Your Paparazzi business is just that, YOUR BUSINESS. Now that you are a business owner, it is extremely important that you responsibly manage the financial aspects of your business. One of the most basic principles is to track how much money you are making with your business.
Expenses are costs incurred in running your business. Examples of expenses are costs of inventory, shipping costs, packaging materials, advertising, business use of our cell phone, etc. It is very important that you keep your business expenses separate from your personal expenses. I recommend that you open up a separate checking account at your local bank or credit union specifically for your business. All income you receive should go into that account and all expenses you incur should come out of that account.
Revenue is money you receive from your business. The most common form of revenue is from your Paparazzi sales. Once you have a team, you might also receive revenue in the form of commission payments from Paparazzi.
The amount of money your business makes is called your PROFIT. Profit is determined by subtracting the EXPENSES your business incurred from your business REVENUE.
Profit = Revenue - Expenses
In simple terms, you will pay taxes on the profit your business generates. It is important to accurately track your revenue and expenses and determine your profit. Many consultants choose to calculate profit monthly.
To help in tracking revenue, expenses and profit, I have created a very simple spreadsheet. You are free to view the sheet and save a copy for your personal use.
Please refer to a professional accountant or tax advisor for questions regarding taxes and other requirements in your specific situation and state. This article and sheet do not represent business or tax advice and are for information purposes only.