133: Mastering Financial Systems for Small Business Success (Why it’s Essential to Master This Type of System to Impact Your Taxes!) with Heather Leicy

 Dolly DeLong: Hello, and welcome to another Systems and Workflow Magic podcast episode. I am your systems and workflow BFF and guide, Dolly DeLong. Today, I am thrilled to share a real-life friend with you. I have Heather Lisey on the podcast today, and Heather and I met in real life at the creative educator conference in January 2024. I think she might not believe this, but I think we hit it off and

Heather Licey: Oh.

Dolly DeLong: We had known each other online. It’s commonplace for many business owners to meet online through Instagram. Still, it just hits differently when you meet a person in real life, and then you realize they’re not only a good Instagram person but also an excellent real-life person. So this is Heather for you.

Here are all the things I love about Heather: She loves Jesus, her husband, her daughter, and survivors. You all know I love a good episode. She’s passionate about her business, so she’s perfect about serving her clients. So that’s my version of her bio, but here’s her official professional bio.

Heather is an ice cream-loving wedding and senior photographer from Lancaster, Pennsylvania, who finally took the leap and went full-time in her business in 2022. She loves serving photographers who want to find clarity. They also need financial confidence in their business numbers and to create systems that work for them so that they can spend more time with family and friends.

So, the confetti and her extraordinary personality are constantly popping around her. It’s true. You all, it’s true. She’s a very joyful woman. So when she’s not freaking out behind the camera, you can find her snuggling her puppies. She is a baby girl who just turned one and is working on a house project or finding ways to date her husband, which I respect so much continually.

She also loves ice cream, like Heather loves a good scoop. So Heather, welcome to the podcast.

Heather Licey: Thank you for having me, and also for your intro and the one that I wrote, which were very close to each other, so that at least I’m giving off the feel that I want to give off.

Dolly DeLong: We’re giving off this and, like, when you. Meet a person you’ve been following on Instagram. The vibes they give off on Instagram don’t match who they are in person; you 100 percent match what you give off. So I want you to know you’re the real deal.

Heather Licey: Oh, thank you. So that everyone knows, I message Dolly every time for survivor updates on who she likes and what she thinks about the last episode. She’s my girl, and I have to message her all the time now.

Dolly DeLong: One day. Did we talk about this? Do you want to be a survivor?

Heather Licey: I don’t, but Joel does, and he’s like trying to hit it that he’s there, I think for the 50th one is like the next big one that’s coming up, and he’s trying to like to start applying so that he can make it on that episode, which I don’t even know if you can want to decide that, but he’s determined to be on there.

hahaha

Dolly DeLong: for him. I’ll be rooting for him from the comfort of I’d like to think that I would be perfect on Survivor, but let’s be honest, you all, like, I love my comfort, I love, I love food, I love, I would just be voting myself off. I’d be like, I’m hungry, vote me off.

Heather Licey: This, what? Last season, two people voted themselves off, and I’m like, you can’t do that! You’re not allowed to do that! I would never show. I wouldn’t say I like r, that andn’t surf there. But, those people that voted themselves off, I’m like, what? Some so many people try to be on, and you vote yourself off.

Uh, 

Dolly DeLong: do admit, I was like, you guys are so weak, 

like, you guys, but then I was like, Dolly, if you were in that situation, you’d be like, please, just somebody vote me off, please.

Heather Licey: I do everything poorly, and then they’ll get voted off.

Dolly DeLong: Yeah, I have to vote me off, so. All right, we got off the track with Survivor because of me; I’m sorry, but Heather, so whenever you did your official pitch to be on the podcast, I was like, immediately yes, I was so excited to learn more about the financial side of your business, like, could someone To be sincere, like, I didn’t know that this was your area of expertise.

I was just like, Oh, she’s a perfect wedding photographer. She’s an outstanding educator for other photographers. I had no idea that this was a side of your business. So, I, I was, Immediate. Yes, because of your personality, but also immediate. Yes. I know that there are a lot of business owners who listen to this podcast, and there is a constant struggle to develop a system for the numbers behind their business, shame behind numbers, and also just how to start operating, just like how to run their business with a good money mindset.

Because there’s this fear, underlying fear all the time. So, your coming on is perfect in so many ways because I know this will air after tax season. And listeners are like, Dolly, I thought you said this was perfect timing. It is perfect timing because I want listeners, including myself, to do this. I like to have an ideal system and awareness of how we work.

Operate our business with our money year round, not just a scramble, like during tax season. Because I will share this, I shared with Heather that there’s always this ick in the pit of my stomach around March or April of every year. Yes. I set it up like I pay my taxes. I sometimes spend more than I need to.

I feel like. Cause I’m afraid of going to jail. I pay for everything, yet there’s this fear at the back of my mind that I’m not doing enough. I’m not doing it like the government will throw a curve ball at me. And they’re going to be like, you owe this much, but really like, there’s nothing to be afraid of if you set up.

Systems for yourself. You’re fine. But I want to take the ick out of our stomachs and collectively breathe a sigh of relief because Heather is going to be sharing a, maybe, weekly and monthly rhythm that we can set up for ourselves as solo business owners. Wemay not have an accountant or a bookkeeper quite yet. Hence, I need to set these up.

Rhythms can help us efficiently operate the back end of our business. Heather, I’m excited to chat about that.

Heather Licey: I, I can’t wait. I like to say that, and I know everyone is like, what? Why is she so excited? Somehow, I’m in a creative world and love spreadsheets and numbers. So I, I’m all about this. But before I jump in, I will review a weekly rhythm and some monthly and quarterly things you can do.

But first, I want to put out a disclaimer because it’s so important to know that every state is different. There are general rules, but every state and accountant differs in how they file their taxes. And so make sure that you take this rhythm, but then also communicate with them and see what’s best for them as well, because we want you to save money not only in the time that you spend but also when you’re having your accountant file your taxes, like, save time on not having them have to do more work than they need to do.

But also, because then you’re just going to be paying more. So, talk with them and see what rhythm works best so they can get the needed numbers. This is a perfect way to get you started, and it’s just a rhythm to follow and speak with them. So, I’m Just putting that out there to start.

And then let’s jump in. So we’re going to do weekly rhythm first. And so I have four things to do in a week. And I always suggest starting it on either the first day of the week or the last day. So Monday or Friday, it’s just a nice little bookend to your week. And so the first thing to do. Hass to do with your income. And so, to ensure you track all of the income you’re making in your business, if you have a CRM, it’ll do it for you, which is so lovely. But if not, it can be a simple spreadsheet where you’re just writing down who you got it from, what it was for, and how much it was.

So whatever that system looks like for you, go ahead and get that started. But the big thing for income is that you want to ensure you’re delegating some of the money every time something hits your bank account. That is to ensure that you’re just setting yourself up successfully to pay any bills you have.

So, the first bucket you want to set money aside for is your taxes, a big topic of discussion today. That is 25 to 30 percent of your income. Each time it comes in that pays for your yearly and sales taxes; it just covers you overall. The next bucket will be 30 percent for business expenses.

Let’s give you some money back so that you can keep growing your business. Having new equipment or education to give back and grow your business constantly is important. That last little bucket is for your future. So the first two are present, what you need to be paying now, setting yourself up financially well in the present, and then the last one is in the future, and that’s for your retirement savings.

So I recommend about 8 to 13 percent into retirement, which can be an IRA or a savings account. But just so that you’re already putting money aside and it’s happening right when it hits your account, you don’t think about it. And then you don’t have to believe in three years; crap, I haven’t set anything aside.

I have no money building on itself because money for retirement is all about compounding it. So, even if you put in a little bit, it will compound and pay off. So. That’s income, and that’s the big thing you want to do for that first spoke of your weekly rhythm.

All right, number two is your independent contractors. And for business owners and photographers, it could be like your second shoot if you’re just a business owner and have a virtual assistant. Those are those independent contractors. This can be a straightforward spreadsheet where you write down whoever your independent contractors are in one column.

The next column will be a total and a tally of the money you paid them. So, throughout the year, anytime you pay them something that week, go into the spreadsheet and add that number. The last column is straightforward. It’s a yes or no. If you pay them more than 600 in a year, you will want to change that column to a yes because that’s when you want to spend or make sure you’re filing 1099 so they can correctly file that income on their taxes.

So, yes, no is all you have to do right now. Don’t even think about anything else until the end of the year. It’s just a straightforward spreadsheet with three columns for that one.

Dolly DeLong: That’s good. I’ve never done that. You gave me a light bulb moment because I’ve never done that. There’s this one hair and makeup artist that I consistently work with, and I know she gets paid as I pay her more than 600 per year. And so that’s so good. Katie Edge, if you’re listening, show the edge. She’s the best hair and makeup artist, and you are too. We need to set this up for you. 

Okay. Thank you for that reminder.

Heather Licey: Super easy because, like, later at the end of the year, when you’re trying to figure it out, you must go through all the checks you paid or wherever your invoices are. So, do this right away. Top of mind. Easy. It takes you about a minute to do. All right, the next one for weekly is your expenses.

This is where you want to ensure you’re gathering and keeping your receipts in one place. Suppose they’re physical receipts, maybe in a filing cabinet at your house. If they’re online, you can keep them in a folder in your email. Or, if you have QuickBooks, you can easily link it to the expenses.

Then, the big one under the expense category or spoke is making sure you’re categorizing your expenses. F or taxes, you can get deductions on how much you owe based on tax write-offs, which are the business expenses you paid throughout the year. And there’s like 15 to 20 common categories that fall under those different expenses, and if you start categorizing them as they happen week by week, at the end of the year, all you have to do is grab the totals for each category instead of going through all of your receipts trying to figure out was this business, was this personal, what did I pay for this, what did I get at Target.

How about this Amazon expense? Don’t save it. Do it right away instead of saving it for later because it’s at the top of your mind, and you can easily do it. I like to say that these four spokes for weekly rhythm can be done in five to ten minutes instead of later on at the end of the year; it’s going to take you hours to try and remember what you did in April, March, May, and who knows what.

Dolly DeLong: Let’s go over number four to ensure you are keeping track of mileage.

Heather Licey: awesome. All right, so the fourth spoke is mileage, and that is just making sure that you’re filing those miles weekly under either personal or business, which can be done in two ways. There are two main ways. The first one’s pen and paper. That’s a little more work for you because every time you get into your car, you’ll need to mark down if it’s business or personal and then write down your odometer when you start and get home.

But there are apps out there like MileIQ that you can use. You can easily record in the background of your phone and have it track it. Then, all you have to do is swipe left or right and say if it’s business or personal. It makes it super easy. And it’s an excellent way to do that right away at the beginning of the week.

Just go through the ones you did in the previous week and have that done. Then, at the end of the year, it will create a spreadsheet for you and let you know your totals for both of those—personal and business—and your total overall. So you don’t even have to think about it. Those four things probably, as I mentioned, take five to ten minutes each week.

It’s straightforward, not too hard, to add to your week’s rhythmically DeLong: Perfect. 

Heather Licey: And then, going on to the next thing, the quarterly or monthly tasks you want to pay attention to. The first one, hopefully, you could check this one off. It ensures you’re catching up on anything you haven’t done during that weekly rhythm. So, if you just had an off week and forgot to track your mileage swipe, which way is it supposed to go?

Go ahead and do that and make sure that your month before is all taken care of before it comes out of your mind and you can’t remember what you were doing on that day. The next and last thing you want to ensure you’re doing monthly or quarterly is paying your sales tax. This is different for every state. Some states charge for just services. In some states, you charge for your products. Some of them are both. Each state also has a different percentage that you have to charge. So, check with your accountant to know how much you should charge. But then, once you get that all set up, make sure you’re charging your clients because if not, the government will still charge you for it, and they’ll take it out of the income you made.

So the simple process is that you charge sales tax for what you’re supposed to on every invoice, either monthly or quarterly, depending on how much income you make throughout the year. You’ll need to figure out your net taxable amount and how much tax you’ve been collecting that sales tax 

And then, you’ll go through your state’s website and make sure that payment is made. So it’s a straightforward process, especially if you have a CRM because you can run a report to get that sales tax and those numbers. All you have to do is plug them into your website and make the payment.

So that is the hefty monthly or quarterly task you must do. Lastly, those annual tasks wrap everything up. It will grab the totals you have from all the numbers you’ve been doing weekly. Collecting those 1099s for all of those independent contractors that you needed to pay more than 600, getting any of your numbers and papers that you’ve been, that have been mailed to you, make sure you’re gathering all of them, and then submit them to your accountant.

So, instead of spending nights or hours at the end of the year trying to get your taxes in order, it should only take one to three hours to gather those numbers and file your stuff for your tax accountant.

Dolly DeLong: Can I ask you a question?

Heather Licey: Heck yeah.

Dolly DeLong: I want to know, well, this. I should have asked you this initially, but what interested you in your business’s numbers? You are a wedding photographer, and that’s very like using both sides of your brain.

Heather Licey: Yeah, I, that’s a great question. I’ve always been a numbers person, and math was my favorite subject in school. And I just always loved spreadsheets. When I started this business, like just being able to track anything and everything, it felt good to know where I was in my business at all times.

And so it never was a guessing game to be like, okay, am I making enough? Am I charging enough? I just, okay. I look, look at the spreadsheet. That makes sense to me: create a spreadsheet, and then you figure it out. So it started with that. And then, I’ll first say that taxes were not my favorite thing to do in my first business, like a couple of years ago.

I was the person who had my dinner table covered in receipts. I waited until the end of the year because I didn’t know better. But I think it was just through that and then trying to figure out a better way. So I wasn’t doing that. Then, that love of spreadsheets came in, and it grew to the point that I now like to research tech stuff. Can I find another way to save money in my business?

Dolly DeLong: I love that so much. And talk to us about pitfalls other creative business owners make, like not setting up systems for themselves regarding money. Why should they incorporate a weekly, quarterly, monthly, or yearly rhythm?

Heather Licey: so I have two. One big thing I see is that they don’t pay sales tax. They don’t know about it because they don’t have that rhythm set up,p and it just gets farther and farther, and like once if you don’t put it you,p That is not a good thing, but like, then you’re not thinking about it, which then when you do set it up, you have to go back and pay for those years that you didn’t pay for.

So when someone thinks about it, like, Oh, I’m not paying it. Like they’re never going to catch me. But when you finally do. Please do what you’re supposed to do and set up your SA. Pay less tax and pay it. They’ll try to figure out how much you owed previously. So that’s like considerable thing number one. The second thing is that people miss out on write-offs that they could have in their business.

So they’re paying more taxes than they need to without even knowing it. They forgot where that receipt went, they forgot that they made that purchase, or they wrote it down under the wrong category, which didn’t get them as much as they could have. So there are just little ways that they could have saved even more and gotten maybe a return that they didn’t know, and then they paid instead.

Dolly DeLong: Wow, Heather, you have; give us a perfect system, not only for weekly rhythm but quarterly, and make it look like I would let me back up and say quarterly. Weekly, monthly, and quarterly.

There we go. I find my words. Thank you for sharing those systems with us. You gave us an excellent little master class, and I want to ask how people can connect with you. Find you work with you even if they don’t, let’s say, need a wedding photographer. Well, then, what is another way that people can work with you?

Heather Licey: So, you can find me on Instagram at Heather dot Marie dot Licey, but then also outside of that, you can go to my website, heather ml photo.com, and I help photographers with these Taxings. I have spreadsheets you can use to help you set up yourself. It’s specifically for those expenses and all of those categories that you can use for write-offs.

It walks you through where they are and then helps you categorize and organize them throughout the year so that you’re not waiting until the end of the year. But then there are other ways that you can connect with me through that. Um, I love doing work. Um, if you are struggling with those types of things like spreadsheets and workflows and don’t love those number sides of things in your business, that is something that I can help you set up to make it easier for you on the back end.

Dolly DeLong: That’s wonderful. And I will do a plugin, like make you do a plugin. Talk to us about this little thing called Conquer Live because I know Heather. You are one of the founders. I don’t even know what to call you. The co-founder, Wow.

Heather Licey: We are co-hosts. So I don’t know; I guess it is co-founders, too. But yes, I co-hosted Conquer Live and the Conquer community with Jamie. It is for photographers in their first one to three years of business. And it’s enjoyable to focus on the business side of your business. So, instead of shooting and learning how to use a camera, it’s how to set yourself up on the backend to provide the best experience for those clients and save time just by spending more time outside your business.

But it’ll be running for you. So, we do weekly or biweekly chats that people can join for free. We also have Conquer Live once a year, where you can do an intimate retreat with educators. It’s a two-to-one ratio, and it’s just this big, huge, fun community gathering where we help grow your business one-on-one.

Yes,

Dolly DeLong: It is an intimate gathering, and I’ve heard from many people who have participated as participants or educators that it’s one of the best conferences out there. So, I will be sure to link that in the show notes.

So, if you are a photographer in the first one to three years of your business, please check out the Conquer Retreat. Heather also gives you a p u. I know that you have a aini course coming out. Is it a course I’m butchering all the terms, and that’s why I want you to give it to correct me? Is it a course about how to, essentially, like?

This conversation about finances and your photography business is continuing. Can you tell us more about that?

Heather Licey:  the segues, Dolly. Yes. So, in 2024, a tax course will be coming out, and it will be created for you. If you were at square one, you just started your business and aren’t sure about taxes and what that means as a small business owner. It’s going to walk you through the terminology, the rhythms to do, and all of the forms that you need to know about as a small business owner so that you can do your taxes and file them correctly and not have to worry about it and make it a stressful thing in your business.

Dolly DeLong: That’s so good. And it’s, what is this, especially for business owners who are wearing all the hats in their

Heather Licey: Yes. Yes. Yep. It’ll be set up to incorporate an accountant, but it’s before you have a bookkeeper. So, when you’re starting and have to do everything on your own, that’ll be the course for you to make it manageable.

Dolly DeLong: O, man. Where were you in my life? 2018, Heather.

Heather Licey: I need to know where I was in my own life when I started, 

Dolly DeLong: I? 2018. But that. That has been such an answer in my life because when you begin your business, you want to do everything right. And, but then, at the same time, you freak yourself out about everything. And so this is, I, listeners, please don’t walk, run to, to let all of this information from Heather.

I will be sure to put all the correct links in the show notes so that you are connected with Heather, whether it be Facebook. For conquer the retreat, conquer live, or this fantastic tax course coming up, and you all taxes can be like, don’t, don’t make it so boring for yourself. It is an essential foundation for your business, and it sets you up for success and sets you apart as a business owner.

And Heather is a great person to learn from. And then I will have you do one more plugin for yourself because I want everybody to fall in love with you even more. Talk about your YouTube channel. I know you give excellent education for free on YouTube. So, talk about your channel a little bit.

Heather Licey: Yes, I also have a YouTube channel, the scoop and ice

cream reference, everyone. It’s a YouTube channel all about managing and understanding your taxes and business. Systems And it’s a little like said bits, five to 10-minute videos of one thing you can set up for yourself.

For those taxes, so that you’re not trying to scramble and figure it out on your own. Just grab one of those most helpful videos; you can set yourself up f you piece them all together,

Dolly DeLong: But why would somebody piece it all together? Just go and learn from Heather. You all watch the video and then go and buy Heather’s course. And I get nothing from saying that. I like genuinely believe, like, if you want to learn from a rassionate and, Competent educator because there’s so many people that claim to know a lot about taxes, Still, you just you’re like, Oh, I don’t know if I would learn from that person. It would be best to learn from Heather because she will be your friend. She wants to encourage everyone she meets.

I am one of Heather’s biggest cheerleaders. You all should know this, Sande. I will cheer her on. Again, thank you so much, Heather, for coming on and sharing your tax systems with us. I know that’s something that not many people want to discuss because it’s not the sexy part of business, but it is an essential part of business.

I hope this has helped shift your mindset regarding those numbers behind your business. Thank you again, Heather, for Sharing so much with us. For those of you who are listening, don’t forget that all of the links mentioned by Heather and me will be in the podcast show notes and the corresponding blog posts.

So you don’t have any excuse. There are links. Grab those links. So, until then, have a streamlined and magical week. You excelleare nt, Michael. Next week, you and I will catch you on new systems and workflow-related podcast episodes.