Getting Your Finances Straight For A New Year

The Soloist Life

If this last year was NOT smooth sailing for your Soloist business finances, now is an ideal time to pave the way to better. There’s still time to avoid unpleasant surprises (think giant tax bills) and start streamlining your financial life before year-end:

The five strategic pieces of information you want in your hands before year-end.

How to think about your financial team (and why it’s worth investing in the right experts).

How a financial surprise made me completely shift how I managed my business cash flow.Why you want to build a cash reserve for your business and a resource to get you started.

LINKS

Rochelle Moulton Email List | LinkedIn | Twitter | Instagram

Consultants + Money podcast episode on cash reserves (Erica Goode)

BOOK A STRATEGY CALL WITH ROCHELLE

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TRANSCRIPT

00:00 - 00:43

Rochelle Moulton: Think of it like a non-emergency emergency fund for your business. It's a way to smooth out the inevitable cash flow variations in our kinds of businesses. And once you fully fund a cash reserve, I can guarantee you will like the comfort and freedom that it provides. Hello, hello. Welcome to the Soloist Life podcast, where we're all about turning your expertise into wealth and impact. I'm Rochelle Moulton, and today I want to talk to you about getting your finances straight. It's late October as I'm recording this and it's the perfect time to get both strategic and tactical

00:43 - 01:18

Rochelle Moultob: as you pave the way for the year you want for your business and for your life. So let's start with the strategic. Okay, at this point in the year, you wanna have several things in the bag. 1, you want a reasonable idea of your current and projected financial position. That means how much revenue have you already closed and what's likely to hit before year end. Same thing with your expenses so you can get a feel for your bottom line year. It also means how much more can you tuck away in your taxed advantage solo 401k. Now

01:18 - 01:59

Rochelle Moultob: remember, you can make additional employer contributions above and beyond your salary deferrals. Don't have a solo 401k yet? Talk to your financial advisor or your CPA about the best options for you. Contributing consistently to your 401k is a baller move, especially for soloists since we don't have anyone funding our future life but ourselves. 2, take this understanding and combine it with whatever other income and expenses are happening in the other parts of your life. Maybe you have other sources of income like a spouse or other businesses. Share all of this with your CPA so you don't

01:59 - 02:39

Rochelle Moultob: get surprised with a whopping tax bill you haven't accrued for. 3, have your CPA give you a revised estimate for your annual federal, state, and local taxes. And I say revised because I know you worked out an estimate with your CPA earlier in the year, right? You're just honing it now, making sure you account for any unexpected blips. And 4, have you got your plan for your business firmly in mind for the next year? If not, now's a good time to start strategizing or finish strategizing? What investments of time and energy will your plan require of

02:39 - 03:13

Rochelle Moultob: you? Is this the year you write that book and say no to some new client engagements? Or is it the year you step on the gas and go court new clients or build out some new offerings? All of these have implications for your finances, and it just takes a tiny bit of time to line up where you want to go with keeping your finances on an even keel. And 5, how happy are you with how you manage your finances this year? So let me give you a few questions to think about here. Are you happy with

03:13 - 03:50

Rochelle Moultob: how your cash flowed this last year? Not just how much, but when? Did you get the right information on your financial results in the right way at the right time? Did you have any unplanned big expenses, like say a tax bill, that had you scurrying around to deal with? Did you have enough cash set aside so that you could invest in yourself without worrying to attend conferences or hire a coach or buy some training? Your answers to these kinds of questions will point to changes you can make, and some will be quite simple, to get your

03:50 - 04:28

Rochelle Moultob: finances in better order. Maybe it's time to hire a bookkeeper, or replace your CPA with someone more strategic, or just start holding yourself accountable for getting and keeping your finances straight. And make sure you don't cheap out here. Excellent business financial advisors cost money, sometimes a not insignificant amount of money, but the best ones will earn their fees many times over. You know, in the middle years of owning my business, I got slapped upside the head with a huge tax bill. It was a combination of an excellent year in my business with a mistake by my

04:28 - 05:02

Rochelle Moultob: CPA that I didn't catch until after the return was filed. Nobody likes those kinds of surprises. But my first move was to instantly change how I accrued for taxes. I started taking a percent of my revenue every month and tucking it outside my business checking account where it didn't co-mingle with my regular cashflow. And then I use that account to pay quarterly and annual taxes. And because I added a cushion to the amount the CPA told me to set aside, I almost always have a bonus left after our taxes are paid. And I just 0 out

05:02 - 05:34

Rochelle Moultob: the account. We take the funds and invest half for the long term and play with the other half. It's like a bonus and it always makes me smile when I transfer it over. I also use that situation to find a new CPA, not because they made a mistake. I mean, that can always happen, but because I knew it was the system we were working that was at fault. They were not interested in strategic discussions, but operated more like a tax mill, pushing out returns like widgets. So I hired myself a new team. I found a bookkeeping

05:34 - 06:12

Rochelle Moultob: firm with a standard operating procedure and secure systems and a tax firm with a vested interest in strategy as well as tactics. I will say I sleep so much better at night with that arrangement. But there's another piece to that too, and that is your cash reserves outside of taxes. So friend of the show, Erica Goody did an excellent episode. It's number 82 of her Consultants and Money podcast that I heartily recommend, and I will drop a link to it in the show notes. It's a quick and juicy 8 minute episode on how to set up

06:12 - 06:49

Rochelle Moultob: cash reserves for your business. Think of it like a non-emergency emergency fund for your business, it's a way to smooth out the inevitable cashflow variations in our kinds of businesses. And once you fully fund a cash reserve, I can guarantee you will like the comfort and freedom that it provides. So as you consider all these questions, you can decide which tactical moves make the most sense for you. The goal is to get and keep your finances working for you rather than the other way around. So let me give you a few examples of things my clients

06:49 - 07:29

Rochelle Moultob: have done to handle their finances with more ease and comfort. They have hired a fractional CFO to plan and manage their business finances. Not a low cost solution, but 1 that allows them to detach from the day-to-day tactical. They funded a six-month cash reserve to smooth out wide swings from a whale project model. They handed off monthly bookkeeping to a specialty firm that interacts directly with their CPA. They worked with their spouse to generate a 2 earner household cash flow and reserve model and I highly recommend this for those with more complex financial lives. You will

07:29 - 08:09

Rochelle Moultob: not regret doing that. They engaged a fee only financial planner to model various scenarios so they could make fully informed longer-term decisions in concert with their CPA. And while my clients tend to be well-established with six-figure plus incomes, don't think they haven't shared their past financial horror stories with me. The moral of the story is this. The sooner you get your finances working smoothly to support you, the faster you'll get to reap the rewards, the ease and comfort of focusing on your business without constant worry about it all crashing down around you. Take it from me.

08:09 - 08:35

Rochelle Moultob: It's worth the small amount of time now to plan and set up the systems that will keep your finances on the straight and narrow for years to come. Now, as we wrap up this episode, if you haven't joined my email list yet, now is the time. Your soloist business and your future self will thank you. The link is in the show notes. That's it for this episode. Please join us next time for the soloist life. Bye. Bye