Jan 2020 Income At-A-Glance
Gross Income for Jan: $153,784
Total Expenses for Jan: $40,115
Total Net Profit for Jan: $113,669
Difference b/t Jan & Dec: -$17,546
% of net profit to overall gross revenue: 74%
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. If you click on my affiliate link and sign up for the products and services I trust and recommend, then I will earn a commission.
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 Jan Tax Tip: Are startup costs tax deductible?
If you have already started your business, you probably know there are costs involved with getting it up and running before you are even open for business.
Whether it is research, education, equipment, or organizational costs, there are things you need to spend money on before you are ready to start making money.
In the tax world these are called “startup costs”, and the question of whether these startup costs are tax deductible is a big one.
I also get a lot of follow up questions, like if yes, when can I deduct them? And are they expensed all at once, or do they need to be amortized over several years?
The answer, as always with taxes, is: it depends.
But here are a few general rules that I know will be helpful:
- Startup expenses are deductible, but only if you eventually start the business.
- The costs will be deducted in the year you are “open for business”, not the year they are incurred.
- The first $5,000 are expensed all at once, and the remaining balance is amortized over 15 years.
Let’s look at a quick example.
Let’s say you decide you are going to start a podcasting business that will make advertising revenue.
In November of 2019, you spend $7,000 buying top-of-the line equipment, joining Podcasters’ Paradise, and researching the podcasting business.
In early 2020 you spend another $3,000 getting things ready to go for the business.
In October of 2020, you bring on your first paying sponsor.
You are now officially a business.
You make a total of $5,000 during 2020 in gross revenue.
So how do the taxes work?
In 2019, you will not take any deductions for the business, even though you spent $7,000.
You weren’t open for business yet, so you cannot deduct them in that year.
In 2020, you claim $5,000 of gross income. THEN you deduct the first $5,000 of start up costs, including what you spent in 2019, as a full expense.
The remaining $5,000 in startup costs are amortized over 15 years, giving you about $333 to deduct per year for 15 years.
So for 2020, your total business net income is a loss of $333 ($5,000 income minus $5,333 in expenses).
There are other nuances of the startup tax law to consider.
For example, if you have total startup costs greater than $55,000, then you could minimize your immediate deduction.
Organizational costs, such as forming your entity, are also treated separately.
As always, it’s best to discuss your situation with a tax professional BEFORE you start spending the money, just so you’re clear on how it all works.
Keep in mind the startup expense rules can allow you to turn those early expenses – before you even start the business – into a nice tax deduction, as long as you do it properly!
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!
David Lizerbram’s Jan Legal Tip
How can I avoid an “Accidental Franchise”?
One of the benefits of owning a trademark is enjoying the ability to license the mark – meaning, you can agree to let someone else use the trademark in exchange for a fee or some other type of compensation.
In theory, trademark licensing should be straightforward. However, the “franchise trap” or the “accidental franchise” makes it more complicated than it may initially seem.
Franchises are highly regulated at both the state and federal level.
For example, franchisors are required to make substantial disclosures of financial information, which must be audited. In California, as in many other states, the franchise must be registered and reviewed by state regulators. This is just a small sample of the legal burdens placed on franchisors.
Franchising is a perfectly good business model, but it’s a big problem if you find yourself accidentally placed in the position of being a franchisor.
Just calling a contract a “Trademark License Agreement” rather than a “Franchise Agreement” doesn’t make it so.
The Federal Trade Commission (FTC) defines a “franchise” as any continuing business arrangement that satisfies the following conditions:
- The right to use a common trademark in the operation of the business;
- The imposition of significant control, assistance, and/or support over the method of operating the business;
- The payment of a fee, including, but not limited, to initial fees, royalties, advertising fees, training fees, and fees for equipment.
The intent of the parties is not relevant to the determination of whether a business arrangement is, in fact, a franchise.
The key to determining whether or not you fall into the definition of a franchise is typically the second element, which deals with “control”. Here’s where it gets tricky.
Trademark licensors have to exercise quality control over their licensees. Failure to do so can result in what’s referred to as “naked licensing“, which can lead to a loss of trademark rights.
So in order for your trademark license agreement to be valid, but not to be considered a franchise, you need to exercise some control, but not too much control.
One important question to ask is whether the license agreement allows the licensor to exercise control over the trademarks themselves (which is good), or if it also allows the licensor to exercise control over other elements of the business, such as operations.
If the latter is true, then it may be an “accidental franchise”.
Need assistance with your trademarks? Feel free to contact me at any time!
What Went Down In January
Think Like An Expert Challenge
We’re getting ready to launch something we’ve never done before – and we’re so excited to share it with you!
We’re teaming up with Jill & Josh Stanton from Screw The Nine to Five to run our first ever challenge called Think Like An Expert Challenge.
You might be wondering, “What’s the challenge all about?”
Our promise for the challenge is that by the end of the 5 days you will feel confident, know how to attract the best customers, and finally have a flow for making serious bank.
Because here’s the truth:
As entrepreneurs, we’ve all faced the imposter syndrome head-on. Whether your limiting beliefs have stopped you from pursuing an idea, kept you from sharing your voice, or prevented you from making the impact you know deep down you can make, it’s time to break through.
If you’ve ever said to yourself:
- I’m not ready yet
- What if it doesn’t work?
- Who would even pay me?
- I don’t feel confident putting myself out there
- My husband / wife / friends don’t understand
- What if I lose money?
- There’s already so many people teaching this
- I don’t have the time
- What if I offer something and no one buys?
Then our 5-day Think Like an Expert Challenge is designed to help you break through these limiting beliefs so you can finally start creating financial and lifestyle freedom.
Throughout the 5 days we’ll be covering topics like:
- How to stay one chapter ahead,
- The importance of serving,
- How to promote yourself,
- Playing to win, and
- How investing in yourself is one of the most powerful things you can do on your journey.
Our first ever Think Like an Expert Challenge is over, but if you’re ready to create next level success in your life by sharing your existing knowledge through in-person trainings, virtual workshops, or masterminds, then check out Knowledge Broker Blueprint by Tony Robbins and Dean Graziosi. It’s ON FIRE!
Ditch Busy is LIVE!
In January I launched a brand new podcast called Ditch Busy where I focus on helping you take back control of your time.
If you spend your days feeling:
- Overwhelmed by your growing to-do list,
- Like you are constantly in the weeds,
- Frustrated because it feels like you’ll never get ahead,
- Helpless because time management just isn’t your strong suit
Then Ditch Busy is for YOU!
Each episode is focused on helping you uncover one way you can start taking back control of your time today.
Recent episodes include topics like:
- Setting realistic expectations
- Avoiding the ‘premature yes’
- How to better manage your time with a calendar
- Designing your perfect day
Be sure to subscribe wherever you listen to podcasts by heading over to DitchBusy.com!
New California Privacy Law Took Effect Jan 1, 2020
The new California Consumer Privacy Act (CCPA) took effect on Jan 1, 2020, and it’s important you understand what to do if the new law applies to you to protect you and your business.
If either of the 2 statements below apply to you or your business, you MUST make changes to your privacy notice and how you respond to user requests. Nothing to be afraid of, but something to be aware of :)
- Receives for its commercial purposes, sells, or shares for commercial purposes alone or in combination personal information of 50,000 or more consumers, households, or devices. Translation: if your website gets 50,000 visitors a year from Californians, this law would apply to you.
- Derives 50 or more percent of its annual revenue from selling, renting, releasing, disclosing, disseminating, transferring, or communicating Californian consumers’ personal information to another business or a third party for monetary or other valuable consideration. Translation: this is a BROAD definition of selling and could affect you.
It’s not always easy to understand and comply with privacy laws and what’s required – we get it.
That’s why we practice what we preach and turn to experts to help us.
James has been helping us stay compliant here at Entrepreneurs On Fire for a LONG time, and so if you’d rather not go at these privacy laws alone, then head over to James’ website and see how he can help you comply!
Product/Service Income: $121,682
TOTAL Journal sales: 755 Journals for a total of $22,460
The Freedom Journal: Accomplish your #1 goal in 100 days!
- TheFreedomJournal.com: $695 (9 Hardcovers & 4 Digital Pack)
- Amazon: $9,936 (374 Freedom Journals sold!)
- Total: $10,631
The Mastery Journal: Master Productivity, Discipline and Focus in 100 days!
- TheMasteryJournal.com: $30 (1 Hardcovers & 1 Digital Packs)
- Amazon: $4,043 (167 Mastery Journals sold!)
- Total: $4,073
The Podcast Journal: Idea to Launch in 50 Days!
- ThePodcastJournal.com: $178 (3 Hardcovers & 0 Digital Pack)
- Amazon: $7,578 (196 Podcast Journals sold!)
- Total: $7,756
Podcasters’ Paradise: The #1 Podcasting community in the world!
- Recurring: $16,836 (200 monthly)
- New members: $2,937 (21 new members)
- Total: $19,773
Real Revenue: Turn your BIG IDEA into Real Revenue
- New members: $197
The Revenue Crew: An Elite Mastermind ON FIRE!
- Currently closed to new members
Podcast Sponsorship Income: $79,030
Free Courses that result in the above revenue:
Your Big Idea: Discover your big idea in under an hour!
Free Podcast Course: Create and launch your own podcast!
Funnel On Fire: Create a funnel that converts!
Affiliate Income: $32,102
*Affiliate links below – if you click on my affiliate link and sign up for the products and services I trust and recommend, then I will earn a commission.
Resources for Entrepreneurs: $26,556
- Audible: $158
- BlueHost: $0 Step-by-step guide and 23 WordPress tutorials included! Disclaimer: This is my affiliate link and I will receive a commission if you sign up through my link
- Click Funnels: $25,569
- Coaching referrals: $500 (email me for an introduction to a mentor for overall online business or a Podcast focused mentor!)
- ConvertKit: $269
- Disclaimer Template: $60 (legal disclaimers for your website)
- Fizzle Mastermind: $0
- Virtual Staff Finder: $0
Courses for Entrepreneurs: $2,660
- Knowledge Business Blueprint by Tony Robbins: $0
- Create Awesome Online Courses by DSG: $2,050
- Digital Course Academy by Amy Porterfield: $397
- Boost Blog Traffic by Jon Morrow: $0
- Opesta by Ethan Sigmon: $213
- ASK by Ryan Levesque: $0
- Closers on Fire by Dan Lok: $0
Resources for Podcasters: $2,293
- Pat Flynn’s Fusebox Podcast Player: $24
- Podcasting Press: $400
- Designrr: $848
- Tim Paige’s Make My Intro: $0
- Libsyn: $955 (Use promo code FIRE for the rest of this month & next free!)
- UDemy Podcasting Course: $66
Other Resources: $593
- Amazon Associates: $183
- Other: $410
Total Gross Income in Jan: $153,784
Business Expenses: $37,146
- Advertising: $500
- Affiliate Commissions (Paradise): $2,488
- Accounting: $1,011
- Cost of goods sold: $4,256
- Charitable Contributions: $355
- Fulfillment (Shipwire): $1,120
- Design & Branding: $
- Dues & Subscriptions: $70
- Education: $269
- Legal & Professional: $2,962
- Meals & Entertainment: $468
- Merchant / bank fees: $1,715
- Amazon fees: $10,669
- PayPal fees: $735
- Shopify fees: $44
- Office expenses: $1,098
- Community Refunds: $1,385
- Promotional: $643
- Travel: $2,935
- Virtual Assistant Fees: $3,024
- Website Fees: $1,399
Recurring, Subscription-based Expenses: $2,969
- Adobe Creative Cloud: $100
- Boomerang: $50 (team package)
- Bonjoro: $45
- Authorize.net: $70
- Cell Phone: $249
- Direct Heros: $97
- Google Suite: $60
- Internet: $260
- eVoice: $10
- Infusionsoft CRM: $309
- Insurance: $648
- Libsyn: $177
- Chatroll: $49
- Shopify: $68
- Linktree: $6
- Sumo: $29
- TaxJar: $19
- Telestream: $43
- Taxes & Licenses: $523
- Thrive Cart: $37
- Zapier: $15
- Xero: $30
- Zoom: $70
- Workflowy: $5
Total Expenses in Jan: $40,115
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 Jan 2020: $113,669
Biggest Lesson Learned
The power we give our limiting beliefs
If you lack confidence when it comes to putting yourself out there, or you know you have an impactful message to share but you can’t seem to reach the right audience, or you feel like you’re constantly spinning your wheels when it comes to that one big idea that will finally help you WIN…
We get it.
In 2013 when John asked me to join the Entrepreneurs On Fire team, I was hesitant for a couple of reasons, but one of the bigger reasons was I didn’t feel like I was qualified to step up and fill a role that could create such a big impact.
I lacked confidence, and I was constantly second-guessing whether or not anyone would care what I had to say.
Who am I to help serve Fire Nation when I’m just learning about entrepreneurship myself?
What I didn’t recognize or give myself credit for at the time was the fact that I had skills and experience in areas that could change the trajectory of Entrepreneurs On Fire as a business.
My ability to hone in on the details, to catch mistakes before they happen, to break down complex structures and figure out how to make them run effectively, and to serve a community by connecting with individuals one-on-one – these are all skills and experience I had, but wasn’t giving myself credit for.
And then it hit me: I published my first ever blog post on the site, and about a week later I got one comment. That comment changed everything – the person wrote “This was really helpful; thank you so much for sharing!”
Wait – someone found what I had to say helpful?
And I knew if I could help one person, then I could help two, three, four… a hundred.
I made it my mission to stop letting my limiting beliefs have all the power. I could literally prove to myself with that one comment that person left on the blog that I was helping someone. And at that point, it wasn’t about me anymore. It was about how many potential people I could serve by continuing to put myself out there and share my knowledge.
I encourage you to think about what limiting beliefs you have in your life right now, and how you giving those beliefs power is affecting your business, how you show up, and how you’re living your life.
Those beliefs only have power if we give it to 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.