Cheque yourself

I’ve heard it said that people can tolerate ongoing volatility in one place only: their your personal finances, or their design business finances.

A certain amount of volatility in the latter seems unavoidable to me, and not necessarily a bad thing, so that leaves the former: predictability in your personal finances.

For most of us, that probably means a design business behaving more like a reliable job we had in the past, that paid on a predictable schedule.

If you’re running a small—or even solo—type design business, and not already doing it, I think a predictable payroll system (or a payment system that like it) is worth considering.

This approach doesn’t make sense for type design practices of all sizes. If you feel fairly established, however, and pay yourself intermittently based on what’s going on in your business, it might be worth talking to your accountant about whether you should consider setting up a payroll system for yourself.

Figuring out a base salary that you feel comfortable won’t be a problem when you run payroll every month or every other month—which might mean it is a decent amount lower than the amounts you transfer yourself manually now—is one way to help build a buffer in your business accounts, and give you more predictability in your personal finances.

In my first year of business, I attempted to “simulate” the predictability of payroll. It worked—to a point. I only managed to create short-term predictability. Once the time came to hand everything off to my accountant for my year end, I’d nervously wait to hear if my understanding of what I was supposed to do was correct, or if I’d miscalculated my entire year.

Even if I had done everything correctly, the potential that I’d done it wrong bothered me, and I’d end up researching things in the tax code I don’t really need to know—a completely avoidable distraction from what my business is actually supposed to be doing.

I have learned it is much better to pay a small “predictability” fee to a payroll provider, and have everything else calculated and remitted automatically.

It certainly doesn’t remove all accounting surprises—no one is expecting that—but I do get to choose where the surprises live.

Until next time,
Kenneth