Shooting for their dream business

Free Web programs help track finances

Heather and Jesse Ciras are still holding down full-time jobs while working on their fledgling wedding photography business. (John Bohn/Globe Staff)

Heather and Jesse Ciras have a dream. The couple, who have a fledgling photography business shooting weddings on weekends, wants to build their part-time venture into a full-time operation.

They're off to a good start. They launched Ciras Photography in 2006 and were able to cover expenses that first year. In 2007, they invested most of their earnings in new equipment. This past year, they actually showed a small profit. But in order to take their enterprise to the next level, they knew they would have to develop some real business skills. And they just weren't sure where to start.

"Seriously, all the bills are in a shoe box," said Heather, 26, who also has a full-time marketing and communications job. "I know I have to get these things more organized."

To jump-start the process, the Quincy couple applied for a Boston Globe Money Makeover, saying they were feeling overwhelmed. "We need to fig ure out what money is ours and what money is the business's," said Jesse, also 26, who spends his weekdays working as a microbiologist.

When the couple sat down with Compass Planning Associates' John Perkins in the firm's Boston office, the first item on the agenda was pinning down the numbers.

"Whether it is your own finances or your business finances, you need to know where you stand," the fee-only planner said. "That's what allows you to make decisions."

Noting that many people find financial programs like Quicken intimidating, Perkins, who is based in Compass's Northampton office, recommended that the couple take advantage of free online personal finance services like Mint.com or Yodlee.com. Both services are extremely user friendly, he said, and would allow the Cirases to not only gather transactional data on all their accounts but also organize it into categories and use it to generate reports.

Heather, who had procrastinated about actually buying a financial software program, was thrilled to find a free alternative. "Isn't Mint amazing?" she said later, after exploring the site.

Once the numbers are organized, the next step is a business plan, Perkins said.

"That's critical if you want to build this into a full-time business," he said. "You have to be able to look further ahead."

Free plan-writing assistance is available through a variety of sources. Perkins suggested that the Cirases start with the Small Business Administration, then check out mentoring services offered by SCORE, which pairs young companies with experienced business executives.

Since the photography business actually made a profit last year, Perkins said the couple needs to start paying closer attention to their taxes. Not only does Uncle Sam expect them to pay quarterly estimated taxes, but the couple will also have to pay the self-employment tax, which takes a 15.3 percent bite out of any profits. Perkins told the couple to start shopping for a good tax adviser, looking for someone who can both prepare their taxes and help them with technical tax matters such as depreciation and business deductions.

"Are you deducting your Internet provider?" he asked. "Your cellphones?" A quick shrug from both indicated that they were not.

Retirement savings is another important area to be addressed with the tax adviser. By establishing a SEP IRA (Simplified Employee Pension Individual Retirement Account) through the business, Perkins said the Cirases could effectively put up to 20 percent of their net business income into retirement savings. In doing so, they would also lower taxes by reducing taxable income from the business.

"You should be putting 10 to 15 percent of your gross income away for retirement," said Perkins, noting that the couple can reach that level by spreading their annual contributions between the SEP, their workplace retirement plans, and their personal IRAs.

Buying a house was high on the Cirases' initial wish list.

"I hate the idea of just taking money every year and giving it to someone else," said Heather, who saw the current depressed market as providing some good buying opportunities. But Perkins told them to wait, explaining that a house would both saddle the couple with significant financial obligations and limit their future flexibility.

"You are trying to start a business, and cash flow is very important to you," he said. With a monthly rent of $1,100, the couple is currently just making ends meet. That means the additional money required for a house purchase, which would more than double their monthly housing costs, would have to come from the business. "So I would say build the business now and save the money for a future down payment," Perkins said.

The couple, now married three years, understood the need for a safety net. They already had both a renter's insurance policy and a business liability policy. They also have life insurance that would be used to pay off student loans should one of them die. And there's an emergency fund that currently totals about $10,000.

Perkins said that's a good start, but recommended that the couple try to grow their emergency fund to about $20,000. Given their competing financial demands, Perkins suggested that the Cirases divide their savings into three buckets: retirement, emergency, and general. "Then fund each every month," he said.

Once the emergency fund hits $20,000, he said the couple could shift some of their savings to the general account, which would provide money for things like travel and a home down payment.

The Cirases left Perkins's office with a lengthy "to do" list and a lot of enthusiasm. "The wedding season in New England is really just three or four months long," Jesse explained. "It is slow right now." The couple plans to use the off-season to work their way down the list. That way, they'll have the work done well before they photograph their first June bride.