You’re reading Business-of-One, the bi-weekly briefing for solo business owners pulling double duty as their own CFO.
Every issue takes what’s moving in the economy and connects it to what it means for a one-person business.
This issue lands right before Halloween, so we’re keeping one eye on the scary stuff. Don’t worry, the only thing haunting you today is your expense report.
Let’s get into today’s issue.
The Brief
What’s happening and what it means for your business
- On the calendar: Halloween is Saturday, and the tax year has about ten weeks left. Both are sneaking up on you.
- The Big Idea: How to find the hidden costs haunting your business when you’re the only one watching the books.
- Ask the Accountant: Can you deduct your Halloween candy, decorations, and costumes?
- Around the Web: These entrepreneur stories are every founder’s nightmare.
The Big Idea
Vampire Costs: Finding the Expenses Quietly Draining Your Business
Halloween is the one time of year we enjoy being scared. In your business, the scariest things are often the ones you can’t see. We mean the small, recurring costs that slip out of your account month after month and never get a second look.
When you’re a team of one, nobody else is reviewing the books. That makes it easy for a few kinds of vampire costs to take hold. Zombie subscriptions are software and tools you stopped using but never canceled. Ghost invoices are money clients owe you that you’ve quietly stopped chasing. Creeping fees are the bank, payment processor, and platform charges that nudge up over time. And surprise taxes are the bill you didn’t set money aside for, which tends to show up right when cash is tight.
The fix isn’t complicated. It just needs a little light. Once a quarter, pull up your last three months of bank and card statements and flag every recurring charge. Ask of each one, “did I use this” and “did it earn its keep?” Cancel what fails the test, and downgrade what you only half use. Then sort your unpaid invoices by age and follow up on anything past due before it goes cold.
Next, deal with taxes before they deal with you. If you make quarterly estimated payments, the final one for the year is due in mid-January, and the best protection is a steady set-aside. Move a fixed percentage of every payment you receive into a separate account the day it arrives, so the tax bill never feels like a jump scare. Your accountant can help you pick the right percentage.
Do this once and you’ll likely find money you didn’t know you had. Do it every quarter and the vampires stay out of your accounts for good.
Ask the Accountant
Q: I’m hosting a Halloween pop-up for my clients this year. Can I deduct the candy, decorations, and costumes?
A: Possibly, for some of it. The test is whether the expense is ordinary and necessary for your business. Candy and decorations for a genuine business event, like a client open house or a promotion open to the public, are generally treated as business expenses, often under advertising or promotion. Costumes are trickier. Clothing is typically only deductible if it’s required for work and not suitable for everyday wear, so a costume you could wear to a party is likely out, while a branded mascot outfit used only for marketing may qualify.
There are a few other things to keep in mind too. Handing out candy to trick-or-treaters at your own front door is a personal activity, so that spending generally isn’t deductible. If you give actual gifts to specific clients, the deduction is limited to $25 per person per year. And keep your receipts along with a note on the business purpose, since that paper trail is what protects the deduction.
As always, talk to your accountant about your situation before you count on a deduction.
Around the Web
It was a dark and stormy night: Sleep with a nightlight tonight. These entrepreneur tales are terrifying.
Your next listen: We talked to Mari who admitted she’d hustled for years to land her dream role, then hated it.
Your Halloween inspiration: Halloween spending is expected to rise 3.82%, so if you’ve been debating launching a spooky season special, here’s your sign to go for it.
Member Spotlight
Mariana Serrano, The Cadence of Social Impact
Mari Serrano spent years working her way up to a leadership role at a $50 million nonprofit, then realized within weeks that it wasn’t the right fit. After a LinkedIn message led to a coffee chat with a stranger, she left her job four months later with no business plan and launched The Cadence of Social Impact.
Mari credits word of mouth and strong relationships for her growth, and Collective for keeping her bookkeeping and tax questions off her plate so she can focus on the work. Her advice for fellow solos: practice random kindness, starting with yourself, and get curious about your fear instead of ignoring it.
Hear Mari’s full story on Off the Books.
