Most of my clients have lasting results with the money changes we make. But what makes some clients more successful than others? I don’t judge success by dollar amounts of debt paid or profit made. Some of my most successful clients had overall smaller dollar changes. I judge success by my clients reaching their financial goals, staying protected at their income milestone, paying themselves and having great job satisfaction. If my clients can remove the stress and uncertainty that can come up around money, I call it a win. But my most successful clients all have three qualities about them that made them “extra” successful.
1 – They have a money goal and a purpose for the money.
My most successful clients have a money goal. Saving to buy a building, leave the 9 to 5 job, open a day spa in 3 years are all examples of my client’s goals and purpose for a set amount of money. These goals aren’t fuzzy. They know how much they need, and they have a timeline to make it. If they don’t start that way, they get it when we work together. If your money goal is “as much as possible” or “as much as I need to cover overhead” you likely don’t have the same laser focus to create and make money as my most successful clients do. The truth is, if you aim at nothing, you’ll hit it every time. You need to define and write down your goals with a plan to reach them. Not that plans can’t grow, change, and evolve, but if you don’t start with one at all you aren’t going to be able to really measure your progress.
2 – They take immediate action to control their money.
They opened the holding account, they took the utilities off autopay, they started tracking income every day. Some of my clients have done those tasks the same day we have our session! Keeping their laser focus on the goal they take quick action and have wins immediately. I have seen less success with entrepreneurs who are slower to make necessary changes. The motivation to get it done quickly goes away, and often only about half of the recommendations make it into the business. They may pay their expenses intentionally, but they don’t make the time to create a monthly spending plan (budget). My most successful clients commit to making changes with their money quickly, one step at a time, and they follow through right away.
3 – They celebrate every financial win and use them to stay motivated.
Let’s face it, saving 5 years for a building can get a little boring. Every $200.00 deposit seems tiny in the face of the price for a building. But my most successful clients celebrate every single win, whether it is a deposit into a building fund, or a payday when they proudly sign both the front and the back of their paychecks. Staying motivated can be difficult sometimes, and we all have to deal with the sometime lack of motivation. Celebrating the little things brings joy into the progress, not the end state. If you aren’t celebrating and doing a little dance after every sale or payday, I challenge you to start today. Find a small money win and recognize it with gratitude.
If you are new to business, or don’t already have your self-employment tax system set up, this post is for you. Many entrepreneurs treat taxes as an afterthought, often because cash flow is tight, and they don’t set back personal taxes when they take a paycheck. In the US Self-employment taxes are Social Security and Medicare taxes, like those that are withheld from when you are employed. When the IRS speaks to self-employment taxes, it is referring to this type of tax. There may be additional taxes that business owners and self-employed people have to file.
The rates for self-employment taxes may seem high when you first start paying your own. For the 2019 tax year the self-employment tax rate is 15.3% of net earnings, meaning after your expenses. The truth is that the employer must pay about ½ of the tax expenses for their employees. So, generally the same percentage is paid by everyone, but if you are employed you pay half (7.65%) and your employer must pay the other half (7.65%).
You must withhold your taxes and deposit them at least quarterly, and this is where many small business owners run into problems. The rules don’t allow for self-employed people to just pay annually, you must deposit quarterly, or you can face late-payment penalties. Here is a simple process for setting up your tax system for a successful 2020.
- Pay Regularly Online. You can easily set up to deposit your taxes online through www.EFTPS.gov by enrolling in the program and receiving a PIN from the IRS, and can deposit your taxes online whenever you take a paycheck. You don’t have to pay them quarterly, just make sure what you paid in each check totals what you owe by the end of the quarter. If you always deposit 20%, this shouldn’t be a problem. This is what I do, I don’t hold back and deposit quarterly anymore. I deposit online every payday.
- Write Yourself a Paycheck. The easiest and best way to track your income, and the amount you must pay taxes on, is to write yourself a paycheck. When you just take money out of the till and spend it, it becomes a tracking and accounting nightmare. If you get into the habit of writing yourself a regular paycheck, and immediately withholding your self-employment taxes, you will simplify your accounting and reporting for the end of the year and keep yourself protected from tax issues. You can join the movement of entrepreneurs who have committed to pay themselves a paycheck in 2020 by visiting www.entremoneycoach.com/payday.
- Stay organized with your expenses. Your self-employment taxes are calculated on your NET income, meaning after expenses. Keep your receipts organized, perhaps in an envelope by month, and put the total on the outside of the envelope for each month. You can very easily keep a running total of your expenses on a sheet by totaling the expense envelopes. This doesn’t need to be complicated!
The rules for reporting self-employment income are straightforward. If you are a sole proprietor or a single member LLC, you must report your self-employment income and pay taxes using a schedule C when you file your 1040. If you have a corporation or an LLC with more than one member you must file a different form. Staying organized and regularly handling tax deposits will make your 2020 tax year simpler and less stressful.
