Wouldn’t it be nice to have more money in your pocket, without taking on any new clients or projects? What if we told you that it's not just possible, but fast and easy to increase your profits, and put your systems on autopilot so you never have to worry again.
In this post we’ll introduce you to 4 power moves you can make to build a better business, and increase your bottom line.
Move 1: Claim Whats Yours
A quick review of your projects and expenses can reveal profits hidden in plain sight.
Task #1: Find your income
When it comes to increasing your business profits, your first power move is to reclaim what’s yours: namely, the profits you’ve already earned this year that suspiciously haven’t hit your bank account yet.
Chasing down past-due invoices isn’t a fun part of the business, but unfortunately, it’s a skill all solopreneurs are likely to need at some point. The best case scenario for year-end bookkeeping is that you send collection notices on every invoice you’re still owed and 100% of them pay right up. (I said best case, not likely, ok?!) It just takes a few minutes (and a deep breath) to quickly review your books and shoot off a templated collection email that should land at least some additional cash in your pocket.
Task #2: Review your expenses
Up next? Don’t let your money get spent without your consent. It’s time to review your recurring charges and cancel any unnecessary subscriptions
Is there a more annoying feeling than seeing an expensive annual subscription charge on your card for something you no longer want?
Rule of thumb: if you didn’t remember it existed or haven’t logged in since the week you registered, it’s gotta go. Not sure? You can always reactivate later!
There are many apps and services you can use to automate this process and make tracking down subscriptions if you don’t want to do so manually. We love Rocket Money (formerly Truebill) and Trim.
If you make these two simple moves today, you’ll have increased your business profits with minimal effort (and zero stress!)
For bonus points: double check to see if YOU owe any outstanding credit card bills or contractor invoices, and get paid up! It’s good for your books and for paying those good vibes forward.
Move 2: Love it or Leave It
Letting go of what you don’t love can sound a little scary, but it’s actually the ultimate hack to helps solopreneurs like you invite joy (and profit!) into your life.
An excellent benefit to being a solopreneur is that you don’t have to keep exactly the same job description year after year. By assessing what’s working for you (and what isn’t) we’ll create the space for you to do more of your highest-paying work. It’s like giving yourself a promotion AND a raise.
Task #1: Figure out where your profit and joy are aligned
To make the most of your business efforts and increase your bottom line, you’ll want to offer services where the value you provide to the client outpaces the time and effort you need to put into the work. Considering where you get the most return on your energy can help you figure out where to refine. Try this method:
Grab a pen and paper or open a blank doc, and jot down your 5-10 biggest clients/projects of the year (or more if you had them and want to assess!)
Give each a score from 1-5 on the following three points:
- Money (the project fee met or exceeded your expectations and was aligned with the value you delivered)
- Work (the tasks involved were meaningful, enjoyable, and of mutual value)
- People (working with the partner or client was positive and productive)
Your highest-scoring projects are the ones you want to try to replicate (and charge the most for!)
Task #2: Eliminate or outsource the rest
You ARE allowed to say no to future projects (even with previous clients) if the trifecta of money, work, and people doesn’t align for you.
You got into this business to let go of things that don’t bring you joy – don’t lose sight of that!
Streamlining your offerings and outsourcing tasks you don’t enjoy increases your profit by allowing you to charge more for your most valuable, targeted expertise (and giving you additional bandwidth to deliver on that promise!)
One final note: want to let something go, but can’t eliminate it from your offering or business model entirely (like, say, scheduling or sending cold emails)? Outsourcing is your new best friend. Use automations to outsource administrative tasks and hire contractors of your own to manage other essentials that aren’t sparking joy for you.
Move 3: Tame your Taxes
Guess where solopreneurs are the MOST vulnerable to accidentally eroding their own profits? That’s right…it’s taxes. Over 74% of freelancers overpay their taxes by paying easily avoidable penalties and missing valuable deductions. The good news is that just a little bit of preparation can save you countless hours and help you avoid costly mistakes.
That’s why getting a jump on 2023 by tackling your taxes TODAY is a huge power move.
Task #1: Get your tax bill estimate now
Don’t wait till you open Turbo tax to find out what you owe in taxes. Use this simple calculator to estimate what you owe. If you haven’t made an estimated tax payment yet, Better late than never! The IRS charges you a penalty in the form of interest on unpaid taxes you owe throughout the year. You can save hundreds by making those tax payments before the end of the year.
Task #2: Start collecting your deductions
When you are self-employed any expense that is deemed reasonable and ordinary reduce your taxable income and can lower your taxes. Common deductions include home office and internet, software and equipment as well as travel and meals if used for business purposes. Print out this deductions cheat sheet and review your recent bank statements so you don’t miss out any tax savings.
Task #3: Make a plan for filing
If you are a sole proprietor or LLC, you will file a Schedule C on your personal tax return that includes your self-employed income and expenses. Being prepared to file come tax time in April means having kept a good record of your income, expenses, and quarterly payments throughout the year. If you wish to retain a CPA, you’ll want to do that before the start of the year as the good ones book up fast and most won’t take on new clients between January and April.
Need a simple spreadsheet for tracking your income and expenses? Try this free bookkeeping Google Sheet out.
Hot take: You might have seen the headlines about the IRS getting an increased budget for enforcement and collection. What this could mean for you as a solopreneur is an increased chance of being audited and penalized for any tax mistakes, even inadvertent ones. There’s never been a more important time to get your house in order!
Move 4: Invest in Future You
Our final power move in this series is to learn how setting aside money for retirement (AKA future you) can grow your profits today.
A true profit-first strategy includes investing in your future, because contributing to retirement accounts is the ultimate profit-increasing hack for the short AND long term. In the short term, you can get a tax credit for your contribution, keeping more money in your pocket this year. In the long term, compounding interest can turn your thousands into millions.
As a solopreneur, you get to take ownership of a lot of awesome things in your life: how you spend your time, who you work with, who you’re accountable to. As your own employer, though, you also have to make your own retirement plan.
This is a step that’s often overlooked or pushed aside, but there’s a few really good reasons for solopreneurs not to ignore saving for retirement. Of course, there’s the obvious: your future self will thank you when those contributions in the thousands compound into millions!
But did you know that self-employed retirement plans actually offer some pretty magical tax write-offs? By contributing $10,000 to a special retirement account called a SEP-IRA, you could save $3,000 in taxes next April. That’s basically the government paying you $3,000 to put money into retirement.
Here's how you can take action right now towards increasing your profits while saving for retirement:
- Calculate your eligible contribution and tax credit with the Ruby Money retirement calculator
- Open a SEP-IRA account. We have a few recommendations here.
- Contribute before the tax filing deadline.
Great work making those power moves!
You've pushed past your fear & implemented better business systems to increase your profit before the year ends.