Shownotes
Small Business Tax Prep Tips For Handmade Products
Our expert today walks us through the steps you can implement now so that your tax filing experience is less painful next time. We cover ...- Who should be part of your financial team (+ why they're so important!)
- Specific actions to take every month
- Common mistakes to avoid
- The best tools to use for
- Tips to reduce taxes as you become more profitable
- How to take the dread out of tax prep
Tune in now for small business tax prep tips that will make tax time so much easier!
Danielle Hayden is a reformed corporate CFO who is on a mission to help rule-breaking female entrepreneurs understand their numbers so they can gain the confidence needed to create sustainable profits. After spending more than 10 years in the boardroom, Danielle is now in her sweet spot as the CEO of Kickstart Accounting, Inc. where she helps business owners with bookkeeping, financial analysis, education, and as the author of the Profit Planner book series. When Danielle isn’t crunching numbers on her clients’ behalf or crafting the next iteration of the Profit Planner, you can find her hanging with her two kids as she inspires them to lead their fullest lives and doing almost every fitness-related activity ranging from Spartan races to pilates. There are so many tips to help make small business tax prep for your handmade product business easier. Listen now to get them all.Resources Mentioned
- Join the next Gift Biz Bash - Free!
- Ep 361 - How your business income should impact your personal life
- QuickBooks software
- Genius Scan app (for scanning receipts)
Danielle's Contact Links
Website | Facebook | Instagram | Twitter |LinkedinJoin Our FREE Gift Biz Breeze Facebook Community
Become a Member of Gift Biz Breeze If you found value in this podcast, make sure to subscribe so you automatically get the next episode downloaded for your convenience. Click on your preferred platform below to get started. Also, if you'd like to do me a huge favor - please leave a review. It helps other creators like you find the show and build their businesses too. You can do so right here: Rate This Podcast Apple Podcasts | Google Podcasts | Spotify Thank you so much! Sue Know someone who needs to hear this episode? Click a button below to share it!Transcripts
Gift biz unwrapped episode 366.
Speaker:It might look good on your taxes,
Speaker:but it's not going to show you a profit and you're
Speaker:going to be very discouraged.
Speaker:Attention. Gifters bakers,
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Speaker:Join us for an episode,
Speaker:packed full of invaluable guidance,
Speaker:resources, and the support you need to grow.
Speaker:Your gift biz.
Speaker:Here is your host gift biz gal Sue moon Heights.
Speaker:Hi there.
Speaker:It's Sue.
Speaker:And thanks for joining me here today.
Speaker:I can't believe we're already coming up to our second gift
Speaker:biz bash.
Speaker:Not sure what this is.
Speaker:It's something new that I recently started for you.
Speaker:The gift BizBash is a zoom party that provides a short
Speaker:session of free live training,
Speaker:and then a chance for you to highlight your company and
Speaker:any promotions you currently have going on.
Speaker:Or if you're interested in doing a collaboration,
Speaker:you can give us the details on that and perhaps find
Speaker:your next biz buddy.
Speaker:The first one was a couple of weeks ago.
Speaker:Oh my gosh,
Speaker:we had so much fun and it's going to be coming
Speaker:up as a podcast episode here shortly.
Speaker:Why don't you join us for this next one?
Speaker:Spots are limited so that I can keep the bash to
Speaker:about 45 minutes or so.
Speaker:You can sign up for as many as you like or
Speaker:pick and choose based on your availability to see the schedule
Speaker:and to sign up,
Speaker:go to gift biz,
Speaker:unwrapped.com forward slash bash.
Speaker:It's a hundred percent free for you to pick up a
Speaker:growth tip and get eyeballs on your business,
Speaker:to what could be better.
Speaker:Gift biz,
Speaker:unwrapped.com forward slash bash.
Speaker:I'll see you at the next one.
Speaker:And now onto the show today,
Speaker:do you recall the old vaudeville films where they'd have a
Speaker:big hook that would come out from behind a curtain and
Speaker:grab a bad actor around the waist and pull them off
Speaker:stage? Please don't do that to me.
Speaker:When you hear what we're talking about today,
Speaker:it's a topic that I know you've heard enough about lately,
Speaker:and probably want to forget until this time next year,
Speaker:that is Ugh taxes,
Speaker:but what if you didn't have to dread tax season?
Speaker:I mean,
Speaker:it's going to come around again,
Speaker:whether you like it or not,
Speaker:and putting a blindfold on now,
Speaker:won't make your experience with filing any better next year.
Speaker:But listening to this episode can our expert today is going
Speaker:to walk through what you can do now so that your
Speaker:tax filing experience can be less painful.
Speaker:Next time around we cover who should be part of your
Speaker:financial team and what actions to take and tools to use,
Speaker:whether you're a newbie in business or a seasoned pro,
Speaker:I think you'll pick up a tip or two to ensure
Speaker:that tax filing sanity is in your future.
Speaker:Today. It is my pleasure to introduce you to Danielle Hayden
Speaker:of kickstart accounting.
Speaker:Danielle is a reformed corporate CFO.
Speaker:Who's on a mission to help rule-breaking female entrepreneurs understand their
Speaker:numbers so they can gain the confidence needed to create sustainable
Speaker:profits. After spending 10 years in the boardroom,
Speaker:Danielle is now in her sweet spot as the CEO of
Speaker:kickstart accounting,
Speaker:Inc, where she helps business owners with bookkeeping analysis education.
Speaker:And she's also the author of the profit planner book series.
Speaker:When Danielle isn't crunching numbers on our client's behalf or crafting
Speaker:the next iteration of the profit planner,
Speaker:you can find her hanging out with her two kids as
Speaker:she inspires them to lead their fullest lives or any,
Speaker:and almost every fitness related activity ranging from Spartan races to
Speaker:Pilates. Hmm,
Speaker:Spartan races.
Speaker:That's interesting.
Speaker:Danielle, welcome to the gift biz on repped podcast.
Speaker:Thank you so much for having me here.
Speaker:I'm very excited to have this conversation with you,
Speaker:Me too.
Speaker:But before we even go into the candle question,
Speaker:what our Spartan races,
Speaker:They are an obstacle mud run.
Speaker:Very odd that I got into this.
Speaker:I had a friend who invited me a few years ago
Speaker:to train and go to one and my fiance and I
Speaker:had a blast.
Speaker:So I'm as girly as it gets.
Speaker:I do not want to get dirty at all.
Speaker:And then it comes to race day and you're climbing into
Speaker:mud. And it's the funniest thing in the world so much.
Speaker:Oh my gosh.
Speaker:That does sound amazing.
Speaker:And your shoes probably come off as you're running through the
Speaker:mud and some points.
Speaker:Oh yes.
Speaker:I can't tell you how many people have lost their shoes
Speaker:in there and something that you don't do that in real
Speaker:life. You're not going playing in mud like kids and monkey
Speaker:bars and lifting heavy stuff.
Speaker:It's a really,
Speaker:really challenging events,
Speaker:but it's so much fun and you leave feeling like a
Speaker:million bucks.
Speaker:It sounds amazing.
Speaker:And you've kind of gotten like a mud spa treatment at
Speaker:the same time.
Speaker:I said that in my last race,
Speaker:I said,
Speaker:you know what,
Speaker:guys? I said,
Speaker:people pay good money for this.
Speaker:And just toughen up.
Speaker:There you go.
Speaker:All right,
Speaker:well, we've already gotten a little bit of a peek into
Speaker:who you are besides just your intro.
Speaker:But I also want to do this by way of a
Speaker:motivational candle because we've been doing it all these years.
Speaker:So I can't stop.
Speaker:Now, Danielle,
Speaker:if you were to describe yourself by way of a motivational
Speaker:candle, what would it look like?
Speaker:Bike a color,
Speaker:and then maybe a sane or a motto or a quote
Speaker:that would resonate with you.
Speaker:So my favorite color is red.
Speaker:I love the smell of cherry almond.
Speaker:Everything is cherry almond in my routine.
Speaker:And then my quote for long as I can possibly remember
Speaker:is mind over matter.
Speaker:And I really do truly believe that.
Speaker:Yeah, my kids roll their eyes.
Speaker:My mom laughs my team.
Speaker:I'll ask every time I say it,
Speaker:because I truly believe that our mind controls what actually becomes
Speaker:our reality.
Speaker:I agree with you.
Speaker:It can limit us or it can open us up to
Speaker:opportunity. It depends which switch you want to flip.
Speaker:Yeah, absolutely.
Speaker:Okay. And we are going to have to flip some switches
Speaker:here, Danielle,
Speaker:because these are the topics that I know people who are
Speaker:listening, shy away from all the accounting and the numbers and
Speaker:all of that.
Speaker:Talk to me a little bit about how numbers became such
Speaker:a passion for you.
Speaker:Yeah, it's really interesting.
Speaker:I actually didn't do very well in math growing up.
Speaker:So I wasn't a math nerd.
Speaker:I never thought I was going into school for math,
Speaker:but I was actually working as a hairdresser and I realized
Speaker:that I loved the numbers side of how to make money,
Speaker:right? Like that is how you made a living.
Speaker:There was understanding,
Speaker:you know,
Speaker:how many haircuts or how many hair colors that you had
Speaker:to do in order to hit your different quotas.
Speaker:And then I started talking to the other stylists and saying,
Speaker:Hey, you know,
Speaker:if you do this,
Speaker:you'll meet the same quotas.
Speaker:And then if we all do this,
Speaker:the salon will have to pay us even more money.
Speaker:And so I got the whole team rallied around understanding the
Speaker:numbers that they needed to hit in order for us to
Speaker:all achieve our goals.
Speaker:I didn't know it at the time I went back to
Speaker:school for accounting and fast forward,
Speaker:it all came back full circle.
Speaker:As I'm sitting in the corporate boardroom,
Speaker:I realized this is the same thing that I was doing
Speaker:10 years ago at the hair salon,
Speaker:but in a different way,
Speaker:using the numbers to ensure that we hit our goals and
Speaker:rallying the team behind those numbers and understanding those numbers so
Speaker:that we can all hit our goals together.
Speaker:And so I fell in love with the process and that's
Speaker:what we do today at kickstart is helping other business owners
Speaker:understand the numbers and what they need to do in order
Speaker:to be able to find the success in their business and
Speaker:not feel so overwhelming in this topic.
Speaker:I love it.
Speaker:And I know you've had a lot of experience with handmade
Speaker:creators, you know,
Speaker:or smaller businesses too.
Speaker:And one of the things that we continue to see all
Speaker:of us is that sometimes we're not looking at the right
Speaker:numbers because we'll look at,
Speaker:let's say how many products we sold at a certain event,
Speaker:but we're not looking at how we priced the products.
Speaker:You know?
Speaker:So we're not really seeing margin.
Speaker:We're just seeing revenue,
Speaker:but that's not what you're bringing home and putting in your
Speaker:pocket. So that's a big issue here.
Speaker:Yeah. I told you before we pressed record,
Speaker:when we first started kickstart,
Speaker:we worked with that was our first customers was a lot
Speaker:of I'm from Cleveland,
Speaker:Ohio. And we have a really big market here that we
Speaker:were able to really help transform a lot of handmade creative
Speaker:entrepreneurs in understanding it's not the number of products you sold.
Speaker:It's not the gross because that's a number that people focus
Speaker:all the time.
Speaker:How much revenue did you bring in?
Speaker:It's the expenses.
Speaker:People forget that the expenses are just as important as how
Speaker:much they brought in and then their time.
Speaker:Okay. Yeah.
Speaker:Time. I mean time is something I think as makers we
Speaker:think, well comes naturally to me and it's just me and
Speaker:I'm the owner of the business,
Speaker:you know,
Speaker:it's kind of like the old fashion.
Speaker:You don't tip the owner type thing.
Speaker:We don't charge for our time.
Speaker:If we're the maker.
Speaker:And if you're in business,
Speaker:that's not going to work for very long.
Speaker:And if you enjoy it,
Speaker:so a lot of our clients will tell me,
Speaker:I don't mind it.
Speaker:It's therapeutic because that's the whole reason you started this business
Speaker:to begin with because you had something that you enjoy doing
Speaker:and that you were good at,
Speaker:and then you started selling it.
Speaker:And so a lot of our clients will say to us,
Speaker:I enjoy this so much that my time really shouldn't be
Speaker:included, but that's not true.
Speaker:As you continue to grow your time has to be included
Speaker:just like all the other expenses in order to truly understand
Speaker:your business Completely.
Speaker:Okay. I'd like to guide the conversation into a specific topic
Speaker:here. And that is something that everyone wants to like shove
Speaker:to the side because this time of year it's for many
Speaker:of us over as of like within the last couple of
Speaker:days, and that is taxes,
Speaker:you know,
Speaker:so often as April 15th approaches,
Speaker:then all of a sudden it comes to light that,
Speaker:oh my gosh,
Speaker:what do I need to do to prepare?
Speaker:I've got to get my numbers going,
Speaker:you know,
Speaker:all of that.
Speaker:And then even when we submit taxes,
Speaker:the question,
Speaker:did I do it right?
Speaker:Did I give it to my accountant properly?
Speaker:You know,
Speaker:if you're not doing it yourself,
Speaker:all these questions.
Speaker:And I'd really like us all to get to a point
Speaker:where we're feeling comfortable early on in the process of what
Speaker:we need to prepare for taxes.
Speaker:So that come a year from now,
Speaker:everyone listened to this show can be like,
Speaker:okay, I'm so glad I put in play an easier way
Speaker:to manage taxes so that we can focus on our business
Speaker:and not just that stressful time.
Speaker:Right? So that's the conversation I'd like to go with.
Speaker:How does that sound for you?
Speaker:Sounds amazing.
Speaker:Definitely a conversation that needs so much time and attention,
Speaker:especially this time of year.
Speaker:I can't tell you how many clients come to us,
Speaker:overwhelmed and frantic.
Speaker:And then it brings on all the other mindset issues,
Speaker:right? In the shame and guilt.
Speaker:This is a really good opportunity to be able to do
Speaker:it differently next year.
Speaker:Perfect. All right,
Speaker:so let's take it from somebody who's brand new.
Speaker:Let's just go with a clean slate.
Speaker:Okay. How do you frame getting ready for taxes?
Speaker:Like just an overall statement to start with.
Speaker:Is it going to be time-consuming do we put processes in
Speaker:place? Like what's the value of doing this now versus just
Speaker:wait until the end?
Speaker:Yeah. It's going to be a mad rush,
Speaker:but that's okay.
Speaker:I just don't want to deal with it right now.
Speaker:What would be the advantage of addressing it today?
Speaker:Yeah, so I am a big believer in that we have
Speaker:the opportunity as business owners to be able to make business
Speaker:decisions for our taxes throughout the year.
Speaker:So this should never something that you're only thinking about between
Speaker:January and April.
Speaker:This should be something that you are thinking about at the
Speaker:end of every month.
Speaker:And so if you are just starting out part of your
Speaker:process as a business owner at the end of each month
Speaker:or quarter,
Speaker:is the process of reviewing your numbers and looking at,
Speaker:do I have a net income or do I have a
Speaker:net loss?
Speaker:And if you have a net income,
Speaker:either setting aside the appropriate amount of funds,
Speaker:or if your tax accountant advised you to make tax payments
Speaker:throughout the years,
Speaker:the year be able to make those tax payments.
Speaker:Now, when you get to year end,
Speaker:you've made business decisions throughout the year,
Speaker:according to your taxes.
Speaker:So if you have a huge profit you've saved,
Speaker:you've spent accordingly,
Speaker:you've had a conversation with your tax accountant about maybe becoming
Speaker:an S-corp.
Speaker:You understand how much you took an owner's draws.
Speaker:You understand the information.
Speaker:So everything's put together.
Speaker:So you've saved time,
Speaker:you know,
Speaker:where you stand.
Speaker:So you have confidence.
Speaker:You're not surprised by your tax bill.
Speaker:So you have a sense of calmness and a sense of
Speaker:ease. So those are some of the emotions that you can
Speaker:enjoy. If you start this process now for next year.
Speaker:Wonderful. And I'm going to tell you right now,
Speaker:a lot of us have no idea what that process even
Speaker:should be like.
Speaker:A lot of people,
Speaker:you know,
Speaker:you're talking about having a tax accountant.
Speaker:If we're just starting,
Speaker:we don't have one.
Speaker:You know,
Speaker:if we're farther along than we do,
Speaker:give us an idea of what financial team could look like
Speaker:as you grow your business.
Speaker:Because right now let's just talk to the person who is
Speaker:just starting out selling products.
Speaker:What eventually should they evolve into in terms of help with
Speaker:their numbers?
Speaker:So I want you to have what I call the financial
Speaker:triangle. You have your bookkeeper.
Speaker:So this is the person who is entering all of the
Speaker:transactions into your accounting system.
Speaker:You are never too early for a bookkeeper.
Speaker:I truly believe that as soon as we're making money,
Speaker:we need to have our systems in place to be able
Speaker:to have this information recorded.
Speaker:They are also the person who will help you understand the
Speaker:information throughout the year and be prepared for tax season.
Speaker:The second person is your CPA.
Speaker:So this doesn't need to be anybody fancy.
Speaker:This could be a local CPA,
Speaker:a tax partner to your bookkeeper.
Speaker:So not the same firm,
Speaker:not the same company,
Speaker:not the same person,
Speaker:your bookkeeper and your CPA should be two different people so
Speaker:that you have a checks and balance.
Speaker:You know,
Speaker:that two people are looking at those numbers and that they
Speaker:are accurate and they can work together.
Speaker:So your CPA is a person who's coming in at year
Speaker:end to file the taxes.
Speaker:However, I do want you to talk to that person at
Speaker:least one other time throughout the year,
Speaker:maybe that time is summer or quarter three,
Speaker:to make sure that you are prepared for the end of
Speaker:the year.
Speaker:And then the third person is your financial advisor.
Speaker:And I know starting out that might be surprising that I'm
Speaker:telling you if to have a financial advisor,
Speaker:however, as self-employed individuals,
Speaker:we still need to be thinking about our long-term strategies in
Speaker:terms of our retirement disability insurance for your business.
Speaker:So thinking about who is in your corner,
Speaker:to be able to help advise on those long-term financial strategies,
Speaker:to make sure that you are protected.
Speaker:And ideally,
Speaker:again, these three people should be three different companies,
Speaker:three different individuals,
Speaker:however you want them to work together.
Speaker:So you want them to be able to communicate and be
Speaker:able to work together.
Speaker:Wonderful. And I just want to make mention to everyone who's
Speaker:listening. I want you to reference back to episode number 360
Speaker:1 with Aaron Bridgeman.
Speaker:And there,
Speaker:we talked about how the income that you make in your
Speaker:business bridges over to your personal life.
Speaker:And that's very compatible with what Danielle's talking about.
Speaker:I almost look at these as two twin episodes that you
Speaker:should listen to together.
Speaker:I know her very well.
Speaker:Yeah. I think you should just had her on your podcast
Speaker:too. Didn't you?
Speaker:I did.
Speaker:I will second that we speak the same love language.
Speaker:Yes. And so she was talking a lot about how you
Speaker:transition your profits over to your personal life.
Speaker:All that you were just talking about here in these last
Speaker:comments. So again,
Speaker:I think these are to just listen to them back to
Speaker:back. You'll get a wealth of information.
Speaker:Okay. So let's get back to your financial triangle.
Speaker:So we've got your bookkeeper,
Speaker:your CPA and your financial advisor.
Speaker:That is the optimal image of the partners that you should
Speaker:have in place as part of your financial team.
Speaker:What do you say?
Speaker:Because now I'm going to bring in a layer of reality.
Speaker:Someone who is just starting out is going to do their
Speaker:own bookkeeping for some time.
Speaker:I mean,
Speaker:you just know they are,
Speaker:even though they probably shouldn't,
Speaker:unless they have a friend,
Speaker:how can we kick them off in the right way?
Speaker:So they're prepared as best they can be for tax season
Speaker:two. Like what basic things should they be doing with,
Speaker:for sure the statement that they should be handing this off
Speaker:as soon as they can.
Speaker:So, you know,
Speaker:you'll still have an accounting system.
Speaker:So I would recommend QuickBooks or zero wave as a free
Speaker:option. However,
Speaker:long-term, it is not an effective option.
Speaker:And those systems will help you create the necessary profit and
Speaker:loss statement,
Speaker:which you will need in order to be able to file
Speaker:your own taxes or have a CPA,
Speaker:do your taxes for you.
Speaker:So you want to make sure that you are in an
Speaker:accounting system.
Speaker:The mistake that I see people make is that they use
Speaker:a Google doc or an Excel spreadsheet.
Speaker:And unfortunately that is not full-proof and it leaves a lot
Speaker:of room for error and can cause a lot of issues.
Speaker:It can result in you overpaying on your return.
Speaker:It can result in you not taking enough deductions.
Speaker:So you really want to make sure that you have a
Speaker:system in place that's going to help you capture the information
Speaker:in order to be able to then use that profit and
Speaker:loss statement,
Speaker:to be able to file your taxes.
Speaker:Right. And you know,
Speaker:if you're just putting it on an Excel spreadsheet,
Speaker:you still then have to figure everything out from the numbers
Speaker:that you've put down.
Speaker:It does take a little bit of time.
Speaker:I've heard of zero before we use QuickBooks.
Speaker:And you're saying wave long-term,
Speaker:isn't a good solution.
Speaker:I'm all for putting people on the right tool,
Speaker:right from the beginning.
Speaker:So you'd say zero or QuickBooks,
Speaker:right? I would say Xero or QuickBooks.
Speaker:QuickBooks is by far our long-term favorite.
Speaker:We find that QuickBooks offers a shift in mentality is going
Speaker:to be able to give you long-term support in your reports.
Speaker:And because entrepreneurs,
Speaker:business owners understand that when they start to work in QuickBooks,
Speaker:it shifts their mindset and saying,
Speaker:I got this right?
Speaker:Like I'm doing this.
Speaker:I am considering myself official enables that growth opportunity,
Speaker:that growth mindset.
Speaker:Okay. And something that I learned,
Speaker:I had a quick book specialist actually in our VIP coaching
Speaker:call this week.
Speaker:And we were talking about the differences between QuickBooks online and
Speaker:QuickBooks desktop.
Speaker:And what I understand is that for people who are inventory
Speaker:rich, QuickBooks desktop is better.
Speaker:Unless you want to do an add on like an additional
Speaker:app, I guess you call it that you would add on
Speaker:to QuickBooks online.
Speaker:Is that right?
Speaker:That is correct.
Speaker:Yes. Okay.
Speaker:So would you then given that recommend QuickBooks desktop for a
Speaker:maker community?
Speaker:I would not.
Speaker:Okay. Most of the makers that we work with use either
Speaker:an inventory add-on that syncs with their point of sale system.
Speaker:So it's a little bit different from the traditional marketing that's
Speaker:out there for systems most marketing,
Speaker:right? When,
Speaker:so when you're marketed a software,
Speaker:a big highlight for marketing teams to give you is that
Speaker:we sync with QuickBooks.
Speaker:However, what I think is more important is sinking with your
Speaker:point of sale system.
Speaker:And so you want your inventory as part of your point
Speaker:of sale systems that every time an item is sold,
Speaker:it's being removed from that system.
Speaker:Makes sense.
Speaker:Yeah. So then when you need to replenish your inventory,
Speaker:you can easily see,
Speaker:you can do an inventory report and there you go.
Speaker:You've got what you need.
Speaker:Yes, exactly.
Speaker:Okay. Wonderful.
Speaker:And honestly,
Speaker:QuickBooks, you know,
Speaker:it sounds big and scary and any accounting system to someone
Speaker:who's never done this before,
Speaker:it sounds difficult and challenging really what it is,
Speaker:is inputting data.
Speaker:And then that tool does the work for you.
Speaker:You know,
Speaker:it produces your profit and loss statement or your inventory report,
Speaker:all of that.
Speaker:So it's really just a matter of making sure that you're
Speaker:inputting the information it needs to do its job.
Speaker:We'll continue this conversation after a quick break to hear from
Speaker:my other company,
Speaker:which also happens to be the sponsor of the show.
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Speaker:When we work with new clients,
Speaker:one of the first things that we do is use our
Speaker:strategic framework to make sure that the QuickBooks chart of accounts
Speaker:and income statement is set up accurately so that you can
Speaker:understand your numbers.
Speaker:Unfortunately, what comes out and QuickBooks tends to just be an
Speaker:alphabetical list of accounts.
Speaker:And long-term,
Speaker:that's very difficult for you to understand what is going,
Speaker:where and why.
Speaker:And so I do encourage anyone who can to take the
Speaker:opportunity to work with an expert who can help you make
Speaker:sure that QuickBooks is set up accurately and that things are
Speaker:being categorized in the right places,
Speaker:not just for taxes,
Speaker:but for you as the manager of the business,
Speaker:to be able to manage your expenses and understand the numbers.
Speaker:All right.
Speaker:So with the understanding that everything needs to be set up
Speaker:correctly and not just the automatic a to Z listing,
Speaker:right? Let's say that all of that is set up because
Speaker:I want to take this from the basics.
Speaker:What's the information we're supposed to be putting in Into QuickBooks.
Speaker:Yeah. I mean,
Speaker:that sounds very general.
Speaker:I get it.
Speaker:No, that's okay.
Speaker:So QuickBooks will walk you through a process of setting up
Speaker:what's called a bank feed.
Speaker:So you will set up the bank feed for your checking
Speaker:account, your savings accounts,
Speaker:any credit cards that you have,
Speaker:PayPal can be a bear.
Speaker:So you want to link your PayPal correctly.
Speaker:So depending on how you have your PayPal account set up,
Speaker:you'll want to make sure you link your PayPal accordingly and
Speaker:QuickBooks. But once all of those systems are set up or
Speaker:once all those feeds are set up,
Speaker:it will automatically upload each transaction.
Speaker:So you're out making money,
Speaker:spending money,
Speaker:and QuickBooks is bringing all of those transactions into the system
Speaker:for you then to categorize for each expense and each income
Speaker:line. Now,
Speaker:one thing that we see a big error that we see
Speaker:when we first start working with clients is that historical information
Speaker:will not have the vendor name.
Speaker:And so no matter where you're spending money,
Speaker:you actually want to click on the transaction and make sure
Speaker:you're putting in the vendor and then the category or the
Speaker:account and what you want it to go to.
Speaker:The other piece of this would be your sales.
Speaker:So depending on what point of sales system you're using,
Speaker:let's say you're using square.
Speaker:You'll also sync your square system to QuickBooks,
Speaker:or have a mechanism to pull all those transactions in as
Speaker:you're making money.
Speaker:Okay. So anywhere where you have purchasing,
Speaker:once that's connected,
Speaker:all of your sales will come in and then with your
Speaker:credit card,
Speaker:which is your credit card,
Speaker:when you charge on a credit card,
Speaker:does that sync into QuickBooks?
Speaker:Yep. Oh,
Speaker:I didn't know that clearly I have a bookkeeper,
Speaker:All of your checking account.
Speaker:So your deposits and your expenses or your credit cards as
Speaker:you're making money and spending money,
Speaker:everything is pulling into QuickBooks.
Speaker:The most important part of a bookkeeper job is to make
Speaker:sure that they're maintaining the integrity of the income statement.
Speaker:They're maintaining the integrity of the chart of accounts.
Speaker:So again,
Speaker:what I think is most important when we do our accounting,
Speaker:our end goal is always for business owners to be able
Speaker:to understand the information.
Speaker:And so you need to have the right categories put in
Speaker:place in order when the expenses come in,
Speaker:they're going to the right categories.
Speaker:That way,
Speaker:when you're looking at the income statement,
Speaker:it makes sense.
Speaker:Well, and it's actually representative of what's really happening.
Speaker:Like heaven forbid you have a cost of sales.
Speaker:That's really showing us income or something like totally off you're
Speaker:in the wrong side of the accounting.
Speaker:Exactly. Right.
Speaker:And that could really throw you off.
Speaker:Totally. All right.
Speaker:So if you have everything connected up,
Speaker:then it's important to make sure that the categories are correct.
Speaker:It's either money going out money going in and then allocated
Speaker:to, you know,
Speaker:there are all the other separate categories too,
Speaker:right? Like entertainment or education,
Speaker:all of that.
Speaker:Yeah. So those are awesome,
Speaker:important categories.
Speaker:And I would recommend you have your categories grouped by types
Speaker:of expenses.
Speaker:So under travel could be,
Speaker:this is a random example,
Speaker:but like airlines,
Speaker:hotels, parking gas,
Speaker:all under travel,
Speaker:and then under payroll would be contractors.
Speaker:Any payroll fee is if you're paying any employees,
Speaker:those would be all be under your payroll sub category.
Speaker:So grouping them in that way.
Speaker:Our advertising is another one.
Speaker:It's anything that you have under advertising and marketing might be
Speaker:like booth fees,
Speaker:marketing, contractors,
Speaker:website developers,
Speaker:so that everything under advertising and marketing is grouped together.
Speaker:And the reason that this is so important is that there
Speaker:is a beautiful report called percent of sales.
Speaker:And it will show you where you're spending money,
Speaker:how much of your sales,
Speaker:your spending in each category.
Speaker:And so it really allows you very quickly to say,
Speaker:am I spending too much money in advertising?
Speaker:Like, whoa,
Speaker:that's 30% of my sales going to advertising.
Speaker:We should probably do something in order to get that down
Speaker:closer to 10%.
Speaker:So it allows you to be able to have that analytical
Speaker:conversation with yourself or with your money team to be able
Speaker:to decide on what would be a good idea to continue
Speaker:to spend money on.
Speaker:Okay. And what if you've really upped your game this year,
Speaker:now that we're out face-to-face again,
Speaker:and this is someone who finds selling their product face to
Speaker:face through craft shows,
Speaker:farmer's markets,
Speaker:all of that is a really good idea.
Speaker:And they want to be able to analyze which shows are
Speaker:really performing for them with,
Speaker:like you said,
Speaker:booth fees,
Speaker:travel, hotel booth,
Speaker:set up all the different things that go into a show.
Speaker:Is there a way to pull out and allocate keeping them
Speaker:in travel or booth fees or,
Speaker:you know,
Speaker:all of those expenses,
Speaker:but allocated on a show level.
Speaker:Yeah, you absolutely can do that in QuickBooks.
Speaker:Okay. So there's a way to tag expenses.
Speaker:Is it a sub level tagging type thing?
Speaker:So there's a few different options you can create depending on
Speaker:how many shows that you're going to do.
Speaker:You can create an account for each type of show.
Speaker:So some of our clients will they'll do it by the
Speaker:each account as a type of show that they're going to
Speaker:be attending.
Speaker:And then the fees and expenses,
Speaker:according to those types of shows,
Speaker:if you want to do it specifically for each show,
Speaker:you can tag it by source.
Speaker:It is on a higher level of QuickBooks account.
Speaker:So if you have essential oils or basics,
Speaker:you can not tag each sale by source.
Speaker:So that would need to be done by a journal entry.
Speaker:And I would partner with your bookkeeper or your money team
Speaker:in order to be able to get that level of detail
Speaker:in there.
Speaker:Okay. And it really,
Speaker:in the end,
Speaker:it's circling back to what you said before.
Speaker:If you're just starting like get someone who really knows what
Speaker:they're doing to help you set up your QuickBooks account and
Speaker:then you're good,
Speaker:then it's just a matter of inputting all the information.
Speaker:Yeah. What we're talking about here is kind of the next
Speaker:level of information.
Speaker:And so I don't want anyone to get in there and
Speaker:like, wait,
Speaker:where am I going for this?
Speaker:Because it's not in the more basic levels,
Speaker:but if you're in a more basic level of QuickBooks,
Speaker:you can do it by having different accounts for each event
Speaker:and have all the expenses,
Speaker:the booth fees,
Speaker:everything that's associated with that show go to that account.
Speaker:Okay. All right.
Speaker:Wonderful. So let's swing back and talk again about taxes.
Speaker:We're merging into all of the accounting stuff and it all
Speaker:starts with,
Speaker:as you're saying,
Speaker:with having a source where you can actually understand what your
Speaker:numbers are.
Speaker:So you know what you're going to be reporting when it
Speaker:comes to taxes,
Speaker:a couple of questions for you.
Speaker:What about saving all your receipts?
Speaker:Do we need to do that anymore?
Speaker:So the IRS says that anything under $75,
Speaker:you do not need a receipt for anything over 75.
Speaker:Technically you do.
Speaker:I would not recommend putting them into QuickBooks.
Speaker:So we still see a lot of self-employed individuals who,
Speaker:when they're first starting out,
Speaker:we'll take a picture and import that information to QuickBooks.
Speaker:What ends up happening is that you end up doubling up
Speaker:your expenses between having that manual entry and then the entry
Speaker:from your bank feed.
Speaker:So it's registering twice as what you're saying Per rocked.
Speaker:Yeah. Okay.
Speaker:Yeah. That's not good.
Speaker:No, it's not good.
Speaker:It might look good on your taxes,
Speaker:but it's not going to show you a profit and you're
Speaker:going to be very discouraged.
Speaker:I would recommend there's a million different apps out there.
Speaker:I personally use genius scan.
Speaker:It allows you to save right to drop box.
Speaker:So you can take a picture of all your receipts,
Speaker:save them in a Dropbox file.
Speaker:If you are traveling,
Speaker:I want you to make sure that you have those receipts
Speaker:saved. That is a big audit red flag,
Speaker:but even so any of your day to day transactions that
Speaker:are over $75,
Speaker:you could take a picture of them,
Speaker:save them in a Dropbox file.
Speaker:Do not put them in a shoe box.
Speaker:We all know at this point,
Speaker:the ink fades.
Speaker:So I take a picture of them,
Speaker:save them electronically.
Speaker:You can do it by month or by year,
Speaker:but how those receipts electronically.
Speaker:Okay. So all you need to do,
Speaker:let's say you are out at a show and you have
Speaker:a food receipt or something.
Speaker:You just use genius scan,
Speaker:take a receipt.
Speaker:It automatically goes into your Dropbox and then you can throw
Speaker:away the receipt.
Speaker:Correct. Yay.
Speaker:Okay. Everyone scan all of your receipts and then get rid
Speaker:of that box.
Speaker:You can do that.
Speaker:Yes. Get rid of the box.
Speaker:Yay. That feels they're very refreshing.
Speaker:A little spring clean to our accounting systems right there,
Speaker:for sure.
Speaker:So what do you say and what do we do to
Speaker:manage and balance year end and inventory?
Speaker:You know how people at the year end see that they've
Speaker:got some money to spend?
Speaker:Well, these are two separate things.
Speaker:So let me start over year end inventory.
Speaker:As makers,
Speaker:we have a lot of ingredients,
Speaker:elements, cost of sales that go into the creation of our
Speaker:product. And at the end of the year,
Speaker:we're not all zeroed out necessarily.
Speaker:Do you have any guidance or recommendations for us or suggestions
Speaker:on how we manage that at year end?
Speaker:Anything that we're able to control to make our tax bill
Speaker:less. So it really depends on how you're filing your taxes.
Speaker:If you are filing your taxes on a cash basis,
Speaker:which want to say 90% of our maker,
Speaker:clients are filing their taxes on a cash basis.
Speaker:You are taking the tax deduction,
Speaker:the tax expense,
Speaker:the day you make that purchase.
Speaker:And you're considering it income the day you make that sale.
Speaker:And this is really important because you actually won't have year
Speaker:end inventory.
Speaker:You can count it.
Speaker:I suggest you understand your inventory and know what you have
Speaker:on hand.
Speaker:However, from a tax perspective and an accounting perspective,
Speaker:you will not actually be keeping your inventory on the balance
Speaker:sheet. You will be taking the expense,
Speaker:you'll be taking the deduction as you spend money throughout the
Speaker:year. Okay.
Speaker:So if you're buying wax for your candles,
Speaker:that is an expense at the time of that purchase.
Speaker:Correct. And if you're showing a large profit,
Speaker:so let's just say for this year,
Speaker:you're heading towards the end of the year.
Speaker:And because you have bookkeeping in place and you're reviewing your
Speaker:numbers on a regular basis,
Speaker:you see in October,
Speaker:November, oh,
Speaker:wow. I'm really profitable this year.
Speaker:What should I do to make sure I'm not overpaying in
Speaker:taxes? You can go out and buy a bunch of wax.
Speaker:And now that wax now do not spend money just for
Speaker:a tax deduction.
Speaker:Only spend money.
Speaker:If you know that you need that material.
Speaker:Yeah. You'll be using it into the year.
Speaker:Right. We've seen people spend money just to get the tax
Speaker:deduction. Don't spend a dollar to save 40 cents,
Speaker:but you can go and buy that wax in December.
Speaker:And it counts as an expense in that year.
Speaker:And then you'll use it in the following year.
Speaker:Okay. So how does that work if you flip over your
Speaker:calendar year?
Speaker:So let's say you by the end of December,
Speaker:because you're going to need it to your example,
Speaker:but you don't actually receive it until the following calendar year.
Speaker:So it doesn't actually come into inventory until that following January,
Speaker:It doesn't matter because your cash.
Speaker:So it's all about when the cash comes in and the
Speaker:cash comes out and Cassius king.
Speaker:Alright, wonderful.
Speaker:Perfect. So,
Speaker:I mean,
Speaker:I know you're not a tax advisor.
Speaker:I mean,
Speaker:I have seen people buy a new vehicle for delivery for
Speaker:their business or all sorts of things to get their taxes
Speaker:down, you know,
Speaker:because they have that income,
Speaker:any suggestions for people,
Speaker:if they're looking at a huge tax bill,
Speaker:but they feel like they could be doing something to their
Speaker:advantage. I mean,
Speaker:should you move it over and pay yourself more or I'm
Speaker:sure you've seen more examples than I have,
Speaker:but any suggestions on that end Talk to your money team.
Speaker:They know your situations.
Speaker:So taxes are not cut and dry.
Speaker:There's not a one fits all solution here.
Speaker:You need to talk to your money team in order to
Speaker:understand what your financials are telling you that you need to
Speaker:do this year.
Speaker:It would be unfair of me to say,
Speaker:everybody, go create an S-corp and put yourself on payroll.
Speaker:Because if you are not ready for that,
Speaker:that is not doing you at any service.
Speaker:You need to talk to them.
Speaker:Does it make sense for you to purchase a vehicle?
Speaker:For instance,
Speaker:if you are an LLC,
Speaker:you can deduct your vehicle.
Speaker:But if you're showing a ton of profit,
Speaker:it might make more sense for you to become an S
Speaker:Corp and put yourself on payroll.
Speaker:Now you can't deduct the car in the same way.
Speaker:You would have to reimburse yourself for the car.
Speaker:However, you're getting a greater tax deduction by putting yourself on
Speaker:payroll. So you need to be talking to your money team.
Speaker:So that includes your bookkeeper and your tax account to make
Speaker:sure that you can get the right advice for you.
Speaker:I think as Corp is the biggest change that we've seen
Speaker:people make in the past few years,
Speaker:gone to the days of thinking that you have to take
Speaker:everything as an owner's draw,
Speaker:we have more and more of our small business clients becoming
Speaker:an S-corp,
Speaker:putting themselves on payroll and taking advantage of them becoming part
Speaker:of the business expenses of their business.
Speaker:Yeah. And I think the biggest thing that you're advising that
Speaker:I'm hearing besides all the detail underneath is have people in
Speaker:the know who are part of your team who can advise
Speaker:you properly.
Speaker:Because just because let's say a friend of yours through a
Speaker:chamber meeting or something has switched over to an S-corp and
Speaker:is reaping the benefits doesn't mean that's right for you.
Speaker:You know?
Speaker:So you really,
Speaker:to your point,
Speaker:Danielle need to look at individually what your situation is,
Speaker:what your numbers look like,
Speaker:and then take advice from that group that you've put together.
Speaker:Yeah. You really have to make sure that somebody is looking
Speaker:at your specific situation and not giving that overall guidance.
Speaker:Right. Which again is also why you want to establish these
Speaker:people early and keep them informed of your business.
Speaker:As you were saying,
Speaker:check in with your CPA at the mid-year point,
Speaker:too. You know,
Speaker:so any actions that could be taken can be taken before
Speaker:you're at the end of the year when you can't affect
Speaker:it again.
Speaker:Exactly. When you go home at the end of the day,
Speaker:Danielle, and you think back on your day or your week,
Speaker:and you see things that you wish people would have done
Speaker:differently just to make their life easier.
Speaker:What things come to mind?
Speaker:You know,
Speaker:the biggest thing that comes to mind for me,
Speaker:especially in this topic is we,
Speaker:as entrepreneurs are wearing all of the hats,
Speaker:right? We try to,
Speaker:we think we can,
Speaker:We try to write.
Speaker:And as women,
Speaker:for some reason,
Speaker:we think we have to,
Speaker:or we need to,
Speaker:as you attend more events,
Speaker:as you grow your business,
Speaker:it's really important to remember.
Speaker:You don't have to do it all.
Speaker:It was so rewarding for me to hire my first contractors
Speaker:and then employees.
Speaker:We have seen it with our staff members who are our
Speaker:clients who have needed support and got the support that they
Speaker:needed before burnout.
Speaker:And so if you are really overwhelmed with the numbers piece
Speaker:of your business,
Speaker:I want you to start to think about that money team.
Speaker:Yo, maybe this year,
Speaker:it's just getting a CPA in place.
Speaker:Maybe next year is getting a bookkeeper in place.
Speaker:And then the next year is getting a financial advisor in
Speaker:place. I just don't want you to feel like you have
Speaker:to do it all alone.
Speaker:Entrepreneurship is hard and this money conversation,
Speaker:it's freaking hard and it can be really confusing and overwhelming.
Speaker:You're not alone.
Speaker:You're not the only one thinking,
Speaker:gosh, this is really confusing.
Speaker:There's so many business owners out there who are really good
Speaker:at their craft.
Speaker:They didn't set out to beat an account.
Speaker:They didn't set out to understand the numbers.
Speaker:They set out to produce this amazing craft and give that
Speaker:to the world.
Speaker:And unfortunately,
Speaker:part of that is knowing your numbers.
Speaker:And just,
Speaker:if you tuned into this point in the podcast,
Speaker:first of all,
Speaker:I'm proud of you.
Speaker:You're doing the things that you need to do and keep
Speaker:doing them Perfect.
Speaker:And honestly,
Speaker:if you free yourself up of that time to make more
Speaker:product that you can then sell,
Speaker:you're going to recoup any costs that you have,
Speaker:and you're going to be happier and feel lighter and enjoy
Speaker:your business more.
Speaker:So Danielle,
Speaker:let's talk a little bit more about kickstart accounting and you
Speaker:were mentioning some resources that you have a little bit as
Speaker:we've been going through the conversation.
Speaker:So why don't you share some of that with us?
Speaker:Yeah. So kickstart accounting,
Speaker:our goal is to help business owners understand their numbers.
Speaker:And we do that through first of all,
Speaker:taking bookkeeping off of their plates.
Speaker:We understand,
Speaker:you know,
Speaker:like I was just saying how difficult businesses and we want
Speaker:to be able to take one hat.
Speaker:I always picture,
Speaker:I got to get this like statue someplace.
Speaker:I picture the crazy white lady.
Speaker:So that book,
Speaker:one of our kids,
Speaker:crazy hat lady and where she's just able to strip off
Speaker:at least one hat,
Speaker:right? So that you can get that time and get that
Speaker:energy back.
Speaker:I had a client say to me last week,
Speaker:I spend Sundays doing all of my QuickBooks.
Speaker:Well, how long do you think it's going to be until
Speaker:you start to resent your business?
Speaker:Yeah. We just take one hat off of our client's plates
Speaker:and be able to give them some of their time and
Speaker:energy back.
Speaker:So if this is something that resonated with you and you
Speaker:need that support in your business,
Speaker:the kickstart accounting team is always here to help and talk
Speaker:about your specific situation and you can contact us at kickstart
Speaker:accounting, Inc com.
Speaker:Okay, perfect.
Speaker:And share a little bit about your podcast.
Speaker:The kind of information.
Speaker:If someone were to switch over,
Speaker:we've got all podcasts listeners here,
Speaker:obviously, what would they be learning from you from your show?
Speaker:Yeah. Entrepreneur money stories.
Speaker:We are talking about all things,
Speaker:money mindset.
Speaker:I mentioned it a little bit ago.
Speaker:We think that we're the only one thinking,
Speaker:why am I not good at this?
Speaker:Right. Everybody else knows their numbers.
Speaker:Everybody else has their money mindset in place,
Speaker:or everybody else is good at understanding the accounting.
Speaker:And that's not true.
Speaker:And so we're talking about our best.
Speaker:We have other entrepreneurs coming on,
Speaker:talking about their best strategies for how to overcome their money
Speaker:mindset. And then we're talking about some how to sew,
Speaker:how to understand your numbers,
Speaker:how to get this information.
Speaker:We have a whole system series coming up.
Speaker:That's going to be really,
Speaker:really, really special,
Speaker:especially for the people who are just starting up,
Speaker:getting the systems in place so that you can track all
Speaker:the numbers that are going to move your business forward.
Speaker:All of us should be listening to your show because if
Speaker:we're just starting out knowing and doing even just one step
Speaker:better is helpful.
Speaker:But I think you can get us to a number of
Speaker:steps better in the whole money mindset and actually doing it.
Speaker:The goal for all of us for next year,
Speaker:this time is to feel really solid with having submitted a
Speaker:tax report,
Speaker:feeling good about the numbers and feeling confident as we move
Speaker:forward so we can focus on growing the business.
Speaker:Thank you so much,
Speaker:Danielle. I really appreciate you being on the shelf.
Speaker:You're so welcome.
Speaker:It was a pleasure.
Speaker:Thank you.
Speaker:Promise me.
Speaker:Okay. I mean really promise me you won't be like the
Speaker:majority of people who breathe a sigh of relief that they've
Speaker:made it through another tax season and can now coast,
Speaker:along until it comes back again,
Speaker:who needs that pressure?
Speaker:When it circles back,
Speaker:Danielle has given us the pathway to tax filing freedom.
Speaker:I'm walking in that direction.
Speaker:Are you going to join me before you move on to
Speaker:your next activity today?
Speaker:Make sure to get your name on the list for at
Speaker:least one gift biz bash.
Speaker:You can see the dates and times for upcoming sessions and
Speaker:get signed up over@giftbizonwrapped.com
Speaker:forward slash bash.
Speaker:And if you're enjoying the podcast and would like to show
Speaker:support for the show,
Speaker:a rating and review is always fabulous and help spread the
Speaker:word about the podcast,
Speaker:but there's another way for you to get something tangible in
Speaker:return for your support to visit my merch shop for a
Speaker:variety of inspirational items like mugs,
Speaker:journals, water bottles,
Speaker:and even more featuring logos images and quotes to inspire you
Speaker:throughout your day.
Speaker:It makes a great gift to,
Speaker:and we just added some new products for the season.
Speaker:The turnaround is quick and the quality is top-notch nothing but
Speaker:the best for you.
Speaker:Take a look at all the options over at gift biz,
Speaker:unwrapped.com forward slash shop.
Speaker:All proceeds from these purchases goes to help offset the cost
Speaker:of producing this podcast and now be safe and well.
Speaker:And I'll see you again next time for the gift biz
Speaker:unwrapped podcast.
Speaker:I want to make sure you're familiar with my free Facebook
Speaker:group called gift is breeze.
Speaker:It's a place where we all gather and are a community
Speaker:to support each other.
Speaker:Got a really fun post in there.
Speaker:That's my favorite of the week.
Speaker:I have to say where I invite all of you to
Speaker:share what you're doing to show pictures of your product,
Speaker:to show what you're working on for the week to get
Speaker:reaction from other people and just for fun,
Speaker:because we all get to see the wonderful products that everybody
Speaker:in the community is making my favorite post every single week,
Speaker:without doubt.
Speaker:Wait, what,
Speaker:aren't you part of the group already,
Speaker:if not make sure to jump over to Facebook and search
Speaker:for the group gift biz breeze don't delay.
