Bookkeeping For Coaches & Course Creators: How to Handle an Increase in Sales

Welcome to the third and final installment of the “Bookkeeping For…” series — all about how to do your bookkeeping based on your industry.

We’ve talked about brand and web designers and copywriters, and now it’s time for business coaches and online educators to shine!

That’s right — if you’re a business coach, a mastermind host, a digital product seller, or course creator, I’m looking right at ya!

Watching people make the switch from 1:1 services to 1:many can be so exciting. There’s little I love more than watching my clients grow! But I know it may not feel so exciting to you. At least not when it comes to your books.

Growing this way almost always means your books get more complex!

Don’t worry — in this video, I’m going to show you all the need-to-know bookkeeping basics for business coaches. No stress, no fuss, just a simple, clear, and organized way to get them done (and maybe a color-coded spreadsheet too because, hello?? Why not!).

How to structure your P&L statements as a coach or course creator

A profit and loss (P&L) statement is a profit and loss statement, no matter what kind of business you have. The only difference really is what happens inside of that P&L statement, like where your income is coming from and where it’s going once it’s inside your bank account. 

And whether you’re a business coach, course creator, or another type of online educator, I always recommend structuring it to where your revenue is on top, direct costs are in the middle, and other expenses are at the bottom. 

You’ll see not only what’s going in, but what’s coming out in a more “chronological” sense. It paints a more accurate picture of where your business finances are sitting at any given moment.

Check your revenue

To track revenue brought into your online business, you need to break it all down into categories. It’s not enough to guesstimate what’s going in and from where. You need clarity so you can know for certain whether or not an offer is making your business any money. 

I like to tell my coaching clients to break it down into these categories:

• Affiliate income
• Course sales
• 1:1 coaching income
• Group coaching income
• Online shop income (digital products, for example)
• Sponsorships and collaborations

Obviously, there may be more categories than this, fewer, or there can be ones you don’t see on this list. But this is a good starting point. 

Costs & expenses for your coaching or course business

Expenses for business coaches can like a little different than it does with other online business owners. That’s because you spend far less time on 1:1 services, and more time on one-to-many offers. 

And even then, those vary pretty expansively depending on your business. So let’s take a look at what you can expect to pay as a business coach. 

Common expenses for coaches & course creators

Like many of my clients, I don’t see coaches, digital product creators, or online educators needing to pay a lot in the way of sales tax. But like I’ve said in the other installments of this series, it all depends on where you live. So make sure you stay up to date with your specific state regulations!

You also need to look at your direct costs.

Essentially, a direct cost is what you’re paying towards someone who is directly contributing to client work — yes, even affiliates in YOUR affiliate programs (not what YOU’RE getting paid to do, and NOT contractors either).

And now, we have what’s left over for expenses! Expenses can be anything like:

• Ad spend (Facebook, Google, etc.)
• Contractors (VAs, brand photographers, bookkeepers, etc.)
• Bank fees
• Credit card processing fees on platforms like Stripe, PayPal, or HoneyBook
• Training and education
• Software subscriptions (course platforms especially!)

LLC or S-corp?

Many business coaches and online educators start out as service providers under an LLC. They pay an owner’s draw from their business account and transfer it to a personal one. This is great because expenses and revenue by line item are still pretty low, and it’s easy to manage!

However, once these service providers start growing their offers into a one-to-many format, that’s when switching to an S-Corp might be a good idea! In an S-Corp, you are an employee of your business and pay yourself a salary.

How you choose to set up your business can also have an impact on your P&Ls. If you’re an LLC, those owner’s draws won’t ever show up on your Profit & Loss report. But if you’re an S-corp, your salary will show up on your Profit & Loss as an expense, in addition to the payroll taxes your business is now paying on behalf of you, the employee. 

S-Corps require more detailed books, sooooo…it might be a good idea to enlist some bookkeeping help to get it taken care of!

Should you hire a bookkeeper for your coaching or course business?

If you’re just now starting your business from scratch and you know you want to be a business coach or online educator, hire a bookkeeper immediately! 

This type of business model (one to many) requires extensive bookkeeping. So unless you’re okay spending the large majority of your time doing your books — hire some help. Like yesterday!!

However, not everyone starts out their business thinking they’ll become an educator or coach. Many of my clients grew into that role. If that’s the case for you, and you also:

1. Don’t really want to do your books
2. You don’t have time to do your books (even if you think doing them isn’t all that bad)
3. Are just now making a shift in transactions — more one-to-many than 1:1s being sold

Then go ahead and add “hire Madison Dearly Bookkeeping” to your bingo card ?My team and I are here for you and would LOVE to help out. And we make bookkeeping fun! How many financiers can you say THAT about??