Should you hire an Accountant? YES.

When I started my business "officially" in 2005 I was lucky enough to already have a family Accounting Firm in place. Well, not really my family, but my husband's family. They'd been using this firm for 20+ years for their own business and were kind enough to have them take care of our tax needs as well. I thought, "GREAT!" That's one thing we don't have to worry about. I kept my own books to make things easier on the Accountants, and I'll admit I find it sort of fun to keep my own books. I use Quickbooks, should any of you be wondering, and after the initial setup (chart of accounts, invoices, etc.) it was pretty easy to manage. I like knowing exactly how much money I've got coming in and going out, and I'm able to track each month and each year, and compare it with previous years. At the end of each year I know approximately how much I grossed and how much I netted, so typically there are no surprises when the Accountants come back with the final numbers.

Everything sounds perfect, right? Well... not really. Nearly every year since I started my business we've had some kind of surprise at tax time. I've tried talking to the Accountants a few times over the years and never got much response, if any, and too many times there's been stress and wonder. Worst of all, I kept thinking it was my fault. Sure, I've made a few mistakes over the years to which I've corrected and become more aware of what I should and shouldn't be doing... but to have something new come up every year which means more money out of pocket, well, that's not right.

It was thanks to another member of my husband's family who called me to tell me they'd be dropping the "family" Accountant, that my eyes were opened. Apparently they'd been having many of the same issues we had. And most of all I just never felt comfortable with them. I couldn't call and ask for advise, and not knowing how much they charged the "family", I didn't want to risk creating undo expenses. So, it was time to start looking around for a new Accountant. Someone I could talk to, get tax advise from, and who would hopefully clean up and fix any mistakes that had been made in years past.

Holy shit have I learned a lot these past few weeks. I decided to interview a few different Accountants here in town and all three asked me the same question, "Why are you operating as a Sole Proprietor?"

That's a great question, but not for someone who doesn't know the answer. As a freelancer and (very) small business, my question back to them was "Why shouldn't I be?". Apparently, as a small business, once you reach a certain level of income there are some big tax advantages to becoming what's called and S-Corporation. Huh? Let's break it down a bit.

Sole Proprietor
Starting a business as a Sole Proprietor is pretty easy. Just file a DBA (Doing Business As), grab a Federal Tax ID number (also known as an EIN Number) and you're pretty much in business. Just remember that as a Sole Proprietor you will pay (as of right now) 15.3% of your income (after deductions) in taxes. So if you have a taxable income of $50,000 per year, you'll pay $7,650 in taxes. Also, should you ever get sued for any reason, your business is YOU. Meaning, your personal property can be seized to pay off a business debt. This is putting it in simple terms, but you get the idea.

S Corporation
Now I'm not a tax professional, and should you need any tax advise (blah blah blah) don't come to me and don't take anything I'm saying here as tax advise. Every business is different and your situation may differ greatly from mine. Now that I have that out of the way, here's my understanding of the differences in an S Corporation. First off, legally, as an S Corp, the business is liable in itself for any debt and I, as an individual, am no longer personally liable. Meaning if something happens or if someone sues the corporation, they can't seize my personal assets - only those of the corporation. Pretty cool.

Next, and this is the better part, the S Corporation would pay me a "Fair Salary" to which I would pay my normal taxes as usual, and anything earned beyond that salary would be considered profit... meaning it's taxed differently (far less). I'm not gonna get into all the terminology because I still don't even understand it all, but of course that's why I (now) have a new Accountant.

So let's use the previous example of a $50,000 a year income (this is just a round figure for easy math) and we'll say you live in Lafayette, Louisiana. As a Graphic Designer in the town of Lafayette, Louisiana, the median salary is approximately $38,000 per year. The city or town you live in may be higher or lower, but we'll use this as an example for now. That means your S Corporation will pay you a monthly salary of about $3,167, and you'll pay taxes on that salary, equaling about $5,814 per year. The rest of that money is paid out as ordinary income (also known as profit sharing) and not subject to the same taxes (they're only subject to the shareholder's income tax rate), which in Louisiana is somewhere between 2% and 6%. If we round it out to 4%, then you'd only have to pay an additional $480 on the $12,000 in profit.

Confused yet? Well, here's the bottom line: With a $50,000 per year income, as a Sole Proprietor you'd pay a total of $7,650 in taxes. As an S Corporation you'd pay a total of $6,294, saving you $1,356 in taxes to Uncle Sam. Maybe not too much of a difference now, but as your business grows and you make more money, the savings can become substantial. This is something my former Accounting firm neglected to tell me, and makes me all the happier that I've fired them and hired someone new.

So, if you're in business for yourself, and you think you're doing fairly well... I might advise that you talk to an Accountant and just have them look at your company. You might be surprised at some of the things you've been doing wrong, and some of the things you've been doing right. Most Accountants will give you a free consultation and I'm here to tell you that for me, hiring a professional that is easy to talk to and appears to know what they're doing is by and far worth the money you pay them. I was also very surprised at how little the Accountant I hired charges. Funny things you find out when you actually look for them.

Office Redesign - Conclusion (for now, wink wink)

Ready for the master reveal? Those of you who've been following my path to a better home office have seen some of the before pictures and progress along the way, but now I'm happy to say that the new office is 95% complete (still need to make a few tweaks, but they're mostly cosmetic) and more importantly I'm SO MUCH HAPPIER with the finished space! Before moving on, here's the "before" office after I painted my wall:

You can see I had a fairly small amount of actual desk space. My chair, although nice to look at, was so uncomfortable that I kept it loaded with blankets. My desk was overflowing with paperwork and I had no space to spread out or do sketches (those were sometimes done at the kitchen table or after a reasonable shoving-aside of desk top items).

So as a re-cap, I decided to custom-build my desk (with the help of my dear husband). After all, purchasing a desk that I felt would be an adequate size was definitely not in the budget (we're talking thousands of dollars here), but for @$300 I could have a desktop that would rival that of any corporate executive. And here's the final product of that vision!

Now you can't tell me that's not simply glorious! Let me explain some of what's going on here. First, we have the desktop: made of three pine base "modular" pieces, measured to fit two standard-sized metal file cabinets in each as well as support the desktop. The actual desktop is made of Oak veneer over plywood, edged with oak trim and has no less than 7 coats of polyurethane encompassing the entire top. This was done to give it a maximum finish and prevent any problems should something spill. It's a breeze to clean as well, with such a smooth finish.

Underneath the desktop you'll see my uber-thriftiness at work with 5 file cabinets I hunted down and purchased from the local Goodwill and thrift shops. To bring some color into my office and keep things organized, I picked up any old file cabinets I could find, a few cans of spray paint, checked my bagua map (feng shui - I'll go into that a bit more later) and painted away. I LOVE how they turned out! Okay, so I skipped the wood one and I know more than one of you will point that out, but I didn't mind the wood so much and wasn't sure how the paint would do coating it, so give me a break there. But I think these are WAY better than the dingy old gray and beige these cabinets originated in. Plus I know that all my backup files are stored in the green cabinet, current files are in yellow, business files are in red, etc. Easy to remember when you color code (at least for me!). And of course I couldn't forget my best friend in this venture, so I left space and got a new bed for my little girl Tullia. This little Schnauzer can't be more than a few feet away from me at any given time, so now instead of sitting on my feet or getting rolled over by my chair, she has a lovely little spot of her own.

I've mentioned Feng Shui in this and previous posts. For those of you who aren't familiar with it, Feng Shui is the art of organizing your environment for better health, success, etc. It involves placing certain types of items and colors in certain areas based on direction, as well as harmonizing your life by removing clutter. If you've never tried it, I highly recommend it. Not only is it fun to have a sort of "guide" on how you should design your room or space, but it really gives you that excuse to finally clean out the clutter that's gathered in the dark corners. I guarantee you'll feel good once it's done.

So my first step with the office was to get out my bagua map. This is a map that tells you where certain items should be located in order to maximize your goals. Since I'm a graphic designer, I created a little layout of my office and superimposed my bagua map over it, so I could move and place things in advance and know exactly where everything should be. It didn't all turn out exactly as I show on the map, but it really did serve as a fundamental guide and ultimately made the moving-in process much faster. You'll see my map displayed to the right. Since it might be too small to see I'll break it down for you. From left to right, top to bottom, the nine squared colors represent Wealth & Prosperity (red/blue/purple), Fame & Reputation (FIRE elements, red), Love & Marriage (pink/red/white), Health & Family (WOOD elements, blue/green), Center (Chi, EARTH elements, yellow), Children & Creativity (WIND elements, pastel colors), Wisdom & Knowledge (black/blue/green), Career (WATER elements, black/blue/brown) and Helpful People & Travel (white/gray/black).

You can see now why I chose certain colors for my file cabinets... red/purple in the wealth section, pastel green and blue in my creativity and children section, etc. I probably should have painted my yellow cabinet pink or white in order to align with the map more accurately, but hey, we're not all perfect and I really like yellow! I did place all of my plants on top of a wooden chest firmly in the "WOOD" area (Health & Family), I'm still on the lookout for a mirror for my Career section and of course my main working area is smack-dab in the Fame and Reputation area. After all, a business is nothing without a good reputation, right? I have a couple of candles spread around in the Fire section, and since I'm not a fan of the color pink I thought a nice compromise would be to add a pink African Violet to my Love & Marriage area (that way I only have to see pink when it blooms). It is a lovely plant though and a nice balance for my deskspace.

Last, I replaced my chair. Comfort when you're sitting for 5 or more hours per day is an absolute must, and thanks to a good friend of mine I was pointed toward the chair you see here. As it so happens the chair was on sale and a coupon code saved me even more, otherwise the chair could likely have cost me more than the desk. But it was well worth the investment and let me tell you I couldn't be happier with it! I've only had it for a few days (hence the delay in getting this article written -- I wanted to get the chair before posting this), but it's heaven on my back and shoulders. I still have blankets around my desk, but now they're actually used for warmth instead of back and tushy adjustments. I did design my desk to sit about an inch-and-a-half lower than my old one and now I can actually rest my feet on the floor. I swear desks were not built for short or even average-height women.

If you have it in your head to build yourself a better workspace, PLEASE do it! My "Chi" flows better, I'm much more organized, I have space to spread out and my office actually feels more like an office instead of just a place I put my desk. It helps creativity, it helps workflow, and it just makes me feel more satisfied when I'm forced to be in it for the majority of my day. I hope your new space does the same for you.