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So far Angela Keller has created 90 blog entries.

7 Financial Tips for Business Owners During COVID-19

Following the recent restrictions on gatherings, businesses that are allowed to be open, and all other health concerns and restrictions, your business may be caught in the wake of COVID-19. You are not alone. There are many business owners in similar positions to yours. While I don’t have a silver bullet for ending this pandemic (unfortunately) I do have a couple ideas of how you and your business can move through this turbulent time.

Be Proactive With Creditors and Landlords

For many people, rent and mortgage payments are due on the first of April, coming up in ten days. You may also have other bills, such as credit cards or debt payments coming up soon. If you are at all concerned about your ability to make these payments, I encourage you to get in touch with your creditors and/or landlords. Politely but firmly explain your situation to them and ask if you can work something out, like a reduced payment or a refined payment schedule. Because so many people are in a similar place, you may garner their sympathy and receive some assistance.

Cull Your Expenses

Now is the time to really go through your personal and business expenses with a fine-tooth comb. Cancel any subscriptions or memberships that aren’t vital. If you’re in California or Illinois, for example, then you’re probably not going to the gym or yoga studio anytime soon. Review your business’s spending needs and nix anything unnecessary or now irrelevant.

Get Creative With Your Services

Think about ways you can adapt your business to the current times. Maybe it’s time to ramp up your online store and start doing local delivery. Many yoga teachers and entertainers are starting to offer their services online. Brainstorm and get creative.

Check Available Resources

Every community has different resources available to those struggling with expenses due to COVID-19. Here in California, you can refer to the information provided by the Employment Development Department to see if you qualify for aid. Also check local nonprofits and other resources. Many communities are creating volunteer networks and community funds to protect the most vulnerable in the community. If you are seriously at risk, consider seeking these out. Otherwise, consider contributing to them, either monetarily or with volunteer time.

Lean On Your Money Team

This is a time when those on your money team can really come in handy. Reach out to your financial confidants, your bookkeeper, financial coach, etc. and start strategizing on how you can fortify your business during these tough times. Don’t make these decisions alone; remember that you have allies.

Mindset Matters

Although the virus is seriously threatening, those most at risk are the elderly and the immunocompromised. It’s important to remember that we are taking all of these measures in the name of collective care, to protect those of us who are most vulnerable. I encourage you to remember this and to avoid self-victimizing, panicking, or hoarding. Holding onto a mindset of courage and generosity will do wonders in this time, for your own mental health and everyone around you.

File Your Taxes On-Time!

You may have heard that the IRS has officially extended the deadline to pay taxes to July 15, 2020. While this is great news for business owners, it’s important to remember that you still need to file your taxes by April 15th. If you are unable to meet this deadline, you can request a six-month extension for filing. You can check out the IRS site for more info. EDIT: The deadline to file has also been extended!

I hope these ideas bring you some sense of hope and agency in unpredictable times.

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Angela

5 Steps to Get Ready for Tax Time

Yep, it’s that time of year again! As a small business owner, or let’s face it, just as an individual, tax time can be stressful.  But there are ways to reduce that stress and be ready for tax time before you know it.  As a former tax preparer and practicing bookkeeper, here are my top suggestions;

#1 – Designate a folder or box for all the mail that arrives regarding taxes.  You don’t even have to open the envelopes just collect it all in your “spot”.  Super simple!

#2 – If you are doing your banking online, you are probably getting email notifications that your tax statements are available.  I like to flag these emails as they come in and then sit down when I have some time later in the week to go back through the emails, log in and download each statement from the bank.  Save all of these to a file folder you’ll call 2017 Tax Documents.

#3 – If you are running a small business (and a side hustle does count), please, please, please tell me you have been running that business out of a bank account separate from your personal spending.  If not, go open that separate account right now!  If so, you can easily determine your income and expenses for the year by reviewing your bank statements.  Better yet, if you are running your business on an accounting platform such as Quickbooks Online and you have updated and reconciled your accounts, those reports are right at your fingertips.  I do suggest that you start this step in January just to give yourself plenty of time.

#4 – You should have received all of your tax mailings by mid-February. If your tax preparer is going to want everything in electronic form (or you just want to stay super organized) scan all of your paper statements and add them to your 2017 Tax Documents folder.

#5 – Grab a copy of last year’s tax return and review the entries you had last year.  Or if you have a digital file from last year, compare the statements with the information you have for this year.  This can jog your memory so you know you haven’t missed anything.  The last thing you want is to have to file a corrected tax return because you left something out, so just take the time and make sure you’ve got all of your information.

You did it!  You are ready for tax time!  And if #3 is causing you to pull out your hair, maybe it’s time to talk to a professional to help you set up a system or to decide if you are ready for ongoing proactive bookkeeping.

Angela

Why Hiring a Financial Coach Is Worth It

Having someone to talk to openly about your money is an invaluable resource. When that person also helps you set goals and untangle financial knots, that’s even better! Hiring a financial coach can be well-worth the investment. Coaches can help you break through emotional and logistical roadblocks to set up better systems in your business.

What Does a Financial Coach Do?

A good financial coach will work with you in a way that’s personalized to your needs. Their presence and the tools they use help provide structure for you to reach your desired goals.

They also provide nonjudgmental listening and act as a sounding board for your financial concerns and dreams. Given the opportunity to talk through these things, many people begin to work through their emotional blindspots and start making more logical financial decisions. A good financial coach guides this process in a structured and goal-oriented way. For example, they can help you determine a revenue target intended to help you reach other goals in your life. They can also help you test out new ideas for your business and help you tinker with your profit model.

What Do You Gain From This?

Some business owners balk at the expense of hiring a financial coach. The irony of this is that working with a coach can help you increase your profit margins. Like a bookkeeper, hiring a coach can be viewed as an investment in the longterm profitability and wellbeing of your business.

Aside from increased profits, working with a coach is also an opportunity to gain financial clarity. You can work on any emotional baggage you have around money, determine where the money from your business should go to best serve you, or find a way to spend more time attending to your favorite parts of the business.

If you appreciated these ideas, try checking out my service packages. You can schedule a free curiosity call with me to chat about whether working with a coach is right for you.

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Angela

Why Hiring a Bookkeeper is Worth It

Hiring a bookkeeper can seem like an expense up front, but the payoff is worth it. I’d be remiss if I didn’t mention on my blog how hiring a bookkeeper can not only save you money in the long run, but actually allow you to increase your revenue. I encourage business owners to think of consulting with a bookkeeper as an investment in your business.

The Investment

When you hire or consult with a bookkeeper, their job is to clean up and create financial systems. They can help you set up your record keeping so that you’re tracking what’s needed for taxes. They can also help you do 1099’s correctly, particularly because they’re responsible for knowing and following 1099 regulations. Similarly, they can help point out and correct errors, discrepancies, and duplications in your records.

Right now, I’m cleaning up a lot of messy QuickBooks files. QuickBooks markets this idea that everyone can do their books on their own. This is true, with a small caveat. While it’s totally possible to do your books on your own, there is a vast amount of technical knowledge involved in bookkeeping that you may not have the time nor interest to learn. You records are going to benefit you far more if someone knowledgeable is looking after them.

The Gains

So, what do you gain when your records are well-kept? Errors are corrected, which can potentially save you money right out the gate. You incur no late fees on taxes because everything is organized and filed on time. You can use your reliable records to glean insights into when and how money is made in your business. You have less stress about finances because you know everything is being tracked correctly. And finally, you have more time to do the things in your business that you actually enjoy. Should you be spending your time doing bookkeeping when you’re actually really fabulous at making art, building cabinets, providing live entertainment, etc?

A bookkeeper is an important part of your money team. I hope this article inspires you to look into hiring or consulting with a bookkeeper to improve your record keeping. You can check out more of my thoughts on the subject at “Why DIY Businesses Still Need a Bookkeeper” and “How to Get the Most Value From Your Bookkeeper.”

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Angela

How to Build Your Best Money Team

Money team jumping into the air

Money is a team sport. Although we have an unfortunate notion in our culture that talking about money is taboo, we need to do our best to break it. By collaborating with others and building a team of people we can trust to talk to about our money, we can start getting the help and information we need.

There are many different people who can make up a money team. Money confidants, such as close friends and coaches who you can confess your financial feelings to, and receive good advice from, are one good example. Your bank can be considered a part of your money team, especially because good customer service is an important aspect of banking. Similarly, your tax prep person, financial planner, accountant or bookkeeper, and even the people you get financial advice from, are all important parts of your money team.

These “team members” fall into three different categories: people in your life, trusted professionals, and advice sources. Let’s take a look at each category and figure out how you can find good team members.

People in Your Life

Anyone in your life who you’re able to talk to about money falls here. Most importantly, these people are able to provide you with space to air your feelings. In some cases, they may also offer good advice. For example, if you’re friends with an accountant or a retirement planner, you’ve hit the jackpot! If not, good friends that you can open up to are still very helpful. The more we air our feelings about money, the more we’re able to think clearly and pursue practical solutions

If you don’t have anyone in your life that you’d consider a financial confidant, don’t worry. Run through your list of connections and identify some people with whom you might feel safe sharing thoughts, feelings, and ideas about money. Then, try approaching them with the idea of sharing these things. Many people are happy to have someone to talk to about this, so it’s worth a shot. For more tips, you can read my article on Why You Need a Money Buddy.”

Trusted Professionals

Here’s where your team members might get more diverse. Financial coaches, bookkeepers, tax preparers, and financial planners all fall into this category. Not everyone will need to refer to every one of these professionals, and perhaps not on a regular basis. However, working with professionals in all of these areas can do wonders for your financial life.

Like a money buddy, coaches are there for you to confide in, but are also trained to help you find specific solutions. Good bookkeepers are able to deliver valuable financial insights about your business and follow appropriate record-keeping laws. If you run a business, you might find you appreciate that someone else does your record keeping, while you get to do whatever it is you really enjoy. Here’s an article about how to find a good bookkeeper.

Tax preparers are great to consult with during tax season. The most helpful tax preparers help you get a better idea of what you need to file, what you can write off, and if you qualify for any credits. Depending on your assets, you may or may not need to have a financial planner you can regularly work with. If you want to do some complex planning, it might be good to consider adding a financial planner to your money team.

Advice Sources

The last category is made up of public figures and advising entities. Your bank is probably the most important member of your money team here. If you don’t have a bank that provides good customer service, or if you’re getting charged bank fees, switch, and fast. Being able to sit down with a bank employee when you have questions is an important aspect of building your money team. Bank fees are just annoying, but also totally avoidable! Read my articles about “How to Avoid Bank Fees” and “How I Broke Up With Wells Fargo (And You Can Too!).”

Earlier in this article, I mentioned that a financial planner can be a good reference, but another option is to simply meet with a planner at a firm as needed. I had one client who, when planning for retirement, made one appointment at a firm and got all her questions answered. No commitment needed, and a good source of advice.

The last member of this category is public advice figures. There are quite a few out there, so finding the ones who give the best advice for you might require some sifting. These articles contain some of my thoughts on finding good financial advice. Also, here are a couple of my personal favorite resources.

Building a money team takes some work, but when you have a network of people, professionals, and resources who can help you solve your money problems, you’ll be glad you did it!

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Angela

Image: Husna Miskandar

Reduce the Hassle: 3 Tips to Keep Your Money System Simple

When I work with small business owners I often run see this one unfortunate pattern; many business owners believe that your money system has to be complex in order to work. The reality, however, couldn’t be further from that. We’ve already talked about how important having a money system is, and how to visualize it with money-mapping. Keeping your money system simple and streamlined makes it easier to visualize, but also much easier to follow through on and keep organized. If a system requires a bunch of checking in or spreads your money into a bunch of accounts you forget about, it’s not worth the maintenance. Here are three strategies you can use to pare down your business’s money system to a manageable size.

Limit Your Cards

If you’ve got a ton of cards under your business, keeping track of all of them and keeping them paid off can be difficult. To make it easier on you, I suggest paring down the number of cards you use. This will help you better keep track of your bills, credit rewards, and any other info associated with your cards.

Please note, I’m not advocating for closing any of your credit cards, as this can lead to a lowering of your credit score. However, here’s a good guide on how to do that, if you’re interested.

Under One Roof

One recommendation I regularly make to my clients is to consolidate their money into one institutions. If you have business bank accounts at three, four, or five different banks, that’s gotta be hard to stay on top of! Getting it all under one roof will help you keep an eye on your finances as a whole more easily. If you have multiple banks and you’re wondering how to go about consolidating, you might like to read this piece about switching banks we featured a couple years ago. It contains a guide to comparing banking offers and picking to the best option.

Keep Track

Making a regular habit of checking in with your finances. Make this easy by consolidating your passwords to your different accounts and portals. If you don’t have to go searching for passwords before you begin your checkin, you’re way more likely to actually do it!

I also recommend using an app or other tracking system. I especially like Mint.Others also like YNAB, or paper money tracking. Digitally tracking your money can save you some time, while also giving you a quick snapshot of your accounts when you need it.

If you found these tips helpful, you might also like this article on automation, which is another money hack to keep your systems tidy!

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Angela

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part III

In the last two parts of this in-depth guide to money mapping, we’ve talked about why it’s helpful and how to get started. We’ve also touched on creating a system of accounts to set up a regular paycheck for yourself and an assurance of profit. Creating your own money map based on these ideas takes a lot of evaluation of your finances. You need to assess your operating and tax expenses and analyze your living expenses and savings goals. Once you’ve assessed these amounts, they translate into the percentages you put into each account.

What’s Your Percentage?

I help clients figure out what their percentages could be. We assess the needs of their business, and we figure out how much they actually need to live on. We discuss their life goals, and how those relate to money. There are good benchmarks for each percentage, which are suggested by Profit First. For your reference, the suggested percentages are: 5% profit, 50% owner’s pay, 15% taxes, 30% for operating expenses. This breakdown applies to most solopreneurs (anyone under $250,000 in annual revenue).If this doesn’t feel doable for you right now, don’t sweat it. It takes a lot of work, evaluation, and good financial habits to create a sustainable money system.

Applying the Model

Let’s look at an example of all of this mapped out. In this example business, the owner is using the ideal benchmarks and keeping a cushion in their Owner’s Pay account. What they do take out is then subdivided, with 20% of their pay taken off the top for three savings goals (I like to call this “paying yourself first.”). The remainder of this money goes to living expenses. While this model might be unrealistic from where you stand, keep in mind that this is something my clients work towards. I’ve included it here so you can start to picture what your own money system looks like.

If you enjoyed this guide, I recommend also checking out Part I, and Part II. And, try going to the Tools page, where you can play with an allocations calculator. Plug in your revenue and your preferred percentages to see what your amounts are! Then you can start filling in your money map.

Money mapping is an important tool, and one that I enjoy walking clients through. If you’re interested in working with me, check out my services page to check out my packages, and schedule a call.

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Angela

 

Image by:

Estée Janssens

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part II

Last week, I talked about money-mapping, why it’s helpful, and how you can get started. Today, we’re going to dive into more money-mapping using the Profit First methodology. Profit First posits its own money system, pictured in the above map. Its goal is to ensure that you as the business owner get paid.

Solopreneur Paycheck

In order to ensure that you actually get paid by your business, you need to portion off a certain percentage of your income, and then designate that for your personal finances. This portioning off is exactly what the Owner’s Pay account is for in the Profit First system. The Profit First system advocates for creating separate accounts for all your different pots of money associated with your business. If you can’t do that or don’t want to, I advise using a spreadsheet. You can use this to keep track of how much money is designated for Profit, Owner’s Pay, Taxes, and Operating Expenses.

So, back to that Owner’s Pay Account. Once you put a percentage of income in it, you then transfer some portion of that to your personal account, which serves as your solopreneur paycheck. When I work with clients, we work to figure out what portion should go into this account. That amount depends on how much the business makes in revenue, and what portion of their personal expenses they want to cover using income from their business. If income in their business varies month to month, we decide on an amount that they transfer to their personal account, leaving the leftovers to act as their cushion during slow months. This way, the business owner receives a steady stream of income, even if their business varies from month to month. This is the solopreneur paycheck.

The Function of Profit

Cordoning off funds for operating expenses and taxes may seem practical enough, but the Profit account is what makes the Profit First system unique. The profit account accumulates and then is distributed quarterly. Business owners are encouraged to use their Profit Distributions to reward themselves for their hard work. This keeps the owner excited about and invested in the business. It also discourages any tendency to reinvest everything back into the business, or over-save.  Rewards can range from a day out to charitable giving, to really anything you want!

In part three of this series, I’ll discuss what applying this model to your business can look like, and integrate all the info we’ve gone over so far. If you’re enjoying this and would like more, check out part one! You can also head to my services page and schedule a call with me. Money mapping is one of my favorite subjects. Come talk about it with me!

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Angela

The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part I

Keeping track of your money and where it needs to go may feel like a difficult task. That’s why visually mapping it can be especially helpful. When I work with clients, I help them create a visual flow chart to show where every dollar goes. Today, I want to walk through why I do this, and how you can get started on your own money map.

Simplify Decision-Making

The goal of money mapping is creating a clear visual guide of what to do with every incoming dollar. If you’re confused about where to put incoming money, your systems can quickly get out of whack. By drawing out the paths your money can take, you make it clear to yourself where everything needs to go. You also simplify the decisions you need to make, because you have everything spelled out right in front of you! This way you’re able to take action to put your money in the right place quickly and easily.

For extra points, you can automate some of these transfers each month, so that you don’t have to move everything manually. If that sounds interesting, you might like to read “Pick One of These 5 Tips to Automate Your Wealth”.

How Much Do You Need?

In order to create that map and streamline your decision making, you need to do the math up front. It’s important to think about how much you need for your own pay, business taxes, and operating expenses. When I work with clients, I help them determine these numbers in the process of creating their map. If you want a DIY version, you can check out my articles on financial self-care, which will help you determine your personal expenses and understand how they relate to your business finances. Going through your records and averaging your operating expenses can help you get a good idea of what that percentage might be.

The above image is an example map from Hadassah Damien at Ride Free Fearless Money. In this example, you can see that she’s fleshed out the necessary percentages of income that need to be set aside for savings, taxes, business expenses, and personal expenses. In part 2 of our discussion of money mapping, I’ll talk about Profit First and what these percentages are according to their theory.

From Income to Final Destination

Above all, the goal of money mapping is to know where your money is going every step of the way. From the moment you receive income, to the moment that money is saved for taxes, invested for retirement, or put away for a savings goal – you’ve got a plan. Consequently, this is an opportunity to define those final destinations. Creating a tax savings account and an operating expenses account come in handy here. You can also think about creating savings goals for yourself, and making a plan to contribute regularly to those.

If you found this article interesting and helpful, I invite you to download the first 5 chapters of Profit First! The book has its own suggested money map that I’ll also talk about in part 2 of this series. If you’re into this kind of thing, I’m sure you’ll enjoy the book.

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Angela

All About Oversaving, And Why Overcoming It Can Strengthen Your Business

Often issues with money stem from not having enough – so when you hear the word “oversaving,” it might not sound bad. However, oversaving can be a serious issue that may be blocking the potential of your business. It may also point to anxieties that need to be resolved. Let’s take a look at what oversaving is and what you can do to overcome it.

What Is It?

If you experience anxiety or guilt over spending money, even on basic necessities, you may have oversaving tendencies. You might struggle to spend money on your business or operating expenses. Alternatively, it might be hard for you to spend on something other than reinvesting in your business. Or, you might have a hard time parting with any money know you could save it for retirement or business emergencies.

Oversaving both stems from and enhances anxiety, stress, and burnout. It often comes from a fear of scarcity. While saving money is an important skill, if it’s taken to an extreme, it can keep you from spending money to solve urgent problems in your business and your personal life.

What Can You Do About It?

Saving money is a great habit, but the key to overcoming the oversaving habit is to get strategic about your saving. Rather than living in this panicked feeling of “I have to save every dime I possibly can,” create some money systems! Coming up with savings goals, establishing a spending plan, and automating your money are all great ways to introduce strategy and systems. 

Savings goals can be especially helpful, because they can lend purpose to all that saving, but they also create an end point you’ll eventually meet. Limiting and directing your savings in this way can help curb the habit and assuage your anxieties. When you use the Profit First system, you put aside money to pay yourself first, but you also save for taxes, put aside money for operating expenses, and also distribute profits every quarter, which are meant to be spent by YOU so you can reward yourself for your hard work. If you’re interested in learning more about the Profit First System, check out the first 5 chapters of the book here.

Doing some emotional work around money can also really help you clear up your oversaving. I recommend reading Bari Tessler’s The Art of Money for more ideas about this. She helps you unpack your feelings around money and combining the practical with the emotional. If you’re interested, check out my book review.


Oversaving can be a sneaky habit, difficult to catch and overcome, but I believe in you – you can do it! And anyway, saving is so much more effective when it’s done in order to meet a goal. If you enjoyed this article, I suggest looking into Profit First. If you want to chat more about these ideas and take a look at your money, you can take a look at my service packages and book a call. You have a few more days left to set up a Quickbooks 2020 Reboot, which you can schedule here. Doing a year-end review could help you identify a couple goals to save for!

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Angela

Photo by Sharon McCutcheon