June 2016 Income At-A-Glance
Gross Income for June: $214,536
Total Expenses for June: $65,223
Total Net Profit for June: $149,313
Difference b/t June & May: -$3,073
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 June Tax Tip: How to pay yourself as an entrepreneur
This month we’re going to cover Part II of our series on getting back to the basics with your taxes, accounting, and finances.
If you missed Part I, we talked about the importance – and really the necessity – of completely separating your business and personal finances.
But if we have to completely separate our business and personal finances at all times, the next logical question becomes:
“How do I take money out of the business to use personally?”
Or in other words:
“How do I pay myself for all that hard work I’m putting into the business?”
And the answer, as with most questions in accounting, is:
What Type of Entity Are You?
Your choice of entity influences almost every part of your tax, accounting, and legal strategy; how you pay yourself is no different.
Both the method and the amount you pay yourself is determined by what type of entity you operate out of.
Here’s a rundown:
Sole Proprietor / General Partnership / LLC
Contrary to popular belief, an LLC acts exactly the same way for tax purposes as a sole proprietor or general partnership. All three are considered “pass through” entities, which means the business itself pays no taxes.
Instead, the profits pass through to you, the owner, and you pay any applicable taxes on those profits on your personal return.
What this means is that you are paying those taxes on the profits of the business whether you take some, all, or none of the profits out as a “payment” to yourself.
So you are essentially free to take as much, or as little, out as you like in distributions with no tax consequence.
The tax has already been paid on the profits.
So as the owner operating out of one of these three entities, you do not pay yourself any type of salary. Instead, you simply take out money from the business to you personally in the form of distributions.
These distributions can be done via bank transfer, writing a check, or any other method you prefer. The important thing is that you are documenting these withdrawals as distributions when they occur.
As with the the sole prop / general partnership / LLC situation, S Corps are considered “pass through” entities. And just like with the previous entities, the profits in an S Corp are taxable to the owners of the S Corp – regardless of how much they do, or don’t, take out in distributions.
But if you have been listening to prior income report tax tips, then you know there are big tax benefits with S Corps in the form of saving on self-employment taxes.
Because of those benefits, the IRS actually requires that all owners in the business take a “reasonable” salary. And unlike with the distributions, the salary has to be an actual payroll where taxes are being withheld and paid each month, and monthly, quarterly and annual payroll tax returns are being filed.
Because of this, we highly recommend using a payroll company to do this for you, cause it can get tricky.
You can use a company like Gusto for as low as $35 a month to handle all of this for you.
So let’s run through a quick example:
You’re a company that has a profit of $100,000 a year.
You want to pay yourself $80,000 a year and leave the other $20,000 in the company.
If you are a sole prop / general partnership / LLC, then you will simply transfer that $80,000 to yourself however, and whenever, you want, and code it as a distribution.
If you are an S Corp, then you will take a portion of that $80,000 as a reasonable salary – say $35,000 in this case – and take the rest out in distributions. Again however, and whenever, you want.
As a business owner, it’s easy to put yourself last. But paying yourself still needs to be a priority, and it’s even more important that you do it the right way.
Following this guide will help get you there!
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!
What Went Down In June
Welcome, Ian to Team Fire!
June started off truly ON FIRE as we welcomed a new member to Team Fire.
Meet Ian, a Puerto Rican native who has experience working with SaaS, app creation, and project management.
Ian truly hit the ground running, and ever since day one he has been drinking from the fire hose.
How did we find Ian?
In the midst of all the post-move chaos and us trying to settle in to PR, we turned to Zip Recruiter to post our job.
Here’s how it went down:
Just days before, Goldy – whom you may have received emails from every now and then – left the EOFire team. We needed to hire someone fast, but we didn’t want to risk hiring someone who wasn’t qualified.
John and I chatted and decided the right move was to hire someone locally who could help us not only make huge strides with the projects we have going on for EOFire, but who could also help us navigate PR.
After taking inventory of the types of tasks and projects this person would be working on, and realizing that a majority of the things we needed help with were project-based, we put everything together in a job description and posted it on Zip Recruiter.
If you want to check out the exact job description we posted, just click here!
Within a couple of days, we had over 55 applications for the Project Assistant position, and within two weeks, Ian was on board!
We can’t stress enough how integral our team has been in the growth and success of EOFire.
To learn more about how our team is set up, how we knew what to delegate to each of our team members, and how we’ve actually found and on-boarded them, check out this post on How the EOFire team works. There you will find multiple resources for finding and hiring your virtual team!
JM, Jess, Tipu, Claire & Ian: you’re all amazing!
A Trip to SF & RI
May was crazy for its own set of reasons, but June also brought a fair share of crazy, including:
A last-minute surprise trip to San Francisco so I could celebrate my nieces’s 4th birthday and Father’s Day with the family!
…and also a 36 hour trip to Rhode Island to see one of John’s best friends get married (and of course visit Providence College!)
All of this, combined with the fact that John’s family was in town for 10 days, made for a busy month of awesomeness!
It also reminded us how important it is to take a time out – and that finding a balance can be tough.
How do we manage to take a time out, all while making sure we’re not dropping the ball in our business?
It doesn’t happen overnight, but when you focus on building a strong foundation for your business in the beginning, and hiring either team members or contractors who can help you take your business to the next level, the sky is truly the limit.
If you’re working on building a strong foundation for your business right now, then hopefully you’ve already checked out The Fire Path Roadmap, a free 6-day email series that takes you through the process of building a strong foundation from the start.
More Island Adventures
As I just said, June was an ACTIVE month for us with travel – and also here on La Isla Del Encanto.
On the heels of my parents and Aunt & Uncle visiting us:
…John’s dad and his cousins came to visit!
To say we explored the island during our hosting time would be an understatement!
Our adventures in June included:
- Kayaking and paddling boarding down the Guajataca River
- Hiking around Quebradillas and our neighboring beaches
- Zip lining in Toro Verde
- Flying in a 6-person plane to Vieques
- Kayaking the Bioluminescent bay
- Doing a beach hopping tour
- …and MORE!
Here we are in the 6-person plane on our way back to PR from Vieques…
The last beach we visited on our beach hopping tour was truly breathtaking. The image below has ZERO filters – the trees and water are actually that color!
Whew! Having the opportunity to sightsee our way across Puerto Rico with family and friends was a real treat.
But an even bigger treat awaited us in Palmas Del Mar…
Our new home! :)
The EOFire Headquarters is now located in Palmas Del Mar, which translates to Palms of the Sea.
Here’s a shot of the view from the brand new EOFire studio:
We’re really excited about settling into Palmas, where we’ll have access to an entire golf course, tennis courts, a beach club, and over 30 restaurants – all within the community!
Here’s a view from one of the restaurants in the marina area:
But what we’re most excited about is the actual community here in Palmas.
A perfect example: our first day here we were greeted by two of our neighbors – gift baskets in hand – in addition to receiving an invite to a mixer at a house down the road.
Believe me, when John told me that we were attending a mixer at someone else’s house, and then going to an 80’s cover band event at the Beach Club – all within 2 hours of arriving at our new home – my first thought was, “no way – we’ll never be able to make it happen.”
But you never know who you’re going to meet, and we were very lucky to have received that invite. As a result of accepting, we now have 6 new sets of friends and an awesome memory of our first night in Palmas.
Product/Service Income: $120,315
The Freedom Journal: Accomplish your #1 goal in 100 days!
- Shopify: $25,508 (609 Freedom Journals sold!)
Podcasters’ Paradise: The #1 Podcasting community in the world!
- Recurring: $3,515
- New members: $18,979 (39 monthly, 7 annual, 2 Elite)
- Total: $22,494
Podcast Sponsorship Income: $67,000
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
The Fire Path Course: $69 A step-by-step business roadmap
Affiliate Income: $94,221
*Affiliate links below
Resources for Entrepreneurs: $58,749
- Audible: $651
- Aweber: $0
- BlueHost: $1,950 (Step-by-step guide and 23 WordPress tutorials)
- Click Funnels: $53,252
- Coaching referrals: $948 (email me for an introduction to a mentor for overall online business or a Podcast focused mentor!)
- Disclaimer Template: $158 (legal disclaimers for your website)
- Fizzle: $477
- Infusionsoft: $0
- LeadPages: $1,313
- Shopify: $0
- WP Curve: $0
Courses for Entrepreneurs: $31,577
- David Siteman Garland’s Create Awesome Online Courses: $6,547
- Scott Voelker’s The Amazing Seller: $0
- Ramit Sethi: $4,952
- Rick Mulready’s FB ADvantage: $1,212
- Bryan Harris’ 10k Subscribers: $17,168
- Fire Pole Marketing: $0
- Grant Baldwin’s Booked & Paid to Speak: $62
- Ray Higdon’s 3 Minute Expert: $0
- Ray Edwards’ Copywriting Academy: $110
- Josh Turner’s LinkedIn Academy: $1,526
Resources for Podcasters: $985
- Libsyn: $663 (promo code Fire)
- Pat Flynn’s Smart Podcast Player: $30
- UDemy Podcasting Course: $15
- Music Radio Creative: $97
- Podcasting Press: $180
- Amber Ludwig-Vilhauer (done for you services): $0
Other Resources: $2,910
- Amazon Associates: $756
- Other: $2,154
Total Gross Income in June: $214,536
Business Expenses: $62,659
- Advertising: $5,739
- Affiliate Commissions (Paradise): $4,033
- Accounting: $750
- Cost of goods sold: $4,082
- Design & Branding: $1,980
- Education: $70
- Legal & Professional: $725
- Meals & Entertainment: $2,448
- Merchant / bank fees: $2,058
- Amazon fees: $240
- Shopify fees: $546
- Stripe fees: $66
- PayPal fees: $593
- Office expenses: $921
- Other Business Expenses: $351
- Promotional / events: $1,372
- Paradise Refunds: $3,689
- WebinarOnFire Refunds: $0 (invoice total)
- Shipwire: $7,000
- Sponsorships: $15,000
- Show notes: $348
- Total Launch Package Fees: $175
- Travel: $3,149
- Virtual Assistant Fees: $5,774
- Website Fees: $1,550
Recurring, Subscription-based Expenses: $2,564
- Adobe Creative Cloud: $100
- Boomerang: $70
- Brandisty: $24
- Authorize.net: $91.10
- Cell Phone: $210
- Google Storage: $9.99
- Go2MyPC: $12
- Internet: $159
- eVoice: $9.95
- Infusionsoft CRM: $497
- Insurance: $551
- Libsyn: $309
- 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 June: $65,223
Payroll to John and Kate: $18,193
In our May 2014 Income Report, Josh focused on how to pay yourself as an entrepreneur. Check it out!
Total Net Profit for June 2016: $160,356
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: