(Transcript continued from the Episode 137 show notes and audio podcast)

New Keyword Phrases Are Coming Up Every Hour

Before we get to that, there were a couple of things that I saw in the news this week that I thought were very interesting, especially for us search engine marketers who are working with search engine optimization, and particularly organic search.

This week Search Engine Land is reporting that Google reaffirmed that 15% of searches that they deal with on a regular basis are absolutely brand new and have never been searched before.

Now, Google processes some number of trillions of searches every year. Google doesn’t tell us exactly how many searches they’re doing, but they did say back in 2012 that they were doing just over a trillion searches per year. Then last year they gave another round number and said two trillion searches per year last year. That means it’s growing.

Let’s say this year it’s around three trillion searches per year. For those of you that aren’t good with numbers, three trillion is a really big number, it’s three-thousand billion searches per year.

Most years there are 365 days in a year. If you take 3,000 and divide it by 365, that gives you the number of searches per day. If you do that again and divide by 24, that gives you the number of searches per hour. Whatever that big number is, hundreds of millions of searches per hour, if you multiply that by 15% that’s the number of searches that Google has never seen before.

Every hour 50,000,000 searches someone types in are something that Google has never seen before and they have to figure out what to say, what results to return. I thought that was quite an amazing number. It’s hard for me to even imagine how you would process and discern what people were looking for. You talk about 50,000,000 times in an hour someone is asking you a question that they’ve never asked you before, I think that’s really amazing.

Google continues to do this sort of massive data service for us with the Google search engine and it’s very interesting to understand how many new search terms there are every year. What does that mean for we affiliate marketers, we search engine people? It means there is always fertile ground for us to attack. In the time that I’ve been talking to you about this topic there have been over a million new search terms given to Google for the very first time. A million new search terms.

Now, obviously all of those don’t have high commercial intent, all of those are not worth going after. But if you are wondering whether or not it is too late to start creating content and attacking new keywords, the answer is there are 50,000,000 new keyword phrases every hour, so it’s okay for you to go ahead and get started with your internet business today. Go listen to the episode from last week. Don’t procrastinate. Start creating new content and go attack some of these 50,000,000 keywords that are being introduced per hour and attack some of the old ones, too, and you’ll like that result.

How The Late Night IM Podcast Got Started

I get questions a lot about how did you start your podcast. I’ve told that story on this show many times. I listened to Jason and Jeremy over at Internet Business Mastery and I learned about internet marketing from those guys. I was both amazed and just enamored with internet marketing and with the medium that I learned over podcasting.

I worked on internet marketing for a couple of years without podcasting, I started blogging about it. I just knew that I had to have a podcast. Most of you know, I reached out to Cliff Ravenscraft on Jason Van Orden’s recommendation and I said, “Cliff, what do I need?” and he sent me a box of stuff. Here we are almost creeping up on eight years later since I published my first episode.

You may be in the same situation. I know some of you are, because I get these questions about how do you do your podcast, how much time does it take, how much work is it, and so forth. You may have this little quiet voice, a little dream in your head about having a podcast. I’m going to tell you to listen to that voice. It’s so much fun. I think you can tell that I love podcasting. I think you might, too.

The best way to start a new podcast, period, barnone, is to take Cliff’s course called Podcasting A to Z. I mention this just to say that there is a new podcasting course coming out on Monday. He starts a new four week course and he guarantees that at the end of the course if you follow all of the steps and do all of the stuff that he teaches you how to do, you’ll have a podcast in iTunes and people will be listening to it. Maybe even more than just your mom and your sister will be listening to the sound of your voice after four weeks. That’s amazing. It took me much longer than four weeks, there was no Podcast A to Z, I had a lot of stuff that I decided to figure out on my own.

If you have that little voice telling you, “I really need to start a podcast,” let me encourage you to go over to Podcasting A to Z. Don’t worry about all of the details, just read the testimonials. It’s amazing. At last count he had 60-something testimonials on there. He has launched hundreds of podcasts through that course. I highly recommend that if you have that little voice you go check that out. Imagine yourself listening to your own podcast in just four weeks. That’s really cool.

Online Business Accounting Tips

I wanted to talk this week about the finances of internet business and what the things are that you need to do. I need to start this off with a major disclaimer. I am not a professional accountant. I am not a tax attorney. I don’t know anything about finances other than what other people have told me and I am not professionally trained. If you need accounting advice or legal advice about your business, you should seek it. I am not your attorney. I am not even an attorney.

Are we clear on all of that? Great. Here’s what I think I know.

There are a couple of questions that always come up about finances. The very first one that always comes up is, “Should I start my own company?” Usually the question they’re trying to ask is, “Should I form a corporation so that I can enjoy the tax status of a corporation?” Usually you end up talking about what is called a subchapter S-corporation.

By the way, most of these comments that I’m going to make are U.S. centric comments, because I’m from Dallas, Texas and Dallas is in the United States of America. Actually, Dallas is in Texas, which is sort of its own country all by itself, but Texas is in the U.S.A.

I know there are analogous laws in other countries, but your mileage is going to vary on that. In any case, the question is if there’s a huge tax advantage for me and am I missing the boat by not starting a corporation right away.

There are other reasons to start a corporation with regard to limiting your personal liability for things that happen in the business. That’s a subject for another podcast. In terms of taxes, what I’ve found is that, no, there’s not a big impact to taxes in our case, in the case that we find ourselves in here on the Late Night Internet Marketing Podcast. Most of us are part-time entrepreneurs, we’re not making millions of dollars a year with our side business. We have day jobs, most of our income is coming in on a W-2 from our regular employer.

If that’s you, what is going to happen typically is you’re going to file your normal tax forms (the 1040) and you’re going to file a special schedule that describes your business and you’re going to pay something that looks a heck of a lot like regular income taxes on the money that your business generates. That’s just how it’s going to go, even if you form an LLC.

Now, when you get to be a bigger corporation and making more money, you can do more creative things. My understanding is there are a lot of things that you can do with a subchapter S-corporation that you create either as an LLC or a regular Corp. That’s definitely worthwhile. When you’re making that money, you should definitely consult a tax attorney and understand what is best for you and your business.

I say don’t worry about it, because I think usually what happens when new entrepreneurs are trying to get started is they get all tangled up in these finance questions about whether or not to start a corporation, do I need to go to LegalZoom and create an LLC, what do I need to do.

What you need to do is create value in your business.

Printing business cards, working on the graphics for your website footer, forming corporations, and doing a bunch of this other kind of stuff that is just distracting you from the business of actually getting out there and creating value that people will pay you for. I want to tell you that my personal opinion (which again is not a legal opinion and I am not an accountant) is that some of these things like creating an S-corp LLC, or whatever it is that you end up creating, can wait until you are making some money and there is a reason to go do that.

There are lots of reasons to create an LLC or some other kind of corporation. I think in the fullness of time you’ll want to do that. I just don’t think, in my personal opinion, that should be a very high priority for you and your new online business. That’s just my opinion.

What should be a very high priority for you is keeping your business finances completely and totally 100% separate from your personal finances. By this I simply mean go down to your bank, tell them that you are starting a small business and that you need a separate checking account and savings account, and only use those things for your business. If your business needs money, transfer that money from your personal account into your business checking account and use that money from your business checking account.

If you’re going to be doing Paypal transactions, which you most certainly will be, create a separate Paypal account that is a business account specifically for your business. If for some reason you need a credit card, make sure that’s a separate credit card that you are not using to take your family out to dinner. And I encourage you to be very careful about generating a lot of debt with a business credit card, because a lot of times you’re using that credit card to buy stuff that you don’t actually need.

The reason for that is if the time comes that you ever get into a situation where the Internal Revenue Service wants to understand what your true business expenses are, you’re in a much better position to defend whatever it is that you’re doing if there is a bright solid line between what you’re doing in your business and what you’re doing in your personal life.

The second reason that you want to keep your finances absolutely separate is that it makes it much easier for you on a monthly basis to tally up all of the expenses and tally up all of the income, and understand whether or not you are making money in your business. I think if you’re going to have a business you need to treat it like a business. On at least a monthly basis you need to be looking at some kind of profit and loss analysis that tells you this was a good month and I need to do more of that or this wasn’t such a good month so what do I need to change in order to take my business forward. I think that’s really important.

The third reason that this is important is because if the time comes that something bad happens in your business and you are in a legal situation where someone is suing you for the money in your business, one of the many factors that will influence how much money they get and whether or not they’re able to get at your personal assets, like your home, your car, and your savings, is whether or not that bright line between your personal finances and your business finances exists. The brighter that line is, the better the defense is.

There are a hundred other factors. I’m not an attorney, I think I mentioned that. I just want to tell you that keeping that stuff separate cannot do anything but help you in terms of tax accounting, in terms of personal accountability to the profitability of your business, and in terms of liability protection. That bright line is key.

If you don’t take anything away from this podcast, even if you’re a sole proprietor, I want you to make sure that you have all of your finances separate for your internet business, even if you’re just starting out. Your local bank will be happy to set up some very simple banking for you for your business.

The related question that I always get with regard to this is, “What do you do about bookkeeping?” I understand that I need to keep all of these records for taxes so I can say what my business expenses were and I can fill out my taxes. How do you keep it?

I would say that most people that I talk to, the vast majority of people that I talk to, get started with something like an Excel spreadsheet. There’s a subset of people that don’t even recognize the problem until tax time and then they’re digging through their email trying to find all of the emailed receipts that they got from all of the hosting and other stuff that they bought during the year so that they can show expenses to offset the income that they generated during the year.

I think an Excel spreadsheet is a place to start. I’m not a big fan of that and I’m not a big fan of doing things in your business that you’re not very good at. Me, as an engineer, I’m not good at accounting. I can do it, I’ve been a cost center manager in a large corporations, I’ve had accountants that worked with me to manage the finances of those cost centers, but I’m not an accountant and I don’t enjoy it.

When you’re not good at something and you hate it, that’s a recipe for complete and total disaster. So I personally have a bookkeeper that periodically collects up all of my Paypal transactions and all of that other stuff and does all of the stuff that is necessary to keep my books current. That information gets handed off to my tax preparation accountant who does my taxes whenever they need to be done.

That’s what I do personally. Maybe you do your own taxes, maybe you’re comfortable with an Excel spreadsheet, maybe you’re a B-school graduate and you had four semesters of accounting and you love doing it. That’s great for you. For me, I hire a very inexpensive virtual bookkeeper and she does these things for, and she does an outstanding job every period of time that I need to do that.

Just recently with all of this drop-shipping stuff that I’ve been talking to you about, I recognized that I’m going to increase the number of transactions that will impact me and my business by about 100-fold.

Right now I have relatively few transactions. I get lump sum payments from affiliate deals that I do, I don’t have any courses on the market right now, although that’s going to change soon, and so the number of inbound transactions I have is relatively few. The number of outbound transactions I have is also relatively few. I pay for things like hosting and Facebook ads, which are billed on a regular basis, so it’s pretty easy for her to manage.

In a drop-shipping situation the accounting load on my business is going to go up by at least a factor of 100, because every time someone orders a $5.00 widget from my drop-shipping website that’s going to create a transaction that possibly has to collect taxes if it’s in the state of Taxes, that money is going to come in, that’s going to go to my Paypal account sometimes, sometimes it will go to Shopify, sometimes it will go to Amazon Pay, depending on how they paid for the transaction. Then I’m going to have to go source that product, so I’m going to have an outbound transaction to some supplier in China to drop-ship it. Finally, in the middle of all of this, I’m going to be paying every week, or maybe even at a higher frequency than that, Facebook for ads. All of these many transactions, instead of having hundreds of transactions a year it’s going to go to thousands or hopefully tens of thousands of transactions per year, so I knew I needed a better solution.

After talking to my bookkeeper, I decided to move from what she was using, which was Quickbooks Desktop, to Quickbooks Online. She’ll be doing and handling the bookkeeping for that in Quickbooks Online, which very nicely interfaces with my bank, with Paypal, and with Shopify, which is where I’m running my ecommerce business.

That’s another thing that you can consider. If you look at an online solution, and these online solutions are relatively inexpensive, especially if you don’t need a lot of features, you can look at something like Quickbooks Online, or another one that is really good that people like is Freshbooks, to manage your online finances so that at the end of the year you’ll be ready to go for your income taxes and everything will be right there, because you can just manage things throughout the year. And you can use that software to accomplish the other thing that I told you about, which is a monthly profit and loss statement where you’re course correcting your business throughout the year. I definitely recommend Quickbooks Online. I don’t love any of these software packages. Either Quickbooks or Freshbooks should be a great place for you to start for accounting in your online business.

I should say if you’re looking for a free solution for accounting, I haven’t evaluated it – I evaluated Freshbooks and Quickbooks and the Shopify integration for Quickbooks is free and that’s one of the things that got me going in that direction along with the fact that my bookkeeper is a Quickbooks person – but there is another one called WaveApps. It’s a free solution that you can use and I understand it’s very good. Accountants that I’ve talked to that are online business people love it, so maybe that’s another option for you. My understanding is that it’s free.

Whatever you do, you need to be taking good care of your accounting information during the year so that you don’t get into this big crisis at the end of the year where you’re trying to pile everything up.

One pro tip. If you are going to file income taxes as a business, you’re going to need to file a schedule along with your income taxes. One of the things that is an important accounting piece of this is a chart of accounts. If you’re going to do your books yourself, a pro tip is to pay an accountant a little bit of money to help you set up a proper chart of accounts.

That way when your business is small you can use a properly constructed chart of accounts on your own and then when it grows up you can just hand the whole thing off to a real accountant who is properly trained and at least you’ll have the proper foundation for your accounting that they can then improve on and go off of and handle things for you.

Those are my tips regarding internet business finance. I strongly recommend that if you only take away one thing from all of this mess it’s to make sure that you have that bright line between your business finance and your personal finance. That is absolutely critical for your financial health moving forward with your business.

Wrapping Things Up…

That wraps it up for this week. It’s really great to talk to you. I’ve been crazy busy with the drop-shipping stuff. The store is over $100 in revenue now. I’m making steady progress and I’m right on plan for how this course is going. I’m getting very excited and I’ll keep you posted as that develops.

For those of you that ended up one of the 1,600 people that went over to ConvertKit’s Product Creation Masterclass that I’ve been talking about for the last couple of weeks by clicking on my link to get there, thank you very much for all of those visits over there. If you’re one of the people that signed up and you’d like to work with me and the group of us that are in there as we go through the course, we have a daily thread that we’re posting on in the Late Night Internet Marketing Facebook Group. I’d love to see you there. I’m going to be available to answer some questions and reveal what I’m working on and all that stuff. Right now we’re on Day 3 of the course, so it’s certainly not too late for you guys to jump in and join us if you signed up. I hope to see you over there.

Until next week, go get some awesome stuff done. I’m counting on you.

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