I was talking to a new Domain Investor last week who was trying to figure out how to get the business-side of his domain investing side-hustle setup correctly. He’s going to end the year with about $5,000 in sales, and while he agrees it’s nothing to write home about, he’s hoping to break into five-figures next year.
He asked me,
“now that I feel like this is a real way for me to make a meaningful amount of money on the side, what do I need to do to make sure it’s all organized the right way?”
Once you are making more than around $5,000/year buying and selling domain names it’s time to think about a few simple things you should probably do. The top three things on my list that I share with new investors is:
- Start an LLC (or the equivalent in your country) – there are a number of key advantages to setting up an LLC for your domain business, the main being personally protecting you and your personal finances.
- Create a separate bank account and credit card for your LLC – the easiest way to keep your finances organized is to keep your personal and business finances separate. This will make your life a lot easier for you to provide everything your accountant needs to file your taxes. It also makes tracking income and expenses a breeze.
- Use Quickbooks – sure, there are other solutions out there for keeping track of your books but I’ll be honest, Quickbooks is the easiest to use and the one that every accountant on the planet knows how to plugin to and use instantly.
While it might take a bit of time to get all three of these things setup, once they’re up and running you’ll be able to really treat your investment portfolio like a business. Tracking how much money you’re spending, how much you’re making, and how your portfolio is performing month-to-month is a lot easier if you can just login to something like Quickbooks and get a Dashboard full of data.
Using a separate bank account and credit card means setting up Quickbooks is insanely easy, you literally just add the bank account and credit card and it will take care of the rest.
Yes, it’s pretty damn exciting once you start making real money with domain names, just remember, a little work on the back office can make your life in a front office a whole lot easier as your business grows. I hope this is helpful!