Majority of Small Businesses Unprepared for Cash Crisis

A couple months ago, I had the opportunity to write for Chase News & Stories about a new study from the JPMorgan Chase Institute that analyzed data from nearly 600,000 small businesses and found that only about half of small businesses maintain a cash buffer large enough to support 27 days of typical cash outflows.


Image: Jeff Weese via pexels

I had a tight deadline for this piece, and I needed to find a small business owner willing to discuss cash flow – not exactly a topic that many small business owners want to publicly admit they struggle with. Fortunately, I have a connection to Neva Peterson of Neva Knows Business, a bookkeeping and consulting business in Las Vegas, Nevada.


I’ve been friends with Neva’s daughter, Jennifer since junior high school, so she was willing to open up about her experiences starting her own small business and dealing with cash flow while growing her business and hiring employees. Her thoughts are not only insightful but pretty entertaining!

You can check out the piece here.

2017 Goals and a Recap of 2016

I’m a die-hard fanatic of New Year’s Resolutions. As I mentioned earlier, there’s just something about a new year, a fresh start, a blank page, that gets me excited to start thinking big.


Image: via pexels

I started my freelance writing business in October of 2015 and became a Forbes contributor in December of that year. (You can find out more about how I made that leap so quickly here.)

This time last year, I was fired up about my writing business. I had three regular clients in addition to Forbes, and I’d grossed $425 from my writing in December. My goals for 2016 included making $4,000 per month from my writing and cutting down to half time at the CPA firm.

I’m happy to report that I blew those goals out of the water.

2016 Goal #1 – Make $4,000 per month from my writing

My writing income grew steadily in 2016. I kept my head above water during tax season, bringing on a couple new writing clients even as I was working 60+ hours per week. I had my first $4,000+ month in May of 2016, and I started bringing in at least $4,000 per month every month starting in July. December of 2016 was my best month yet. I collected more than $10,000 from my writing alone.

2016 Goal #2 – Cut my hours to 1/2 time

In August, I quit my job at the CPA firm. I loved my job, I worked with some amazing people and had clients that I really enjoyed, but the hours and stress of tax season just weren’t working for me anymore.

In early April, I was so stressed that I broke out in hives on my face and my hair started falling out. I don’t know about you, but that was a wake-up call to me. This kind of stress was not good for my health (physically or emotionally) or my family. At the end of April, I talked to my boss about cutting back to 3/4 time. She was fine with that schedule outside of tax season but needed me to commit to at least 60 hours a week from February through April 15th.

My new schedule was much more tenable – mornings weren’t so rushed, and I had more time and energy to come home from work and unwind before cooking dinner. But to be honest, my heart was not in it anymore. I was much more excited about writing than I was about mentoring newer staff and I was already dreading the loss of work/life balance that would come next busy season.

In July, I came across a job post for a technical and content writing position with a consulting company focused on CPA firms. It seemed like an ideal fit. I applied, interviewed, and was offered a full-time position, working remotely from a home office.

BUT. . .

Accepting that job meant my son would remain in daycare full-time, and I would not have the time to continue to pursue and expand my freelance writing business. I was so tempted to just accept the position to get out of public accounting, but I knew this was a great company that cared about their people. I didn’t want to accept an offer from them, just to quit a few months or years down the road because I wanted to be my own boss. With a major lump in my stomach, I called them to say I was turning the job down, but if they ever needed a freelancer, please keep me in mind.

The next day I received a call telling me they’d thought it over and whether I worked as an employee or a freelancer, I was the right person for the job. They wanted to bring me on as a regular freelancer, working up to 20 hours a week.

That opportunity was enough regular income for me to leave my job. I put in my notice in July and began full-time freelancing from home in August. I could not be happier with my decision. My business has grown steadily, I am excited to get up and get to work, and I almost always take Fridays off to spend time with my 4-year-old son.

So, what’s next?

2017 Goals

#1 – Make $75,000 from my writing

I made $10K from writing in December of 2016 so you may be wondering why I’m not setting a goal to make $120,000 in 2017. Well, December was not a typical month. I wrote an e-book for a client that brought in more than $3,400. And while I would love to do that every month, that’s probably not going to happen.

To bring in $75K in 2017, I will need to make $6,250 per month. That is a much more attainable goal for me right now, especially because I still value the work/life balance I’ve gained in the last few months. But hey, if I make six figures this year, I certainly won’t complain!

#2 – Max out HSA and IRA contributions

At my old job, I had access to a 401(k) with profit-sharing and my employer contributed $600 per year to a Health Saving Account. Now that I am self-employed, I am on my own for health insurance and retirement planning.

To reach this goal, I need to contribute $283 per month to my HSA and $458 per month to my IRA. I am putting the HSA contributions on auto-pilot. I plan on funding the IRA with contributions here and there throughout the year when I have a good month.

In both cases, if I come up a little short at the end of the year, I have until April 15, 2018, to make contributions that I can deduct on my 2017 tax return.

#3 – Post regularly on this blog

I neglected writing for my own site for most of the last half of 2016. In 2017, I plan on getting into a more consistent posting schedule.

So those are my business goals for 2017. I am really excited to grow my writing business and set myself up for personal and professional success in the coming year.

How about you? Are you a goal setter? What are your goals for 2017?


Get Ready to Issue 1099s

If there’s one thing I see freelancers let fall through the cracks, it’s issuing 1099s. In the past, many people were lax about issuing them. After all, the IRS rarely, if ever, penalized taxpayers for sending them in late.

Well, it looks like those days are over. Keep reading for why this matters so much now, and tips to ensure smoother, speedier filing of 1099s in 2017.

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Penalties doubled last year

Thanks to the Trade Preferences Extension Act of 2015, there is a substantial increase in failure-to-file and late filing penalties for 1099s filed after December 31, 2015, effectively doubling the amounts.

A “failure” may include failing to file the forms by the due date, failing to furnish a copy of the form to the recipient, failing to provide all required information and failing to provide correct information. The Act increased the penalty for general failures from $100 to $250 per return and raised the annual cap on penalties from $1,500,000 to $3,000,000.

Anyone who intentionally disregards filing requirements will see penalties increase from $250 to $500 per return with no annual cap.

 The increased penalties apply to both the copy filed with the IRS and the copy filed with the payee, so the penalties essentially total $500 per form with an annual cap of $6,000,000 for general failures. For intentional failures, combined penalties are $1,000 per form with no cap.

Deadline moved up in 2017

The Consolidated Appropriations Act of 2016 also moved the deadline for filing Form 1099-MISC to January 31 if you are reporting amounts in Box 7: Nonemployee Compensation. Tha majority of 1099-MISC filers report information in Box 7.

If you aren’t reporting amounts in Box 7, then the deadline remains February 28 for paper filing or March 31 for electronic filing.


Who needs to file Form 1099?

If you are engaged in a trade or business and made payments for services, non-employee compensation, rent, real estate sales or prizes or $600 or more during the year, you are required to issue a 1099 to the recipient.

Before you shrug and think that doesn’t apply to you, consider:

  • Did you outsource the design of your website?
  • Did you hire a virtual assistant?
  • Did you hire a lawyer to help with setting up your business structure or reviewing a contract?
  • Do you work with other independent contractors?

If you paid $600 or more to any of these people, you might need to issue a 1099.

You don’t need to send a 1099 to corporations or for payments of rent to real estate agents. There is one catch, though: even if your lawyer is incorporated, you are still required to send them a Form 1099 if you paid them more than $600. I guess the IRS doesn’t trust lawyers!

You also don’t need to send 1099s to sellers of merchandise.

What you can do now

To make complying with deadlines and avoiding penalties easier, ask all new vendors and contractors for a Form W-9 before issuing any payments. The information provided on Form W-9 is used to prepare 1099s, so gathering that information before issuing any payments will ensure you’re not scrambling for addresses and social security numbers with the deadline looming.

Next, Use the IRS’ Taxpayer Identification Number (TIN) Matching Program to ensure that the TIN provided on the Form W-9 is correct. If a discrepancy is found, contact the contractor immediately to resolve the issue. For program guidelines, see IRS Publication 2108-A.
Finally, forget paper filing those forms. The simplest – and cheapest – option I’ve found for filing 1099s comes from Yearli by Greatland. You can stay compliant for just $4.99 per 1099. Yearli will e-file state and federal 1099s, mail a copy to the recipient and save all of your data from year to year, saving you time in the future.
Use my referral code to get 15% off your filing! All you have to do is enter promo code U72 when you file your forms to receive the discount. (Note: This post is in no way sponsored by Yearli, but if you use my promo code, I receive a $10 Amazon gift card. So thank you!)