The Marissa Rehder Show

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Ep. 66 Bookkeeping- a must for all!

by Marissa Rehder
July 14th 2022
00:27:42
Description

In this week’s episode, Marissa is interviewing a bookkeeping wizard, Drezden, to talk about how to stay on top of your book keeping. She also shares important tax tips and the software she recomme... More

you're listening to the Marisa raider Shell, I'm a mom of three farm wife and creative entrepreneur who thrives on helping dreamers endures, make the most of their God given talents. You can consider me your newest BFF who will be in there to cheer you on and give you practical tools to use in your business and your life all while empowering you in your faith, providing you with hard truths and motivation to get you chasing your dreams. I am bringing you actionable tips to uplevel your life and business as a busy mom and believer, I'll share laughs and encouragement with you as you chase after your God given dreams, I believe that you've been given this one life and purpose for you to live out and if you're ready to be the rock star you're meant to be then you're in the right place. Let's get started. Welcome back to another episode of the Marisa raider show. I am super excited, I think I say that every episode and I know I for sure say it every episode that I have a special guest but I am extremely excited for Dresden to be a part of our show today.

She is in the financial world for business owners and I just think that is something that it's one of the last things that a lot of us get to get our stuff together around and so I just cannot wait to soak up all of the knowledge that she has, so I'm gonna let her introduce herself to now. Yeah, I'm so excited to be here, I am just really thankful for this opportunity and I own palms pro books. My goal is to help give other women um service based entrepreneurs, the financial tools and resources that they need in order to start grow and scale their business. Um so a lot of the women that I come in contact with go into business for things that they're really passionate about, so whether that would be like um real estate or coaching or like being a salon owner or anything that they have the skills in, that's why they go into business, it's not for their finances and so often there's like a lag there or disconnect um for the, for the women that I work with and so my goal is to help you learn how to understand your financials in a way that's going to make you prosper.

Oh, I absolutely love that. Um so this is gonna be my nerdy side coming out here, but my husband and I have been binge watching shark tank on CNBC, they replay all of the old episodes on there at night and so after we put the kids to bed, we like run in there and watch four or five episodes of it and I always think, wow these people have it all together and last night there was one guy that they were like, you're, you're the inventor, you're not the entrepreneur, you know, and we really would like to see you either bring somebody on that could help you with that or you know, and I got to thinking that bookkeeping and finances is that exact area at least for me. And I think a lot of business owners, that's the last thing that we think of when we get into business, we're so passionate about what we're doing, that we don't even think about that part, We're like, oh that part, that part will come, I have a budget, I manage my own personal finances, but it's a whole new ballgame when it comes to business finances.

So what is, what's some advice that you have for for business owners when they're just now realizing that they need a little help in this area? Sure. So the biggest tip that I have, especially for new business owners um is to keep your personal and your business finances separate. Um a lot of people go into business and don't really realize the importance of not using your personal bank account um but then they get themselves into a pickle like come tax time when they're trying to give all of their stuff over to their, their tax preparer and it's like, oh my goodness, okay, I guess I don't really know how much income I had or was that expense business related or was it personal? Like they just, they don't know, and then they get really overwhelmed trying to sit through all of their bank statements and like putting it into spreadsheets and just trying to get all of their data ready to go for tax time and so that's that's one of the biggest struggles that I see with other business owners. And then um the other thing that I also come across is um you just don't have the time.

So once you um have started the bookkeeping process it's really hard to maintain because you're juggling all of the other things like you're you're trying to market and reach new clients, you're trying to do the tasks that you have to do for your business like whether you're um a coach and you have to mentor your clients or like a hairdresser who is providing services on a daily basis and then they're often times trying to do it at night time or on the weekends or whenever they can get to it. And so then it just kind of builds and compounds and then it just gets really overwhelming when they try to sit down and actually do the work because it's it's become a big thing rather than a little thing. Yes. Um My husband could attest to that. I don't I don't like finances, they stress me out and so luckily he takes one for the team and he does his farm book work and he does my business book work on top of it but he leaves it until the last minute and so it gets to be time for, we're going to go into meet our tax guy and he's like, I have eight months.

He's like, I do really good like january february March and then after that he kind of lets it lets it slide a little bit and I just think every time like thank goodness this is you and not me. Especially because like during the summer depending on what type of farmer he is, those are his busy season. So he has even less time to worry about those types of things during those busy seasons for him. Yes, exactly. He, we're pretty well well diverse in our farm And so he would tell you that we, every season is a busy season. Summer seems to be, seems to be, especially with just the baling and all the hay and all that kind of stuff. Just long days and hot, humid days here in Iowa sunup till sundown. Exactly. Exactly. Oh my gosh, cool. Yeah, he, he's my saving grace. Otherwise I would be completely lost in this in this realm of, of things.

Um, so let's, let's move on and talk about preparing for tax season a little bit because I think that is especially for new business owners. I mean, and even as you grow and scale your business all of a sudden you are just for me, it's deer in the headlights. Like my tax guy asks me questions and I just bring my computer along and I'm like, let me look that up for you quick. Um, so for, for brand new business owners as long as you're you have those separate pink accounts, one for your personal and one for your business you can really get by with just a simple spreadsheet. Um You can actually download all of your transactions directly from your bank account to S. C. S. V. File and then you can just go through and total those all up. Um for your tax preparer. You can do that on a monthly quarterly or annual basis but the more frequently you're getting in there the less errors you're gonna have because you're gonna remember what those transactions were for. Um And it's gonna be easier breaking those up into littler pieces.

Um Once you start getting I I generally say like Between 30 or 50 and higher transactions every single month, it's really not practical for you to sit down and try and put all of that into an excel sheet. So at that point you would really want to consider an accounting software just because it's gonna streamline the process for you and make your life so much easier than manually doing it all in there. Plus it's less prone to error when you have an accounting software that's going to help you like code your transactions and it allows you to reconcile your bank account which is also another really um big thing that most business owners don't realize that they should do because when you're putting things into an accounting software it's not foolproof. Um And so like technology can sink incorrectly and then miss or duplicate transactions. And so when you're reconciling your bank account each month it helps you ensure that you're not missing anything or that it didn't double entry something. Um And so once like once you once you grow and you have a lot more transactions to work through, that's when it's really beneficial to, I use quickbooks, you can do desktop or online.

Online is my favorite just because there's so many different integrations that you can get with it. Um But I think it's a really powerful tool. You literally read my mind as you were talking there. I was thinking I wonder what she recommends for software and we we do the same. And so my husband has quickbooks also and he does have that problem where it it puts it as miscellaneous or it creates the transaction as something that it's not and so he has to individually go through and make sure that it's all correct. And so it's not quite as time consuming as sitting down and individually man, you know like doing it in a spreadsheet that would get really ridiculous, you know between two businesses but he does have to go through and and retarget some of them which is a good thing because honestly the other thing that it does because we we do it for both businesses and then we do it for our personal finances as well. And I honestly think that that alone would open our eyes to where our money is going and things like that.

So he'll ask me like what is this for? Because I have to help them categorize all of my expenses. And so I sit on the couch and watch shark tank and he does that we've got a great system going and by we, I mean I got and so I will have to like think about it and I'll be like, oh wait a minute am I still paying for that? He's got some subscriptions and different things that I didn't realize was still coming out of my account because it's $15 here or $15 there, you know, and all of a sudden he'll be like, what is this for? And why does it keep coming out? And I go and I researched it and I realized, oh that never canceled when it showed up or I forgot to cancel it when I plan to or something like that. And so I honestly think that it's just good practice and helps you stay on top of where your money is going also in your business definitely. Um You make a really great point about catching things that you're still paying for, that you don't want to necessarily um And like when you're, when you're waiting until the end of the year and going back through, think about how many times those charges would have added up.

Um that you could have saved that money um by catching it sooner. And then another really awesome. Not awesome. But another really powerful story is banks. If you don't catch fraudulent charges they'll usually um give you grace for like a 30 to 60 day period max. So you you're generally supposed to find these transactions within 30 and 60 days and report it to the bank as fraudulent charges so that you can get reimbursed anything past that they consider um that I don't think negligence is the right word but they say that You should have caught it sooner and then anything past 60 days you're just you're out of luck, they're not going to refund you for any fraudulent charges after that. And so people who are going in um like quarterly or semiannually or even annually and they're like oh my goodness, there's charges clear back from March and it's now december, you're probably not going to be able to get those fraudulent charges reimbursed.

Yes, that's such a good point. It just reminds me of the movie tammy where she steals everybody's identity and like buys a jet ski and I all I can think of is like yes I'm gonna have a random jet ski on my bank account at some point and I'm gonna have to catch that. That movie is hilarious. Oh that's another thing my husband and I really like is movie night her movies were really, all of our movies are great. They are absolutely, and if you haven't seen it, you're gonna want to go and watch it now, definitely. Oh my gosh! It'll give you a whole new perspective on identity stuff that's for sure. Oh my goodness! So what do you like? What's your absolute favorite thing? Why would you, why do you choose bookkeeping when it's something that so many people dread? Like what drew you to this line of work so that you can empower business owners to take control of their finances. Sure. So I am very analytical and data mindset.

Um I really like looking at things and seeing how profitable they are and finding trends and I just I really like analyzing numbers and finding growth opportunities. And so um for me um I can take financial reports and give you guidance on areas that you can maybe grow. Um and that really complements people who are more visionary and creative because they often don't have that skill set to be able to take these financial data and analyze it in a way that they're making wise decisions in order to grow bigger. Um And so that's my favorite part like yes um it's kind of repetitive like going in and categorizing things for the most part and making sure that everything is flowing through on your financial reports. But I go above and beyond. So like I'm actually sitting down and analyzing those reports that way I can help advise my clients on decisions that's gonna benefit them. And so it's really about that relationship, which is why I went into the bookkeeping side rather than the tax side because I want to help clients on an ongoing basis have a strong financial foundation every single month rather than just once a year where they're planning to save on taxes.

Yes. Oh I love that. That is that's a great reason to get into. Honestly, I'm kind of in awe of how your brain works because I'm definitely the creative that that needs the assistance. What stage of business do you recommend? Someone higher per se you to help them with their bookkeeping? It really just depends on each specific business. It's not like a one size fits all. Um And it also depends on um like the entity structure that you have. Um So like sole proprietors, if you don't have any employees you're likely able to get by a little bit longer um without having a bookkeeper on. But once you start becoming like an LLC and you're managing employees and trying to like run a team. It's really important that you delegate that task out that way. It frees up your time um to focus on the management and the leadership aspect of your business, but it also helps you stay more compliant because there are a lot of um rules and things that many business owners just aren't aware of, especially when it comes to payroll, it's it's really regulated and um it can get built up quickly um for a lot of business owners then and then the next level would be like an s.

Corporation which is an LLC that has a special tax delegation. Um And it it just um it's taxed differently and so trying to make sure that you are coding things in a way that's going to benefit you the most for tax time um is when you would really want to look into having a bookkeeper. Um And a lot of people don't realize that it's more affordable than you might think. Um Some people I think view it as like a luxury type service, but it's more of like a foundational type service because if you don't have a strong financial foundation you as you grow and you scale you're going to be scaling on a rocky foundation which is only going to create larger problems later on. Absolutely. I completely agree with that. So when you're talking about like a sole proprietor versus an LLC, a lot of um small businesses that are one person run our that sole proprietor or that LLC. Um I have a sole proprietor is what I did because it just that's what our tax guy said made the most sense.

But my husband, he's a partner in our family farm and there's five of them, so they're an S. Corp so we also understand that side of it and so it's definitely much more intense when it comes to farm stuff and the farm does have their own bookkeeper because it's just their farmers. That's what they do. They go out and they farm and ask them how to save a dying sick calf. And he will give you 30 ways. But you know bookkeeping is that's way above because they are they're paying out dividends, they're doing this, they're doing that, they're buying machinery there. You know it's it's a very different ball game. So I can totally relate when you said you know as a sole proprietor, you can kind of go you know in a little bit longer that way because it's it's less to to document and it's just you and you're bringing money in your spending the money within your business. Um What do you suggest? So say you're scaling and you're ready to bring on your first employee, What does that kind of entail? So tell us a little more about that. Sure.

So when you're ready to bring on um your first employee, it's really important to look at the difference between um an independent contractor versus an employee because how you treat those people are so different um independent contractors are people um like me um who you would hire for service but you don't have that control over when they do the work, how they do the work um And like their schedule but then like when you're actually hiring a team member, so say you needed somebody to do administrative work or um you're a coach and you're you're bringing on like a another coach to compliment you or however, whatever kind of employee you're looking for, um you have um more expense because you're responsible for half of the Social Security and Medicare taxes. And then you would need to look into like a payroll software to help you run the payroll um correctly and you have more responsibilities on making sure that you're paying all of your payroll taxes on time and accurately.

Um And so at that point when you're actually getting into the payroll, I think it would be really important to actually look for a bookkeeper to help assist you just because it's so easy to mess up. Um And then the legal ramifications from payroll is a lot more strict than like tax ramifications. Absolutely, absolutely. We did that, we had a nanny and we had to pay her like a salary um for about 10 months and we are, we actually hired our tax people to do all of that for us because it was, it was way above. I mean, Trent tried his hardest, but it was a lot of math and it was a lot of figuring and it was just one of those stresses that just didn't need to didn't need to happen when somebody else clearly knew what they were doing and of the payroll software, the one that I use in my company that I always recommend, especially for small businesses um is gusto.

Um They are the most um reasonably priced. They also have really great customer service and um they're the most user friendly platform now once somebody is really large and probably above 30 ish employees or more, that's when I would look into a software like ADP because they're geared more towards like the bigger, more robust businesses. Yeah, that makes complete sense. So I have a hypothetical friend, let's go this route. She um she's gonna know I'm talking about her when she listens she owns a candle making company, her and I have collaborated on a few things and so what we do is we just run it all into her business and it's my line and then she just pays out you know for service, you know like as a contractor kind of thing. But she has been talking about you know bringing on somebody to help her make the candles and like keep up on the things and things like that.

So when you're bringing in somebody that's just gonna do a few hours a week for you and things like that, how how do you recommend doing that? Would you say that she should hire her as an employee or come up with some sort of like contract agreement type thing or what's when you're not quite sure you're ready to bring on a full time employee like kind of what's the workaround? Not the workaround but what's best practice for that for small business owners? Sure. So it's not necessarily amount about like full time versus part time on like the amount of work that they're doing. It's more so about like the level of control that the business owner has over that person. Um And so a lot of business owners actually misclassified workers because they they just don't have the information on um like what qualifies somebody as an independent contractor versus an employee. And it's really looking like they have like lists out there on the I. R. S. Website and like for each individual state.

But the gist of it is control. So whether you have control of when they're working, who's buying the supplies in order to perform that work. Um Do you have control of the quality of the work that they're doing? Um And then it just really like it's not a, okay I checked all of these boxes. Yes and all of these boxes. No that's what they are. You have to look at the bigger picture as a whole and see which side um you dear towards the most because you're probably gonna be pretty close to the middle on some of those things unless it's really cut or dry. And so but even if you're not having a full time bookkeeper, it's really good to consult with like your CPA or tax preparer. Just if you're ever unsure of how somebody should be classified just to get that guidance at least on the first go. Um Because if you miss classify somebody as an independent contractor who should have been an employee, um they'll they'll make you pay the back taxes for all of your payroll filings that you should have withheld.

Um and then you also incur penalties and interest on top of that and so it can, it can really compound and get kind of large. Um So I I always recommend for small business owners who are looking to get into payroll even if you don't have somebody on an ongoing basis, always consult with a tax preparer or somebody that way you can get guidance on that first classification. That is great advice. I feel like this is such a scary topic for business owners. You know, it's just because it's not common knowledge, it's not something that people talk about. It's not something that a lot of people are are sharing even in the online space. I mean there are some people who who are doing it like yourself, but it doesn't seem to be near as many as like say the coaching industry or you know, business coaches and life coaches and things like that. It seems like everybody's preaching their opinion on those things and that's so that's not, you know, like clear cut by any means. That's just whatever that coach personally believes.

Whereas this is so I don't know, it's it's just a little bit more. You have to toe the line with it, I guess. Yeah, there are actual rules to this. Oh my gosh, but you, you explain it so well and you make it so easy to, to understand. So thank you. That's amazing. You're welcome. I'm glad that it's really relatable. I try to make things as practical as I can because I know that not everybody has that analytical mindset and so I really try to um give you relatable concepts that way. Like the visionaries and the creatives can have something tangible that they can apply it to. Yes, I love that. So where can my listeners find you at, when they need their bookkeeping done or they're they're looking for more information on how to make sure that they're running their businesses appropriately. Of course. So I am on facebook, my business pages, palms pro books.

Um, and then I also, if they ever wanted to shoot me an email, um it's my first name. So Dresden, that's um, D as in dog, ours and read, he is an elephant Z. As in zebra D as in dog, he is an elephant and is a nose. It's still different because most people try to put it with the nets, but it's Dresden at palm's pro books dot com and you can shoot me any kind of questions that you have. Um and email and I will get back to you. Um I just want to help people and like you said there, there really is a misstep and a disconnect in the financial world for people who um they're just not getting the information out there. And so that's my goal. Even if you're not ready for bookkeeping services, any question that you have, I'm more than happy to answer for you. Oh my gosh, you are just the sweetest. Honestly, I will put all of that in the show notes so that people can click right on it and get a hold of you and come find you on facebook. I have learned so much in this brief conversation that we've had and now I'm thinking, I think we need a bookkeeper, so yes, absolutely.

We're going to have to chat when we get done. But I appreciate you so much and I appreciate the approach that you take this and the knowledge and the simplicity that you bring to such a dynamic part of business because it really is, it's got so many moving pieces and I think that that's intimidating for business owners. So thank you for making that so understandable for all of us, creatives welcome. It was such a pleasure being here with you and I'm really thankful for the opportunity. Absolutely! Alright, well I hope you enjoyed this episode and as you know, I'm gonna be here, cheering you on until next week. Yeah

Ep. 66 Bookkeeping- a must for all!
Ep. 66 Bookkeeping- a must for all!
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