Observations of a First Time Business Owner

Posted by Matt Farmer on January 20, 2014 · 6 mins read

In 2013 I was a bona fide business owner for the first time in my life. Of course, by bona fide business owner I mean that I had to pay estimated taxes this year because of the income that wasn’t coming from someone who was withholding my taxes from a paycheck on my behalf. That’s right, I had to deal with the terrifying 1040-ES. In addition to that, this year was my first tango at setting up what will be my proper side company moving forward: Crazy Goat Creative.

I thought I’d take a moment to share some of my observations from the last year.

  • Estimated Taxes are Intimidating. I had a pretty good idea of how much I was going to make in 2013, so it wasn’t that bad. Unfortunately, 2014 is going to be pretty much up in the air. I’m going at it from trying to figure out exactly how many hours of consulting I want to do and what rate I want to charge working up from there.
  • Just go ahead and get checks for your business checking account. I didn’t originally. Now I’m kicking myself. 99.99% of the time I can pay with a debit card. Unfortunately, that remaining 0.01% usually involves a government agency of some sort and I really hate standing in line to pay in person.
  • Your toolkit matters. Any developer can tell you that’s true when building software. Well, it’s true when building a side business as well. I hate having to spend money on the odds and ends that are needed to run a business, but honestly, I’ve found it’s better than not having them. My current (business-focused) toolkit is: - QuickBooks Online – This is the canonical copy for my books. I use the cheapest package, but I can do all the accounting related things I legally have to do, and can give a Real Accountant™ access when I need to with no fuss. It additionally integrates directly with the bank account and pulls in new transactions on its own.
  • Harvest – This is my go to for time tracking, client estimating and invoicing, and credit card processing for bills. Unfortunately, every automation between QuickBooks Online and Harvest sucks, so I have some human time that’s going to be involved in keeping the two in sync, but it’s worth the tradeoff (especially since QuickBooks charges more for the same features implemented poorly).
  • Stripe – When I invoice clients from harvest, I can wire it into a Stripe account so that my clients can pay instantly by credit card.
  • Squarespace – I’m essentially paying Squarespace to allow me to have a landing page / blog for Crazy Goat Creative right now. When I’m updating the Crazy Goat site my objectives are getting in and out, and I love Squarespace. (I also use it for this blog.)
  • Banks sometimes suck, but beggars can’t be choosers. When you’re bootstrapping a small side business, the words “Free Checking Account” are gold. I bank with PNC and have been pleased by their free checking offering and their in-person customer service. Their online services, however, leave a lot to be desired. They want lots of stuff done in person, and I’m not generally an in-person bloke for such things.
  • Your fixed overhead is an important number that can separate the difference between want and need. The yearly fixed overhead for Crazy Goat sits at around $250. That’s how much I would have to spend to keep the business alive regardless of my income. If I start an organizational GitHub account (because those are cool) and start creating a bunch of repositories on it, then we’re talking an extra $300 per year. Knowing that more than doubles my fixed overhead will motivate me to find a better solution or hold off until it’s actually needed.
  • It’s not really as big of a deal as it looks like before you do it. All a business really is, at its heart, is a piece of paper that says you, and potentially some partners, are going to be providing some good or service to some folks, and you’re willing to put your money where your mouth is in doing it. Before I booted up this LLC I was a bit intimidated by the concept. I am significantly less so now. (Now I’m just intimidated by taxes. Ha.)

Anyway, I don’t know if anyone has had the same / different experience from me, but as I started getting my tax return ready this year, a few of these things were running through my head. If you’ve never started an LLC before, I highly recommend doing so if you’ve got some side business you do. I’m no accountant, but I’ve picked up the basics of managing the books for a business and managing the tax liability. I know very little, but yet I know a lot more about our tax code than when I started. (Even a good bit I wish I didn’t know.)

Crazy Goat Creative hasn’t taken in any revenue yet, but here’s to hoping that 2014 is a good year for me on that front. I’m hoping to get enough capital to mobilize a side project I want to do, so if you know of someone looking for a talented engineer for a few hours work of work, let me know. My credentials are readily available.

Leave me some comment love, and I’ll see you cats soon.