SPI 053 : What They Didn’t Tell Me Before I Started My Online Business

The Smart Passive Income Podcast Logo

In this session of The Smart Passive Income Podcast, I talk about several things that I wish I knew about before starting my online business and working on my own. If I could go back in time and tell myself these things, I would have been much better off.

When I was laid off in 2008 and started working for myself, I didn’t know what to expect. I was sort of forced to figure things out on my own as they were happening, which means I was stressed out and clueless much of the time.

Whether you are thinking about starting your own online business or have one already, there are definitely some valuable lessons to be learned here and I’m hoping this podcast session will, at the very least, get you ready for what’s to come or help you figure things out that you may already be struggling with.

In this session, you’ll find out:

  • A special announcement about the SPI Podcast!
  • The one thing that separates those who are successful with their business and those who are not.
  • What your job really is when you start working for yourself.
  • Who I hired to help me take loads of worry off my shoulder.
  • When you should incorporate – before or after you make money.
  • About tax stuff and some rules I have to make sure I don’t overspend.
  • A very personal story (i.e. nightmare) about healthcare coverage.
  • One thing that sucks about being an entrepreneur that works from home and what you can do to fix it.
  • Why you need a “9 to 5″ even if you’re working on your own.
  • What my daily schedule is like.
  • About the “Crab Bucket” and how to beat it.

Right click here to download the MP3

Items mentioned in this podcast include:

Note: some of the links below are Amazon affiliate links.

Thank you all for checking out this session of the SPI podcast, and finally, if you haven’t done so already please take 1 minute and leave a quick rating and review of the show on iTunes by clicking on the link below! It would be extremely helpful for the show!

Thanks again, and all the best!

Cheers! :)

Transcript

Click Here to Download the Transcript for Session 53 (PDF)

  • http://contentmarketingup.com Michael Chibuzor

    I can’t wait to listen to this podcast Pat. I know one thing though – starting a business can come with BIG surprises. At some points when my business was just kicking off, I didn’t consider accounting as a vital element.

    But I do now. I’m going to listen to this, and as usual, pick up gems to expand my content marketing business.

    BTW: Your email on “starting a newsletter” was great – I was actually searching for that information last night. If you’ve some time, please check this out: http://contentmarketingup.com/niche-domination-guide/

    • http://www.shuckabuck.com Eric @ ShuckaBuck.com

      Really, Pat? 50% … I save 23%

      Of course, I’m not making 50k/mo, and I don’t live in CA.

      My CPA also said that it’s fine if I pay my taxes by April 15th for the previous year.

      hmmm

      • http://libeltyseo.com TomL

        This podcast is right on the money. The accounting portion of it is a headache… setting your own schedule is a must… or you will work yourself to death. I’ve burned out more times than I can remember already.

        There should be a manual about all of this handed out by the SBA for anyone even thinking of starting a real business.

        Regards,

        Tom

        • http://howtocreateawebsiteonline.com Vince @ How to Create a Website Online

          I agree with you Tom, a major headache! I can only imagine how difficult it is for Pat with all his passive income!

        • http://www.microbizaccounting.com Achabani

          Having some knowledge about accounting is very important. It is dangerous to just offload everything to your CPA or bookkeeper. If you want a brief overview of accounting and bookkeeping then I suggest you take a look at my blog.

  • http://thepursuitofhoppyness.com Tim F.

    Thanks for producing this podcast, Pat. This is the VERY important stuff that we don’t really want to think about or deal with when we’re launching our business ideas.

    It’s easy to envision everything going perfectly, but the reality is, mistakes will be made. You’re helping us make them a little bit less, and that’s good.

    You’ve walked the walk, and your wisdom is invaluable for anyone wishing to walk their own path.

  • http://snitchim.com Eric

    Thanks for offering this as a download…I start listening and got hooked. But I don’t have time to finish it all.

    The download will be a great time saver, and I can listen to it when I have time and no distractions.

    I can not wait to listen to this one all the way through though!

    Thanks again,

    Eric

  • http://www.bodybuilding-experience.com Patrick

    Hey Pat,
    i’m sitting in the university, but can’t wait to listen to this podcast. I know it will be great and even if i have my business for one year. I can learn more and more from you!
    , Pat(rick) :)

  • http://finallyourwedding.com Ryan Baker

    Hey Pat!

    So timely with this podcast. I launched my first website (thanks to you!) mainly to learn how to do it. Now I’m building my second site for my first online business. I have a feeling I’ll be referencing this podcast quite a bit!

    Looking forward to SPI Wednesdays! Happy 2013, Pat.

    -Ryan

  • http://www.orangemasala.com rahul

    thanks for sharing the downloadable link…looking forward to hear this…

  • http://languagelearningdaily.com Chino

    Finally someone decided to post about the business side of online businesses! We see a lot of people promoting so many products about blogging online but seldom do we hear about the legal issues, about actually setting up the business side of the business and all that.

    Looking forward to more podcasts for 2013! Keep it up!

  • http://www.detailedsuccess.com Kris @ Detailed Success

    Awesome podcast Pat!

    The healthcare story was crazy! And 16k for delivering a baby?! Whut the!?!
    Remind me not to move to the states.

    About loneliness, a great way to not have it is to have a ton of hobbies (I’m thinking about going to jiu-jitsu classes) Plus weekly man dates (yes I said it) with your guy friends.
    I bet there are also a ton of networking events near you each week. You should check em out.

    Schedule is king. You have to be very disciplined if you want things to work. Surprised me that you work at night. Aren’t you tired? Can you focus 100%?

    Thanks

    • http://www.passiveproductive.com Sam Matla (Passive Productive)

      I too am surprised that he can work so productively at that time of night! I find the morning is best for me.

      • http://www.detailedsuccess.com Kris @ Detailed Success

        I’m also more of a morning/day person. After 7pm my brain tends to shut off and I can’t focus as well.

        I usually do the writing and setting important things up earlier and leave the mundane tasks for later when my brain feels like pudding.

  • http://www.heartforhandmade.com Ria Montefalcon

    Hi Pat, been following you for some time. I have a blog that I “dream” to monetize in the future, need to learn how to do this through personal research, reading etc. Just wondering, are you a Filipino or half Filipino?
    Your blog is amazing and I found your site during the time when I do research on personal finance. Keep it up, youre doing a great work to share knowledge with others.

  • http://www.marykathrynjohnson.com Mary Kathryn Johnson

    Great advice, Pat!
    Be careful, however, with your tax and bookkeeping advice. A CPA is trained, tested and certified to Audit companies, and has less than half his/her training, testing and certification in Taxes. You are actually paying too much, and getting the wrong qualification if you hire a CPA and a Bookkeeper if your company does not require auditing of it’s books.

    You should hire an EA and a Bookkeeper. An EA is an Enrolled Agent who is exclusively trained, tested and certified to prepare tax returns and represent taxpayers in front of the IRS.

    Just an FYI…Keep up the great work!

    • http://www.microbizaccounting.com Achabani

      There are also a lot applications out there that can help you manage your business finances without the need to pay your CPA or bookkeeper too much. I good example is Shoeboxed.

  • http://zedblogger.com/blog Ali Zia

    Hi Pat,
    Just listened to the podcast. It was amazing_specially your daily scedule. There is something I want to share with you.
    I just wasted four months without doing any promotion for my blog. About a month ago, I read the Niche Site Duel and I was inspired to build my own audience through search engines. I took your formula (With modifications and a two months campaign to cross 20,000 visitors) and started to write articles.
    So far, I made 40 backlinks and it was amazing. Now I am in a confusion. Should I just carry on with the strategy or stop doing that and focus more on guest posting (because most of the experts say article marketing and web 2.0 Links are a waste of time in 2013).
    I am launching my eBook on 20th february (I will be coming soon to get my drink you just promised in your eBook tutorial). I need to cross that 20,000 visits/month before the book launch. If you or any other member of SPI community have a suggestion for me in this case… :)
    Just wanted to share this with you. Amazing podcast #SPI 053 (y)

  • http://7minentrepreneur.com/ Joe Cassandra

    Uh huh, I’ll be expecting “SPI in my brain” each week…love the commitment for 2013,

    I think I missed it, I’m listening to it again, but I didn’t pick up when you think we should incorporate?

    • http://valueofsimple.com/ Joel Zaslofsky

      “SPI in your brain” stuck out to me too Joe. Like Pat, I came away from New Media Expo with a dedication to release more frequent episodes of my podcast. I’d like to go to a weekly format too and I think I now have the skills and experience to make that happen.

      Even if I can’t pull off my own weekly podcasts, at least I’ll have Pat’s consistency to look forward to.

  • http://www.gospelsongwriter.com Mickey

    Thanks. BTW, what encoder do you use to post your podcast on your site?

  • http://goldandsilverpassiveincome.com Tom

    Pat,
    Loved your podcast and your goal for the year. Thx for blessing us to take the next step in our own endeavors.

    Tom

  • http://Urbaneventsaz.com marcus

    New Year, New business, good podcast to start off with to get everybody’s entreprenuer juices to flowing at the start of the year. Good podcast pick pat.

  • http://www.davidveldt.com David Veldt

    FINALLY! Pat, this is the type of information I’ve needed. Nobody wants to talk about the less glamorous side of business but it’s necessary. I’ve been looking around for info on taxes, healthcare, etc. for some time now.

    I’m pretty pumped about your announcement, your podcasts are a great escape.

    ps. Inbound.org ran their first reddit-style AMA with Rand Fishkin today, if they do more I think that would be a great venue for folks to throw some open questions at you :)

  • http://goldandsilverpassiveincome.com Tom

    Pat,
    Looking forward to the new task you laid out for the year. My goal is to take my blogs higher this year using what you laid out.

    Tom

  • http://saxophonehub.com Greger

    Hi Pat! I’m a 6 months swedish SPI fan.
    I almost freaked out when I listened to your podcast today, because just two hours before I had a long discussion with my wife about the EXACT topics you talk about in this session – Weird! The struggle of separating work time and family time, always thinking about work stuff, setting up a schedule.

    One of the reasons for getting out of the “secure job” and setting up my own business, which is both online and offline, was to be able to do things when I wanted do do them. It’s so easy to get caught up in the mentality of “oh, I’m just gonna do this thing as well, it only takes a few minutes”, and four hours later you wondered what happend to the time.

    I believe that the entrepreneurial drive that many of us have can be a beast sometimes which really needs to be tamed and controlled.

    Like you I’m a father and husband but also a working musician, web developer and business owner. In that order.

    After finding your Blog (yes, I actually found you this way) I’ve learned sooo much about business online and for that I want to thank you.

    I don’t like to waste my time so about three months ago I decided to take action on niche sites. I vaporized the google competition in a winter related niche in Sweden just in time for christmas and now I know it really works.

    Then, about two weeks ago I launched a membersite for “learning how to play the saxophone by video” and I’ve already been getting indications on the need for my site. Tip: Join related forums and give your best advice! (It wasn’t my idea, it was Pats!)

    Your tutorials on market samuraj, niche sites and link building really made my learning curve go sky high. Thank you again and I am very much looking forward to your weekly podcasts this year. To you and all SPI fans I wish nothing but success.

    • Pat Flynn

      Thanks Greger, congrats on the new membership site, and I wish you all the best as well!

  • Sonny

    HAHAHA! You said your wife isn’t into talking about your business, I hear you brother…if my business is the speeding boat, my wife is the 2 ton anchor and she’ll put a stop to it right quick. She thinks it’s a huge joke…but she’s quick to spend that Google check. That’s why my other income goes into Pay Pal…she don’t know how to use that!

    • Marlon

      Why does it seem that it was me talking? lol

  • http://www.freedigitalphotographytutorials.com Stephen @ FreeDPT

    It’s awesome that you are going to post one podcast per week! Honestly, I only listen to you randomly because I never knew when it was coming out, but now that I know it is a regular show then I will look forward to it each week :)

    I’m glad you shared how you are setting a goal for this year. I think that is one of the the most valuable things people can learn – to make goals, and track progress.

    Once I set a goal to do at least one thing per day to move my online business forward, it has started growing exponentially! That daily commitment forces me to come up with new ideas and seek ways to grow my business.

  • http://www.smartbusinessrevolution.com John Corcoran

    Hey Pat: Smart idea to double down on the podcast. The atmosphere in that podcast awards room was amazing.

    Thanks again for the awesome buffet dinner. I think I am still full. And I don’t think I can even look at another crab leg.

  • http://www.dxdigitalmarketing.com Norman Wright Jr.

    LOL… I love the crab bucket story :-)

  • http://Comingsoon! Rich Kunigisky

    Pat,
    Near the start you were talking about wearing a lot of hats and not knowing how to do all of the different jobs. The best resource I found on this is the book
    “The E-myth revisited” by Micheal Gerber. I think it will really help your listeners understand how to start a new business without creating a job for themselves that they hate and that drags on them like a ball and chain at the first sign of success. It descibes why it is so important to think about how to scale your business before it happens and put a plan in place before it’s too late and you are completely overwhelmed. Thanks for another good episode Pat!
    Rich

  • Kelley Oswalt

    Hi Pat!

    GREAT podcast. This is just the type of stuff that I’ve been looking for and so many online business peeps don’t discuss much. This is golden material, and I hope on occasion you will talk more about back-end business infrastructure lessons learned.

    One thing I didn’t get was an answer to incorporation. You glossed over that quickly, so I’d love to get your feedback about whether you would think forming and LLC should happen from the beginning of your business. Most of my research suggests doing so from the start is best for segregating personal liability.

  • http://www.militarymoneymanual.com Spencer

    Pat – you mentioned that you hoped people didn’t find the podcast boring. Let me tell you that it is INCREDIBLY useful just to hear someone talk about the nitty gritty details that go into setting up and running a business. Your recommendation for a CPA and book keeper, as well as the information on paying business taxes quarterly is immensely useful. You’re making dry material come to life by telling it through your personal story. Thanks!

  • http://www.premiumwebdesign.com Glennette Goodbread

    Great podcast! May I ask where on earth did you get health insurance for $250/mo? I’m currently getting prices and they’re at least double that!

    Glennette Goodbread, Owner
    Premium Web Design and Hosting

  • http://www.jasongracia.com Jason

    Pat,

    So many great things in this episode! Thank you for sharing and for working so hard to create one of the best sites online for growth in your business and life.

    Especially good were your tips about taxes and healthcare. That info would have come in handy when I started years ago. Taxes were a nightmare!

    A weekly podcast sounds great, get used to people wanting your photo you rock star, and loved your story about the crab.

    Good stuff!

    Jason

  • http://thelatestarter.com/ Eden

    Great idea for a post/podcast. Stuff you really don’t think about until you’re in the trenches living it! Handy to know, thanks Pat

  • http://farmmarketingsolutions.com John from FoodCyclist

    Pat,

    Again, another good podcast, and one that, as usual hits close to home. Amazed at how open you are. Let me rephrase, I’m not amazed that you in particular are so open, but just that this podcast exists in the first place.

    Was in a similar some-what spot with the health insurance, never a fun situation. My wife is due July 12th.

    Happy to hear that you’re doing it weekly. Given how many episodes you will have to publish I am really excited to see where the content goes. My vote is a goodly amount of success stories from other people who are making it. Those always gave me more of a perspective as I listened to your show.

    Keep up the good work man. Bummed that I wasn’t into your blog when I had ridden my bike to San Diego from NY City, I would have offered to buy you a beer to get you out of the house.

    Cheers,

    John

  • http://www.viamaverick.com Chris Altamirano

    “Hey uhmmm..wanna get a divorce?” haha that’s funny man, good thing she didn’t say yes! :D

    This podcast was NOT boring at all bud! I’ve always wondered about taxes, especially since you and I both live in this beautiful state of California, where the income tax is especially high.

    I was speaking to Grant Cardone, Author of the 10x Rule, and he had just moved to Florida because California’s income taxes were too high and he eventually got fed up with it and left.

    Do you think you’ll ever move out of California to keep more of your income? I’m pretty sure a lot of internet marketers establish their buildings in Nevada, rent a small office and then make that their address business. It’s a bit crafty but from what I know it works.

    If not, “just fix it later.” haha cheers bud!

    - Chris

    • Pat Flynn

      Hey Chris, a lot of people are moving out of Cali, that’s for sure, to save some money and I totally understand if that has to happen in order to survive, but I’m not going to move just because I can save some bucks. As long as I’m spending less than I earn I’m going to live exactly where I want to, which is here in San Diego where my family and I can enjoy each other and the company of our friends the most. Thanks bud!

  • http://www.sirvatka.com Cathy Sirvatka

    Awesome Pat! I’ve been working on my own for several years but not really taking the business anywhere (hardly making any money). I only recently got an accountant and became an S corporation which seems scary, but I know it will be beneficial. Great ideas about setting tax money aside in separate account and keeping on a work schedule. I work all the time (1:10am right now). Your advice on this is sound and I intend to implement! I am amazed that you will do a podcast every week! Wishing you prolific ideas.

  • http://www.squidoomaestro.com Mitja @SquidooMaestro.com

    Hi Pat! I couldn’t sleep so I checked the e-mail and there was your new podcast! Let me say that this podcast is not boring! You answered on questions I had. And your talk was helpful and funny ;) When you said: “I’ll fix it later.” it was too much hilarious :)! Health care in your country is very expensive, I can’t imagine this in our country. I’m from a little country called Slovenia (EU). I hope you’ll talk about tax in more details, because I’m also interested in this. I hope we can chat sometime and discuss about business online. Until then, all the best Pat!

    - Mitja Drame

  • http://thecollegeinvestor.com Robert Farrington

    Hey Pat! Thanks for the great podcast – I really enjoy the more nitty gritty stuff.

    I thought I’d remind you of the interview we did last year about How 5 Top Bloggers Made the Jump to Self Employment: http://thecollegeinvestor.com/3905/how-5-top-bloggers-made-the-financial-jump-to-self-employment/

    It really reminded me about what you were talking about today, and shared some similar strategies to what others have done. Thought you might find it useful to share with your readers!

  • Mike

    Hey Pat I would love to hear a podcast on copy writing and creating effective sales letter, especially for ebooks. Also looking forward to the weekly podcast episodes.

  • http://www.ronswebsite.com Ron Lum

    Great podcast Pat. I became a freelance web designer because my job opportunities were bad and my future was bleak. I want to tangent my knowledge of the web into online business. This was very useful.

    Also, regarding to people that try to bring you down: in psychology, this could be a “superiority complex.” The person either boasts himself or tears other down, to make himself look better, relatively. Interestingly enough, superiority complexes are rooted in feelings of inferiority. And as you said, these people are really not people you should socialize with.

    -RON

  • http://inmyhomeoffice.com/ Ian McConnell

    Great podcast Pat,

    I came from having brick and mortar businesses, and the biggest problem with an online business is the lack of interaction with customers.

    Offline I was talking to customers every day and each one of them helped me improve and provide a better product and service… The interaction was directly responsible for my success and I miss that interaction.

    I’ve tried online to get customers to interact, but get a very low strike rate… It’s so much harder because I don’t think people actually think you are being genuine. I might have to try something different.

    Cheers
    Ian McConnell
    Western Australia

  • http://dageniuslab.com Brian Kwong

    Pat, the topics on tax, healthcare, schedule, naysayer in this Podcast is GOLD and its not boring at all because it is exactly what all of us who are creating an online business are dealing with.

    I had been following to your blog for more than a year now but this is the first podcast that I listened to that really jumped out at me. I look forward to more of these podcast in the future!

    Brian

  • Remco

    I laughed about your ‘we’ll fix that later’ quote. My son was also born about 5-6 weeks earlier, we had insurance, but were not finished with preparing.
    We had a tough time of thinking a name, which took about 2 days ;-)

  • http://manofaction.de Tim

    Hey Pat,

    I really find so much inspiration from your site. Just a quick thank you from Germany. I’m in the very early stages of my business, but I’m super dedicated and focused on getting this stuff handled. Keep up your great work man, its an inspiration for us all!

  • http://www.takingmassiveaction.blogspot.in Aditya Jaykumar

    Hey Pat,

    Iv been waiting a long time for this podcast, really glad its here..thanks a lot!.. Well i have had a lot of learning over the last 3 months. The best part is that the learning that i do is more like an adventure, with many interesting people, techniques and skills on the way. All in all, i love Internet Marketing because it lets you use your creativity and innovation to reach your target audience who might be on the other side of the world. Right now, i am using my basic website as a platform to learn new skills and at the same time perhaps connect with like minded individuals. In fact, every time i learn about a new trend or craze, i think about how i can monetize that niche and get the long tail word as my domain..lol.. I hope you had a great time at NMX 2013…thanks once again! and have a great year ahead!

    Warm Regards,

    Aditya Jaykumar

  • http://simplydebra.com Debra

    I just finished listening to the podcast and it was really helpful. I’m still working full time, but I need to put myself on a schedule to help me build my personal blog or else it’ll never grow.

  • http://www.cuadernodemando.com Manu

    Thanks for your awesome podcast Pat. I love your productivity tips. I also just published my first Kindle eBook and I have to thank you especially for the session #42 with Jonny Andrews and Hollis talking about provinding value, the Jim Patterson strategy and much more.
    Fraternal love from Spain, dude!

  • http://www.suezen.me Susan

    Great podcast Pat! Thank you for being so inspiring. Looking forward to the next podcast session!

  • http://www.freshrag.com Dave

    Is it weird that I got giddy as soon as I found out there was a new podcast up? I’m excited that these will be coming out in a more regular basis.

  • http://hubze.com David Foster

    Hey Pat!

    Thanks so much for yet another great Podcast. I met you in NYC at Blogworld. Was a great time. But I had been doing a podcast myself and I too am just amazed how many people find us due to the podcast. I really feel video and podcasting or the combo of the 2 is going to explode in 2013. I mean for the past year, the only place I really get my news etc is on Podcasts. I can listen on demand and being an Entrepreneur I have to “fit” things into my schedule and podcasts are perfect for that.

    Anyway, looking forward to more!
    David Foster

  • http://www.smartbusinessrevolution.com John Corcoran

    Hey Pat – I just got done listening to this episode and I thought it was really valuable. A couple of points:

    First, I agree that you don’t necessarily need to form a LLC or a corporation right off the bat if you are trying to start an online business (or any business for that matter). I realize it is heretical for an attorney to say that, but the reality is if everyone had to spend a couple hundred or thousand bucks to formalize a LLC or an s-corp before they started dabbling around online, no one would do it. Also, you have to ask yourself what the risks are. If you don’t have a lot of assets to protect, and you are doing a type or manner of business which is unlikely to incur a lot of liability (such as simply blogging or affiliate marketing), then the benefits probably don’t outweigh the costs.

    Secondly, I use a bookkeeper for my business as well and I agree it’s hugely valuable. Unless your background is in bookkeeping/accounting, then your time is probably better spent focusing on working on your business. And as you grow in size, it’s

    One thing I advise with my coaching clients is to create an “org chart” for the company they want to be 5 or 10 years from now. At the top is CEO (you), then below it you might have sales, accounting, HR, etc., depending on the business. At least initially, your name will be in all the boxes. Eventually, your goal is to back yourself out of most of the boxes so that the business runs itself without you having to be there.

    About the healthcare situation… that’s really frightening and stressful. I can’t imagine how difficult that was for you guys. I’m glad you had the money saved up and now Keoni has a great story to tell for years and years. There are health care brokers out there who work with small biz owners and help them navigate the crazy, treacherous waters of finding health care. I know one who is very good, but I won’t name her here because that would seem sleezy (you can email me if you need a recommendation). But the point is – there are brokers out there who can help with health care.

    Finally, I totally agree about creating a schedule. Everyone works differently, but for me, creating a daily schedule helps tremendously. I use the free planners available at productiveflourishing.com, but there are other resources available. On most days, I spend about 10-15 mins at the beginning of the day looking at my most urgent work I need to do and planning out what I need to accomplish that day. I also use different paper planners to plan out blog posts and other long-term projects.

  • http://www.gofoamroller.com Randy

    Thanks for the inspiration bro. I just started my first 2 websites at the start of the year and its been a rough (content and backlinks, ugggh). The learning curve is challenging, but i’m getting used to it. Good thing I have GREAT teachers: You, Chris Guthrie, and Joseph Archibald. I know it will pay off one day. thanks again! Best of Luck to us in 2013!

  • Nolan

    YES!! Pat Flynn Every Week! Thanks Pat, I’ve only listened to the first 3 minutes so far and you’ve already made my day.

  • http://www.mycudjoe.com Hi Pat

    Hi Pat,
    There is certainly no doubt that you and many other great bloggers are making it big and therefore encouraging some of us. Everyone including myself can’t wait for the podcast but I think you must read why I think you’re a ‘successful-failure’.
    http://mycudjoe.com/index.php/2013/01/why-john-chow-pat-flynn-darren-rowse-and-several-others-are-successful-failures/

  • http://PoorDoctor.com Buck Joffrey

    Pat–there are a LOT of things you can do to get your tax rate down. You are making really good money now and you ought to really consider diversifying your income a bit more. Internet business and information products are great but there is NOTHING to depreciate. I have both brick and mortar and internet businesses and the way I do this is by essentially trapping all profits into depreciable assets–assets that I call assets of perpetual wealth.

    What if I told you that I made 7 figures in each of the last 2 years and have paid less in taxes than my 75K/year office manager? Well…that’s the truth.

    Now my situation might seem a bit extreme, but when your investments include hard assets like real estate and equipment, there are all sorts of ways to save on your tax bill that are PERFECTLY legal. You do have to have a good tax professional and I would be happy to refer mine to you if you want to talk to him. He’s expensive, but he is tax attorney/CPA who use to work for the IRS and has saved me probably over a million dollars by now.

    I just started my blog a couple months ago but I will be hitting on many of these topics along with basic stuff. I’m trying to bridge the gap between internet and brick and mortar business because it seems like most people do one or the other and don’t know about the other side and its advantages. I have a long way to go before I am a Pat Flynn level blogger, but some of the articles might be worth for internet business people to check out.

    Thanks again for the interesting, honest stuff you put out.

  • http://sonhouseblues.com/ David McLeod

    Another great podcast Pat! Thanks! Let me know if you need any help in 2013.

  • http://www.foroptimalhealth.com/ Gregory Pais

    Hi Pat,

    It’s Gregory again, (you’re only ND follower?). Starting last year for children , and for everyone this year, insurance companies cannot discriminate against you for a preexisting condition-pregnancy in your example in podcast 53.

    One of the major problems with the previous situation was that insurance companies would purposefully look for ‘gotcha’ preexisting conditions to deny coverage to their policy holders that had been paying insurance.

    Before the passage of the Affordable Care Act in 2010 (Obama Care), health insurance companies could refuse to insure children with preexisting conditions as common as an ear infection, leaving parents to pay out of pocket for all medical care or to forgo it all together. Now, children with preexisting conditions like ear infections or asthma cannot be denied coverage.

    I would make the case that there’s much you can do to keep your child from getting an ear infection and staying out of the doc’s office in the first place. But this example at least gives you a sense of how bad it was.

    By the way, home birth is an incredibly viable option. One that wouldn’t strain the bank account of someone without the $16,000 to pay for their hospital stay. Really glad it worked out for you guys.

  • http://discoverwithandy.com Andy

    Well, since you brought it up Pat, all I’ve got to say is “Why you asking all them questions? …Assumin’??” ;)

    Nah, seriously though, I’m working on getting my podcast up and going as we speak, and I never would have done it without your guide. It’s still got a while before it comes out, but I’m very excited about it, and I can’t wait :)

    Thanks so much for all you do!

  • http://www.cloud65.com Online Income

    what Bryan said I’m alarmed that a stay at home mom can get paid $5159 in 1 month on the computer. have you seen this site link http://www.Cloud65.com

  • http://www.warriorforum.com/warrior-forum-classified-ads/737422-full-review-easy-video-suite-josh-bartlett.html Easy Video Suite

    Hey Pat,

    I knew nothing when I first started with “making money online”. Spent a lot of money and wasted even more time.

    Thanks for spreading wisdom!

  • http://www.producracy.com Andrew E

    Hi Pat,
    Great episode – very personal – glad to hear the real life lessons and stories.
    Hope 2013 is a great one for you.
    -Andrew E, producracy.com

  • http://www.howtovanish.com Trace Mayer, J.D.

    @Buck Joffrey, there is a lot of wisdom in your comment. There is a lot of difference between what you made and what you incur tax liability on. Plus, useful life and depreciable life may be different; hopefully you don’t get stuck with too much Goodwill. After all, it is not how much you make but how much you keep.

    Reading Pat’s income reports almost makes me cringe because there are probably a ton of things Pat could do to optimize tax liability. It is almost malpractice that his CPA does not help out more.

    First, I would start with his State Income Tax Optimization (http://www.howtovanish.com/products/tax-domicile-report/) since that is probably the lowest hanging fruit and could result in an immediate ~10% savings. Second, I would target jurisdictional arbitrage with at least a Singapore or Hong Kong corporation so that retained earnings do not incur current tax liability unless or until distributed. Third, for asset protection I would insulate his business by securing it and its assets like domain registration and hosting in digital friendly jurisdiction(s) like Iceland. Fourth, for the increased legal and accounting flexibility I would persuade Bluehost and other companies paying affiliate commissions to do so in bitcoins or find a provider who does (like Ice Servers in Iceland).

    http://www.howtovanish.com/products/tax-domicile-report/

  • http://www.stockfoto.at Alex der Fotograf

    Pat, you are so right about this business being a little lonely… especially at the beginning lots people think that we are crazy being constantly at work… especially when they do not understand what exactly we are doing…

    Thanks for the schedule tip. I am overworked but i think it would make me feel better having some sort of structure…

    Even though the tax part was a bit boring for non US marketers, the rest of the ideas were great….

  • Sasha S.

    Hello, Pat.
    First of all, thank you for this podcast!

    This episode was pretty good. I have 2 questions however.

    First – others mentioned it here too: what is your idea on incorporating – when is the right time? I understand it’s not a legal advise, but simply curious what your experience so far tells you on this topic.

    Second, thinking of work schedule and putting work out of your mind to be with the family. I tried a business a few years ago and I found it very difficult to not think of it all the time. You’re either fired up and think of it all the time – but then you’re not completely with your family, only physically there, and it’s noticeable; or you actually manage to put work out of your mind – but then you lose the fire and motivation/momentum in business. What do you think? how do/would you deal with this problem?

    Thank you again!
    Sasha

  • Doron David

    Pat – great podcast.
    I was surprised to hear your working schedule is at night which is most likely the case with anyone who has a 9-5 day job including myself. Hearing this is your schedule as well motivates me a lot. Although my brain works better during the morning time, by 9:00pm my productivity is not so great. One day I stayed at home and was able to complete a week’s full of work for my online business. Frustrating as I know if I took a 2 week off work I can actually accomplish something, but hey, this is the reality of things.

    Thanks for a great podcast!

    Doron

  • http://incometherapy.com Sarah Park

    Thanks for sharing this, Pat. Really learned a lot from this. This is very helpful.

  • http://www.robertaloufek.com Roberta Loufek

    Pat, I’m an RN – thank you so much for advising your listeners to get health insurance. Your personal story helped illustrate why it is so important. One accident or unexpected illness (they always are unexpected) can wipe you out financially. No one thinks it will happen to them but it can and does all the time. Keep up the great work!

  • http://www.mobileapptycoon.com Thomas @ Mobile App Tycoon

    Looking forward to the weekly podcasts Pat! I’m also considering forming an LLC for my business, however my rule of thumb is that I’m only going to once my business can pay for the costs (and then have at least decent profit level after) on it’s own.

    Thomas

  • Brendan

    Thanks Pat,

    Really enjoyed your podcast, you touched on many areas that I’ve been reflecting on over the past few weeks and helped develop further my thinking. All the best.

  • http://www.entrepreneurideadads.com Brett Bartlett

    Love it when you say your wife is not THAT interested in your business.
    My wife who I love more than anything in the world will get more fired up and excited about great baby clothes deals from Gap than $100,000 deals in my business. hahahahaha.
    Love that I’m not alone on this :)

    Take care

  • Byron Friday (@akaTGIF)

    Pat,

    your sooo funny some times, your Podcast are very personal and NEVER BORING my friend.

    You podcast sessions awesome buddy!

  • http://www.passiveproductive.com Sam Matla (Passive Productive)

    Thanks for this Pat,

    Something that really stood out for me was you talking about people that will bring you down, ‘non-believers’ as you say. I’m 17 years old and this is something that I experience on a daily basis, normally it’s my parents telling me that I should “wake up and experience the real world”. They’re awesome, but it does get on my nerves. Then brought up the point of not discussing that area of life with people like that, which is a brilliant idea, and I think that’s why I get ripped on a bit – because I speak so confidently about my online business ventures, yet I have nothing to show.

    Again, I appreciate what you’re doing. Thank you very much,

    Sam

  • http://pagerankworld.com Brandon Bear

    Awesome post Pat… I’m probably one of the minority here, but I actually only found SPI about 3 days ago… and I’ve got a lot of reading to do. (And listening)

    Why couldn’t you have shown me your site a couple years ago? :P

  • http://websitebuddha.com David >> Website Buddha

    He went paint balling and hid behind a rock the entire time!! I cracked up at that one :)

  • Travis

    Let’s get that new website design up and running!

  • http://www.ramblingsofawahm.com/ Allie

    Hey Pat,

    I am a very loyal listener to your podcast and really look forward to more of them. When you announced that there would be more I was excited! But then a little worried because I don’t want less SPI posts. I read all of them, even though you don’t really see me comment that often. I’m always lurking, lol.

    On a lighter note, I loved the story of your wife and the birth of your son! I was close to tears, really. I love hearing that you are just a dad, husband and person. You are like us, just better at some things that we all want to be great at. But we listen to you and work too. All we can do is try.

    I would love to interview from a dad (Stay at home dad) perspective sometime for a post for my blog. When I get the nerve I will email you some questions and see what you think. We can schedule the post for the release of your book. Crossing my fingers.

    Thank you for being an inspiration!

    ~Allie

  • http://howtocreateawebsiteonline.com Vince @ How to Create a Website Online

    Another great Podcast Pat! Keep up the good work brotha!

  • Taswir Haider

    The accounting portion of it is a headache… Looking forward to the weekly podcasts Pat!

  • http://picharnan.com picharnan

    Thank you very much for Podcast Pat! ^^

  • Mark

    Really good podcast Pat. Can you tell me what your audio setup is? Mic, Compresser, Pre-amp etc?? Is this information anywhere on your website?

  • http://www.simplepickup.com Simple Pickup

    Hey Pat,

    We created our first online business. The hardest part we’ve encountered was the health insurance issue. In fact, after a year into our business we have yet to purchase it and there are 4 of us!! However, we’re getting on it, what would you suggest is a good one to go after? Right now one of our friends has bluecross PPO but that is an individual basis… what about for a company?

    Also, we’re thinking about hiring some freelancers / employees – how would that work?

    Thanks Pat!! <3 ya

  • http://tdcwebdesign.com Thomas

    Paleo diet uh?

    I used to do the same thing until I watched this:
    http://nutritionfacts.org/video/uprooting-the-leading-causes-of-death/

    (warning: it is long!)

  • Kevin

    “You are the average of the 5 people you spend the most time with”–Jim Rohn (Tony Robbins mentor)

    Great podcast Pat! You were tearing through some useful information but loved the speed!

    I love your idea on the small work group–I think you’ll be able to pull it off well and with your multitude of interests & projects it shouldn’t be too difficult to hammer something out. With your audience it will be amazing to have small groups of people from all over the world all coming together to help eachother out.

    Technology today is pretty fricken amazing–sometimes we forget this!

  • Scott Hughes

    Love the podcast, looking forward to listening every week. I have decided that 2013 is the year I quit my job and go full time online. Thanks for the great info.

  • http://moresocialtraffic.com George @MoreSocialTraffic

    Pat, I am always impressed with the quality content you always put out. You are one of my online hero’s. Keep up the good work!

  • Cindy

    Thank you so much for this. You had mentioned awhile back you would talk about healthcare coverage and I was just getting ready to ask, “When?”

    Your candor and willingness to share are very much appreciated.

  • http://start-your-web-site.com Tim Hague

    Hi Pat,
    Awesome podcast, the healthcare stuff is really a problem, maybe it’s getting better these days. I’d love to be considered for one of the case studies, I’m one of those guys with a 9-5, a family with three kids and a passion for having my own online business. I’ll admit I have struggled to bear any fruit monetarily but I’m loving being able to learn from folks such as yourself. Looking forward to hearing the details on your plans…
    Best regards,
    Tim

  • http://www.martmusicincome.com TBLAZZSOLOZ

    Pat is on Fire On this POdcast
    This is one of the best….

  • http://www.babyboomerwealthsecrets.info willie robertson

    Hi Pat,

    Powerful podcast. Lots of food for thought for the beginning online business owner.

    I do the online thing part time currently while still working full time…Fortunately my job provides me with health care and I can cover my taxes with my work income…I used to have a delivery route as an independent contractor and I paid my taxes on that income out of my job…

    I think nailing down a real schedule to work from at home is probably one of the biggest challenges home business owners have as well as trying not to get isolated from the world…

    Great stuff Pat,

    Thanks for sharing,

    Willie Robertson

  • http://heard.fm Chris Jacob (heard.fm)

    YYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYYEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEESSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSSS!

    Pat I’m SOOOO thrilled to hear the podcast will be moving to a weekly format.

    Heard.fm was launched this year as a result of my *pain* waiting for the next SPI Podcast. Like so many of your fans I crave more SPI in an audio format – because it’s just so much more *convenient* for us to consume in our busy lives.

    You’re spot on about Podcasting this year. It’s going to explode!

    There is a fantastic opportunity for the Smart Passive Income Blog to be a pioner in this space. To work with myself at Heard to produce and broadcast the SPI Blog as a high quality, professionally narrated, premium podcast – think Audiobooks, but for Blogs.

    If you’re interested, please drop me a line… I’m confident your fans will LOVE IT.

    I’m currently working with Yaro Starak of Entrepreneurs-Journey.com to hire a narrator; and I’m also proactively seeking a narrator for ZenHabits.net

    Have a chat with Corbett Barr if you want to do a bit of a background check … Heard just received an “Honourable Mention” in the ThinkTraffic, Mentorship For A Year competition. I’ve also been discussing my business goals and vision on Fizzle.co for a few weeks now.

    I’m *very* passionate about building and running this business.

    Cheers,
    Chris Jacob
    http://heard.fm – “Listen to your favorite blogs — on the go!”
    It’s like Audiobooks, for Blogs.

  • Ita

    We self paid for our first baby too, we had insurance, but moved out of the country. We misunderstood, and thought we would be covered out of network . . .
    The good news was that the entire cost of birth where we were was less than our entire deductible now! It seemed like a lot of money then, but in retrospect, we got off very easy!

    I also love that you do most of your work at night. That is also the only quiet time in my house, and is when I get stuff done too!

  • http://www.activateyourincome.com Randy Hollingsworth

    Another great podcast Pat, thanks once again. You always fill your post and podcasts with so much useful information. I was recently listening to a podcast from Dan Miller at 48 Days To The Work You Love and I thought it was pretty cool, when he mentioned that he listens to your podcast. Keep up the good work, you’re getting noticed everywhere.

  • Stefan

    Thanks Pat!
    As I will be starting to work full time on my online projects in April, this podcast comes at exactly the right time for me. Thanks for sharing your insights!

  • http://www.jobiety.com Kash

    Thats an awesome news. I love your podcasts and it’d great to have them regularly.

    Thanks.

  • http://www.autoprofitincome.com Greg Jeffries

    Excellent podcast. The topics of choosing a correct business entity and healthcare are so important. And the crab story is excellent – constantly surround yourself with positive encouraging people, because even if you’re doing something amazing and positive there’s always gonna be haters.

  • http://outcomemarketing.com Karilee | Marketing Coach

    Great content – I find I learn something in almost every post or podcast you do. I really LOVED your “Bucket of Crabs” analogy. I used to explain the same thing in terms of “caveman instincts”. You see, the middle of the pack was safer. The guy running ahead (or the one furthest behind) was likelier to get picked off by predators. So any deviation from the middle of the pack seems to trigger those who love you to reflexively try to drag you back to “average” in many cases. While they mean well, it’s never fun for those who are focused on leadership and/or entrepreneurship, or any kind of living differently.

    And for an even more complex (but brilliant!) analogy along the same lines, check out Pete Michaud’s post on Life as a Geoboard: http://www.petermichaud.com/essays/life-as-a-geoboard

  • http://homeupkeepadvisor.com Zaidi

    Hey Pat,

    Thank you for sharing your wisdom and a load of information with us. Yes, I am gearing on starting online marketing this year after following you for few months. it is not easy and I can see that it takes a lot of planning and commitment to break through. I have a plan and commitment to take action and I hope that I will be able to sustain the same level of commitment all year round.

    Again thank you much for what you do.

  • http://www.fluxvfx.com/ Marissa

    Awesome episode! I’ve learned so much from your site and the podcast is the first one I listen to in the car. I can second EVERYTHING you said in this episode. My biggest problem is the loneliness and trying not to fall over from all the hats I have to wear. This will probably be the year I seek out some paid help for the many things I can’t get to.
    If I can just create my motion graphics all day without running the business side I’d be a happy camper!
    Thanks again for all the advice and for sharing so much with the world!
    Marissa

  • http://www.TheLindyProject.com Mike

    I’m happy to hear the podcast is going weekly!

    I love the episodes about people making money online doing something other than talking about making money. More of those would be great!

    Specifically I would love to hear any advice/resources/stories about companies that have to work with people in real life, but are expanding due to the internet. Like one of your previous success stories, Steve the jazz musician, I teach, but I teach social dancing (Lindy Hop). I’m having a lot of trouble translating it to internet business, because it requires people to get together and dance… in real life…

    Thanks in advance. Looking forward to SPI 2013!

  • gil

    This was incredibly helpful.

  • http://www.thecorporatethiefbeats.com Daniel

    Great podcast Pat I have been following you now for the last couple of months now and these podcast keep me motivated to keep working hard. I don’t make a full time income yet but I am generating some online income and this topic of becoming and llc has been on my mind. I was going to sign up as an affiliate the other day for blue host and when I got to the form it asked for a bunch of crazy stuff that Im clueless about. I think what you covered here is a good topics to revisit again in the podcast. Delighted to hear that the podcast is every week now looking forward to the next one

  • http://www.patrickwagner.com Patrick Wagner

    I am looking forward to the podcast, this story is so similar to so many across the map, and all of the how to make money ones have grown a bit stale because they do not actually show you what you need to do other than to spend money you don’t have.

  • http://techhogger.com Kunal

    Amazing tips as always Pat. Your podcast are undeniably the best blogging and Internet marketing podcast I have heard so far.

  • http://www.howimakemoneyhq.com/blog/top-30-earning-blogs/ top earning blogs

    Haii pat,

    Wow.. what a podcast!!!!
    I just downloaded and shared with my friends
    keep going

  • http://www.thetopblogger.com Taswir Haider

    GREAT podcast. This story is so similar to so many across the map, and all of the how to make money ones have grown a bit stale because they do not actually show you what you need to do other than to spend money you don’t have.

  • http://www.microbizaccounting.com Achabani

    I had to learn about SEO, email and internet marketing when I started my blog. Accounting is not a problem for me because that is what I blog about. I think it is important to wear many hats when you start on your own so that you can learn the language. I find it very disappointing to pay $16000 for medical bills. I wonder what is happening to all the taxes we pay.

  • http://www.howmanycaloriestoloseweight.biz Thomas Calix

    This is Amazing Work Pat keep up the Good work.

  • http://www.edatingdoc.com/150-dates/ Radio Wright

    Hahahahahahahahahaha!!!!!

    I almost past out laughing when you said this in the podcast:

    “Sooo Hey let’s get divorced, Yeah – That went over well.”

  • John

    Outstanding Pat!

  • Travis

    Pat,
    I listen to most of your podcasts, and this has been one of my favorites. I would be happy to hear even more detail about taxes, book keeping, how you use your VAs, etc. Along these same lines, I would also love to hear your thoughts on incorporating and trademarking your brand. Maybe you could go into some detail on things that you have learned with both of these and the right timing to do them. Good stuff, and looking forward to future episodes.
    Travis

  • http://Www.artistsync.org Kyle Wilson

    Wow, thank you for recording this episode. It fit my situation just perfectly and I really felt like somebody finally understands. It’s nice to hear that not everything goes perfectly for you every time and that even someone as successful as you has struggled to make entrepreneurship work. Looking forward to a productive week with renewed inspiration thanks to you!

  • http://cheapironfistshoes.blogspot.com/ Mistie O

    I think that my biggest problem is not staying focused and on track. I work 9-5 and I am on the internet all day at work…. So that can make it difficult for me to come home and work on my blog, etc…. I know that and especially after reading your blogs and site that staying focused is so important and that this is achievable… Thank you

  • http://www.arindammullick.com Arindam

    Hi Pat,
    Very nice podcast . Practical and smart for the new entrepreneurs.

  • http://www.rocketcases.com Skye

    Man I keep forgetting how stressful health insurance can be. So glad I don’t have to worry about those issues in Canada. I take it for granted all the time then hear stories like this and see how lucky we are up there.

    I’m also really glad I have biz partners and I think that’s one of the reasons that got me motivated to become an entrepreneur. Without them I don’t think I would have done it.

    I definitely think a book keeper is needed for me very soon.

    I like your specific work schedule Pat. I find it very hard to tune work out. I’m thinking about it all the time. I’m trying to block it out during certain periods but it’s very hard when you’re stoked about your business and just want to work non stop and keep it growing.

    Great stuff Pat. Keep it up.
    Skye

  • http://www.patrickwagner.com Patrick Wagner

    This is the tedious part of being in business for yourself. My first year was a total disaster. I did not keep good records and ran into all types of problems.

  • http://www.auroraitpros.com James Petryka

    Best podcast yet! I’ve listened to all of your podcasts and have learned from each one. This podcast gets real with parts of online business that don’t normally get discussed. I would love to hear more stories about difficulties and mistakes of “the early days.”
    Thank you for sharing!
    James

  • Steve MoneyPlanSOS Stewart

    Wow. I hadn’t heard your story about having the baby before the health insurance kicked in. You said you prayed and prayed and prayed that everything would turn out all right. I think you were more than lucky, you were both blessed.

    Keep rockin’ Pat!

  • http:www.organicpalace.co.uk Deborah

    Hi Pat, Great podcast,I am particuarly going through negative comments from friends, like the one “are you going to have to get a job” and family pushing to ask how much money I make, which is nil and I just fake till you make it attitude. I have friends who say comments, are the SOCIAL ok with you doing this business won’t you have to go out and get a job, do you still get benefits, its all so rude and getting me down a bit, but after listening to your podcast i feel more optimistic, thanks so much.
    Deborah

  • http://CraigDesmarais.com Craig Desmarais

    Hey Pat!

    Great podcast as always! I would love to see a post about how you stay on top of your VAs, what your schedule looks like for communicating with them and how you keep them accountable.

    Also, it would be cool to provide some templates for how you track expenses, income, etc for those of us who are launching a new online business or have been in it for some time with a lack of structure.

    If you know of any resources like these, please share! Thanks!

  • http://straightshothealth.com Kevin

    Pat,

    WAY LATE reply to this but I just went through the transcript again to double check on when you filed your LLC.

    I know you started out without an LLC and switched, but if you could go back in time would you START with the LLC or not? How difficult was it to perform the switch from an individual to an LLC?

    No legal advice–just would like your take on this.

    thanks!

  • http://www.feelingsuccess.com Gurj

    Great podcast, it really shows the inside story of what it takes for someone to succeed. Most people don’t see the struggles and think that people who are successful were either “lucky” or it was just “genetics” but the fact of the matter is that when you research any success story, the people are always tested before they actually succeed.

  • http://fourpartharmony.co.uk/ Dave G

    Great to hear you’re going weekly – I love to listen on my walks, clears my head and fills it again with useful stuff, thanks :)

  • http://www.evolveyourweddingbusiness.com Heidi Thompson

    Pat-I love how candid you were in this episode! Thankfully I now live in a country that provides everyone with healthcare (the UK) but I grew up in the US and I remember that my 18th birthday present from my insurance company was being dropped from my dad’s policy. I also completely relate to the lonliness that comes along with working on your own. I’m working on finding my right schedule at the moment and I’m finding that I work best in the evening.

  • Mauricio

    Hi Pat.

    I’m from Colombia and I’m changing my business to online. You mentioned a schedule and I’d like to know how do you organize yourself. Is there a way you could share with us your schedule?

    Thanks. I just love your blog and podcast.