Will my publicist accept equity?
By Melissa A Vitale
I have been running my public relations agency for a little more than two years, and for a few years before that I worked at a public relations firm led by my mentor, Jim Dowd, a veteran of more than 20 years in media. Like Jim’s agency, mine specializes in helping startups garner top- tier media coverage. Also like Jim’s, my firm offers lower prices than most major public relations firms because I have lower overhead. I learned how to run my business from Jim and, in turn, I have built a successful agency that has received accolades from journalists, editors, clients, and colleagues.
Also, like Jim’s agency, I do not accept equity in place of monthly retainers, the answer to a question that entrepreneurs often ask me. I still write proposals for those people, wanting to treat everyone equitably, but I know they likely cannot afford my services. I see the request for what it is: startups seeking a free campaign in the hope that their company will succeed and eventually make more than enough money to repay me for my hard work.
A proper PR campaign can often launch in less than three weeks, but it could take years for a startup to match that momentum. I could only accept equity if I knew I could depend on near-immediate Return of Investment, but, as I’ve seen, most startups can take years to reach that point. I have a proven track record, which is why many startups want to work with me, but if I were to accept equity, rather than cash, basically I would be paying vendors and my employees with promises. I could work four to five months without pay, and a startup would have free access to a New York agency. If the startup were to fail, how would I recoup that lost revenue? If I could afford to work gratis, I would gladly volunteer at a charitable nonprofit.
Many of these same founders would never accept such a lopsided business proposal: professional services in exchange for an IOU. Since starting my business, I have had about 20 startups ask if I would take equity instead of cash. Of those, I thought of accepting the offer from only one, and only after receiving regular monthly retainers for nearly two years, after which I knew it was a viable startup, making an equity swap a safe option.
Many business owners and independent contractors have heard the story of the washed-up Shark Tank competitor who couldn't get an investment in his new company, because when he was back in law school, he was offered equity on a company to which he turned down. The company went on to become Under Armor. I've been given this example from startups to encourage me to accept equity. The first thing I point out: The project that Under Armor offered equity for was short term, not a full-scale involvement that would last 5-12 months and over 100 hours of sweat equity.
If there's a short term project of under 6 weeks--not committing my company to investing months of unpaid labor-- and if you can show me the documentation that your brand will be the next Under Armor, maybe we can talk. But most PR services that I provide are a minimum of 5 months time.
Unfortunately for those startups hoping that I take nothing but equity, I cannot work for free. If you can show me a good return within 18 months, then maybe we can discuss that alternative, but if not, my business, like most every other business, runs on capital.
If you are looking for a publicist who accepts equity, I suggest hiring a university student who does not yet have business vendors with monthly fees or contractors to pay. If you need a successful sniper publicist, please peruse our site and schedule a consultation.
To learn more about what we do, visit: https://www.melissaavitale.com/about.html
How to avoid refiling your taxes within your first year of business
This post is a personal lesson that we hope to share with other young entrepreneurs heading into their first year of business. For other great material on Public Relations, please find more great blogs below. For those interested in hearing about my first year of taxes as a business owner, read on.
By Melissa A Vitale
I had been operating my business for about four months in 2017 when another new business owner asked me for my expertise on how to handle taxes. The conversation was winded, because it wasn’t easy to explain that frankly, I didn’t know what I was doing, nor was it a priority as it probably should have been. When I started my PR Firm, I was more concerned about clients and revenue than business expenses and taxes.
“Don’t take my advice,” I finally told her. “If I earn enough that I need to worry about taxes this year, I will… but 2017-Melissa will bring in the revenue and 2018-Melissa will worry about the taxes.”
In the meantime, when it came to taxes, everyone, or so it seemed, had advice for me.
My friends have never been in the position of investing their savings, and launching a business with little planning, direction, or resources would chide early on to be sure that I saved 30 percent of all revenue for taxes.
“If I did that, I wouldn’t be able to eat,” I coldly responded in the first months on business.
Like that unsolicited advice, I ignored the concept of taxes for most of 2017 and focused on one thing: building my business, Melissa A Vitale Public Relations, from the foundation up.
In my mind, I could either worry about taxes or worry about generating revenue; without money coming in, I wouldn’t need to worry about paying Uncle Sam anyway. I looked at the opportunity cost and decided what was more beneficial overall and made a note to ask around for CPAs come 2018 while my business continued to grow.
Well, 2018 came…and January passed…then February. In early March, I started calling Certified Public Accountants. Most laughed at my attempt to hire an accountant so close to April 15! Luckily, one angel (referred to me by la famiglia, so my Italian upbringing approved!) accepted the project that my taxes became.
I hadn’t been using any business tools at first, but six months or so in, I luckily adopted QuickBooks for my invoices. While my invoices were half-tracked, my expenses were only kept in my bank statements. Long story short, my CPA was in for a hell of a time.
She tried, unsuccessfully, to persuade me to report exactly all my expenses, but the idea of perusing multiple statements across 12 months seemed impossible.
I asked every CPA I ran into if I could estimate my expenses until I found one who declared, “Absolutely.”
As you can expect: Worst. Advice. Ever.
With this misinformation, I used everything I could, calendars, emails and agendas, all my written records except my bank statements, to estimate my overall expenses for 2017, with the promise to be much more diligent for 2018
Still evolving from employee to business owner, I approached taxes the way I had most school exams: prepare a little, wing it, and hope for the best. As you can guess by the headline, things didn’t turn out the best they could have, not without a refile that is.
I finished my taxes and owed what I felt was a fair amount. If my revenue had been a salary, I would have been taxed nearly triple the amount my CPA came up with, so to me, the first-year owner of an LLC, I thought that was just fine.
While I was setting up a payment plan with my CPA to start paying my year-end taxes without losing a lump sum, I kept my promise for tax diligence and began entering expenses from January to April 2018 into QuickBooks. Once I started entering my expenses, I realized that technology had made things so easy for business owners, and I didn’t even take the time to notice.
My CPA began sending me emails about the estimated taxes I owed for the first quarter of 2018. Suddenly, what I thought was reasonable was no longer sustainable with a new business.
I looked at my actual expenses for the year and realized, I may have made a big enough mistake to actually impact my finances, and therefore business capabilities for the following year.
I did a bit of research on my own about tax laws and got myself up to shape. I inserted all my expenses that I had (because credit card statements expire 12 months retroactively, I lost the first six statements of 2017 by the time I sat down to refile) into QuickBooks, and realized I made a paramount mistake: I underclaimed close to $25,000 in expenses.
I called new CPAs, ones that specialized in startups and small businesses and decided to refile with one who comprehended my financial situation, experience and goals.
My new CPA laughed at the difference of expenses and informed me that not only did I owe the IRS less, I probably deserved a refund.
I went from struggling to pay my taxes to sending out one, simple check, but again, it wasn’t without a refile. While I was able to condense that story into under 1000 words, the actual 6-month timeframe included months of calls between two CPAs, hours on the phone with banks, weekends pouring over invoices and expenses and a lot of tears and sweat to be able to get a letter from the IRS in the mail without anxiety.
I realize that a lot of business owners will read all this and roll their eyes. “Stupid Millennial, no shit you have to track all your expenses.”
You’re right. Most business owners know this. However, there are more new, young business owners everyday, all wondering the same thing: do I need to worry about taxes my first year of business?
Not only did I learn that lesson, I made the mistakes so others can avoid it.
I want to own my mistakes as a young business owner, because I want others to learn from them the same way I did.
My QuickBooks is now impeccable. I update my information faster than my CPA can check in on it, and I would never have that diligence if I didn’t go through almost of year of Refile-hell.
So take it from me: don’t estimate your expenses. Brew some coffee. Roll something fat. Turn on your hustle music. Hunker down and do whatever you need to do to focus because when it comes to taxes, no matter how young your business is, you need to be accurate.
If my mistake can help one person avoid the same trial, sharing this tale will all be worth it.
Sometimes we business owners want to save time to focus on the important things: namely, bringing in revenue. Taxes are one of those compulsory things that, if not given the proper time or attention the first time, can become even more costly.
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Melissa A Vitale Public Relations
A public relations agency specializing in brands and startups in crytocurrency, artificial intelligence, sexual wellness and legal cannabis.