Although I’ve had my own business for ten years, I’ve never had a good grip on keeping track of my mileage. I could never remember to write down the miles in those little booklets, and basically what I’ve done is estimate miles based on the appointments I kept in my calendar. I bet I lost out on mileage deductions over the years for all the small trips I made.

In July, I researched and decided to try Trip Cubby, an iPhone application created by App Cubby. For $4.99, it’s been well worth it!

I simply add a new trip, type in what the purpose of the trip is, my destination, the odometer reading on my car, and whether I should be paid for this trip. Once you add your first trip, your starting mileage is pre-populated in the odometer start field with the ending odometer reading from the previous trip.

At the end of every month, I email the trip information for the month to myself, and App Cubby sends me a CVS file with all my data. It’s going to make tax time infinitely easier!

App Cubby also has a syncing feature that allows your data to be saved on their servers in case your phone goes on the fritz or you want to sync the information to other phones.

I’ll still have to figure out my mileage for the first half of this year, but next year is going to be a breeze!

Do you use another type of smart phone and use a similar app to track your mileage? Let us know about it!

These posts may also inspire you:

1. Use Online Map Software to Help Track Mileage
2. Ten More Top iPhone Apps for Busy Mompreneurs for Work, Life and Play
3. Five Steps Summer Sanity: Your Systems (Part 4)

New subscribers to my newsletters receive a message from me asking them what they need help with most right now for their birth business. Sometimes there is already a blog post on Inspired Birth Pro that I can send with my reply, or it sparks an idea for a new blog post. Although I don’t always get to personally answer questions that come in, they are valuable to me because it gives me insight into what it is childbirth professionals need help with when it comes to their businesses.

Here is a a question I received about a month ago from Val Peterson of Birthday with Val:

I love being a doula!! I would have to say that the most challenging area for me with this work is the financial consistency aspect.

I have come into a much stronger comfort level when it comes to stating my fee, but I could sure use some guidance in being more organized, or a better word , systematic with financial side of things.

I used to have individuals sign my contract, and pay a retainer fee. The remainder would be due around 37 weeks of pregnancy. Now that I take more clients on, I have offered two options… either they pay half when they sign my contract, and the remainder is due at 37 weeks, or if they can afford to pay the entire fee up front, I have been offering 20% off the total fee.

Even with this system of mine, the finance part is tricky for me. Some couples say they want to use me, and then it can be real quick that they send me the payment, or sometimes dragged out….

I replied to Val and asked for some clarification on what she’s doing now, and her response was:

I typically have problems collecting the payment. I do so much work with my clients, and have not come up with a consistent method of being paid. I have great couples who typically always pay me before their births…

I need some guidance for after the first meeting, and they decide to use me as their doula, getting paid!!

Asking to be paid without feeling like you’re a collection agency can understandably make small business owners feel uncomfortable. Here was my response to Val:

What has always worked for me is that before their final prenatal visit, I’ll email them a reminder about the meeting and say something like, “Also enclosed is your final invoice. If you would like to pay via PayPal or with a credit card through Google Checkout, please let me know and I’ll send you a payment request.” At the prenatal visit I’ll also hand them a paper copy of the invoice. It’s always worked well.

Accepting credit cards can help to facilitate quicker payment. The downside of course would be the approx 4-5% credit card fees, but that is just a cost of business.

People generally expect that they will receive a bill or invoice when they receive services, so having an invoicing system is an easy way to address the issue of getting paid.

What works for you? Add a comment to share your experience!

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2. New Beginnings at Inspired Birth Pro
3. Ask Inspired Birth Pro: Is it Worth Doing Email Newsletters? It Depends.

• Books – required reading for certification, your doula library, professional development
• Educational aids for use during prenatal/postpartum
• Clothing and shoes purchased for use at births
• Business cards and stationery
• Advertising and Marketing fees
• Cell phone expenses
• Business phone line expenses
• Office supplies
• Copying services
• Meals and/or Beverages at client interviews
• Meals with professional colleagues for networking purposes
• Fees to networking events
• Food and supplies that you take to a birth
• Certifying Doula organization and other professional membership dues
• Professional publication subscriptions
• Percentage of Internet and Utility fees used in the home (I highly recommend tax advice on deducting use of your home and utitlities for business)
• Website fees – hosting, domain, online subscriptions for services tied to your website
• Fees paid to professionals for outsourced services (logo and website design, accounting, legal advice, business coaching, etc)
• Business mileage
• Interest and annual fees for business credit cards
• Bank fees for business bank account
• Software for use in business
• Parking and toll fees
• Conferences and Travel Expenses – conference fees, meals, flights, car rentals, hotel accommodations, tips, taxi fare
• Professional development training workshops – for your profession as well as courses that help you build your business
• Liability insurance

For more information from the tax man himself, visit the website for the Internal Revenue Service. They also offer a variety of opportunities to learn more about small business taxes, by DVD, streaming online video, phone/webinars and in-person classes. So, there’s really no excuse to not be more in the know about taxes for your small business. To find out more about specific business expenses, do a search on the IRS site for Publication 535 – Business Expenses.

Tracking Your Expenses

On another note, how are you tracking your expenses? Here are some tips:

• Save all your receipts. Organize them in a way that makes sense to you. Some people have an envelope for each month of the year and store receipts by month. Others may have something as simple as a basket, folder or manila envelope to save all of them for the year.
• Keep up with recording your expenses. Some business owners use a program like Quickbooks, Quicken or Microsoft Money. Others track expenses by category in a spreadsheet program like Excel. Yet others manually record their expenses in a notebook.
• For expenses such as meals and coffee, write on your receipt who you went out with and the purpose of your meeting. For example, if you had a cup of coffee at Starbucks with a potential client for an interview, write “Name of Person, Doula Interview”.
• There are all kinds of rules for deducting the use of your home for business. It’s a good idea to get professional advice about whether you should deduct these types of expenses, especially if you choose to do your own taxes. Sometimes these types of deductions can raise flags with the IRS. Your taxes may be affected if you have been deducting home use expenses and buy and sell your home within a certain time frame.
• If you are seriously building your business, you may want to consider hiring an accountant to do your taxes or get advice. They can often point out many deductions, business and otherwise, that lower your tax liability and be well worth the fees you pay to them. To find a good accountant, consult with other small business owners. If you have small business networking groups (doula or non-doula groups alike) in your area, seriously consider joining one or two to get business advice.

We’ve passed the halfway mark with the Reorganize Your Doula Business Series. I’m always curious to know how I can better help birth professionals, so please email me your thoughts and send me comments, tweets and add to the Facebook page discussions.

These posts may also inspire you:

1. The Tax Man Cometh
2. Getting Your Books Straight
3. Is This a Business or a Hobby?

Image by Dave Dugdale via Flickr

Do you know where the money from your business is coming and going? Do you have a system for keeping track of your expenses and a way to file your receipts? Keeping accurate financial records is important because it helps you to see where you are today in your business, and helps you create and move towards your future goals.  Here are some ways to help you create a basic system for organizing your records and tracking your business finances:

1. Open a business checking account. Check with some banks in your area for fee-free business checking accounts to avoid unnecessary expenses.
2. Deposit all money you earn in your business into your checking account, and pay all your bills through your checking account. If your expenses exceed your income, deposit money from your personal bank account into your business account and track it as a loan to your business.
3. Apply for a business credit card, or get a business check card through your bank’s checking account so you can make online purchases.
4. As much as possible, keep your business purchases separate from your personal purchases.
5. Maintain a file or create an envelope system for your business receipts.
6. Create an invoicing (when you create a bill to collect money) or sales receipt (when a client has already paid you) system to help track your income. Some business owners create a template in a Microsoft Word or Excel. When you create an invoice or sales receipt, print a copy to keep in with your client’s records. Depending on your income tracking system, you may want to print another copy and store all your sales for the year in a folder, binder or envelope.

How should you track your income and expenses?

I personally like Quickbooks because:

1. You can easily create invoices and sales receipts
2. You can input bills that need to be paid later, which can be handy for those who buy and sell products
3. You can easily run sales tax reports
4. Tracking expenses is a cinch, and they can be linked to your checking account, cash account and credit card very easily
5. You can run financial reports very easily
6. Reconciling accounts is an easy task, and if your bank and credit card company have online banking services, you can download transactions and reconcile your accounts quickly and efficiently.
7. If you have an accountant, you can give a copy of your file to your accountant at tax time and it will be easy for him or her to do analyze and fix your books

The downside of Quickbooks is that there is a learning curve. It’s not as simple as Quicken, because the program is based on double-entry accounting. However, there are great tutorials, books and training classes you can take to learn Quickbooks, and once you get the hang of it, it’s fairly easy. You may also need to upgrade every few years because Intuit, the company that makes Quickbooks, doesn’t support older versions. There are several editions for Quickbooks, so you should look at the different types to see which one would work best for you.

Another option is to use Quicken’s Home and Business Program. This may work well for those who use their personal accounts to pay for business expenses or if you want to be able to track both your personal and business finances in one program. I honestly don’t have much experience with the Home and Business software, though I use Quicken for my personal finances and it is different from Quickbooks.

A third option is to track your expenses using a spreadsheet program like Excel. This can be a great option for those who really don’t have many expenses and sales. I’d suggest creating one workbook with 12 worksheets for each month of the year. An additional worksheet can be created to create a profit and loss statement, where you’d use formulas to add up the totals for each month. If you’re really spreadsheet savvy, I’m sure there are ways to link an invoicing system through Excel to automatically enter your income into your tracking spreadsheet.

And of course, another option is to use good old paper and pencil and manually track your income and expenses. You could use a double entry accounting book or simply a spiral notebook.

Depending on the complexity of your practice, it’s up to you whether you hire a bookkeeper or accountant to help you with your income taxes. You may want to consider consulting one as you start your business or if you are changing your business model or adding a new service or product. If you decide to use Quickbooks, you may want to get some help from an experienced accountant or bookkeeper who can help you get your Chart of Accounts set up. Your Chart of Accounts is a listing of all your expenses, bank and credit accounts, and types of income. Someone trained in Quickbooks can help you to properly set up this list so you start off on the right foot. Otherwise, it may take some time if changes to the chart and adjustments need to be made.

Inspired? Share with us how you keep your books straight, and what you might do today to get a bit more organized with your business accounting.

These posts may also inspire you:

1. The Tax Man Cometh
2. Business Expenses and Taxable Deductions
3. Is This a Business or a Hobby?

For the first five years, my doula business finances were a mess! I was getting plenty of births, but I had no idea if I was making a profit, how much, and when it came to the end of the year, figuring out my expenses for tax time was just awful!

And then I stumbled on a product that has solved all most of my accounting problems. It’s called the “File-it!” calendar, and I’ve used it for the last five years with great success.

This calendar hangs on the wall – essential to not getting buried in mounds of stuff on my desk – and I use it to record the places I go and the mileage. I do NOT use it for appointments I’ve not attended yet, or for non-business related stuff. I just record trips after the fact.

Each month of the year is printed on a file folder sized pocket. I put all the receipts for business related expenses in this pocket. When I deposit a check from a client, I write the client’s name on the bank receipt and it goes in the calendar, too. If a non-business related receipt ends up in there, no big deal. Again, it’s on the wall, so I never have to go looking for the place where the receipts go.

At the end of each month, I tear off the file folder pocket for that month. I go through my purse looking for more receipts. (Bonus! Purse gets cleaned out once a month, too!) I enter all the miles, deposits and receipts on the computer. After I’ve entered in the miles, I figured out the dollar deduction for those miles (using the current IRS formula –for 2010 it is 50 cents per mile for business trips) and reimburse myself for those, too. I personally use an Excel spreadsheet with different tabs for income, expenses and miles driven, but you could easily use Quickbooks, MS Money, or another program for this.

And to motivate myself to actually DO this every month, all monies I get for my doula work go into a separate bank account for my business. At the end of the month, I write myself two checks: One reimbursing myself for expenses paid, and one paying myself any profit I can withdraw at that point. Can’t get the money into the non-business account without doing the accounting!

When I am done, the file folder pocket goes into a drawer in my desk. At the end of the year, I bind a year’s worth together with a rubber band and move it to a filing cabinet for more long-term storage. This has been amazingly helpful for me. Just having it on the wall as opposed to in a drawer or shoebox makes it always easily accessible. I’m not promising myself to write everything down as it happens – because I know myself and I won’t do that! Forcing myself to balance the accounts once a month helps me to keep my finger on how well my business is doing financially and how much money I have to spend on things like conferences, books, etc. And I spend a lot less time trying to figure out what the receipts mean, as I can more easily remember a transaction from February 12 on March 1 than at tax time the next year!

I don’t have any connection at all to this calendar company, but I have found this calendar to be so helpful to me in keeping a simple, doable accounting process for my business. Now that I know better how much I make and where the money is going, I am better able to find ways to do things I love, like attending big conferences every year, while still making a profit.

I hope this tip is helpful to Inspired Birth Pro’s readers!

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Andrea Lythgoe is a DONA-certified doula, hospital-based Lamaze childbirth educator, and instructor at the Midwives College of Utah. She is the author of the website UnderstandingResearch.com where she aims to help those just beginning to read research to understand the language of research. When not doing birth work, she enjoys learning photography and watching her three daughters perform in plays.

These posts may also inspire you:

1. Business Expenses and Taxable Deductions
2. Getting Your Books Straight
3. Use Online Map Software to Help Track Mileage

Simply plug in your start and end destinations into an online map program, map it out and print it. Write down the date, where you went and the purpose of your trip on the sheet. The total miles is your one way trip mileage. Multiply that by 2 and that’s your round trip mileage. If you went to several destinations, map the distance for each one.

After you return home, you can file the sheet away until tax time. You can keep an ongoing spreadsheet or manual log for the year, or just file the sheets away and total up the miles at the end of the year.

If I’m working with a client, I’ll usually print out the map when I first start working with her and keep it in her file until we’re done working with each other. Sometimes, if I go to one location frequently, I’ll keep a log of places I go to often with the total miles and just enter that into my spreadsheet instead of printing out a new map every time I go there. I’ve also just kept track of my appointments in my calendar and when I have time I’ll figure out my mileage based on those appointments.

If you work with an accountant, you should verify that he/she is okay with you tracking your mileage this way. If you’re diligent about writing down your start and end odometer readings with every trip, I commend you for it!

These posts may also inspire you:

1. Mileage Tracker for iPhone Users: Trip Cubby
2. Ten More Top iPhone Apps for Busy Mompreneurs for Work, Life and Play
3. Product Review: File-It Calendar by Andrea Lythgoe

I thought I’d share a list of deductible expenses today for your business. It’s by no means comprehensive, but maybe there are some items that you haven’t thought of:

• Books – required reading for certification, your lending library, professional development
• Educational aids for use during prenatal/postpartum
• Clothing and shoes purchased for use at births
• Business cards and stationery
• Advertising and Marketing fees
• Cell phone expenses
• Business phone line expenses
• Office supplies
• Copying services
• Meals and/or Beverages at client interviews
• Meals with professional colleagues for networking purposes
• Fees to networking events
• Food and supplies that you take to a birth
• Certifying organization and other professional membership dues
• Professional publication subscriptions
• Percentage of Internet and Utility fees used in the home (I highly recommend tax advice on deducting use of your home and utitlities for business)
• Website fees – hosting, domain, online subscriptions for services tied to your website
• Fees paid to professionals for outsourced services (logo and website design, accounting, legal advice, business coaching, etc)
• Business mileage
• Interest and annual fees for business credit cards
• Bank fees for business bank account
• Software for use in business
• Parking and toll fees
• Conferences and Travel Expenses – conference fees, meals, flights, car rentals, hotel accommodations, tips, taxi fare
• Professional development training workshops – for your profession as well as courses that help you build your business
• Liability insurance

For more information from the tax man himself, visit the website for the Internal Revenue Service. They also offer a variety of opportunities to learn more about small business taxes, by DVD, streaming online video, phone/webinars and in-person classes. So, there’s really no excuse to not be more in the know about taxes for your small business. To find out more about specific business expenses, do a search on the IRS site for Publication 535 – Business Expenses.

I hope this will help you get organized for your taxes in this final quarter of the year. If you notice that I’ve missed some expenses, please add a comment below so we can all benefit! Okay, now I’ve got to get back to doing MY taxes.

These posts may also inspire you:

1. Business Expenses and Taxable Deductions
2. Getting Your Books Straight
3. Is This a Business or a Hobby?

Just visit the IRS website here and you will see the heading “Small Business/Self-Employed Virtual Small Business Workshop”.

Classes are about 30 minutes in length. The instructors discuss a variety of topics and also reference the Publications you can refer to for more information, which is also available on their website. If you have more questions you want answered, there are phone numbers available on the website and you can speak to an IRS employee. Whenever I’ve called in, the employees have always been very helpful.

Now is a great time to find out what you need as you get ready for the end of the year!

These posts may also inspire you:

1. The Tax Man Cometh
2. Life After Training – Part 3: Learn about Business Ownership
3. Looking Back At Small Business – What Did I Learn?

If you’re not certain about the differences, Nolo has a great article about determining whether you have a business or a “hobby business”. The reason you want to know the difference is so you can properly record your losses against your taxable income on your federal income tax returns. The IRS wants to see that a business is making a profit for at least 3 of the last 5 years. If you don’t, that may raise a flag and you may get audited. You will need to prove that you are making an effort to run a profitable business.

If you know you want to create a bonafide business, here are ways that can prove this intention to the IRS in the case of an audit:

• You have business cards and marketing materials
• You have a bank account just for your business
• You are advertising your business
• You maintain current business permits and licenses
• You are keeping accurate records of your income and expenses

Regardless of how you claim your income and losses on your federal tax return, you still need to check with your local and state government agencies to see what the requirements are for you to run your doula practice. You may need a business permit, and if you sell products along with your services, you may need to obtain a seller’s permit and pay sales taxes. To see what is required in your state, refer to this website for links to your the appropriate government agencies in your state.

After visiting the sites referred to in this article, if you still have questions about the legal requirements for your business, please make a point to get your questions answered. An excellent resource to use is the Small Business Administration, which offers services to small businesses through Small Business Development Centers, Women’s Business Centers and SCORE. Follow this link to find a local office near you. You may also want to talk to an accountant to get an opinion based on your financial situation.

Tomorrow we’ll take a look at liability insurance for your doula business.

These posts may also inspire you:

1. Tips to Diversify Your Birth Business
2. Increasing Your Earning Potential, Part 1 of 3: Diversification, by Leanne Palmerston
3. Getting Your Books Straight