Pay Your Taxes

Here’s the deal – you gotta pay taxes, and you gotta prepare for tax season so you’re not caught off guard.

If you have set your business up as an LLC, you’ll want to pay quarterly estimated taxes. The IRS likes their money, and they like it early.

Work with an accountant, even for just a single call, to ensure your business is set up correctly and you are estimating your taxes properly.

What’s worked for me is saving 15% of “real revenue”, meaning the revenue the business brings in after I pay contractors and the costs of producing the product I create.

Then I divide that estimated number by 4 and pay that amount when quarterly estimated taxes are due.

Even then, I always save 15% in a tax account and save it until tax time. Some years I end up with more in that account which makes for a nice bonus. Other years I owe more than I paid in estimated payments, and it’s nice to have that amount just sitting there.

The business also takes care of any personal taxes I may owe, which is one nice thing about having a separate entity rather than using your personal business account(s) to run your business.

Since taxes could end up being thousands (or tens of thousands) of dollars each year, it’s worth taking the time to prepare properly to pay them in full each year.

@darentsmith | daren.blog

Invest In Assets Not Liabilities

One of the downfalls of many creators who want to turn their craft into a business is investing in the wrong things.

Assets are investments that generate more money for you, while a liability costs you money.

Your office is not an asset – you have to pay for it every month.

Your computer, your equipment, anything you own outright that you use to make money is an asset.

But let’s take it a step further.

Investing in a bunch of equipment on it’s own won’t help you grow your business. Cameras, computers, hard drives, and the like, if they just sit there, won’t generate any money for you on their own.

But, if you use that equipment to create assets that compound, that’s the goal of a successful creative business.

Use your camera to take photos that you then sell online. That single creative effort can pay you forever.

Use your computer and recording equipment to record a song that you can sell and license.

Write a book that you can self-publish and sell online.

There has never been a better time to be a creator, because you could, today, with just your phone, start a creative business and start creating selling digital projects to anyone in the world.

Start thinking about where you spend your time and money. Invest in and create assets that compound over time, and your business will start to grow.

@darentsmith

Financial Literacy for Creatives

One main reason why creatives fail at becoming professionals – making a full-time living from their work – is because they are not financially literate.

Financial literacy can be summed up like this:

  • know how much money you need, how much money you make, and how much money you spend.
  • understand how to make more or spend less and when to make those decisions
  • create a business that supports your work that generates the results you want for your lifestyle

Over the next month I’ll write a short, “atomic” essay every day on a different topic. Read each one and by the end of the month your financial literacy will be much improved.

How much money your creative business needs is a simple equation:

How much money do you need to support your lifestyle? That includes all of your personal bills, savings, spending, etc.

How much money did you spend from your personal bank account the last three months? Divide that number by three and that’s how much you spend.

Now double that number.

That’s how much your business needs to make each month to afford taxes, operating expenses, paying yourself, and to have a little profit for growth.

@darentsmith

Lead With Value

I messed this one up this week.

My brother and I have been gearing up for the launch of our new web app Benchmark, which goes live on March 30th.

Part of this “gearing up” was completing a Typeform Quiz that would help those who take it to quickly identify the current stage their business is in and what they could focus on to grow.

But I broke one of my rules.

Lead With Value

To lead with value means that you serve and contribute before any transaction occurs. That could be a monetary transaction, or even signing up for something with an email address. You’re still transacting – trading an email address for more information or access.

I hate that. 

I don’t want to be promised that the value lies just beyond this $1 signup, or entering my email address. I want you to prove to me that you have the goods.

It’s like that movie, Hitch. You come 90, I come 10.  

My mouth was open, Albert!”

The order matters. YOU come 90, then I come 10.

Not the other way around. 

Well, I messed this up. 

In the Typeform, I made the email question required, even though the wording said it was optional.

Meaning that I put the order in reverse. I was promising value on the other side of that email transaction, but hadn’t done anything to actually provide any value up to that point.

Oof. 

The results speak for themselves:

12 people started the quiz. Zero got past question 2, “what is your email address”.

Whoops.

Once I spotted the error, I quickly fixed it and double checked that it was CLEAR that people didn’t have to enter their name or email in order to take the quiz. 

People started taking the quiz and getting the feedback they needed from us, which was the whole point of adding a quiz to the website in the first place.

Now, I could have approached it differently and said, “well, we only had 12 people try it, so we just need to get more traffic and get that number up in the thousands”. 

But the principle is the same – people don’t want to transact first. They want you to prove to them the value that you have created and show them the results before the transaction. 

I highly recommend approaching your business in a value-first way. Don’t think about optimizing funnels, adding more people to the “top of funnel”, or any of that nonsense. 

Treat people with respect. Show them the goods before you ask them to transact with you. Prove your value and give them some results up front, and the right people will be naturally pulled toward you and your business.


PS – If you want to take the quiz for yourself, you can do so at http://benchmark.app/#quiz

Also wanted to shout out two great people that I came in contact with this week. Randall Kanna has being doing amazing things in growing her Twitter account, and just launched CrowdFox, a new tool to help you manage your Twitter growth.

Stefan sent me an email about a new tool to help get control of your calendar back. Rather than having people schedule blocks of time on your calendar for meetings, they can now, using his tool Callworthy, just get in line, and you can decide when and who you want to call when it works for your schedule. Pretty brilliant. 

You can use code DARENSMITH at checkout and get 10% off for the first year. It’s a pre-order, so if you’re hipster like me and getting in early on awesome new products, this one is a perfect opportunity to do just that.

You Can’t Do It All

I haven’t worked the hours I’ve worked this week in a long time. Not since filming the last season of Relative Race (which just started airing this last Sunday! Go team green!)

Similar to last week, it’s a result of taking on too much and having it all catch up to me. I’m behind on editing a course I shot in January, so I worked late on Monday to try and catch up. 

Tuesday I had to run and get set dressing for the course I’m filming in the sound stage that’s in the building I work in, and then I had to build the set that we were going to be filming on starting on Wednesday morning. 

First set build!

We’re filming all day Wednesday through Friday of this week, so there isn’t much progress I can make on the edits or the film I’m producing, which means I’m staying up late doing those things.

How sustainable do you think this is?

Yeah, not very.

I already feel like I can’t keep going like this. And the frustrating part is that I know what the answer is:

You can’t do it all.

You need to leverage other people and build systems so that you don’t get caught in this situation.

I didn’t even mention all of the blogging that I needed to do this week, the time I wanted to spend with my family, the books I wanted to read…

Enough of that though. You get the picture. 

It’s just one of the bonuses that come with my personality where I feel like I need to do everything myself so that it gets done “right”. 

But, as you can see, there’s a limit to how much any of us can do in a given time period, be it an hour, a day, or a week or more. 

If you don’t start thinking about how to leverage other people and systems now, you’ll never get free of that repeating cycle where there’s always too much to do and not enough time to do it in. 

Leveraging other people and building systems:

You’ve probably heard it called delegation, but I prefer the term leverage. It helps me see that I’m not just giving a task to someone else to do instead of me, but that I’m actually accomplishing more by doing less. Leverage. 

What I need to do is find someone to handle the editing for Craftsman Creative. I need to hire a team of people to produce these shoots. That alone would free up a solid 20-30 hours a week of my time so that I can work on all of the other things that are better for me to spend my time on.

(Know anyone who might want to help me with editing? Need to be local to Utah ((closer to Provo the better)) and work in Final Cut Pro…)

Sooner than later I’ll be able to create a course for under $5,000 and about 4 hours of my time, because it will all be leveraged. I’ll keep doing the sales calls (I love those) and managing the system that makes a great course come out the other end, but I’ll have leveraged a bunch of people and tools to get more done than I ever could on my own.

The best part? If you leverage the right people, you get a better result than if you did it all yourself. I’m definitely not the best set builder, or cameraman, or editor, or web designer, or advertising manager. 

I do all those things because I’m stubborn, and because I don’t have enough cash in the business to hire those people right now. But it’s close enough to a breaking point where either something isn’t going to get done on time, or in the right way, and it could end up hurting my business if I don’t fix it now. 

So, if you’re experiencing the same thing, let me know. But the solution that I’ll be working to implement over the next month or so is completely leveraging these courses so that they can be made in the way I outlined.

Find places in your own business where you can leverage a tool or someone else that might even be better than you at that thing, and give it a try. Let me know how it goes!

Daren

PS – would love to hear what you’ve leveraged in your business and why you chose to do it. Let me know in the comments!