Coaching can be a very lucrative business, and give you the chance to do rewarding work at the same time. But for some, it becomes a huge challenge. Running a micro business with only yourself on staff can lead to a lot of problems, especially if accounting and finances aren’t your strong suit. Here are a few of the major hurdles, and what you can do about them:
Bookkeeping is Eating up All Your Time
For many solopreneurs, bookkeeping takes way too long. If you truly hate it, just an hour a week may feel like too long. It’s likely taking you far longer to do than it would take a professional, simply because you’re not familiar with the most efficient approach and are likely to double check everything worried that you’ve made a mistake.
Regardless of how much time you spend, you’re not being paid for that time. Your clients pay you to coach them and time spent on the books is time not spent working with clients. It’s likely that you coach you clients to streamline and get tasks off their plate if they’re not a strength. This is a good time to take your own advice and weigh the benefits of outsourcing your bookkeeping.
You’re Losing Money to Outstanding Invoices and Hidden Expenses
Some very common practices could be costing you big. The first is invoicing. If you’re providing a servicing and sending an invoice after, it’s likely that you’re waiting too long to collect, since your clients aren’t motivated to pay quickly. You may be offering common terms like 15, 30, or even 60 days to pay the invoice. These are a carry over from the corporate world where there are layers of approvals needed for a check to be cut. If you’re working with small businesses or individuals, there’s no reason an invoice shouldn’t be payable right away.
You may also be paying for a lot of business expenses that seem normal or necessary but aren’t helping you make more money. These can really add up quickly if you’re not keeping track and looking at reports on a regular basis.
You’re Paying More Tax than You Really Owe
If you’re like a lot of microbusinesses, you’re paying taxes you don’t owe. Why? Because you may be unaware of available deductions or aren’t tracking your expenses in a way that lets you deduct them. A solid bookkeeping system will ensure you have all the numbers and documents you need to claim all possible deductions. Here are a few big ones for business coaches:
- Home Office Costs – If you use a designated area of your home as an office, you may be able to
deduct a percentage of your bills based on the size of your home and the size of your office. The business portion of your internet and phone bills are also deductible.
- If you pay for any online marketing or subscribe to any apps you use for your coaching business, these are deductible expenses. Even research materials like business magazine subscriptions can be deducted.
- If you visit your clients in person, keep track of the mileage you travel. You can deduct the actual vehicle costs or just multiply the miles by the current standard rate. If you take clients for coffee or lunch to discuss business, you can deduct 50 percent of the meal costs, but be careful if there is an entertainment element. The recent tax code change removed the deduction for entertainment, so meals eaten in a country club, dinner theater, or similar spot should be tracked separately incase the IRS contests them.
If in doubt, call in a professional. They can make life so much easier and save you money at the same time. If you have any questions or would like to discuss your situation, please fill out this form and I’ll be in touch!