Guide · 6 min read
You sell expertise, not hours of admin. Here's the lightest bookkeeping setup that still keeps your CPA happy and your taxes minimized.
Free business checking + a business credit card. Every client deposit lands in the checking account; every expense goes on the card. Pay the card from the business account monthly.
Retainers on the 1st of the month. Project work invoiced 50% on signing, 50% on delivery. Net-15 terms (not Net-30) — you'll get paid 2 weeks faster on average.
Travel, software bought for a client, and subcontractor passthrough should be billed as separate line items and recorded as wash transactions. Never bury them in fee revenue.
Move 30% of net income to a tax savings account. Once you're consistently profitable, open a SEP-IRA or Solo 401(k) — you can shelter up to ~$66k of income from current-year tax.
Retainers, reimbursables, and quarterly taxes — handled in 15 minutes a week.
Start freeSole prop at the start. Once you're consistently above $30–40k/yr, an LLC adds liability separation. Above ~$60k net, an S-Corp election can save thousands in self-employment tax — but adds payroll and stricter bookkeeping. Talk to a CPA before electing.
Retainers smooth cash flow and reduce admin — invoice on the 1st of every month for the same amount, regardless of hours used. Per-project is cleaner for short engagements but creates lumpy income. Most experienced consultants run retainers for 60–80% of revenue.
Home office. If you have a dedicated room used only for client work, you can deduct a percentage of rent/mortgage interest, utilities, and internet. Most consultants qualify but never claim it because the form looks intimidating — the simplified $5/sqft method takes 60 seconds.
Bill them as a separate line on the invoice, marked 'reimbursable'. Record the expense AND the reimbursement so they wash out — don't just record the reimbursement as income. Many consultants overpay tax for years by not tracking this correctly.
Yes — for two reasons. (1) You'll learn your effective hourly rate per client and spot the ones to drop. (2) If a client pushes scope, you have data to renegotiate. Toggl or Harvest is enough; don't overthink it.