Deductions & Accounting

Deductions, Finances, & Accounting

Expenses related to the operation of a business, in this case an LLC, can be written off. This means the amount of the expense can be subtracted from the amount eligible for federal tax. This is another way to say deductions. LLCs can take deductions on the expenses of operation for the first year.

With a small business you will want to find an accountant that will help you write off business expenses properly.  An accountant will be able to recommend ways for you to use your LLC to improve your tax situation.

Business Expenses

Always track your expenses.  An easy way to track expenses in the beginning is to look at the expenses from your bank from the year.  This is why you need to separate your personal and business bank accounts.

Team Member Expenses

If you are in a partnership or if you have hired your first team member that has spending authorization, you will want to establish controls on how they can spend money and a simple way to tracking money that is spent.

Plan Your Cash Flows

If you are spending your own money to grow your team you will need to track those expenses.

Track your monthly expenses

Know what you will spend every month

• Office space (your home because you do a lot of your work and project management from home)

• Office supplies

• Travel costs (milage on car)

• Office Utilities (home gas, electric, internet because you work from home)

• Loan Payments

• Money set aside each month for taxes

• Swag Gear for onboarding (VOX, Prodigy Promos, CustomInk)

• Web Services you pay for to run your business

Project your Sales

You need to have a conservative plan on how many sales you really will achieve and plan for seasonal variations.  In your Sales equation plan on cancelations.

In solar you will get between 15 and 30% cancelations after a deal is signed.

Project your Payments

Most companies that will pay you will have some delay mechanism to not pay you as soon as your job is completed.  Most companies will have a net 45 type of plan where they will pay you 45 days after an invoice comes in.

With solar companies such as Freedom the main payment comes in after the install happens, and then after inspection, and after the finance company approves and pays Freedom.  At that point in time Freedom will need time to review, and send a statement and then get a payment out the next week.