I think that one thing most creative entrepreneurs will agree on is that dealing with finances and taxes is the least fun part of running a small business. For me personally, I love photography, and I love client relations, but when it comes to the nitty-gritty of the numbers, my brain just automatically starts to swirl.
Ever since I started my business five years ago, tax time has always given me anxiety. And once I entered the phase of my business where I started paying quarterly taxes, “tax time” wasnʼt only confined to one part of the year anymore. Even worse, I would beat myself up over feeling unorganized and so stressed out about it. I felt like I was the only one who couldnʼt get it together!
One area where I struggled most was putting money aside for taxes. As a small business owner, I handle 100% of the income I bring in. . . but that doesnʼt mean I get to keep it all. Unlike people who get a paycheck that automatically deducts taxes, Iʼm responsible for putting a portion of my income away. That meant that when I looked at my bank account, I never really had a strong concept of how much of that money was actually mine to spend. I had a business checking and business savings account, but to be honest, I was not great about diligently transferring money into that savings account to save for taxes.
Enter: the Qapital app. Exit: the days of confusion and anxiety about saving for taxes.
I canʼt remember where I first learned about Qapital, but it has been a #gamechanger. Itʼs a finance app that automatically withdraws money from your account and puts it into an external savings account. Now, I know your first question is: how much does it cost? The answer. . . is nothing! There are no fees to set it up or transfer funds. There are lots of different ways you can use Qapital for both personal and business savings. But for this post, Iʼm just going to stick to how I use it to save for business taxes.
Qapital allows you to set up “rules” for savings, which basically function under a “if this, then that” premise. The rule that CHANGED. MY. BUSINESS. (and lowered my stress) is the “Freelancer Rule”. If a deposit comes into my business checking account, 30% is automatically deducted and put into my Qapital account. That means that I automatically save for taxes, and that the money is out of sight, out of mind.
With the use of Qapital, I know that all of the money in my business checking account is mine to use freely. On the flip side, it means that any money I have in my Qapital account is not to be used for anything besides taxes. It has eliminated the temptation for me to “borrow” from my savings account (I know weʼve all done that!) So when it comes time to pay my taxes, I simply transfer that money to my bank account and make the IRS payment.
I recently read the book Automatic Millionaire, and it suddenly made so much sense why this app really helped me. Until we automate our savings, we’ll continue to struggle to save (unless you are a rare breed who is very diligent about managing your money every time you get a deposit. . . I am not.) Once that money is in our hands, it is oh-so-easy to spend, am I right? So take it out of your hands, follow the freelancer rule, and store 30% it in a Qapital account. You’ll eliminate the stress of saving, and depending on your tax bracket, you may even have some left over! (A financial adviser would probably recommend that you put it in a retirement account. But hey, Iʼm not here to tell you how to spend your money—just how to save it.)
Make 2018 the year you stop worrying about saving for taxes, and let Qapital do the work for you. Happy savings!