July 2018 Income At-A-Glance
Gross Income for July: $161,709
Total Expenses for July: $36,008
Total Net Profit for July: $125,701
Difference b/t July & June: -$8,584
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.
**We’ll receive a commission on the affiliate links below.
Josh Bauerle’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 JLD & Kate at Entrepreneurs On Fire for years now, and they’ve 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 also provide a new tax and accounting tip every month!
Josh’s July Tax Tip: Tax considerations when selling a business
Over the past 4+ years of tax tips on the monthly income reports, we’ve focused entirely on taxes within your business.
- What you can deduct,
- What entity should you choose,
- How else to minimize taxes,
- …and list continues!
But what happens when your business reaches its pinnacle and you sell it?
What are the tax consequences there?
It may seem like a business sale would be fairly straight forward, but the tax impact can actually vary wildly depending on how the sale is set up.
So the answer to the question of “how is the sale of my business taxed?” is like most tax questions: it depends.
In case you’re considering selling your business now – or in the future – here are just a few of the variables involved and things you should be thinking about.
Ordinary Income vs. Capital Gains
When you sell your business, the biggest question is whether the proceeds you receive will be structured as capital gains, or ordinary income.
Depending on how much the proceeds are, and how much other income you make, the difference could be 20% tax for long-term capital gains vs 35% for ordinary income.
On a million dollar sale, that’s a $150,000 difference in taxes!
So what decides whether it’s capital gains or ordinary income?
That’s a tough one to answer, but it really comes down to how the sale itself is structured.
If you’re selling the entire business, such as an LLC itself, it’s almost certainly capital gains. If you’re selling off individual assets, some or all of it could very easily be considered ordinary income.
Full Sale Upfront vs. Installment Sale
Another variable that could really impact the overall tax impact when selling a business is whether the buyer is paying you the entire price up front, or if it’s being paid in installments over several years.
If you receive the full purchase price upfront, it all gets taxed in that year.
But if the payments are spread out over several years, then you’re only taxed as you receive payments, which can substantially lower taxes by putting you in lower tax brackets in each given year of payments.
We talk a ton about the importance of choosing the right entity, and the importance of that choice certainly extends to when you sell the business.
Different entities have different tax consequences when sold.
For the pass through entities such as LLC’s and S Corps, they’re pretty much handled the same way.
But if you choose to operate out of a C Corp, which most listeners know by now I rarely recommend, you could be subject to double taxation: first at the corporate level when you sell, and then again at the personal level when you pull out the funds.
So as always, choose your business entity very wisely.
Selling your business could be a life-changing moment. It’s the culmination of all the hard work you’ve put into building it.
But if you aren’t careful, you could end up spending a far bigger chunk of those proceeds on taxes than you need to.
I always recommend working with qualified CPA’s and attorneys in your business, but when you go to sell your business the importance of this is magnified 10x!
Different sales structures can dramatically change the tax impact of the sale, and there are even things you can be doing early on to prepare.
Build an amazing team of professionals now so you can keep that hard-earned money when the day of sale arrives.
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* Claim your spot in Josh’s FREE Course on Business Entities!
David Lizerbram’s Legal Tip
You Set the Price, I’ll Set the Terms – Contract Negotiation Part I, Jurisdiction and Choice of Law
You can always tell when someone is new to business negotiation because they can’t stop talking about price – how much they got paid for something, or how little they paid for something.
Experienced negotiators know that oftentimes the terms of a contract are much more important than the top-level price. That’s the origin of the saying “You set the price, I’ll set the terms.”
It’s a phrase that seasoned business people and lawyers often use.
OK, so it’s easy to throw that phrase around, but what do the terms actually mean?
I’m going to talk about a few common terms found in business contracts and how you can leverage them to get the most out of any agreement, regardless of price. This is eventually going to be a multi-part series, but you’re getting a sneak preview right now!
Some of the good stuff is hidden at the end of most contracts – what people often call the “boilerplate”.
A lot of this looks like standard language that you can just skip over after you’ve read the parts with dollar signs in front of them. But that’s not the case – those terms are just as legally enforceable as any other part of a contract, and it’s important to know what you’re agreeing to and where the negotiation points are.
Today’s topic is “Jurisdiction and Choice of Law”.
First of all, Jurisdiction and Choice of Law are not the same thing. Jurisdiction refers to where a dispute will be heard – meaning, at what geographic location.
Jurisdiction clauses often refer to courts in a specific county or city. If the contract has arbitration or mediation provisions, those clauses should also include Jurisdiction language.
Why is Jurisdiction important?
First of all, it provides clarity: if we have a dispute over this contract, we both know where that dispute will occur. It’s also a zero-sum term in many cases, which means it’s a point of negotiation that has a winner and a loser.
For example, if you’re in Puerto Rico and the other party to the contract is in Hawaii, wouldn’t you rather make the other guy travel, and incur all of that hassle and expense?
Of course, in most circumstances, you’d rather have the case heard in your local Puerto Rico court.
The reality is that the party with the less convenient Jurisdiction is less likely to file a lawsuit, so this piece of “boilerplate” can be a very important term.
Sometimes, when contracting parties are arguing over Jurisdiction, they’ll pick a neutral venue – so if I’m in California and you’re in New York, we might agree for the dispute to be heard in Texas so we’re both equally disadvantaged.
What is Choice of Law?
Choice of Law refers to what set of laws applies to this contract – meaning, the laws of what country, state, county, or city.
You might think this would be identical to Jurisdiction, and it usually is, but it doesn’t have to be.
Technically, a contract dispute could be resolved in New York using Delaware law. But that requires the court in one state to be versed in the laws of another, so it’s not usually advisable.
Choice of Law might sound simple, but there’s a twist.
Some states are more business-friendly or have different approaches to legal issues. For that reason, lawyers often focus on the Choice of Law, meaning which state’s laws are going to apply, and then change the Jurisdiction to that state.
So if you know that Delaware law tends to be business friendly, the Jurisdiction and Choice of Law terms may both refer to Delaware, even if neither party lives or does business there.
That’s often a smart choice, but again, you need to know that in the event of a dispute, you’re going to be taking a trip – or multiple trips – to the great State of Delaware, so make sure you’re comfortable with that before signing the contract.
We’ve seen that Jurisdiction and Choice of Law, two of the often-overlooked terms at the back of a long contract, can have a huge impact on your legal rights and your ability to get what you want out of a business agreement.
There are a lot of other business contract terms to talk about, and I look forward to sharing more of these tips with you in future Income Reports!
If you have a legal question that you’d like me to cover on a future Income Report shoot me an email with your request! I’ll be sure to give you a shout-out when I join John & Kate to talk about your legal questions!
*Bonus* Download David’s FREE Checklist on Intellectual Property for Entrepreneurs!
What Went Down In July
3 Hours to YOUR BIG IDEA launches!
What is your #1 struggle?
Hi! JLD here, and a few months ago I had an AH-HA moment. I wanted to help Fire Nation with their biggest struggle: discovering their BIG IDEA.
I found that every Entrepreneur is in one of three camps:
- You don’t have a BIG IDEA;
- You have a lot of ‘ideas’, but don’t know which is the BIG IDEA;
- You have your BIG IDEA, but need clarity, focus and direction.
The solution is a FREE training called 3 Hours to YOUR BIG IDEA.
Give me 3 hours and I’ll give you YOUR BIG IDEA.
How it all came together
Once I had the ah-ha moment to create 3 Hours to YOUR BIG IDEA, and Kate and I started creating the content that would make up the free training, I continued to brainstorm the next steps.
What happens after someone goes through the free training and has their big idea?
Sadly, they usually fail to figure out how to turn their BIG IDEA in REAL REVENUE.
That’s when I knew I had to create Real Revenue.
After turning four of my BIG IDEAS into 7-figure revenue generators, including:
- Entrepreneurs On Fire podcast
- Podcasters’ Paradise
- The Freedom & Mastery Journal
- My affiliate relationships
…I know exactly how to take a BIG IDEA and turn it into REAL REVENUE.
So I decided the next step would be to share the exact system I’ve used time and time again: The Real Revenue System.
This course is SOLID, the bonuses are mind-blowing (seriously), and the price point is irresistible.
So once someone joins Real Revenue, they have access to my entire Real Revenue System and can dive straight in.
Those mind-blowing bonuses I mentioned?…
- My Million Dollar Funnel Training
- Kate’s Content Creation Plan Course
- Webinar On Fire
- The Freedom, Mastery, and Podcast Journal Digital pack
So thus far, I’ve helped my avatar discover their BIG IDEA (for free), given them a proven system to help them turn that BIG IDEA intoREAL REVENUE, and next… an Elite Mastermind!
It’s great to have all the tools and resources at your fingertips necessary for success, but what if you don’t want to do this alone?
Joining a mastermind in 2012 was the BEST decision I made. It gave me the guidance, support, and leadership I needed to take my business and life to the next level.
That’s why I decided to launch The Revenue Crew: an elite mastermind filled with awesome people.
I host live group coaching calls EVERY WEEK, and members get access to our exclusive Facebook Group for day-to-day support and guidance.
The next step?…
High-level, one-on-one time with me, JLD.
This really breaks into two categories:
- True one-on-one time: a full day with JLD and
- An in-person, small group mastermind in Puerto Rico.
But more details on those coming in the future…
This is truly a Super Funnel, and I am FIRED UP to bring even more value to YOU, Fire Nation!
If you’re looking to find your BIG IDEA, turn that BIG IDEA into Real Revenue, and join a mastermind of like-minded people to help support you along the way, then it starts with just 1 step:
Join us in 3 Hours to YOUR BIG IDEA today!
Ok great, so once I had the idea for this Super Funnel, how the heck did I put it all together?
To be honest, putting it together wasn’t super simple.
Here’s how we did it…
How’d we build the Super Funnel?
Kate: I’ll take it from here :)
Once John started talking about his idea to build the free course, 3 Hours to YOUR BIG IDEA, Real Revenue, The Revenue Crew, along with the high-level, in-person options, I knew we were in for a doozy.
We’ve built free courses that lead to paid courses in the past, but they’ve always been a mix of several different pieces of software frankenstein-ed together – and they haven’t always given the best user experience (looking back).
This time, we wanted it to be different. This time we wanted it to be a super seamless user experience that gave Fire Nation exactly what they want – when they want it.
A common piece of feedback we’ve received in the past when dripping our free courses over several days is “Can I just have all the videos in 1 place?” More on this in a minute…
So first up was deciding which platform we were going to use to deliver the content.
Ever since we moved our Podcasters’ Paradise membership site over to Thinkific from CustomerHub, we’ve known that Thinkific is our platform.
Not only is the platform super user friendly, but the Thinkific support and training team is second to none. So that part was settled: we wanted to use Thinkific to deliver the content.
And so we set out to do some research on the actual layout and what was possible, and right around that time we happened to land on a free course page from Later that gave John a vision for how he wanted this to look.
That’s when we reached out to Rob over at Themeific (who helped us put together our Podcasters’ Paradise membership site) and asked if he was up for the challenge.
We showed him the free course page from Later and asked if he could help us replicate it in Thinkific.
He was all for it! :)
As Rob was building out the free course page with loads of special codes and things we know nothing about, John and I were busy behind-the-scenes actually creating the content and the design.
Several months later – and a lot of tweaks and changes behind us – we launched 3 Hours to YOUR BIG IDEA along with Real Revenue AND The Revenue Crew ready to rock.
If you’re interested in connecting with Thinkific to create your own online course, we’ve partnered with them to create a Fire Nation special! Just click here and you’ll be off to the races!
And if you’d like to have a chat with Rob to see if he can help you bring your course vision to life on the Thinkific platform, feel free to reach out! We’d love to roll out the red carpet and send a special Fire Nation intro :)
The Podcast Journal Launches!
If you haven’t been following along our journey to launching The Podcast Journal, then you’ve got an entire interest campaign and behind-the-scenes deep dive waiting for you!
We started working on The Podcast Journal late 2017 with the hopes of launching Q1 2018. Many updates, edits, and changes later, we decided to push the launch to Q2 and make it an event by revealing The Podcast Journal at Podcast movement in Philly.
While 4,880 copies were traveling by sea to Long Beach, CA, we had 3 boxes (120 journals) shipped direct to Philly so we could offer up the very first physical copies in person to those attending the event.
We sold 2/3 of the Journals on site and set aside the rest for bulk order requests, so the launch was definitely a success!
We’re also working on getting our Shopify site live and expect The Podcast Journal to be available for order before the end of the month.
If you’re looking to go from Idea to Launch in 50 days – or you know someone who is interested in starting a podcast – then The Podcast Journal is for YOU!
Can’t hardly wait for the physical copies to be available? You can snag your Complete Digital Pack today :)
Podcast Movement in Philly
Podcast Movement is one of our favorite events of the year, and having it in Philly was a real treat.
The event ran from Monday to Thursday, with Monday being an optional workshop day. We opted to see the city and explore one of the most historical places in America.
From the Rocky steps to the Liberty Bell and back to City Hall we saw it all! We also are not afraid to admit that we frequented the Reading Terminal Market…
Here’s a little sneak peek…
The event kicked off on Tuesday, and while John and I spent a significant amount of time at the booth, we were also able to catch a few great sessions – and chat with a lot of amazing podcasters!
Check out our recap post that dives deep into our Top 3 Podcasting Lessons from Podcast Movement 2018!
Podcast Movement is a must-attend event if you’re in the podcasting space, so mark your calendar for August 2019 in Orlando now!
Product/Service Income: $120,919
TOTAL Journal sales: 403 Journals for a total of $15,745
The Freedom Journal: Accomplish your #1 goal in 100 days!
- TheFreedomJournal.com: $2,346 (49 Hardcovers & 11 Digital Packs)
- Amazon: $6,669 (193 Freedom Journals sold!)
- Total: $9,015
The Mastery Journal: Master Productivity, Discipline and Focus in 100 days!
- TheMasteryJournal.com: $439 (12 Hardcovers & 3 Digital Packs)
- Amazon: $3,198 (90 Mastery Journals sold!)
- Total: $3,637
The Podcast Journal: Idea to Launch in 50 Days!
- Launch at Podcast Movement: $2,373 (59 Podcast Journals sold)
- Online Digital Pack: $720 (24 Digital Packs)
- Total: $3,093
Podcasters’ Paradise: The #1 Podcasting community in the world!
- Recurring: $23,292 (193 monthly, 2 annual)
- New members: $8,670 (25 new members)
- Podcast Launch Formula: $3,685
- Total: $35,647
Real Revenue: Turn your BIG IDEA into Real Revenue
- New members: $16,284 (56 new members)
The Revenue Crew: An Elite Mastermind ON FIRE!
- New members: $14,955 (3 monthly, 4 annual)
Podcast Sponsorship Income: $33,000
Podcast Websites: $5,000 Your all-in-one podcast website peace of mind
Free Courses that result in the above revenue:
Free Podcast Course: A free 15-day course on Podcasting
Free Goals Course: A free 8-day course on Setting & Accomplishing Goals
Funnel On Fire: A free 8-day course on Creating a Funnel that Converts!
Affiliate Income: $40,790
*Affiliate links below
Resources for Entrepreneurs: $31,615
- Audible: $236
- BlueHost: $450 (Step-by-step guide and 23 WordPress tutorials)
- Click Funnels: $29,996
- Coaching referrals: $445 (email me for an introduction to a mentor for overall online business or a Podcast focused mentor!)
- ConvertKit: $125
- Disclaimer Template: $246 (legal disclaimers for your website)
- Fizzle: $117
Courses for Entrepreneurs: $7,430
- Create Awesome Online Courses by DSG: $5,542
- Webinars that Convert by Amy Porterfield: $1,500
- Self-Publishing School by Chandler Bolt: $318
- 10k Readers by Josh Turner: $70
- ASK by Ryan Levesque: $0
- Virtual Staff Finder by Chris Ducker: $0
Resources for Podcasters: $447
- Pat Flynn’s Smart Podcast Player: $0
- Podcasting Press: $30
- Tim Paige’s Make My Intro: $250
- Libsyn: $117 (Use promo code FIRE for the rest of this month & next free!)
- UDemy Podcasting Course: $50
Other Resources: $1,298
- Amazon Associates: $280
- Other: $1,018
Total Gross Income in July: $161,709
Business Expenses: $33,413
- Advertising: $1,223
- Affiliate Commissions (Paradise): $2,242
- Accounting: $980
- Cost of goods sold: $1,709
- Consulting: $3,200
- Design & Branding: $1,980
- Education: $270
- Legal & Professional: $45
- Meals & Entertainment: $1,552
- Merchant / bank fees: $733
- Amazon fees: $3,175
- PayPal fees: $451
- Shopify fees: $352
- Office expenses: $355
- Payroll Tax Expenses / Fees: $1,476
- Paradise Refunds: $395
- Promotional: $1,623 (Paradise meetup @ Podcast Movement)
- Total Launch Package fees: $0
- The Freedom & Mastery Journal: $5,000
- Travel: $2,480
- Virtual Assistant Fees: $2,633
- Website Fees: $1,539 (includes building 3 Hours to Your BIG IDEA)
Recurring, Subscription-based Expenses: $2,595
- Adobe Creative Cloud: $100
- Boomerang: $60 (team package)
- Brandisty: $24
- Bonjoro: $45
- Authorize.net: $70
- Cell Phone: $264
- Internet: $80
- eVoice: $10
- Infusionsoft CRM: $309
- Insurance: $551
- Libsyn: $247
- Chatroll: $49
- Shopify: $214
- TaxJar: $19
- Taxes & Licenses: $523
- Zapier: $15
- Zoom: $15
Total Expenses in July: $36,008
Payroll to John & Kate: $15,900
Wondering what we do with all of our net revenue? We share all in our April 2017 Income Report :)
Total Net Profit for July 2018: $125,701
Biggest Lesson Learned
Opportunities are abundant
I had a lot of amazing conversations at Podcast Movement with podcasters both old and new, and one of the recurring themes from those conversations was around the opportunities that podcasting has provided these individuals and their businesses.
I absolutely love hearing this, and it’s one of the reasons why we love teaching others how to podcast: we know how powerful the medium is from our own experience and through the experiences others share with us.
What I took away from these conversations: opportunities are abundant, but you’ll not have them unless you put yourself in a place to see them.
Whether that be launching your podcast so you can connect with others, attending live events and meeting new people, or simply engaging and being present in online communities, remember: opportunities are abundant, but you’ll not have them unless you put yourself in a place to see them.
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.