Greg Hoffman


5/02/2008

 

How do Affiliate Marketers and/or Outsourced Program Managers Manage their money?

Several months ago, I asked Shawn Collins how to handle affiliate checks and taxes. Now my question is more complex, but related. How do 1099 employees, affiliates and outsourced program managers, handle income overall?

I have a good idea of what I'll be doing over the next few months, but I'm looking for suggestions from those that have perfected their finances. Please add your comments below.

Shawn turns over his affiliate checks to an accountant. I looked into that option and chose not to spend $2,000 a year. I don't know what he pays, but the quote I received scared me into trying to figure it out myself. I'll be hiring an accountant, just not on a monthly basis.

On Shawn's post, an accountant, Chad Bordeaux , added his comments: "when setting money aside for your taxes, be sure to set enough aside for your Federal Income Tax (based on your effective tax rate, your “self-employment tax” (15.3%), and any applicable state and local taxes. Depending upon where you live and your income level, this could be anywhere from 20% to 50% of your income when all added up."

Once I hire an accountant and find out exactly what percentages I need to set aside, I'll be paying quarterly taxes diligently. Which leads me to come up with a cash flow strategy. A few weeks ago, my friend Denise O'Berry, sent me a copy of her new book, Small Business Cash Flow, and I've found it to be a great resource. It's the how to book I was seeking. Denise was the first person to introduce me to affiliate marketing five years ago and she gives some very relevant affiliate cash flow business models in her book.



The other thing I've done to work on my finances is to sign up with Quicken Online. They have a 30-day free trial for online services and only $2.99 a month after the trial. I can sign on and bring up my checking, savings and paypal accounts and have bill reminders sent to my gmail and phone. It gives me an instant view of my finances anytime from any computer.




I certainly do not have all the answers, so any help is appreciated. I'm looking forward to a long, healthy, profitable career as an affiliate and an outsourced project manager. Like I said, some of you have the perfect 1099 business model and your comments will help all of us.

Labels: , ,

3 Comments:

Blogger Shawn Collins said...

Hey Greg -

I pay less than your quote for management of my consulting finances.

Currently, it's limited to some consulting and affiliate business, but it was also my OPM activity when I was still doing it.

The way I looked at it was that there was an expense for me to struggle through the learning curve of account.

That cost didn't make sense compared to the money I could earn over that same time.

Also, since there are new tax laws all the time, I didn't want to deal with staying up to date on those issues.

In my opinion, it's typically beneficial to focus on your core competencies and outsource anything you can.

A couple months ago, I figured it was easy enough to drill a hole in the wall to run some Internet cable to another room.

The result was a half day of struggling with the tools I had, going to Home Depot, trying again and making a mangled mess.

The result was costly and ugly, and I should have had our handyman do it for $20.

But sometimes I think a project is easier than it turns out to be. ;-)

9:51 AM  
Anonymous Chad Bordeaux said...

It is wise that you got a system for keeping up with your expenses. Many people do not, and it end up costing them a lot of money in additional taxes.

As far as the cost of an accountant, the cost should be a derivative of the number of accounts and transactions that you have on a monthly basis. If you are paying a monthly fee, you should be provided monthly financial statements and analysis of those statements from your accountant. He/she should be able to review those statements and help teach you methods for increasing your income and decreasing your tax liabilities. My firm usually includes the annual tax fee in the monthly fee as well; some firms do not.

While, my firm can serve clients anywhere, I understand that many people want a firm that is local to them and an accountant they can sit down with. Check out the Professional Association of Small Business Accountants (PASBA.org). It has members through out most of the US and most all of them operate in the manner I discuss above.

10:11 AM  
Anonymous Denise O'Berry said...

Greg --

Glad the book has helped you out. Sounds like you're moving forward and have a good handle on what needs to be done.

The hardest part is keeping up with it if you choose not to outsource. Not keeping up with your financial stuff can get very ugly! :-)

8:52 PM  

Post a Comment

<< Home