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 owner’s wallet.
Let’s get into today’s issue.
The Brief
What’s happening and what it means for your business
- Our news: Collective announced $100M in financing.
- The Big Idea: How to think about funding your business when you’re the only employee.
- Ask the Accountant: Does it matter whether you borrow in your name or your business’s?
- Around the web: You get to be a hero for the day.
The Big Idea
Fundraising as a Solo: Funding Growth Without a Cap Table
We recently announced $100M in financing for Collective and welcomed new investors. You can learn more in our press release, but the announcement got us thinking about funding, and how differently it works when you’re a business of one.
Most fundraising advice assumes you’re building a startup: pitch decks, investors, a cap table. If you’re a solo, the question looks different. It’s less “how do I raise a round?” and more “how much capital does my business truly need, and what’s the cheapest way to get it?” Funding doesn’t have to mean giving up a piece of your business.
For most solos, the options fall into a few buckets. Self-funding means paying for growth out of your own revenue, which keeps you in full control but can be slow. Debt, like a business line of credit or a small business loan, gives you cash now in exchange for repayment with interest. Non-dilutive financing is any funding you don’t pay back with ownership, so you keep 100% of your company. And equity means selling a share of your business, which may not fit a one-person business but is worth understanding.
Whichever route you’re considering, a few moves make it easier. Keep your books current, because lenders and investors want to see your numbers. Keep business and personal money separate. Build a cash cushion before you need it, since it’s far easier to get funding when you don’t urgently need it. And before you take on debt, run the monthly payment against your slowest month of revenue, not your best one.
Ask the Accountant
Q: I’m thinking about taking out a loan to grow my business. Does it matter whether I borrow in my name or the business’s?
A: It can. What matters most is how the money gets used. Interest on money you borrow for business purposes is generally deductible as a business expense, while interest on personal borrowing generally isn’t. The cleanest way to keep that paper trail is to run the loan through your business bank account and spend it on documented business costs.
A few other things to know. Loan proceeds aren’t taxable income, and repaying the principal isn’t deductible, only the interest is. And if you’re a sole proprietor or single-member LLC, many lenders will ask for a personal guarantee, which means your personal assets could be on the line even if the loan is in the business’s name.
Before you sign anything, talk to your accountant about how the loan fits into your overall tax picture.
Around the Web
Your next read: Get the full details on Collective’s $100M financing and what’s next.
Tool we’re testing: Kit (formerly ConvertKit) helps you build an email list and send newsletters, so you can stay in touch with past clients and bring in new ones through an audience you own.
Your next event: Year end is just around the corner. Let’s chat through savvy tax moves to make before the clock strikes midnight on New Year’s Eve.
Member Spotlight
Jasz Rae Joseph, Founder Jasz Rae Digital
Jasz Rae Joseph spent years at top agencies and kept seeing the same problem. Clients were buying tools and tactics, but their CRMs were full of cold data and their content wasn’t bringing in the right people. In 2021 she founded Jasz Rae Digital to help boutique agencies and B2B companies connect visibility with systems that drive revenue.
Jasz built her business around time freedom and travel instead of billable hours. She priced her services so she could hire early, and she grew mostly through referrals and relationships rather than traditional sales tactics. Her advice for fellow solos: put revenue first from day one, and build systems that keep working while you’re away.
Hear Jasz’s full story on Off the Books
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We started Business-of-One because the financial side of self-employment is complicated and most of the advice out there is written for companies with finance teams, not for people running the whole operation themselves. We’re here to change that. Want the biweekly goodness in your inbox or know a solopreneur that needs to read it? Share the love.
