I’ve entered my second full year of self employment in 2011 and rather than provide you with a typical income update as I’ve done in the past, I’d instead like to look at the other side of the balance sheet and detail my expenses for Q1 of 2011 (I’ll get to the income at the end).

How Much I Spent In Q1 2011:

I had to put together these reports because I had the “problem” of making too much money last year that my accountant advised me to start filing estimated federal income taxes on a quarterly basis. This requires me to keep track of my income and expenses every quarter. So what I’ve done is put together a couple pie graphs showing you my total expenses, fixed expenses and variable expenses (primarily one time costs):

Total Q1 2011 Expenses: $7,095.20

I’ve left out my tax expenses which were by far my largest expense of the quarter because my tax rate will vary compared to yours since my wife is working full time now as well.

Total Q1 Variable Expenses: $5,048.26

The variable expenses I had in the first quarter of this year were for primarily one time expenses like the consulting I received for some web projects I’m working on. The software development expense was for version 1 of an in house tool I had developed to help me buy websites. The conference expenses covers my airfare and hotel costs for some conferences this year (like ASW). The equipment expenses covers some ink I had to buy for my printer (boring I know) and my $500 Herman Miller SAYL chair. Before you ask – yes I can definitely tell the difference between my old $99 Office Max chair and my new $500 Herman Miller chair. Best $500 I’ve spent in a long time. The link services covers some directory submissions to Best Of The Web and another monthly service I was testing out. I paid for some staff finding services to help hire my first full time programmer (which so far has been a great success) as well as a job board posting on Problogger.net to hire some more writers for Photography Tips. I spent some money on some one time software licenses. I also spent a little over $100 on food stuff while I was at conferences. Lastly, I forgot to include the few hundred dollars I spent on domain names in Q1.

Total Q1 Fixed Expenses: $2,046.94

The fixed expenses I had for the three month time period of the first quarter were actually pretty low at just over $2,000. Payroll covers one of my outsourced employees who does some work on the websites I build such as WordPress installs, article writing and link building. My hosting provider is Softlayer and HostGator. I have a dedicated server with Softlayer which I use to host larger websites, but if you’re just getting started out you can easily get by with the shared hosting plan from HostGator which I use for some of my smaller websites as well. Aweber is my newsletter service and I’m about to re-hit $89 per month with them for having over 10,000 newsletter subscribers. For the price I love using Aweber and only wish I would have started using them sooner. Finally I have video hosting through Amazon S3 and because all of my sales pages are video based along with most of my course material I tend to spend at least $50 a month on that hosting as well. I suppose I could include a few of the expenses I left in the variable category down here in the fixed category but they wouldn’t add that much to the fixed total.

How Much Did I Earn In Q1 2011? $41,626.52

I made a total of $41,626.52 in total revenue from Q1 2011 which came from a combination of Amazon Associates, Clickbank, Consulting, Adsense and other affiliate earnings. So based on my first three months of 2011 I’m earning over $10k per month even after expenses are factored in. I still need to step things up a few notches if I plan to hit my 2011 income goal of earning 50% more than I did in 2010.

Online Businesses Are Cheap!

Instead of showing a typical income report I wanted to show you the other side of building a successful online business by highlighting the various expenses that I incurred during a typical quarter of business. The fact that I made over $40k from January to March with only $2k in “fixed” expenses is a testament to the low cost of online businesses. If you want to learn how to build a successful online business than I suggest you subscribe to my newsletter. I’m making significant changes this week and shifting the content to providing much more focused step by step tips for people looking to build their own online businesses.