest of 2023 has been a very expensive year—some of it good (trip to Scotland), some of it bad (veterinary expenses) so I have not been able to save anything for months. Seeing my savings decrease is causing me a lot of anxiety because I equate savings with safety. There will be no room for salary this year. Thankfully, when I do my taxes for 2023 the business losses combined with any extra I have paid through my day job should make for a small tax refund rather than having to pay.
Thank you for sharing this Ana! I recognise your feeling that "savings equate safety" so well! I've been gently challenging myself on that, and can really recommend Bari Tessler's _The Art of Money_ in this respect (I may have mentioned this book before) as well as Dana Miranda's Substack Healthy Rich: https://www.healthyrich.co
I enjoyed the Nix too--more so the second time around that I read it than the first. Wellness really surprised me though, good to hear you enjoyed it too!
Super interesting, thanks Astrid. I use a version of the barefoot investor, which works for me better than profit first for some reason. I distribute money into various pots every time I get paid and then pay myself a weekly salary from one of those pots. That salary covers all life expenses and is how I stay afloat!
Thank you for sharing Katie! I'm not that familiar with the barefoot investor--what is it that works so well for you? Is it the buckets, do they suggest percentages, something else? Just curious :)
I honestly can't remember, ha! I think it was the buckets that they set up (setting aside money to spend on whatever you want, for instance). They do suggest percentages. It's an Australian book, and some of it is quite specific to Australia, but the general way he sets up his accounts worked for me. This was about 3 years ago, so I'm sure I've completely adapted/changed it since then, but the principle generally still applies!
This was such an interesting read and helpful for me to reflect on how far I've come and what is currently working for me and what isn't.
I started my business in 2011 as a partnership, which only lasted for a year, but we did submit accounts for that and it was messy.
I think we made a total of €800 profit which we declared but it was such a small amount that in hindsight, we should have given ourselves a bit of leeway to try this out before committing.
Anyway since 2012, I have had a separate business account, as this was the advice I was given from the start. And I would pass that on to anyone starting out. Even if it is not a "business account" in a strict sense, keeping it separate helps with bookkeeping tremendously.
Like you Astrid I had a part-time job for many years that paid my bills, so whilst I had that, I pretty much spent all the income from my business on re investing it into trainings, expenses etc. and it was breakeven for years.
Then is 2019 I was made redundant from my part-time job so that made me take the plunge (or forced me?!) into fulltime self employment.
In 2021 I had a great year, and made ok money and saved as much as I can. However the biggest mistake I made was to not put away enough for my tax bill, as in 2022 I earned less and was not able to save as much. That meant when I had to pay my 2021 taxes in 2022 it stung a bit...
2022 & this year has been leaner and some months I have had to pay for some of my personal expenses from my savings acc, which is not ideal. But that is the reality. I have not thankfully had to top up my business acc from my savings and my business has been paying for itself, even though it has not been able to pay me a full salary every month.
I started out doing my accounts yearly but now I do them monthly. I think as my business is my sole source of income right now, keeping a closer eye on how the money comes in / goes out is important, I know do my accounts monthly.
I use an excel spreadsheet for tracking and an app called Smart Receipt for adding up my expenses. That has been revolutionary! Keeping all transactions in and out of one dedicated account also make it very easy for tracking.
I have not read the Profit First book, but I am kind of regretting that I didn't start off by paying myself something from the very beginning. And I definitely think it is paramount to set aside a part of your profit for taxes, where it applies.
Thank you for your reflections Linn! I agree on doing the monthly accounts: just aside from how much work it is to do it just once a year, doing it monthly also helps with getting used to it and seeing that it's not scary. Thank you also for sharing the reality of some years or months being leaner than others and that being the reality of having a business. Have a good month!
As soon as I started to read your post Astrid I had Profit First in mind, I read the book at the start of this year and have to say it’s quite possibly one of the best business advice books I’ve read. Such a simple process to follow that can work for any business however big or small.
Yes, you're right Sonya, it is such a clear book: I was amazed at how it made all the money things easy to understand. Are you using the system yourself?
My husband is reading Profit First too - he keeps telling me about it. Great share Astrid! Ever grateful for your transparency. ✨✨
You're welcome Claire! Have a good month 🍂
From the beginning of my photography business I have filed my taxes as a sole proprietor because the sales, even in the best years, have not been enough to justify the cost of separating the two. Up until early 2023 my main goal was to build up my savings and since my day job covered all of my expenses any bit I made with photographs went directly to savings. The rest of 2023 has been a very expensive year—some of it good (trip to Scotland), some of it bad (veterinary expenses) so I have not been able to save anything for months. Seeing my savings decrease is causing me a lot of anxiety because I equate savings with safety. There will be no room for salary this year. Thankfully, when I do my taxes for 2023 the business losses combined with any extra I have paid through my day job should make for a small tax refund rather than having to pay.
Thank you for sharing this Ana! I recognise your feeling that "savings equate safety" so well! I've been gently challenging myself on that, and can really recommend Bari Tessler's _The Art of Money_ in this respect (I may have mentioned this book before) as well as Dana Miranda's Substack Healthy Rich: https://www.healthyrich.co
I just finished Wellness and I thought it was one of the best books I've read recently. I also loved The Nix, his first novel.
I enjoyed the Nix too--more so the second time around that I read it than the first. Wellness really surprised me though, good to hear you enjoyed it too!
Super interesting, thanks Astrid. I use a version of the barefoot investor, which works for me better than profit first for some reason. I distribute money into various pots every time I get paid and then pay myself a weekly salary from one of those pots. That salary covers all life expenses and is how I stay afloat!
Thank you for sharing Katie! I'm not that familiar with the barefoot investor--what is it that works so well for you? Is it the buckets, do they suggest percentages, something else? Just curious :)
I honestly can't remember, ha! I think it was the buckets that they set up (setting aside money to spend on whatever you want, for instance). They do suggest percentages. It's an Australian book, and some of it is quite specific to Australia, but the general way he sets up his accounts worked for me. This was about 3 years ago, so I'm sure I've completely adapted/changed it since then, but the principle generally still applies!
This was such an interesting read and helpful for me to reflect on how far I've come and what is currently working for me and what isn't.
I started my business in 2011 as a partnership, which only lasted for a year, but we did submit accounts for that and it was messy.
I think we made a total of €800 profit which we declared but it was such a small amount that in hindsight, we should have given ourselves a bit of leeway to try this out before committing.
Anyway since 2012, I have had a separate business account, as this was the advice I was given from the start. And I would pass that on to anyone starting out. Even if it is not a "business account" in a strict sense, keeping it separate helps with bookkeeping tremendously.
Like you Astrid I had a part-time job for many years that paid my bills, so whilst I had that, I pretty much spent all the income from my business on re investing it into trainings, expenses etc. and it was breakeven for years.
Then is 2019 I was made redundant from my part-time job so that made me take the plunge (or forced me?!) into fulltime self employment.
In 2021 I had a great year, and made ok money and saved as much as I can. However the biggest mistake I made was to not put away enough for my tax bill, as in 2022 I earned less and was not able to save as much. That meant when I had to pay my 2021 taxes in 2022 it stung a bit...
2022 & this year has been leaner and some months I have had to pay for some of my personal expenses from my savings acc, which is not ideal. But that is the reality. I have not thankfully had to top up my business acc from my savings and my business has been paying for itself, even though it has not been able to pay me a full salary every month.
I started out doing my accounts yearly but now I do them monthly. I think as my business is my sole source of income right now, keeping a closer eye on how the money comes in / goes out is important, I know do my accounts monthly.
I use an excel spreadsheet for tracking and an app called Smart Receipt for adding up my expenses. That has been revolutionary! Keeping all transactions in and out of one dedicated account also make it very easy for tracking.
I have not read the Profit First book, but I am kind of regretting that I didn't start off by paying myself something from the very beginning. And I definitely think it is paramount to set aside a part of your profit for taxes, where it applies.
Thank you for your reflections Linn! I agree on doing the monthly accounts: just aside from how much work it is to do it just once a year, doing it monthly also helps with getting used to it and seeing that it's not scary. Thank you also for sharing the reality of some years or months being leaner than others and that being the reality of having a business. Have a good month!
Thank you Astrid. You too.
As soon as I started to read your post Astrid I had Profit First in mind, I read the book at the start of this year and have to say it’s quite possibly one of the best business advice books I’ve read. Such a simple process to follow that can work for any business however big or small.
Yes, you're right Sonya, it is such a clear book: I was amazed at how it made all the money things easy to understand. Are you using the system yourself?
Yes I am I implemented it at the start of the new financial year and love it!
A really useful, reflective post as ever Astrid: thank you x
Thank you Laura!