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Mastering Your Finances: Business Lessons from Jamie Trull

May 3, 2024

Mastering Your Finances: Business Lessons from Jamie Trull

In today’s fast-paced business world, managing your finances with expertise and ease is not just an advantage; it’s a necessity.

Jamie Trull, a renowned CPA and financial literacy coach, recently shared her invaluable insights on organizing business finances to not only stay tax-compliant but also to secure a thriving future for your enterprise. Trull’s four-step approach is a beacon for business owners seeking to navigate the complex waters of financial management with confidence.

Step 1: Organize Your Accounts

The foundation of financial clarity in your business starts with organizing your accounts. This means separating personal and business finances to prevent co-mingling. Trull endorses using a business bank account that allows for different ‘buckets’ for taxes, savings, etc., recommending platforms like Relay* for their versatility. This fundamental step is crucial for clear financial tracking and simplifies tax preparation immensely.

Step 2: Organize Your Books

Accurate bookkeeping is the backbone of a healthy business. Sales and expense records, along with assets and liabilities, need meticulous organization. Trull suggests using a spreadsheet for simpler businesses, while advocating software like QuickBooks Online for more complex operations. She notes, “Spending time to get set up the right way will simplify your life later.” Hence, choosing the right tool that fits your business size and complexity is vital.

Step 3: Organize Your Tax Documentation

Trull emphasizes keeping tax documentation for up to six years due to the IRS audit period. Beyond mere receipt storage, she advises documenting the reason behind each expense being a necessary part of the business. This detailed documentation is critical in defending deductions if audited. Tools like QuickBooks Online offer functionalities like receipt capture that streamline this process considerably, making it efficient to manage over the years.

Step 4: Create a Profit Plan

Perhaps the most forward-looking step, creating a profit plan involves strategically allocating every dollar of profit. Whether it’s compensating oneself, reserving for a rainy day, or investing in future growth, Trull underscores the importance of planning. She introduces the concept of various funds – Rainy Day, Opportunity, Future, Fun, Impact, and Tax Funds – and how they can be managed using platforms like Relay to ensure a balanced and progressive financial pathway.

Financial Management Tips

For businesses, especially those just starting out, Trull offers practical tips for managing finances and organizing accounts for tax purposes. She highlights the importance of an employee reimbursement plan and advocates for the judicious separation of personal and business expenses to ease tax-related complexities.

The Benefit of QuickBooks and Tax Organization

Signing up for QuickBooks through Trull’s program offers substantial discounts and simplifies finance management. By organizing tax documentation adequately and leveraging accounting software, businesses can defend against audits confidently and maintain robust financial health.

Jamie Trull’s insights present a comprehensive, actionable blueprint for businesses striving to optimize their financial management practices. By following her expert advice, business owners can not only ensure compliance and efficiency but also forge a path towards sustainable growth and financial independence. Whether you’re a fledgling entrepreneur or a seasoned business owner, now is the time to reexamine your financial practices and align them with these proven strategies for lasting success.

Video Transcript**

Please note that the following is a direct transcript and has not been edited for errors or omissions. It is a verbatim representation of the spoken words and may include colloquial language, grammatical errors, or other inconsistencies. We have chosen to provide the transcript in its raw form to preserve the authenticity of the conversation. We recommend cross-referencing with the original audio or video source for complete accuracy.

Hello. Hello everyone. Jamie Trull here, your favorite CPA and financial literacy coach. And today what I wanted to do on this channel was an encore presentation of a talk that I just recently gave to a summit. I thought this was a really good talk that I could go ahead and put out here for you on YouTube. And it was all about getting organized with your business finances.

So this is really taking it back to simple strategies to get organized.

I know that’s one of the biggest issues that business owners often face when it comes to their finances, is figuring out that system of organization. So that’s what we’re gonna talk about here today. So you can see on the screen, I’ve even got slides today, y’all. This is a fancy day and we’re gonna be talking about those four key steps to organize your business finances.

So let’s jump on into it. Okay, so importantly, before we start, let’s talk about why we do this, right? It is not just for taxes. We don’t want to think about getting organized as just a thing that we do because we have to file taxes. And honestly, that is, you know, something that is very important. We do need to do it.

Staying organized with your finances.

But there is something even deeper here, something even more important when it comes to your business. And that is all the insights that you can get from staying organized with your finances, from paying attention to your profit and loss statement, to your cash flow. They will give you a lot of really important information about your business.

And if you’re waiting until the end of the year to kind of scramble to get it all together, no shame at all. But you probably wanna put a new system in place for this coming year so that you don’t get yourself in that situation again. So this video’s coming out around the time that a lot of people are probably scrambling at tax time trying to get everything together that they need together. So let’s talk about how to make it better next time around.

Organize your accounts.

Alright, step one, step one of the four steps. Organize your accounts. Organize your accounts. So what does that mean? That means having a business bank account. Many of you probably already have that if you don’t, definitely check out my recommendations at Jamie Trull dot com slash banking. Always, always, always make sure that the business banking you’re using is free and that it isn’t having a whole bunch of minimums and fees and things like that.

Establish a business banking account.

Business banking is very well known for all of that kind of stuff. So you really have to watch out with hidden fees when it comes to business banking. But it is really important to have a business bank account. A lot of people think maybe they can just repurpose a personal type account, but actually you can get shut down for that. That is against banking regulations.

So if they notice that you’re transacting business type transactions, right, like Stripe or something like that is coming through your business account, they, they can shut you down if it isn’t actually a business type account. So make sure you get a business bank account. I highly recommend one that allows you to separate into different buckets. So that’s something that I highly recommend is being able to save separately for taxes, right?

Being able to save separately for savings.

So if you’re wondering what free business banking platform I recommend, I am gonna have to tell you it is Relay.

Relay does all of this where you can actually create separate accounts and track things separately, which is gonna be really helpful, especially once we get into the end of this presentation. And we’re talking about planning for profit and how to apportion out your money into different buckets.

And Relay is also certified in Profit First, so therefore it is the Profit first Preferred bank too, if you use something like Profit First, so highly recommend it. If you sign up right now, there is actually a deal if you use my link to do so, that you will be able to get $50 just for opening up a free account.

So you just have to open up the free account and fund it with at least a hundred dollars and you’ll get 50 extra dollars. Go check out jamietrull.com/relay , or if you wanna check out any of my other banking recommendations, JamieTrull.com/banking. So get that business bank account if you haven’t already, then make sure you’re only running business expenses through it.

Separate your business and personal finances.

Okay? This is one of those things where we do not want to what’s called co-mingle funds, right? That that is the lawyery word to say it. But basically that just means we need to treat our business separately from us personally. And a lot of people then say, well, what about expenses that are kind of split between, you know, myself and my business?

Well, those I typically recommend, and this is just the what I think is best practice. I recommend running those through personally, right? And then your business can reimburse you, or you can just take the tax deduction at the end of the year. It does matter here a little bit what your entity type is. So if you are a corporation,

you’re probably gonna wanna have a employee reimbursement plan for yourself. Also called an accountable plan. I’m not gonna get into all the details about that here, but just know that that is best practice is to pay for those personally and essentially get reimbursed through your business or just take the deduction from your business at the end of the year for the business portion of that.

Save time and stay in compliance.

Okay? So that’s the first thing. Make sure your accounts are organized, get it all separated out, and it’s also gonna have the benefit of when everything is separated correctly, it is so much easier to get things together for tax purposes and to be able to see what’s really happening in your business. So that is the major, major benefit. Not only is it gonna save you time,

but it’s also gonna make it so much easier to really understand what’s happening in your business. So important to remember, this is just kind of like a, a reminder to you, right? You and your business are not the same. You’re not one and the same, especially if you have an actual legal entity like an LLC, right? That is separate from you as a person.

You are not your business.

So don’t act like you and your business, even if you’re self-employed, right? Even if it’s only you, you and your business are separate. And so you really want to wrap your head around seeing that as separate and not kind of commingling it all together, right?

And the other thing to remember is that spending time to get set up the right way, right is going to simplify your life later, like I said. Okay? So what’s step two? Step two, we are moving on to organize your books. Okay? So we organized our accounts first. Now we’re organizing our books. So what does it mean? We talk about bookkeeping? What are books exactly right? So your books consist of your sales and expense records and anything you might own or owe in your business.

Let’s talk profit and loss.

So your sales and expense records, that’s really what goes on your profit and loss statement. And it’s also the things you own, your assets and the things you owe, your liabilities that generally goes on your balance sheet. Those are your books, okay? So it’s really just a record of all the transactions and categorizing those transactions in the right place and on the right financial statement.

That’s what we’re talking about when we’re talking about books. So you have a couple different options for organizing your books, and a lot of this is gonna depend on how big of a company you are and how complex your transactions are. And we’re gonna talk about the comparison of those here in just a minute.

But ultimately, you can use a spreadsheet, right?

A lot of people start this way where they’re just tracking transactions, tracking the money that comes in, the expenses that go out, IE your tax deductions on a spreadsheet. That is very much, you know, I think actually a totally fine way to do it. I do think you probably want to use a spreadsheet that actually creates a profit and loss.

There are templates for that. I happen to have one, right? But you really do want to actually create that, that income statement, that profit and loss statement, so that you can kind of see it the way that your tax person is gonna see it. But you also can do monthly software.

So it’s really up to you what you prefer knowing yourself,but really understanding what the needs are of your business and what you wanna get out of it.

Which one of these is right for you?

At what stage of business? So like I said, let’s kind of compare these spreadsheet versus software. All right? Spreadsheet, it’s gonna be lower cost. That makes sense. It’s gonna be more manual, it’s gonna require probably some manual entry.

Again, depending on what you’re using though, this could be easier. If you use something like my p and l template, it’s already all set up and all the calculations are in there. You just have a little bit of entry you can do. And you can even do that by downloading from your bank and copying and pasting it in there. So it doesn’t have to be a ton, ton of manual entry. There are ways to make this a lot easier, but it is more manual than say a software, which typically is already integrating with all of your accounts. There is no balance sheet.

Generally when you’re using a a spreadsheet, you’re not using what’s called double entry accounting.

I’m not gonna get into all of that. But essentially double entry accounting is what the more complex systems use, the more complex accounting systems will use true accounting, right? It’s not just keeping a list of expenses. It’s true accounting that has a debit and a credit. Not gonna get into that here, but it is important to know that that’s not something you’re gonna get from a spreadsheet, which is part of why a spreadsheet would probably not be great if you have a corporation, because a corporation is gonna probably need a balance sheet, right?

So that’s important to know. And then it is best for simple businesses, right? If you have five employees and hundreds of transactions a month, a spreadsheet is probably not gonna cut it, right? It’s time to invest in something that is a little bit more systematized and a little less manual.

But if it’s just you and you’re a 10 99 contractor and you have a pretty simple service-based business model and you don’t have inventory and you’re not worrying about sales taxes, then this might be the right thing for you, at least in the beginning of your business.

So don’t let people think you have to move to QuickBooks or something right away.

There is a learning curve to that.

Know what you really need and you don’t have to do more than that. Okay? Now, my recommendation would be to use a p and l template, like I said, that actually isn’t just a list of expenses, but truly creates a profit and loss. I have one that will make you charts and graphs so that you can see what’s really going on in your business and make some insights.

The case for our P & L Template

Like I said, it’s not just for taxes that we keep these books, it’s also because it helps us make decisions in our business. So I do have a template you can grow, grab Jamie Trull dot com slash profit lost. It is $49, which is way cheaper than what you would pay if you got a software that typically is gonna have a monthly cost of at least 20,

$30 even for the really simple versions. Okay? So it’s a one-time cost, you can use it for as long as you need to, and it’s available in Excel and Google Sheets. So you can go check that out if you are looking for a way to get organized. You can also use that to get organized really, really fast, y’all.

So this video’s coming out in March,and you can use that probably in an afternoon to actually be able to get your stuff together for 2023 taxes. So if you’re trying to get everything together to give to your tax person or to file your taxes yourself, this is a great place to start to be able to do that and get everything organized fairly quickly. And then we have the other option which is my favorite software. Okay?

So I use QuickBooks Online.

The reason I prefer it, I know a lot of people have thoughts about QuickBooks Online, and I get it, but I do think it’s best in class. It’s really great to be able to grow with you and to really and truly be able to have all the capabilities for all the different types of reports.

It does. True double entry bookkeeping. It is a true accounting software. That does mean it comes with a learning curve. It’s not super easy and it might be something that you wanna think about outsourcing to somebody who’s an expert, and then you can just use the reports rather than be the person actually doing the bookkeeping. So again, depending on your size of business, how complex you are, I’m a big fan of outsourcing the the compliance piece. IE, the keeping up with the books piece to someone else so that you can look at it more from a strategic perspective and you’re just looking at the reports and things like that to make decisions on pricing and costs and cash flow and hiring in your business.

The drawbacks of Quickbooks Online

Now the drawbacks, of course, there is a monthly ongoing fee. Typically they’re pretty much moving most accounting softwares to the cloud. So that means it comes with a subscription. There’s a lot of good that comes with the cloud as well. Honestly, I really like the fact that it’s accessible from anywhere. I have an app on my phone, I can give access to different people, right?

There’s one version of the truth you’re not downloading and uploading and it’s much, much easier to share. I think that there’s a lot of great things and it’ll integrate with your bank and your credit cards and all the things you can integrate and automatically pull those transactions in, which is fabulous, okay? But it does come with an ongoing cost. That is something to be aware of when you’re kind of weighing the pros and cons.

It’s gonna be more automated again, because you can pull it all in. Now, it’s also more prone to error because if you automate it incorrectly, right? If we’re categorizing things incorrectly, then you might have to unwind some things. So again, that’s where the learning curve comes in. But when it’s, when it’s done correctly and plumbed correctly, then it can be super duper helpful.

Do you need custom reports?

You’re gonna have more custom reports. QuickBooks Online has all the reports you could possibly need. So that is the great thing about it. It can grow with you as well. Meaning it can if you, if you just need a lower package for QuickBooks Online. Now, this is not QuickBooks self-employed, which is a separate thing. I’m talking about QuickBooks Online products.

There’s multiple different levels depending on what you need. And you can start out at a lower one or the mid middle one and grow and easily upgrade to the next level when and if you need it. But like I said, there is definitely a learning curve. So the great thing though is I have negotiated discounts with QuickBooks Online.

New user offer for Quickbooks online

So if you are looking for it, if you are a new user, this only applies to new users. This will not apply if you’re an existing user, unfortunately. But if you are a new QuickBooks Online user, or maybe you’re moving from desktop to online, then definitely check out my deals. These are specially negotiated as part of a program that I’m with with QuickBooks.

So definitely if you’re gonna sign up for it, sign up through me, you get a discount for 12 months instead of three, which is what’s usually on the QuickBooks website. And now we’re moving on to step three, which is organizing your tax documentation. So we’ve organized our accounts, we’ve organized our books. Now we are organizing our tax documentation. I know everyone is so excited about this part.

How far back can the IRS go in an audit?

Now, importantly, the IRS has up to six years. Usually it’s about three years for audit, but it can go all the way back to six years in the case that they find something wrong, right? So if they find something wrong in an audit of the last three years, that could open up multiple years. So it’s a really good idea to keep your documentation for that long.

And that also is why, because this is such a long time period, right? We need to remember that we’re probably not going to remember all the details of all the tax deductions that we took and what they were. So that’s why the documentation is really key. Most of this documentation you may never need, but if you do, right, if you do, you’re gonna be so glad that you have it.

So what do we need to have a system for?

Well, we need to have a system for receipts, okay? For tracking your receipts and keeping those that is not a shoebox. Please, please, please don’t keep them in a shoebox. And also a system for more documentation. What is the deduction?

The who, what, when, and why of that tax deduction. So the important thing to know about receipts, right? A lot of people think if I just keep my receipts, I’m good. But remember that your receipts in a lot of cases don’t actually document what the IRS would really need, right? We keep our receipts because in case we’re audited, we’re gonna have them.

But it’s not gonna be super helpful if you have a receipt from you know, target and there’s nothing on that receipt that says why it’s even a business deduction, what you purchased, right? So that’s not super helpful to just keep the receipts.

You also have to document these important things.

Most notably, why was that an actual deductible business expense?

That’s what you’re gonna have to defend to the IRS. So just keeping the receipts is great and all, but really you want to have more than that. And there are different ways you can document this. You wanna pick one that’s gonna work for you if you’re using something like an accounting software, right? Then perhaps it is through receipt capture. A lot of things like QuickBooks Online.

You can actually take a picture of your receipt.

And upload it directly to that specific expense in your accounting software so that it’s all in one place and you can write out an explanation of what it is, right? Right in within the software. And not only that, I told you about Relay earlier in this video, which is the banking platform that I use and recommend,

but they have some new receipt management capabilities as well to help you keep your receipts in order. I’m gonna be doing a video soon, specifically going into that new feature. But if you want a one stop shop, that could be a great place as well. Ultimately, the key to document is why that expense is ordinary and necessary for your type of business, right?

Why is this a true business expense?

Why is it something that is normal in your line of business, right? Writing things like that down, especially when just looking at the expense on its face isn’t super indicative, right? If you went to a conference, why should that conference be deductible? What did you learn there that you are going to apply to your business?

Keep the agenda. Those types of things can be really helpful if and when you get audited down the line. So you’ll hopefully never need any of this, but it’s better to be safe than sorry, right? We will be, our future selves will be so proud of us if we have all of this documented and easy to give over, rather than,

you know, just the fear of audit.

I don’t fear audit because the fact that I have my ducks in a row.

Do I wanna get audited? No. Do I know that I have what I need to support myself in the case that I am audited? Yes. And this is not something that your tax person is required to do or typically does, okay?

So that’s important to know too. Some people think, well, they let me take the business deduction. So I, I guess it’s fine. You’re the one who’s gonna end up having to defend those deductions. The tax person typically isn’t getting your receipts. They’re not, they’re not requiring you to give them all of that information in most cases.

So you wanna make sure you’re protected and you have things documented the way that you need to to protect yourself. Okay? And now we’re onto the most fun one.

Now we’re gonna talk about organizing your profit.

So this is now getting into the strategy side. How do we pay ourselves more? How do we make sure that we’re managing the cash flow in our business, right? So we’ve talked about all the compliance stuff, all the tax stuff, all the bookkeeping, ugh, okay? But now what does that allow us to do?

It allows us to organize our profit and that is really the key to running a sustainable business that pays us well. Okay? So the goal, the goal is to do, use yesterday’s money, not tomorrow’s, right? We want to be using yesterday’s money IE money that we have made that we are now reinvesting into our business, paying ourselves with, paying our taxes with.

We don’t wanna be going into debt for those things if we can avoid it. I’m not one of those people that’s like debt is terrible all the time. It isn’t. There is a time and a place, especially in business for debt, but where we can avoid it, that’s even better. So that is really the goal. How do we manage our money that we’ve already made such that we can achieve our goals in the future without having to go into debt or borrow money? So how do we do this? How do we do this?

We create a profit plan.

And for those of you who have been around on this channel for a while, if you have seen what I do, you’ve known that I have been talking about profit planning for a while. It is my custom framework for basically being able to manage your finances well in your business. Okay? So I have taught this to thousands of business owners. This is something I feel really strongly about and this is how I manage my own finances as well.

Okay? So I’m gonna teach you the basics of a profit plan, but ultimately what a profit plan does is give each dollar of profit in your business a job to do, right? It’s basically saying each dollar you make is gonna be assigned to something. And those jobs are going to be dependent on what your goals are personally and in your business. They’re not gonna be the same for everybody.

The percentages that go into each of these different jobs or buckets are not gonna be the same for you as they’re for everyone. ’cause you’re not the same as everyone. You don’t have the same goals, you don’t want the same things. So why should they be the same? We’re really big on the customization of this and how easy this is to implement.

So what is a profit plan?

Well, I love to be able to illustrate this really well. And we use the word profit, which profit planning in my world has two F’s. I know, I know that it is not spelled correctly, but I use two F’s for a reason and you’ll see why, because I couldn’t leave out the second F.

But we will get there. We will get there. So let’s go through what each of these is. And this is again, a percentage that we are setting aside of our profit in our business. Okay? So that would be our revenue, the money that came in minus our deductible business expenses that are kind of the recurring normal business expenses. That’s our normal profit.

Bucket 1: Pay yourself.

That’s what we’re gonna put into these buckets. Okay? Bucket one, of course, of course. Pay yourself. I’m grateful that profit plan starts with a P because this is the most important one, okay? You need to be able to pay yourself, don’t work for free, right? Make sure that you are paying yourself a living wage, if not much more than that, right? You need to be able to sustain yourself, sustain your business, sustain your family. You don’t wanna work for nothing.

And so many business owners, the issue happens where everybody else gets paid, all the expenses get paid and they’re left. Left with what’s left over. And I don’t want you to be left with what’s left over, okay?

You need to prioritize paying yourself. That is bucket number one. At the end of this, I’m gonna show you also some potential percentages that you could apportion all of this out in. So stay tuned for that. Okay? Rainy day.

Rainy day fund.

The rainy day fund is your emergency fund.

Although I hate emergency because emergency makes it seem like the sky has to be falling.

But this could even be used for if you have a seasonal business, right? And maybe your summer months are great, you run a summer camp and the summer months are great, but not so much in the winter. And you still have expenses maybe during the winter, but you don’t have the same level of income coming in. You could put more into your rainy day fund during those good months and then use it in the bad months, right?

This helps to make sure that you’re not gonna get in a situation where you potentially have to go into debt, debt, use credit cards, all these things to get by because you’re using the money you already put aside for this purpose, right? So that’s the purpose of the rainy day fund, is to have it there in case you need it.

It’s your business savings, right? For when you might need to dip into savings in your business. It’s there and waiting for you. And it’s way better than having to go onto a credit card or get a line of credit or something and pay somebody else interest on that money, okay?

The opportunity fund, I love this too.

I love all of these clearly I love this fund too because the opportunity fund is all about reinvesting back into your business.

Okay? What does that mean? That means intentionally thinking about something you wanna spend money on and maybe it’s more than you would normally spend. Maybe you wanna spend more on a new marketing campaign. Or you wanna buy an educational program. Maybe you wanna go to a conference, maybe you wanna hire someone and make sure that you can pay them for the first three to six months.

‘Cause that’s how long it’s gonna take for them to get up and running, right? How do you do that? You save for it in your opportunity fund. You put a percentage of your profit into an opportunity fund and that percentage is gonna depend essentially on how fast you wanna grow your business, right? If you’re hoping to double in the next 12 months, you might have a lot in your opportunity fund, right?

And maybe that means you’re paying yourself less, but you’re reinvesting for growth in your business so that later on you can pay yourself more. Or if you’re just, you know, not really all that interested in, in growth, then maybe you just put a little bit aside in here. So it really just depends on what your goals are and what you wanna be doing.

But I love my opportunity fund. I funnel a lot of money into the opportunity fund and I love knowing what I can afford because if I then get an opportunity that comes my way, right? If there’s an educational program, if there’s something that I am being presented with and I really wanna buy it, all I have to do is look into my opportunity fund to see if I can afford it.

And if I have enough money, then the answer is yes if I don’t. And the answer is no. It’s as simple as that. I don’t have to hem and haw over those decisions.

Then we have the Future Fund.

And the Future Fund is really going to be all about the money that is going towards taking care of your future. So that could be paying off business or personal debt.

That could be saving for retirement, right? That could be saving for your kids’ college, whatever it is. These are more long-term types of things that we’re gonna put money towards. Okay? So that is your future fund. If you’re really near retirement, you’re probably gonna have a high percentage going near your future fund. If you’re 22, maybe not as much, right?

Or if you are trying to pay off debt, maybe a higher percentage is going to your future fund. So again, it’s dependent upon you and where you want to earmark that money.

Then we have the Fun Fund.

And this is why I have two F’s, y’all. We cannot forget F number two in profit planning. And that is the fun fund that is putting aside money for that trip you wanna take for that home improvement project you wanna do for the hot tub that you wanna buy.

That was my first fun fund, y’all. I’ve told this story before where the first thing that we saved money for was for a hot tub for the back patio. Part of that I will tell you was me being a mastermind because I knew that if I said, Hey, if I make enough sales, we can get a hot tub. My husband would get really interested in my business and he would offer to help out as in any way that he could.

And that’s exactly what happened because he really wanted that hot tub. But having something to work towards and have a percentage, maybe it’s 5% of the profit you’re making in your business is really beneficial. And let me tell you, you might think I don’t have enough money to be able to do that. There’s not enough. Like I can’t take that from any of these other buckets.

You usually don’t have to. And what I’ll say is because there is a tangible thing, right? A tangible item or experience that you’re gonna get because you’re a business owner and you’re in more in control of your income than perhaps you know somebody with a regular job is you will probably be motivated to work harder, right? And I don’t mean work more hours, but to work harder to get more creative.

To bring that money in, to meet those goals. It will also keep you from overspending because you’re like, heck, I would rather put this money into my fund fund. So I have found that I actually end up making more. I make at least the amount that I’m putting in my fund, fund, fund additional from what I probably would’ve made had I not had that. That is very motivating for me and it probably would be for you. So if you think you can’t afford it, think again. Same thing here.

The impact fund is exactly the same.

If you think you can’t afford it, think again. It will motivate you. This is where you are giving to maybe charitable causes you really care about.

There is a mission that is so important to you. So often we think we can’t afford it. It could be 1%, even if it’s just 1%. That’s the difference between charging, you know, $99 and a hundred dollars for something. It’s not that different, right?

And that’s one additional percent that will add up over time and that you can then use to give to, you know, charitable contributions, things like that, to things that you care about to be generous. That is what I do with my impact fund. My business gives 10% away through our impact fund. You don’t have to start at 10%, don’t worry. But that was something that was really important to our mission overall, was to really be helping charities that help women and children.

And so that is something that we make a priority to do with the money in our business. So you can start at just 1%, you can make so much more of a difference and we can collectively make a huge, massive difference even by starting at 1%. Okay? I’m not gonna preach anymore.

We’re gonna go into taxes.

So taxes is the one that, you know, of course we have to include it, nobody’s excited about it. But as an entrepreneur, taxes come out of your profit, right? You typically, now if you’re a a S, Corp or C Corp, you may have some taxes that you’re paying out of your paycheck, but if you are taking profit distributions or you have any profit at all, you are likely having to pay taxes yourself as well.

And so that tax rate will depend on your entity type, it’ll depend on your financial situation. It could really range. It’ll depend on the state that you’re in. This is best to work with a CPA if you wanna get really clear on the percentage that should be put towards taxes. ’cause there’s not really a good rule of thumb that you can use here.

It is so highly dependent on your tax situation, but it is something to make sure you’re putting aside. So that’s another great thing is that you can use various different accounts to be able to do this. And one place, if you’re interested, if you’re trying to find a account that can do this for you, where you don’t have to manage a bunch of different accounts, right?

You can use the the account Relay.

So if you go to Jamie Trull dot com slash banking, Relay is a great one that allows you to have. First of all, totally free business banking free is good, right? And also you can instantly set up different accounts that you can use for these purposes, right? So you don’t have to deal with logging into different things and everything.

It’s all on one screen. You can create new accounts in an instant. It’s so easy. You can move money back and forth seamlessly and instantly. It’s fabulous. And not Only that, but Relay can also help you to automate this. So you can set it up where you can actually just put percentages based on your income that will move into these separate accounts such as taxes or paying yourself.

And it will all be done seamlessly. We actually have some specials right now for Relay where they will actually pay you to open an account. So that’s not such a bad deal. I would definitely go and check that out.

Let’s do a quick example just to drive this home of what profit planning is for your business.

And also you can grab your own profit plan template,

Jamie Jamie Trull dot com slash profit plan with two Fs, remember. And you’re gonna be able to grab a free worksheet that will allow you to put these percentages in yourself and see some of these examples. But let’s just show a really quick example. Revenue minus recurring expenses equals base profit. Okay?

Let’s say it was $15,000 of money came in, you spent 5,000, so you have $10,000 in base profit.

How can we apportion that out using the profit plan? So here’s one example. If you are wanting to grow fast, right? You’re probably, you’re gonna notice that the opportunity fund has a large chunk in it. They have 20% sitting in the opportunity fund. So that is going to help you to be able to really quickly reinvest back into your business into different things, maybe higher marketing, all those types of things to grow your business faster.

It also means that in the near term, your paycheck will probably be less, right? But the hope is that as you grow your business, that will make the total profit amount go up, which would make your paycheck go up over time, right?

So it’s kind of thinking about what’s most important now in your business finances versus in the future.

This is one potential for apportioning that out. Obviously the key is to make sure you’re putting a hundred percent in each of these buckets. And then here’s another example where if you wanted to maximize your current pay, let’s say, so that’s the most important. If you’re like, man, inflation is getting me gas is expensive, you know, all these things,

I need to be able to pay myself more. Okay? This is something that might be what you would do instead. You’d put more into the pay yourself less than to opportunity, meaning probably not gonna grow as fast, but right now I have the money to pay my bills, right? And maybe just a little bit into some of these other funds.

So that’s really important. You’ll notice taxes went up as well because when we pay ourselves more typically, right? When we’re reinvesting less into our business, our taxes are going to go up because that means that we have less business expenses, right? So that’s just something to know when you are determining what your profit plan is gonna be.

So here is the recap of organizing your finances in your business.

Step one, organize your accounts, right? Your bank accounts. Step two, organize your books; step three, organize your tax documentation. Step four, organize your profit. And you may have guessed, but I have tools for every single one of these. We have linked them all down below from free templates to discounts to all the things that you need to get organized with your finances.

That is one of the things that I love to help people do. So not only getting organized with the compliance stuff, with your bookkeeping, with all of that, but also making sure you’re paying yourself what you need to. You have a plan for your cash flow and that your business is profitable. So thanks so much for joining me today. I hope you enjoyed this presentation.

We were fancy with the slides and everything, but definitely go check out all of our free resources and I hope to see you next time.


**++ SPECIAL NOTE that this is a Paid Promo from Relay in this video we do need to include this disclaimer in our blog article: *Relay is a financial technology company, not a bank. Banking services and FDIC insurance are provided through Thread Bank, Member FDIC. The Relay Visa® Debit Card is issued by Thread Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa® debit cards are accepted.

This video is proudly sponsored by Relay Financial. However, all ideas and opinions expressed are entirely my own and are not influenced by any sponsorship arrangements. While Relay Financial has graciously supported this content, the views presented are genuine and independent. Out of respect for our viewers, we only collaborate with companies that we truly believe in. Thank you for watching and supporting the sponsors who make these videos possible.

I'm Jamie — Profit Strategist and Financial Literacy Coach.

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