In this episode, Tiffany Grant sits down with Aimee La Liberte, the owner of My Virtual CFO, to delve into crucial tax strategies and financial management for small businesses. Whether you're a new entrepreneur or a seasoned business owner, this episode is packed with essential insights to help you navigate your financial needs effectively.

Key Discussion Points

Identifying Financial Support Needs

• Aimee emphasizes the importance of understanding specific financial support requirements.
• Options include hiring a bookkeeper, a fractional CFO, or a CPA based on your business's financial complexity.

Tiffany’s Experience

• Tiffany shares her journey in managing business finances, initially considering only a bookkeeper but realizing the need for strategic financial assistance from a CPA or fractional CFO for tax strategy and growth.

Tool Spotlight - QuickBooks Online

• Highlighted as a valuable tool for handling payroll and basic bookkeeping tasks efficiently.

Profit Creation and Tax Payment

• Profit signifies wealth creation for the business owner.
• Paying taxes is an indicator of business profitability and supports societal infrastructure.

Positive Perspective on Taxes

• Reframe your mindset to view tax payments as a positive contribution to governmental services and a marker of business success.

Business Structure Recommendations

• Start with an LLC to establish credibility and legal entity status.
• Transition to an S Corp as profits increase to take advantage of tax benefits and structured payroll.

Financial Management Strategy - Profit First

• Implement the "Profit First" methodology by Mike Michalowicz:
• Create five bank accounts for better cash flow management: Income, Profit, Tax, Owner’s Pay, Operating Expenses.
• Distribute incoming funds according to preset percentages to ensure saving for taxes and allocating profit.

Budgeting and Mindset

• Using separate accounts for different financial needs alleviates financial fear and ensures budget management.
• Structure finances to allow consistent owner pay and expense management without disruption.

About Our Guest

As the owner of My Virtual CFO, Aimee is a trusted profitability advisor to six and seven-figure business owners who are tired of being behind in their books and are ready to uncover blind spots, course correct, and ultimately get more profitable. Aimee also is a certified life and money coach and works with business owners who seek greater confidence and unwavering drive to attract and build wealth in their businesses and lives.

Connect with Aimee

Website: https://myvirtualcfo.co/

Welcome to Money Talk with TIFF, a podcast where we discuss everything,

money, from tips and tricks to current events. Follow me on

my journey to become debt free and meet other cool people along the

way. I am your host, Tiffany Grant. Now let's talk money.

Hey, everyone, and welcome to another episode of the

Money Talk with TIFF podcast. Today I have Amy

Liliberty on the line. I love that name, by the the way. But

Amy is the owner of my virtual CFO and

a trusted profitability advisor to six and seven figure

business owners. So if you are a business owner, listen in.

This is one for you. She helps owners that are tired

of being behind in their books and are ready to uncover blind

spots, course correct, and ultimately get more profitable.

Amy is also a certified life and money coach and works with business

owners who seek greater confidence and unwavering drive to

attract and build wealth in their business, in their lives. Hey, Amy,

how are you? I'm good, Tiff. How are you? I'm doing pretty

good. So right before we came on, I was telling you

how much this conversation is needed right now, in this moment,

especially in my life. But I'm sure

there are so many people out there listening in that

are going through the same struggles. So just to preface this

episode, we're going to be talking about, you know, how to

set up your small business, you know, for tax purposes and

things like that. And then we'll also talk about when should you pay

yourself and how should you pay yourself? Because I feel like that is a very

important thing that gets overlooked in a lot of

beginning small businesses. So let's just jump right in.

So, Amy, what are your thoughts around an

LLC? Like, should people form an LLC, or

should they leave it a sole prop, or what are your thoughts around that. When

you have decided that you want to be an

entrepreneur, which I think is really like a

state of mind. So if you want to have your own business and be self

employed, I think it's an all in type approach. Like,

that's my mindset. So if you're going to do it, let's go all in. Because

we know that we're going to create this entity because we want

to use it as a tool for a

very intentional lifestyle that we are looking to create. And

so I think from the beginning, to create an

LLC is the way to go. Now, there are

other reasons that you may want to be a sole prop, but for me, I

say go with an LLC because that is an indication to your brain

and to your mindset. Like, we're taking this seriously. We're going all

in. When you do an LLC, what you're doing is dividing

yourself as a individual person and your business.

So you're creating that legal protection that if at any point

something happened legally with you within your business,

that. That the person who was

suing the business wouldn't have access to your personal assets.

So I really just like it in terms of, like, stepping forward with the peace

of mind and confidence that you are making that separation.

So that's why I like the soul, the LLC formation

over the sole prop. I gotcha, gotcha,

gotcha. Yeah, we definitely have an LLC. But there's

another thing that's, you know, floating around that a lot of people don't

understand either. And, you know, when you're an LLC,

there's different ways that you can be text. Right, right.

Absolutely. When you. If you just decide,

I'm going to put an LLC so I can make that division between

myself and my business. You're an. You're an LLC in the

IR's. For those of you listening in the United States, this is what

I'm talking about. You are considered a disregarded

entity. And what that basically means to the IR's is

their acknowledgement of, yes, you have a legal entity. We see that. Thank

you. And we are disregarding that

entity in terms of, like, a corporate tax

structure. So please create an accounting

bookkeeping system, track your income and your expenses. And

at the time when it comes time for you to file your taxes,

we want that on a personal return on your schedule C.

So that's like, basically when you do that, that's exactly

what the IR's is instructing you to do. Okay,

so let's say I have an LLC. I've set it up as an

escort now because I read online that was the right thing to

do. What do I do now? Like, what are the benefits

of being in an escort? If you think about it from the standpoint of if

we. Let's go back to, like, the land of, like, sole prop.

So if you decide to have a sole prop, then, you know, that's where you

are. Then you decide to put a legal entity so that you draw that boundary.

Now, you're an LLC with a disregarded entity. And

usually when you're just starting out, that's where I see most of my

clients stay. And the reason why is because when they're scaling

business, chances are their profit margins are smaller than

they are in years two, three, four and five, because they're just

laying the foundation so you're doing the schedule C with that, as I

just explained. But then once you start becoming

increasingly more profitable and you have higher revenue

numbers, what companies tend to do is they decide

to elect with the IR's as an s corp status. Now,

what I explain that as, it's almost like you're putting another

division in yourself, as I am

going to. I want to be treated as a business

owner and an employee.

And so when you do an S corp, what you are doing is

essentially saying Ir's, I'm going to file a corporate

tax return and I'm going to pay myself a reasonable salary

so I can be treated as an S corp because there are

tax advantages to that. Because of the way that when

you're a w two, you have tax withholding, so you're taxed at a

different rate versus when you are a disregarded

entity, LLC paying self employment tax. Gotcha.

Gotcha. So the only way to get that

benefit is to have an S corp. So you can't be like a

partnership or a single member LLC or

anything like that. It has to be an S corp. Yeah. When you file yourself

as an S corp, you are putting

that division between yourself as an owner when you're an

LLC, just like a disregarded entity, LLC.

When you take your owner's draw, which is how you would pay yourself as

an LLC, you are just taking money out of the

equity of the business. So you have profit in the business

and it's sitting on your balance sheet as retained

earnings. What you're doing is when you take money out through an owner's draw, you're

taking some of those earnings to pay for your

personal lifestyle and to, you know, as an owner.

Whereas with the, as a s corp, you are, you can still

take owners distributions and you would put

yourself on payroll and pay yourself a reasonable salary. So you're, you're

taking, you're identifying yourself in two different ways as

part of the business. Gotcha. Gotcha. Now, while we're on the

topic of taxes, because taxes is a big concern

for a lot of people, especially when you're in a small

business. I have friends that had businesses

and didn't do their taxes, maybe didn't pay taxes or

whatever the case may be, and then they're in a ton of

IR's debt. So a lot of times when people hear

taxes, it's like, oh, my gosh, this is like,

horrible. But why do you think people should embrace

paying taxes? If you're paying taxes, it means that you're

running a profitable business. And if you think about, you

know, you hear these statistics. About 82% of

businesses are surviving from, like, one

invoice to another. And when you think about that and you think about

cash constraint and you think about the fact that there

are many businesses that are overspending on what they're bringing

in. And so when you think about just the basic accounting

formula of the income statement, which is sales

minus expenses equals profit, you want that profit number

to be a larger number because you are in

business to create profit. So when you're taxed on that

profit, it's an indication that you are running a

successful business, that you are part of the 18% of

businesses that are running healthy businesses.

And so that should be celebrated. I mean, we all

want to create wealth when we create these

businesses. And when you create profit, you're essentially creating wealth

in your business and for yourself as the owner. And

so there's nothing wrong with paying taxes. I think that the part

that there is a lot of confusion around is that, like, taxes are

bad and, you know, we shouldn't want to pay for taxes.

And so what I recommend to my clients and what I do for myself is

that I. I live in a country that

I want to pay taxes because I want to support

things that the government provides for its people.

And so what I do is instead of saying, oh, my God, I can't believe

I have to pay taxes, I just. I pay my taxes. And then what I've

done, I've done two things. Sometimes I just end up going for

a drive, and I look at the road, and I see the people doing the

construction on the road and the bridges. And I think to myself, my

taxes is helping maintain the infrastructure

of this country. And then if I don't have any intentions of driving

or anything like that, I will go to different

government agency sites. So, like, the national

health department is the one that I have gone to

in recent years, and I just look and see what sort of research that the

federal government is funding. And I like to believe that the amount of money that

I've paid in my taxes is going to support health

research and innovation in the medical field. And when

I do that, it doesn't feel like I am, like, paying

taxes into some vortex where I don't know where the money

is going. I just allow my mind to believe that this

is exactly what I'm supporting and funding when I pay taxes.

That's why I embrace paying taxes, because it's indicating that I

am a profitable business and that I am contributing to

the general betterment of our society.

That is definitely true. And that's a mindset change,

right? Because, you know, like I said, people default

to, oh, my gosh, I have to pay taxes. But if you look at it

in the way that you just explain like, hey, I'm paying

taxes, but guess what? That's because my business is profitable,

then it makes it, you know, like, oh, well, how can I pay

taxes? How can I pay more taxes? Because it just, you

know, shows that, hey, I'm running a

successful business and I am able

to pay taxes. A lot of people aren't able to pay taxes

in their businesses starting up or even when they get older. So

that's a very good mindset shift that needs to

happen. So let me just recap a little bit just to make sure that I'm

following everything, right? So when you first start your business, just

go ahead and throw it into an LLC, because then, like

Amy said, you are telling yourself, this is real, this

is an entity, and I need to treat it as such. And

then once you get some more profit, then start turning it into an S

corp. So that way, you know, you pay yourself as an employee, get

the tax benefits and whatnot. And then if you

are having to pay taxes as a business, guess what

that means you're successful. So now we have a new

benchmark right now going

back to starting up your business. I know when I was reading through your

information, you have an idea that

there's five bank accounts that you need to have set up right off the

bat. So what are those and what do they look like? Absolutely.

So what that's referring to is profit first.

I'm a certified profit first professional. And what that it's

a book that was written by Mike Michalowicz. And what it

is, is it's a principle in regards to helping business owners. And,

I mean, this could be applicable to personal finance as well,

that we as humans will

use our habits in order to,

to make decisions. And so in business, if you have one

account and all the account has all the money coming in and all the

money going out, we really don't have the information that we need

in order to decide, like, you know, like going back to a second about taxes.

Do I have enough money for taxes? Do I have enough money to make payroll?

Do I have enough money to pay my expenses for the month? Because it's all

just sitting there in one, like, you know, one account. And so with

profit first, it's essentially using bank accounts to

create a cash flow management system. And so you've got five accounts

in a basic implementation and you have all your

money coming into the one account, which is the income account. And then based

on a predetermined rhythm, at

minimum we recommend the 10th and

25th of the month. Just as an indicator. You move

the money out of the income account into the other four accounts. And those four

other accounts are profit, tax owners

pay and operating expense. And what that does is

that instead of having these fears like we were talking about before, about like

I don't, you know, I'm going to have to pay taxes. I don't know how

I'm going to be able to, you know, afford that and everything it's already done

because you've already decided and you've allocated dollars

towards your tax savings account. So that account is purpose

is to help you pay for taxes and to save for taxes. And

then you as an owner have money put aside so that you can pay

yourself as an owner. And then the profit account is.

Again, when I was talking to you about business owners that are

operating from one invoice to another, it's because

they haven't consciously decided that they want to be profit,

they want to be a profitable business. And the terms of, like the accounting

principle, as I said earlier, is sales minus expenses equals profit,

right? So if we turn around and we decide that we're going to take

our profit first, we say sales minus

profit equals expenses. If we put the profit

before the expenses, we know that we're going to be profitable

because we've decided that is the

priority over spending on expenses.

So again we do the profit first and then what's left over

after those three other accounts are allocated are the operating

expense monies. What that invites business owners

to do is to have constraint and to make their

business operate in a very efficient manner with the money

that's left in the operating expenses. So the

whole idea of profit first is incredibly easy. Set

up five bank accounts, create percentages and run the money through.

But the actual maintenance and

continuation of it is where the challenge lies.

Because there's temptation. Let's say that you, you know,

sales like you have invoices that are delayed. I.

And so therefore, like, you know, it's time to

make a payment and for, let's say, your credit

card payment and you want to pay it off in full, but you don't have

the money in the operating expense in order to make that payment.

So the temptation becomes like, oh, I've got all this money in my tax

account, I'm just going to take it from there. So it's really

inviting you as a business owner to

really constrain and honor the practice of

profit first, which is you're allocating. You're deciding that the

money is being allocated for these purposes, and you're going to keep it that

way. You know what this sounds a lot

like? What? Budgeting.

Yes. And I say that

because we talk a lot about budgeting on this podcast,

and this is just another way to budget

that may actually also work for people's personal finances

as well. So I'm glad that you brought that up. But I think

it's interesting having the five separate bank accounts because,

like, I shared with you before we even popped on the podcast,

I was like, me and my husband just started paying ourselves as

employees, and we had everything. Well, we still

have everything in one big bank account. And so,

you know, every week I was scared to pay us because I'm like, oh,

my gosh, like, I want to make sure I can cover everything else before

us. But, like, you were saying it

first. And so now what we do, you know, we put ourselves

on payroll, and so we pay ourselves first,

and then we go ahead and handle the business expenses,

and we're in week two of that, and nothing has

blown up. So it's amazing,

actually, how the mind works in all of this, too, because

I was operating from a place of fear. I'm like, okay, I don't

want to pay us because I want to make sure that we can pay our,

you know, contractors, make sure all of our bills are paid for

the business and things like that, and then we'll just take whatever's left over.

But guess what? Every time I did that, there was nothing left over

for us. And so now that we're paying ourselves first,

we're actually getting, you know, a decent salary. I still started it

low, just so, you know, we can kind of

inch into what we want to make. But, you know,

just starting there has been life changing because

not only for the business, but also for personal finance, because

now I'm able to budget a little better. Right? So

all of what you're saying is super, super important, and I'm going to have to

look into doing the five bank accounts and

seeing how much better that makes this whole

situation, because that sounds like a marvelous idea.

So, yeah, what I will say, just as, like, a piece of advice

for you and to your audience, if you are interested, one of the

greatest barriers to entry with profit first. And it's. This

sounds really silly, but it's true.

I've seen it. I've done enough of these implementations is there is

resistance around going to the bank and creating and

setting up the accounts. And the reason is because sometimes

if you're working with a bank where they start asking like, why do you need

all these accounts? You just need this. Why don't you do this? I think

it then becomes to like when you're, when you're like, okay, I'm going to do

something new. And it's not something that is like widely

practiced, it becomes like

overwhelming. And I invite you to, if

you decide that you're going to do this and you decide that, and if you're

working with a bank institution that you have to go in

person to open up the accounts, I invite

you to schedule the appointment and go

to your favorite place, coffee shop,

wherever you like to have like your favorite, like sort of like treat

beverage, purchase yourself a beverage and a non

alcoholic beverage, right. And

go to the bank and open up the account. Like do it so that it's

a super duper treat. The reason why is because when you

do that, it will just make you feel like

such a more confident and

intentional business owner and someone who really

wants, wants to take their business to the next level

by creating these accounts that are going to create greater

confidence and clarity when you're looking at your business financials.

Awesome. Awesome. And actually, I might see if I can go ahead and open

those up today. Oh my gosh, that's awesome. Yeah, right when

we get off the line, because, you know, it sounds like

a wonderful idea. And as everybody knows that listens to

this podcast, I'm all about budgeting, and this sounds like taking budgeting

to that next level when it comes to your business. So I'm

very excited about that and I can't wait to see what that does for

our business. But since we're talking about the next level, right,

when, like, how do you know as a business owner

when it's time to start outsourcing the business

financials? I know in this particular business

that I'm talking about with me and my husband, I have

recently started engaging like cpas, accountants,

bookkeepers, you know, just to get pricing and things like that. Because I'm

like, oh, my gosh, I don't know how much longer I can take this

doing it solo. So how do you know when it's

time? Like, when is it time, Amy?

You know? So I, I think when you're just starting out,

right? I think that there's always time to enlist

the support that you need. It's just really at what

extent and capacity that you wish to have them. So when you're just starting

out, it very well might be that you want to work with

someone who has, like a DIy who has a course that can help you set

up your bookkeeping system. What I have found is there's, there's a

lot of business owners that are really

great about creating social media, and they purchase a social

media tool where they can, like, schedule all their content and all of that,

but they're using an Excel spreadsheet for their business tracking. And

so what I would say is that you need to get yourself on in a,

like some sort of like, bookkeeping system, accounting

software, and there's some that are free and there's some that cost a

monthly fee. And you can decide which one of those work

now. And then you get, and you work with someone who

understands how to set it up because the setup part of it is really,

really important. So you handle that. And then you, as a business

owner, just schedule time, CFO, a CFO

date for you and your business, where you look, you do your

bookkeeping. And again, the way that the technology is designed, it

really helps you really expedite the process of all of the

categorization. And then you can run your reports,

and then you can, you know, look at your numbers. And what I

have my clients do when I work with them in this capacity,

they, like, I give them a list of questions, and I'm like, if you can

answer all these questions and you understand your financials and,

like, you're good to go, then you get to the point where it sounds like

you're at, and it's, I've got a lot of things happening,

and I could spend my time doing things that are revenue

generating and outsourcing different components of

it. So that's where I think you start to entertain. Like, how do I

outsource my bookkeeping? How do I work with someone who

can help me scale this business that may be able to see

things that I'm not seeing simply because I don't look at my

business strictly from a financial lens. And that's where you start to

enlist someone like, someone like me, where I

do bookkeeping, and I also do fractional CFO support.

So working with someone that can help you, support you,

and have a very solid understanding of what you're trying to do and

what you're trying to create in the short term, as long as, as well

as in the three year term, because we want to make sure that we're putting

you in a direction where you're scaling and you're getting yourself to

the goals that you wish to reach. And then after that,

you know, when you're, when you're ready to. I mean, some people, when

they scale, when I, what I find is when they get to anywhere

between like five to $10 million and they're using

like an outsourced framework, at some point they decide to bring

the whole thing back in house because they just feel like they

want to be able to have more of that real time,

like access and some dedicated person on their payroll to do that. So

it's usually like DIY outsourced. And then if you're scaling

to a point where you're wanting to develop an entire finance department, department,

you bring it back in. Now, the type of person that

you're looking for, it's not just

a single person. Because when it comes to anything,

if we think about, I feel like the whole like, way that

one a company markets, I feel like this is the best way to

explain it. A person that is an expert in graphic

design is likely not an expert in SEO.

A person that's an expert in copywriting

is not going to be an expert in website development.

And so it might not be a person who can be a

social media manager. So what you really want to do is when it comes to

finance, it's the same thing. Someone who is a

bookkeeper can help keep your business organized and be your

partner in a day to day engagement. Someone

who is more of a fractional CFO

may be able to help you with your bookkeeping, but is also your

strategic partner in the day to day. And then

you could have someone who's a CPA who's looking at your

business as from a tax lens, that's the lens

that they're looking through. And then there's financial planners who

are helping you help shape in like retirement experts

and who are really trying to shape. Like, how do you create

savings in a very specific way? Whether it's through retirement,

whether it's through purchasing of insurance. So it's like a

whole group of people that support you and really

just being able to understand where you need to be. Like who

you need support with at what time. Because a

bookkeeper's investment, it looks much differently than

a bookkeeper and a fractional CFO. And what you

would pay someone to do tax services for you, you know, it's going to look

different as well. So really having an understanding of

what results you're trying to create with your financials right

now, is like. It's like thinking like

that first and reverse engineering it. I want clarity in my

business financials so that I can run a report and see

where we are. I mean, that speaks like a bookkeeper. I

want to have someone who can help me scale my business

to seven figures in the next two years. You know, that would

require a bookkeeper to help you keep everything organized, but it also will

require, like, a fractional CFO and someone who can help you from, like, a

financial lens on that way. So really getting clear on who it is

and how you need the support is the first step. Awesome.

Yes, yes, yes. That is an excellent point.

And as a business owner, you have to figure out, okay, what

exactly do I need help with? Like, I know in our

situation, I had thought about a

bookkeeper, but I was like, you know, bookkeeping is not really too difficult. I can

probably do that. What I'm worried about, because we use quick quickbooks online.

So if anybody is looking for, you know, a software,

quickbooks is awesome. That's how we run payroll and

everything. But I was like, what we are really

wanting is someone to help us strategize. So strategize

around taxes, strategize around, you know, how to grow

our business. Depreciation stuff, you know, some of the

nitty gritty stuff, not so much the day to day. And so

that's when I kind of switched our focus from trying to find a

bookkeeper to trying to find a CPA or a fractional

CFO like Amy, because those are the type of people that can help

you with those types of things. So I think as a business owner, you kind

of have to nail down what it is exactly that you're looking

for, and then you can start your search around who that

needs to be. So that was a true gem just

now, Amy. But anyway,

you've gone over so much in this episode, and

you're obviously very knowledgeable about business,

finances, and things like that. So if people were interested in

contacting you, how would they find you? So

my website is Myvirtualcfo

co. So you can go there and check

out all of the things happening there.

And I can also be

found on instagramyvirtualcfo. All right,

awesome. Awesome. Thank you so much, Amy, for coming on the show.

You're welcome. Thanks for having me. Absolutely. This was a very

timely discussion, and I'm sure it'll help

a bunch of the business owners that are listening in right

now, because I've learned that a lot of my audience

is people that are wanting to start businesses or people that

are new in their business. So we just gave a whole

game plan around starting a

business and growing a business and then making sure that you have the

right team in place. So this was a really good episode. I

will have all of Amy's links in the show notes, so definitely check

that out. And thank you so much Amy. I hope you have a wonderful rest

of the day. Thanks you too.

Thank you for listening to the money talk with TIFF podcast. For

free resources and materials, head over to

moneytalkwitht.com. and while you're there, why not sign up for

our newsletter so you'll never miss an episode. Talk to you soon.