Posted by Art_MD on 2/17/12 1:27pm
Msg #412104

profit margin 52%

Just did my taxes.
Just curious what GROSS margin others have.
I define gross margin as pay received minus expenses (equipment, mileage, paper, toner etc) minus SE tax.
Mine was at 52%

Art

Reply by Eva75Eva on 2/17/12 3:50pm
Msg #412125

I can already tell you that your 52% may sound pretty dissappointing to you but my gross profit is actually gonna wind up in the negative. After compiling my W9 totals I found I was deficient by exactly the same amount of money I accepted to do jobs for lowballers. In other words had I stuck to my fees when times were leaner and calls were fewer instead of accepting things on their terms I would have been blogging probably a 52% margin as well. This has been quite an eye opener and as I get ready to write the taxman for taxes still owed I am sorely reminded that this is no way to run a business. Had I been the wiser I might at least be breaking even. Hope this makes you feel better at least about not being in the red like I am. Oh by the way I run a very no frills tight ship 100% error proof operation. Emphasis was placed solely on efficiency and quality. I can tell you that paying my rent is becoming more and more challenging. That 30 days gets shorter and shorter.

Reply by Susan Fischer on 2/17/12 7:56pm
Msg #412136

One of the brilliant advantages of QuickBooks, [for one

expample] is the ease of Budgeting.

Budgeting is fluid, and needs weekly attention.

You can stash "money" in an Accounts Payable/Rent (not tied to a tax ded acc't). [I used to do this by hand: get weekly paycheck; physically write a check for 1/4th of each bill due that month, and place in corresponding envelope; with last check of the month, wrote final checks, and sent off four checks to each "vendor." Had there been BillPay, it would have been a lot easier.] But you get the idea - you can simulate by putting partial payments away - like in a pretend savings account, as it were.

In our world, once we're in a handful of pipelines for payments from vendors, sometimes that stack of checks to deposit are glorious - which, is not the time to go shopping, except for deals on paper/toner/Food, etc..

Pay yourself first. When depositing a batch of checks, take 10% of that total, and deposit that into YOUR SAVINGS ACCOUNT. If you get a single check, say a $25 payment for printing docs only job, take $2.50 and just SAVE IT. Make this a rule.

Case in point: Had $15K CC debt '02. Saved in an ING accout [interest was/is low, but it's interest] and over a few year's time, being faithful to above RULE, could make devistating impact on my goal of eliminating that debt. Between that strategy, and using the "0-interest for 3-6 months offers on transfer balances" strategy, achieved ZERO CC debt, and remain so today.

Create a comprehensive Budget, and review with each deposit. With programs like QB and Q'n, and some quality time Doing Books daily with our Accounting Hats On, we can discipline ourselves to making our way as prosperous as possible.

Ok, off my soapbox now. Anyhoo, everyone's different, and profit margins are so individual.

Best,
Susie

Reply by Buddy Young on 2/17/12 10:13pm
Msg #412147

Re: it's not gross margin, it's net profit!!!!!!!

Gross margin is before expences.