Managing the Money: Costs, Records and Taxes

The good news: early-stage money management is simple. A dedicated account, honest records, and fifteen minutes a week will outperform any software you are not ready to use.

Records to keep from day one

• Everything that comes in: sales, dates, amounts, and from whom.
• Everything that goes out: every subscription, ad test, tool, and fee — even the small ones, especially the small ones.
• Invoices and receipts, kept together and findable.
• A monthly total you actually look at.

Three numbers that run the business

1. What a customer costs you to get — total acquisition spend divided by customers acquired. If you do not know this, you cannot make safe spending decisions.
2. What an average sale is worth — and, for repeat customers, what they are worth across their whole time with you.
3. What it costs you to deliver — with your own time priced honestly.

These three numbers answer almost every strategic question you will face: can you afford this ad, is this price right, is this customer type worth pursuing. Guessing them means guessing your business.

Taxes, briefly and honestly

As a self-employed person, your business income is generally taxable, and self-employed owners typically owe self-employment tax in addition to income tax. Many owners set aside a share of every dollar that arrives — the right percentage depends on your situation. Estimated quarterly payments are worth researching early, not in April. The IRS’s Self-Employed Individuals Tax Center is the starting point; a qualified tax professional is the right resource for your specific numbers.

Money under control, it is time to make the work sustainable. Chapter 11 covers the tools worth having — and the ones to skip for now.