292 - Categorizing Your P&L Income with Kelsey Christine of Launch Your Daydream

On today’s episode of the podcast I review the profit & loss statement of Launch Your Daydream with Kelsey Christine and discuss her transition from solopreneur to partnership and back.  Kelsey started Launch Your Daydream in 2017 with a business partner (spoiler alert, it’s not a partnership anymore). Kelsey teamed up with Britt at the time because they found their audiences needed the services the other one was offering. After a year of working together, they decided to merge their businesses and launched Launch Your Daydream in 2017 before ever even meeting in person. They ran it successfully as a partnership for five years and decided to amicably split this past year and now Kelsey runs the business by herself. Launch Your Daydream focuses on creating websites on Showit for photographers by offering template customization, something that fits Kelsey very well as someone who believes in niching down. She collaborates with Showit template designers in an affiliate capacity, averaging around $12.50 in commission from each sale.  Kelsey uses third party Bench Accounting for accounting and tax filing after previously using Quickbooks. Looking at 2023, through June 20th, YTD revenue is $32,000 causing Kelsey a bit of panic. Typically summer is slow, but Kelsey has found it all to be slow this year, possibly due to fear of a recession, and finds that end of Q4/early Q1 is usually her busiest time. A lot of Kelsey’s clients are in the wedding industry and with wedding inquiries being down, she finds that her inquiries are down in response. Compared to this time in previous years, Kelsey typically expects her revenue to be at around $50,000. With Britt, she was hitting revenue of about $100,000 in a year with a revenue goal for 2022 of $120,000. While there was some expected drop off by no longer being a partnership, Kelsey said that even during the partnership the two were doing the bare minimum in the marketing department.  Diving into the P&L,  Total operating expenses: $12,350 
Net profit: $19,500
Turning this into a pie chart, Kelsey would be roughly ⅔ profit and ⅓ expenses. While not focused specifically on profit, Kelsey does focus on the goal of making sure there’s enough in the business account to pay herself $1,750 every two weeks. While revenue has gone down, $1,750 is still an increase from when Kelsey and Britt were on payroll at $1,500 each. There used to be a larger buffer in the business account to help cover these payments but after giving Britt a payout when she left and taxes not going well in 2022, it’s gotten to a scarier place.  Kelsey had issues with her taxes last year because she did not pay taxes on her income from her side cat sitting job. This is why it’s important to pay quarterly taxes on all income that does not have taxes withheld.  Professional service expenses: $4,000   These fees include bookkeeping and tax prep services and outsourced projects to Britt. I typically recommend professional services remain just lawyers and accountants and then everything else goes in independent contractor expenses. I recommend to my students to separate contractors by people who are doing work on the business and people who are doing work in the business.  Marketing and advertising: $3,600 includes Kelsey’s rebrand of photography
Bank and ATM fees: $135
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