A Typical Monthly Expense Report

This is something a little different…So far, I’ve published 20 monthly income reports, and 1 annual income report. However, I’ve never posted anything in detail about my expenses, until today.

I don’t know exactly why I have never included them in my reports. Maybe it’s because when I first started doing these reports there were virtually no expenses to take into account. That being said, I do know that many of you are curious to see what a typical month looks like, so here it is.

The following is my expense report for June of 2010.

Standard / Flat Monthly Fees For Doing Business Online

These are fees that I incur each and every month, independent of how much I actually earn, or how many items I sell.

Hosting & Domain Fees: about $20/month

Using the hosting and domain services from Bluehost, I have a couple of accounts under the $6.95/month plan, and a number of sub and add-on domains that don’t even work out to a buck a month ($10/year, or $0.83/month).

Email / Autoresponder Fees: $66.15/month

A 12-month package from Aweber costs me $193.80, which comes to about $16/month. An extra $50.00 a month is added on because I have email lists that total between 5,000 and 10,000 people.

Shopping Cart Fees: $35/month

These fees are flat monthly fees for the tools I use to make automatic transactions happen with my eBook at greenexamacademy.com. E-junkie costs me $5.00/month, and Paypal’s Website Payments Pro is $30/month.

Side note regarding Paypal’s Website Payments Pro: I do understand that I could instead use the standard paypal checkout method for absolutely free. That will allow me to accept credit cards as payment for my e-goods, however, there are two major problems with the standard checkout method:

  1. When customers click on “Pay Now” or “Buy Now” (or whatever call to action you use), they are taken to Paypal’s website. Here, they can log into their Paypal account, or pay with a credit card. The thing is, the link to pay with a credit card is tiny and almost hidden, which forces a lot of people to think they need a Paypal account to purchase the product. Those who don’t have a Paypal account are more than likely to leave. Not cool.
  2. Secondly, the transaction happens off of your site. The customer actually leaves your site and is taken to Paypal’s payment processor. E-junkie allows the transaction to stay ON your site and include a little bit of branding during the checkout process at the same time, which is very nice. The more you zig and zag your customer around to different sites, the more chances there are of that person leaving with an incomplete purchase. Not cool either.

Online Media Storage Fees: $12.00/month

I use Libsyn to host my media files online, such as my podcast, my webinar replay, and actually my eBook as well. This ensures that my blog server won’t crash if there’s a sudden rush to download certain pieces of media, which I hear often happens, especially when new podcast episodes or new videos are published on the blog.

I looked at Amazon S3 for an online storage solution, but I felt more comfortable dealing with the flat rate from Libsyn, then with fractions of a cent per gig of bandwith transfer with S3. it’s much easier to budget for.

TOTAL FLAT MONTHLY EXPENSES: $133.15

And just as an aside, if you’re just starting out, you don’t need all of these things right from the beginning. You can host your media files on your own site, and if you’re worried because you want to do a lot of videos, host them on YouTube instead. It’s free, and you can get search engine traffic off of YouTube as well.

Also, you don’t need the shopping cart fees either. Like I said, there is the option to go the free route with Paypal, and really if you’re just starting out, you should worry about your content and building an audience, rather than how to make a buck from an audience you don’t have yet.

All this being said, it only takes a couple of eBook sales, or just one affiliate commission on some certain products to make up the entire flat monthly expense.

Standard / Flat Fees For Business Improvement (In General)

The following fees are all fees associated with things that can help my business even further. You don’t have to spend money on any of these things, this is just what I do – which you’ll see why below.

Bookkeeping Fees: $50.00/month

When I started to make good money online, I hired a bookkeeper to help keep track of all of my monthly income and expenses, and input them into Quickbooks. This is probably the best $50.00 I spend every month for my business.

Why?

Because my bookkeeper makes my life SO much easier. All I have to do is send her my files from my business checking account, my business credit card, and my paypal and shopping cart – and she does the rest. I spend about 5 minutes a month doing this, and I have numbers every month I can look at in Quickbooks to see how my business is doing. Oh, and this makes tax season seem like a walk in the park.

Because I have a ton of different income streams, it would seriously drive me insane to try and do all of this myself.

Certified Public Accountant: about $35/month

My CPA helps me with all things financial, including where to put my money as well. I’ve saved a lot of money thanks to my CPA, so the cost of such a service is definitely made up in the savings.

Internet Business Mastery Academy: $97/month

I joined the IBM Academy nearly 2 years ago, and I continue to pay my dues because I still continue to learn from it.

Other Fees

I have other fees in addition to the services mentioned in the previous sections. These fees, however, vary each month, but I just wanted to list them here so you know what I could be paying for. The fees that you see next to the item was how much I spent in June of 2010.

  • The cost of hiring virtual assistants: $149.90
  • The cost of developing iPhone applications: $700.00
  • The cost of a piece of software for my business: $0.00
  • The cost of new equipment that I can use for my business: $0.00
  • The cost of memberships for something that I can use for my business: $103.00
  • The cost of utilities because I do business from home: $23.54
  • Paypal fees (they take a certain % of total cost of each product sold): $103.90
  • Google Checkout fees (same as Paypal): $8.65
  • Payouts to Affiliates: $450.00

I may have missed a few things, but I think I have most everything here.

In total, the expenses I incurred for June was about $1,853.24.

It’s kind of weird to look at my expenses, because $1,873.24 is a lot of money, and when I first started out I would never have fathomed spending that much on my own business in a single month. But, my experience over the past 2 years tells me that this is money well spent, and you can’t just look at the expenses alone without understanding why these expenses exist.

Also, you have to consider that I grossed about $13k in June and many of these expenses exist because I am making this kind of money. For example, the Paypal and Google Checkout fees, as well as the payouts to the affiliates – if I didn’t make any money, these fees would not exist.

Additionally, as I mentioned earlier, a lot of these expenses are not mandatory in order to run a successful online business, so don’t be scared of the total expense. I choose to pay developers to create new iPhone apps and I choose to pay for memberships that may help my business, because they are investments that will pay off for me in the future.

I hope you enjoyed this post and it helpful as you got an even closer look at what goes on in my businesses.

Lastly, if you haven’t already done so, please check out my podcast which is now live in iTunes! Ratings and reviews help the rankings, so thank you in advance!

Have a great weekend everyone!

Cheers!

  • http://www.tacticalcashflow.com Howie

    Sweet! Thanks for this, Pat. It’s 3:40 here, EST, and thought I’d give your blog another read before I try to fall asleep again….lol

    I have all those hardcore entrepreneurial thoughts and ideas constantly running through my head…they keep me up at night some times…. :) No worries, though….my body runs efficiently on 2-4 hours of sleep, no problem. lol

    • http://www.my4hrworkweek.com Eric | My 4-Hour Workweek

      I’ve heard you talk about this minimal sleep thing before – one day I’d love to read about how you make 2-4 hours of sleep per night work for you. Sorry for the off-topic comment.

      • http://www.tacticalcashflow.com Howie

        Don’t get me wrong, Eric, not every night is like that. Last night was simply because I had so many ideas flowing. While I won’t claim to be these super-efficient human machine, there have been very lengthy time periods in my life where I have had no other choice but to go with that little sleep (Military training, deployment, etc). In a way, I have conditioned myself quite well….but, on top of being a soldier, I’m also a nurse….so, I am very much attuned to what my body and mind NEED, as well. Sometimes 2-4 hours of sleep/night won’t cut it, but if asked to, or if I need, I can still function relatively well with that.

        Learning how to optimally balance things, no doubt, will always be an ever present challenge for entrepreneurs who are always attempting to be the best at whatever they do. I admit…I’m still learning. I believe Pat even briefly mentioned the importance of finding these balances, in past posts that he wrote.

    • Pat

      Dude, I once stayed up for 72 hours straight. it was my final, final project in Architecture school at Cal. I know all about lack of sleep and how to function :)

  • http://www.bluefirepoker.com/ Billy Murphy

    Pat,

    $35/month for a CPA!?!? What’s his hourly?

    I assume this doesn’t include tax time?

    I’m curious, do you feel like he’s the most optimal for your situation seeing that you are making a decent income? Even if paying someone else 3-5x as much, if it saved you just a small % of your income you’d see a positive return on it. Have you looked into one of the “advanced” CPAs to see if there’s things they could do for you that you/your current one aren’t thinking of currently?

    • Pat

      Billy, the cost of the CPA is $500 for doing my taxes, I just divided that by 12 months, because I do ask him questions and get advice from time to time. He’s actually fairly expensive and has saved me more than any other CPA I’ve researched. Sorry for the misunderstanding!

      • http://www.making-your-own-website.com Nabeel | Create Your First Website

        Thanks for clearing that up Pat.

        I too was surprised to read $35/Month for a CPA. Well I guess you did a smart move by dividing the total by months, since you do use his services on a month to month basis!

        Kindest,
        Nabeel

        • Pat

          Yeah – I mean, most people would think that $500 to file taxes is ridiculously high, but he does so much more for me month after month, that I figured I’d divide it out. I guess another way of saying it is that the $35/month includes consultation and tax preparation.

  • http://privateLabelUnlimited.com/build50klist/build50klist.html Gary David | Build Your List Fast

    CPA looks cheap. $35/mo.? Anyway, Thanks for sharing us your expenses, I would also not hesitate to spend that kind of money if I earn a gross income of more than $10k/mo. if they can make my life easier.

    Thanks Pat!

    Regards,

    Gary

    • http://www.my4hrworkweek.com Eric | My 4-Hour Workweek

      If the CPA only spends about an hour or so a month on Pat’s books, $35/mo. doesn’t seem too unreasonable.

      • http://www.my4hrworkweek.com Eric | My 4-Hour Workweek

        Nevermind, I just saw Pat’s response above this!

  • http://www.markbell.me.uk Mark Bell

    Hey Pat,
    Great post – I really do appreciate the transparency you show on your site on your earnings and lifestyle. I’m trying to do this with my own up and coming blog.

    When you earn what you do, those expenses seem so little. You mention a number of things you wouldn’t use if you didn’t earn what you do. As a start up blogger, I’m trying to evaluate what is worth paying for now. I reckon I will have to pay out for some things – I don’t expect success without some kind of investment (beyond my hosting fees).

    I got your email last night about suggesting blog posts. Maybe this could be one – suggesting useful investments for start up bloggers.

    If you’ve any tips or pointers, I look forward to them.

    • Pat

      Hi Mark – when starting out, all you really need is solid domain/hosting, and an email autoresponder service. That’s it. It takes time to build an audience and gain trust and authority in a niche, but you need the website (obviously), and a newsletter, although optional, is vital to communicate with your audience when you do come out with something or decide to begin promoting.

  • http://wilsonusman.com/ Wilson

    Hey nice switch there, I was thinking about this the other day, and was going to ask you to do a list of these, must be that law of attraction or telepathy thing going on here. LOL

    Great post! It’s amazing the overhead we have online. It beats selling vacuums door to door. (they use to tell us there was on other company that had such low overhead) I wish I could go back and tell them “Hey about this for an overhead?”

    • Pat

      Haha. I can’t imagine selling door to door. Anyone who does that for a living…I give them major props, because that’s HARD work right there.

  • jeff

    Pat im interested in hearing about the taxes… That may be a bit private but i think everyone would like to know how much of your income you actually keep! …if only you could keep 100% of the earnings all to youself! ;)

    Thx

    • Pat

      Oh man, if it was possible to keep 100% to myself, that would be awesome, but of course Uncle Sam has other ideas. I actually put away 50% of my income as “tax / just in case money”, which usually leaves me a nice bonus at the end of the year because I don’t end up having to pay 50% in taxes.

  • TrafficColeman

    Super Pat

    I see that you like to lay out all your back office stuff so the world can see. Your given the realty of this business that I personally had to learn when the traffic started to go up and more sales started to come in.

    Meaning I started to spend more on monthly basic and became more expensive, which will become a learning curve for any newbie out there.

    Yo Pat..U keep the content coming..

    TrafficColeman “Signing Off”

    • Pat

      Thanks Colman, and by the way, I like how you sign off in your comments every time. Very memorable. Cheers!

      • TrafficColeman

        Thanks Pat..Its something that I been doing for years, and now I just can’t stop doing it ..

        TrafficColeman “Signing Off”

    • http://inventionaddict.com/blog/ Invention Addict

      Super Pat. I like that. We’ll have to get him a cape and suit for his birthday.

  • http://www.my4hrworkweek.com Eric | My 4-Hour Workweek

    Hey Pat,

    It’s really interesting that you’re sharing information about expenses. Too often we look at income and we forget that there’s another critical piece of calculating profit – expenses (I sure hope that as a CPA, I already knew that).

    The next step would be to look at all of your expenses and think, “Is there anything here that I can reduce or eliminate without drastically impacting my income and productivity?” Looking at your expenses and what they’re there for, it doesn’t appear there’s anything you’d want to cut back on, but it’s still a good question to ask periodically.

    - Eric

    • Pat

      It’s nice to draw it all out and see the numbers in front of you all at once, because yes – like you said, you can then begin to eliminate the unnecessary expenses, which eat up the income that people work really hard for.

      So far, I think I’m doing ok, but I’m sure there are ways to improve. There usually always is. Thanks Eric!

  • http://theminimalistpath.com David Damron

    Hey Pat—

    Within the last 48 hours, I was randomly thinking about why you never mentioned your expenses. I read many blogs that claim to make $200/day or more yet never mention that they also spend $100/day or more. It was weird this morning when I woke to see this article. Thanks for giving us a true picture of everything rather than just the selling points (aka monthly income reports).

    David Damron

    • Pat

      I’m in your head, David! Just kidding.

      But yeah, I know what you mean. I’ve seen some people claim to earn like, 3 million dollars off of affiliate income in a year, but then they turn around and say they spent 2.75 million on PPC campaigns. Still a nice chunk of change, but without knowing what the expenses are, our view of how much they actually make is skewed.

  • http://www.networkingexamacademy.com Blake Erickson

    I also use the $30 website payments pro. I was actually quite nervous in signing up for it because if I didn’t earn that money from my site somehow I would have to pay for it out of pocket. My expenses are pretty tight right now, and is seemed like a huge risk. I signed up for it and all of the e-books that I have sold have come through the payments pro. I bet if I didn’t have it I wouldn’t have sold any!. It has been well worth the investment because so far I’ve been able to cover all my monthly expenses.

    For my newsletter I use Mailchimp, its free if you have under 500 subscribers. So its great to use for those just starting out. And even if you have to pay for a newsletter like Aweber or even Mailchimp (which I will have to do soon) it is well worth it because about 75% of my e-books that I’ve sold have come through marketing my book in my newsletter that I send out. So if I didn’t have a newsletter, I probably wouldn’t have had the success I’ve had so far.

    Thanks Pat for sharing your expenses. They are just as important to study as your income reports because without your expenses you wouldn’t have all your income. That being said, if your just starting out, start small. Trying to grow before your time by incurring a bunch of expenses ($1,800+) a month is NOT “$mart”.

    • Pat

      Thanks for the great comment, Blake. When starting out, all you really need is the domain and hosting, which is like $6.95 a month. Plus, I’d throw in an email autoresonder service too. I think that’s important.

      Thanks for reiterating the important of website payments pro, and for the tip on Mailchimp as well.

      Cheers!

  • http://www.lalalamusic.com Patrick | Lalala Music

    Flynnstone!

    Thanks for sharing this with us. Now we know both, your income and expenses. Do you reinvest the money into other ventures or are you saving for something like buying a house? Would love to know more about your other passive income plans.

    Cheers!
    Patrick

    • Pat

      Short answer: yes and yes. ;)

  • http://www.moneycrush.com Jackie

    Wow, maybe I should investigate getting a bookkeeper. Although in my case, entering my business income and expenses doesn’t bother me. It’s entering all those little receipts for my personal expenses! Or maybe I should just eat out less ;)

  • Flor

    Wow, bookkeepers and CPA services are not as expensive as I thought. I hope that’s not just a California thing, because Texas is known to have expensive professionals. Don’t even get me started on the doctors over here :/

  • http://www.obliviousinvestor.com/ Mike Piper

    Very interesting to see this side of things — in particular because my business is now at a point where, after paying our living expenses and maxing out our Roths for the year, we’ve got a few hundred left over each month.

    Trying to figure out a way to invest it in the business to produce the highest ROI. The catch is that it has to be something that doesn’t also require an additional investment of time… :)

  • http://www.making-your-own-website.com Nabeel | Create Your First Website

    Great to see the other side (expenses) too Pat!

    I agree with you, there is no need to get frightened by the expenses that you show, as many of them are optional and increase only if your business grows.

    Kindest,
    Nabeel

  • George

    Hi Pal,
    I am looking for a hosting company, how well Bluehost is supporting you?
    What type of suggestions can you make in terms of Intellectual Property of your site… I mean I don’t want to host with a company that may steal your site or recreate a fake copy to reap the rewards. Thanks

  • George

    I am looking for a hosting company, how well Bluehost is supporting you?
    What type of suggestions can you make in terms of Intellectual Property of your site… I mean I don’t want to host with a company that may steal your site or recreate a fake copy to reap the rewards. Thanks

  • http://experimentsinpassiveincome.com Moon Hussain

    Whoo, what a switch-up! It’s cool to read about your expenses this time around. I didn’t think they’d be that high but that paints such a realistic picture.

  • http://igniteyouressence.com Justin Popovic

    Mr. Transparency. This is amazing what you are doing here Pat. One of the biggest wake up calls I had when I went into business for myself was the amount of money that went out to keep everything running. Considering the volume you are doing, I think you are doing an awesome job minimizing your expenses and I’m now blushing a little because I want to figure out a way to cut costs as well as you have. Great job. Extremely high value content as always.

  • http://5kmission.com Jillian

    Hey Pat!

    Thanks for the peek inside the toolbox. I’m always curious what other people’s operating costs are, mostly because I’m nosy and want to know what I have to look forward to, lol. There are so many expenses that I’m not even close to needing, but it’s good to have some sort of estimate for what others in a similar business are paying.

    I also love that you mentioned building your content and audience before thinking of how to squeeze money out of them. Very wise, we need to not get hung up on the money we could be making someday and work on truly earning it first.

  • http://www.whatsonmybrain.com Josh

    Hey Pat,

    I’m curious to know what your V.A. did for you? In other words, how did you use their services?

    Josh
    P.S. Thanks for the e-mail optin advice the other day.

  • http://www.technshare.com Dev – Technshare.com

    Hey pat,

    Awesome…!! Thanks for sharing your expenses. Great work Pat.

  • http://www.creatingmyempire.com Dustin Stevens-Baier

    Thanks for the expense report, it really gives a good insight into the pieces that go into keeping a business up and running.

  • http://www.freeprettythingsforyou.com/ Keren

    Pat i just found your through youtube and i wanted to thank you for all the valuable easy to understand info you provide! i wish i would have found you 8 months ago when i first started my blog!!
    I just became a fan of your on face book ..i just started my fan page for my blog and my next step is to create my landing page.. thank you again!!!
    Kind Regards
    Keren

  • Edward

    I’d also be interested to hear how you get on with Bluehost. I thought that you’d need something better than the standard plan for this blog?

    Thanks

  • http://www.abstract-living.com Vinay

    Hi Patt,

    Great article. Found it really useful and think you should include this with each of your monthly income reports.

    I am very interested in the Book Keeping services you use. Can you please explain how you found and selected your bookkeeper and the process you use to managem them?

    Cheers
    Vinay

  • Tony

    Hi Pat

    I’m also really interested in hearing a few details about bookkeeping. Could you tell us what tasks you asked them to do?

    I’m just not sure how I should phrase the job instructions. Any tips greatly received.

  • James

    Hey pat,
    Thanks for sharing this great information with us.

  • http://www.manvsstyle.com Schmidty – Man Vs. Style

    Awsome to see the break down in black and white Pat. Usually a lot of people talk about approx costs, but never specific such as here.

    Cheers.

  • http://www.underdogmillionaire.com/blog Joshua Black | The Underdog Millionaire

    Pat, thanks for the honest report. It’s really powerful to see how much other bloggers are spending every month to keep their empires running.

    -Joshua Black
    The Underdog Millionaire

  • http://www.bigredtomatocompany.co.uk Matthew Needham

    Great post Pat. Really good alternative post to the resources page or the income analysis which people are so obsessed about!

  • http://www.proactivemarketing4u.com Tim

    Hi Pat,

    Great post, glad to see an example of someone that’s taken their knowledge of Internet Business Academy and Yaro’s info and turned it into an awesome business!

    Just signed up for IntBizMasters academy “Traffic Attraction Formula” being taught by Jason and looking forward to meeting them live in Oregon in September.

    Again, always love your stuff

    Tim Hansen
    San Francisco Bay Area CA

  • http://www.expensereporttemplate.org expense report template

    hey Pat.

    Great post. Clearly and informative. Best

  • http://just2us.com samwize

    Great post! It is far more interesting to learn from someone’s expense report than income report!

    I learnt a lot from this. Hope to see your expense report regularly!

  • Byron

    Pat, I really feel that you want people to succeed. That’s so encouraging to me. I consider you one of my virtual mentors. Thanks man!

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  • http://rhythm-hub.com Steve

    Wow..I’ve never seen this done before…I’m also a IBMA’er and have found the info super helpful and will continue to subscribe myself..

    I appreciate your approach because you really run it like a true business..expenses from sales= profit..and to me I see about a 80% GP WOW !

  • http://www.murlu.com Murlu

    Wow Pat, this is such an eye opener of business insights. Just look at the average rent for an office then factor in every other business expense, you’re running at a fraction of traditional expenses!

    In comparison to a normal business, this is quite amazing to see the bills vs. income generated – truly inspiring!

  • Kim P

    Very nice, I’d say your expenses aren’t much at all compared to your revenue. You have everything so organized.

    Is your bookkeeper local or did you find them online?

    I like the idea of hiring a bookkeeper. Any tips on what to look for?

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