Here’s the latest Entrepresneur On Fire Podcast for your enjoyment!
July 2016 Income At-A-Glance
Gross Income for July: $166,721
Total Expenses for July: $69,022
Total Net Profit for July: $97,699
Difference b/t July & June: -$51,614
Why We Publish An Income Report
This monthly income report is created for you, Fire Nation!
By documenting the struggles we encounter and the successes we celebrate as entrepreneurs every single month, we’re able to provide you with support – and a single resource – where we share what’s working, what’s not, and what’s possible.
There’s a lot of hard work that goes into learning and growing as an entrepreneur, especially when you’re just starting out. The most important part of the equation is that you’re able to pass on what you learn to others through teaching, which is what we aim to do here at EOFire.
CPA On Fire’s Monthly Tax Tip
What’s up Fire Nation, my name is Josh Bauerle. I’m a CPA and the Founder of CPA On Fire, where we specialize in working with entrepreneurs to minimize their tax liability while keeping them in line with the ever-changing tax laws.
I’ve been working with EOFire for years now, and John and Kate have included me in these monthly income reports with unlimited access to all their accounts so I can verify that what they report here is complete and accurate.
And because they believe in delivering an insane amount of value to you, my job doesn’t stop at the verification level; I’ll also be providing tax and accounting tips to you along the way!
Josh’s July Tax Tip: What should I do with business profits?
We love nothing more than to answer questions directly from Fire Nation, and this month we have the opportunity to do just that!
In the June report, Buzz Park asked in the comments section what EOFire does with the profits in the business after paying themselves, and what the tax implications of that are.
It’s a great question, and it ties in perfectly with the previous two tax tips.
What we haven’t mentioned is what to do with the remaining profits in the business after paying yourself, and the answer, as usual, is: it depends.
The first thing to consider, and it’s something we’ve mentioned several times here, is that unless you are a C Corp, (which almost none of you should be), then your business is a pass through entity. This means your business pays no taxes. Instead, the profits of the business pass through to you, the owner, and you pay taxes on those profits as a part of your personal tax return.
This means two important things:
- You are taxed on those profits even if you leave every dime in the business and never take it out.
- Taking those profits out in the form of distributions incurs zero additional taxes. There are essentially no tax consequences for taking the profits out of the business and using them personally.
So the question becomes, if you are taxed whether you take the money out or leave it in, and you incur no additional taxes by taking it out, how do you decide how much to take out and how much to leave in?
The answer is: it really comes down to knowing your business.
Here are a few questions to ask yourself when making that decision:
How much cash does my business need to operate?
Obviously you never want to put your business operations at risk by draining the cash flow it needs to run.
How much legal risk does your business face?
If you’re worried about the possibility of your business being exposed to potential lawsuits, it certainly doesn’t hurt to move available cash from the business to you personally, assuming you set things up right by legally separating yourself from the business.
If you are an S Corp, how much salary did you take?
S Corps come with enormous tax benefits, but they also require you to take a “reasonable” salary. If you aren’t doing that, taking additional profit distributions can put you at risk of an audit, which can result in losing your S election.
So the biggest keys to remember here are:
- Your business will be taxed on the profits with or without you taking them out;
- Taking them out will incur no additional tax consequences;
- How much of the profits you should take out depends entirely on your own circumstances; and
- Most important of all, remember: the first step is to create a profitable business so that you can start worrying about questions like these!
If you have a question you would like to see covered in a future income report, leave it in the comments section below, or reach out to me directly!
As always, please feel free to contact me if you’d like to discuss what would be best for YOUR business. I LOVE chatting with Fire Nation!
*Bonus* If you haven’t checked out our FREE course on business entities yet, you can get it here!
A Legal Tip from David Lizerbram
What is a trade secret, and how does it affect your business?
A trade secret is defined as “a piece of information, not generally known or reasonably ascertainable, that gives a business an economic advantage over its competitors.”
Well, that’s the legal language, but what does that actually mean?
If you have a business, no matter how large or small, you probably have trade secrets. Examples might include recipes, algorithms, customer lists, or upcoming products.
Trade secrets can last forever and be incredibly valuable (think of the formula for Coca-Cola or Google’s search algorithm), but their legal protection lasts only as long as you keep them secret.
Some steps you might want to take include to protect your trade secrets:
- Create written confidentiality policies for your employees, independent contractors, and VAs.
- Have people you work with sign non-disclosure agreements.
- Have a secure computer password policy.
- When you end your relationship with someone (an employee, a contractor, a VA), have them sign an agreement stating that they will still keep the information confidential.
- Have an attorney do an audit or review of your trade secret policies.
Click here to download your free 3-Step Checklist to stay on top of your trade secrets and protect these valuable assets!
What Went Down In July
Podcast Movement 2016
This was our third annual trip out to Podcast Movement, and this conference just keeps getting better!
What was so great about it?
For starters, the setup this year was top-notch:
- Prime location in downtown Chicago, right next to Navy Pier
- Great signage and dozens upon dozens of volunteers who were available and eager to help
- Smooth flow from hotel entrance, to downstairs, to checkin, to exhibition area, to presentation rooms
- The hotel lobby was very conducive to engagement – running into or meeting up with fellow PM16-er’s in the lobby for coffee, a cocktail, or a meal was seamless.
But of course, the real greatness could be found in the people:
- Motivated and driven attendees who are passionate about podcasting
- Top-notch speakers who brought a ton of value to the stage
- Amazing organizers and volunteers who kept everything running flawlessly
And something that was really interesting to see unfold was the recurring theme that ran throughout the presentations and hallway chats – something that has been quite obvious all 3 years.
- The overall theme at the first annual Podcast Movement: be unique
- The overall theme at the second annual Podcast Movement:
- The overall theme at the third annual Podcast Movement: the power of story-telling
For a full recap of our Podcast Movement experience, including our top takeaways and advice for those looking to leverage conferences in the future, we’ve got you covered right here!
The Adventure Continues in Puerto Rico
July brought with it A LOT of projects for both EOFire and for our new HQ. You can basically think of the month of July as ‘the month of the home’.
Since we moved to Puerto Rico in May 2016, we’ve been doing a lot of exploring, and we’ve been lucky to welcome several family members to the island for visits.
But in July, we were a lot more focused on settling into our new home versus exploring the island.
Our project list for EOFire HQ is growing daily, and it’s been a true test of patience and really good planning to make sure we’re covering our bases.
How do we keep track of it all?
With some good old list-making:
We’ve also made a standing rule that unless it’s major and requires both of our input, only one of us will take the lead on any given project. Knowing when and how to delegate to one other – or to someone else – has been key to helping us move forward consistently.
While our focus on the HQ has taken some of our bandwidth away from business building projects and activities, you’ll notice in our numbers below that we’re not far off from our typical revenue generated.
How does that work?
Great question 🙂
We cannot stress enough the power of systems in your business. Systems are the reason why we were even able to make this move to Puerto Rico in the first place. Systems are what help us keep the business running, even if we’re not able to fully focus on it 100% of the time.
You can check out an entire walkthrough of our new home in Palmas Del Mar, “cribs style”, and also stay tuned for updates once the EOFire Headquarters is in full swing!
We’re back on Amazon!
And ready to rock!
After some intense research and a lot of reaching out to those who know the space best, we finally figured out how to manage The Freedom Journal on Amazon the right way (more on this in a separate income report).
In our April 2016 income report, we talked about the reasons why we took The Freedom Journal off Amazon (mainly because of the massive pain it seemed to be to track and report on taxes paid per state that people were purchasing in).
We’re excited to report that The Freedom Journal is not only back on Amazon, but we’ve also hired a mentor to help us understand the Amazon advertising platform. He’ll be working hand-in-hand with our newest member of Team Fire, Ian, for the next 3 months.
You know we’ll be reporting back in a future income report with our findings and biggest lessons learned, Fire Nation, so stay tuned!
Are you ready to master productivity, discipline, & focus in 100 Days?
My next project is Self-Mastery Journal: Master productivity, discipline, & focus in 100 Days!
I’m INCREDIBLY excited for the launch of Self-Mastery Journal (coming Q1 2017) because this is a project that’s very personal for me.
The Freedom Journal was creating the solution for how to set and accomplish meaningful goals. My EOFire guests thrive with goals, while many of my listeners struggle with goals; The Freedom Journal bridges that gap.
But Self-Mastery Journal is personal.
I believe my strengths are productivity, discipline, & focus.
There is a method to my madness, and in Self-Mastery Journal you WILL learn how to master productivity, discipline, & focus in 100 days.
Straight up, Self-Mastery Journal is going to be work, but if you want to achieve your dreams, it’s time to raise your hand and join me! Allow Self-Mastery Journal to be your guide.
I’ll be sharing my progress, as well as providing gifts and awesomeness along the way, so be sure to sign up for updates at SelfMasteryJournal.com!
Product/Service Income: $129,665
The Freedom Journal: Accomplish your #1 goal in 100 days!
- Shopify: $21,310 (487 Freedom Journals & 48 Digital Packs sold!)
- Amazon: $1,716 (43 Freedom Journals sold!)
Podcasters’ Paradise: The #1 Podcasting community in the world!
- Recurring: $6,590
- New members: $12,010 (34 monthly, 7 annual)
- Total: $18,600
Podcast Sponsorship Income: $81,500
Podcast Websites: $5,000 Your all-in-one podcast website peace of mind
Free Podcast Course: A free 15-day course on Podcasting
Free Webinar Course: A free 10-day course on Webinars
Free Goals Course: A free 8-day course on Setting & Accomplishing Goals
WebinarOnFire: $1,344 Learn how to Create & Present Webinars that Convert!
The Fire Path Course: $14 A step-by-step business roadmap
Affiliate Income: $37,056
*Affiliate links below
Resources for Entrepreneurs: $4,873
- Audible: $501
- Aweber: $0
- BlueHost: $0 (Step-by-step guide and 23 WordPress tutorials)
- Click Funnels: $1,000
- Coaching referrals: $1,500 (email me for a mentor introduction)
- Disclaimer Template: $206 (legal disclaimers for your website)
- Fizzle: $418
- Infusionsoft: $0
- LeadPages: $1,206
- Shopify: $42
- WP Curve: $0
Courses for Entrepreneurs: $23,317
- David Siteman Garland’s Create Awesome Online Courses: $5,106
- Scott Voelker’s The Amazing Seller: $0
- Ramit Sethi: $4,809
- Self-Publishing School: $10,000
- Nick Stephenson’s First 10k Readers: $684
- Rick Mulready’s FB ADvantage: $1,067
- Bryan Harris’ 10k Subscribers: $0
- Fire Pole Marketing: $0
- Grant Baldwin’s Booked & Paid to Speak: $125
- Ray Higdon’s 3 Minute Expert: $0
- Josh Turner’s LinkedIn Academy: $1,526
Resources for Podcasters: $3,832
- Libsyn: $678 (promo code Fire)
- Pat Flynn’s Smart Podcast Player: $66
- UDemy Podcasting Course: $8
- Podcasting Press: $280
- Podcast Movement: $2,800
- Amber Ludwig-Vilhauer (done for you services): $0
Other Resources: $5,034
- Amazon Associates: $2,826
- Other: $2,208
Total Gross Income in July: $166,721
Business Expenses: $66,276
- Advertising: $1,020
- Affiliate Commissions (Paradise): $4,451
- Accounting: $250
- Cost of goods sold: $3,289
- Design & Branding: $823
- Education: $218
- Legal & Professional: $0
- Meals & Entertainment: $1,228
- Merchant / bank fees: $2,011
- Amazon fees: $239
- Shopify fees: $390
- Stripe fees: $36
- PayPal fees: $542
- Office expenses: $7,251 (includes new office setup for both Kate & John)
- Other Business Expenses: $400 (includes postage & delivery)
- Promotional / events: $54
- Paradise Refunds: $11,469 (7 lifetime, 7 recurring)
- WebinarOnFire Refunds: $1,344 (invoice total)
- Shipwire: $2,000
- Sponsorships: $15,500
- Show notes: $624
- Total Launch Package Fees: $175
- Travel: $4,869
- Virtual Assistant Fees: $6,125
- Website Fees: $1,968
Recurring, Subscription-based Expenses: $2,746
- Adobe Creative Cloud: $100
- Boomerang: $70
- Brandisty: $24
- Authorize.net: $91.10
- Cell Phone: $230
- Google Storage: $9.99
- Go2MyPC: $12
- Internet: $318
- eVoice: $9.95
- Infusionsoft CRM: $497
- Insurance: $551
- Libsyn: $312
- Chatroll: $150
- PureChat: $20
- ScheduleOnce: $9
- Skype: $2.99
- Shopify: $29
- TaxJar: $19
- Payroll fee: $77
- Workflowy: $4.99
- MeetEdgar: $49
- Wistia: $25
- Sweet Process: $29
- WPCurve: $29
- Taxes & Licenses: $77
Total Expenses in July: $69,022
Payroll to John, Kate & PR Team: $29,653
Total Net Profit for July 2016: $97,699
Biggest Lesson Learned
Have you noticed something different about the layout of our income reports recently? Instead of wrapping with just a single lesson learned here at the bottom, I’m working in lessons learned throughout!
Check back towards the end of each section to read or listen in to our biggest lessons learned throughout the month.
Alright Fire Nation, that’s a wrap!
Until next month, keep your FIRE burning!
~ Kate & John
Note: we report our income figures as accurately as possible, but in using reports from a combo of Infusionsoft & Xero to track our product and total income / expenses, they suggest the possibility of a 3 – 5% margin of error.
This post was written by Kate Erickson, Content Creator and Implementer at EOFire. Follow Kate on Social:
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