Do you love income reports? I know I do! A few of my favorites include Kristin’s Believe in a Budget, Kayla Sloan’s, and Michelle’s Making Sense of Cents. I love income reports that give me true income plus expenses – what does it really cost to be a blogger and virtual assistant? And what can you make?
I tried sharing my income reports a while ago (July 2015 to be exact, which you can read here), but I stopped because I realized I wasn’t sharing how I got to that income, since I wanted to be anonymous. Well, I’m past that now – after all, how is anyone going to know that working for themselves is possible if they don’t know the good (profit), bad (expenses) and ugly (taxes)?
I know it’s almost time to do a Quarter 2 earnings update, so I’m a little late getting Q1 up, but I have exciting news – as of March, I became a full time writer, editor and Pinterest VA! Yup, I no longer work a typical 9-to-5 – and it’s been amazing.
More about my transition to come, but I really want to show you how my first year of business is going. Technically since I started full time in March, January and February shouldn’t really count, but since they fall under quarter 1, I’ll count them anyway 🙂
What is Quarter One (Q1) and Why Are You Calling It That?
For now, I’m going to give you updates on my first year in business by quarter. Doing a monthly income report is challenging given my busy schedule, but since I have to do taxes every quarter, I’m already adding up my expenses and calculating taxes at least once every 3 months 🙂
In the United States, self-employed people (like Uber drivers, virtual assistants, Etsy shop owners, etc.) should file quarterly estimated taxes 4 times a year:
- April 15 (for January, February, and March)
- June 15 (for April, May and June)
- September 15 (for July, August, September)
- December 15 (for October, November, and December)
While you don’t have to, if you make a profit and don’t pay quarterly taxes throughout the year, you can be hit with a big tax bill in April and you could even be hit with underpayment penalties. It’s not pretty, and now that I work for myself, I’m definitely paying quarterly. To me, I’d rather get a little something back at tax time than owe a ton of money!
My Q1 Income Report
Hey, that rhymes! Okay, fun aside, my quarter one income wasn’t bad for only working part-time 2 out of the 3 months.
January 2017: $1,090
February 2017: $1,158
March 2017 (my first full month of freelancing): $2,164
If I made the same amount per month, I’d make roughly under $20,000 my first year. That’s fine, but not great for surviving. Phoenix is a cheap city to live in, but not that cheap, especially with student loan debt! Luckily since March, my numbers have looked much more like March 2017 instead of January 2017 🙂
My Q1 Expenses
Expenses were tough the first three months! I had to figure out health insurance, increase my home internet speeds, install a land line (because apparently we get terrible cell service in the sixth largest city in the country… but I digress), and upgraded my phone to handle more client projects on the go.
Through January – March 2017, my expenses totaled: $1,975, roughly around $600 per month
Since I did have a lot of one-off expenses in the first quarter, I’m not going to list expenses out right now, but expect to see them in the future!
My biggest expense by far was health care, at least for January through March. I’ll do another post on health care soon, because health care for healthy, young people is actually still annoyingly and prohibitively expensive, so I had to get creative. It was exciting…
Remember above how I mentioned if you don’t pay estimated quarterly taxes when you’re self-employed, you could be hit with a big tax bill? Yeah, that happened to me.
Despite withholding more from my previous 9-to-5 job, I apparently didn’t hold back enough – and neither did my husband after we got married.
Want to know how much I paid in taxes (so far) in 2017? Brace yourself:
Yeah. And we weren’t even hit with an underpayment penalty, which is weird (but awesome. Please don’t take any more money from me, IRS).
It turns out you should save about 20-30% of your business profits for the IRS, which I just didn’t really fully believe… until it happened to me. It was a sad day for me, let me tell you.
In my next income update, the Q2 report (out soon!), I’ll let you know what I paid in taxes based off the income I made from April – June 2017. I’m reserving 25% of my profits per month just to be sure, and I also use a handy bookkeeping program (GoDaddy Bookkeeping, which I’ll review soon!) to help me estimate and pay my taxes.
I learned a few things in this Q1 income report, and I hope you’re able to take a few things away too!
- I love working from home. The flexibility has been incredible
- I’m almost making as much per month as I was at my old job
- Always reserve at least 20% of your profits for taxes or else you’ll be sad
In my next life update, I’ll let you know how I’m making money online and what it took for me to make the leap to full time employment. Curious? I know I always am! Stick around for more, and let me know if you have any questions about my Q1 earnings and life update!