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The Financial Habits That Give You Control Over Your Business with Sarah Silver · It's Time for Success: The Business Insights Podcast

• Sharon: [00:00:00] Welcome to It's Time for Success, the Business Insights podcast. I'm your host, Sharon de Koning. Today we're going to talk about bookkeeping. We all have to do it as entrepreneurs. We start a business and then we have to quickly learn how to maintain our books. We are joined by someone who helps small businesses stop guessing and start growing. Sarah Silver is the owner of Profits and Coffee, and she specializes in making sure your financial foundation is rock solid. Sarah, thank you so much for joining us. Sarah: [00:00:25] Thanks for having me. This is great. Sharon: [00:00:27] Could you tell us, tell our listeners a little bit about yourself and why or how you fell into working with entrepreneurs in their bookkeeping? Sarah: [00:00:35] I started off in bookkeeping completely by accident. I was actually in school for sciences and was brought in as an administrator, and the management discovered that I really had a mind for puzzles and how things all fit together. And so I stayed with that position for a while and actually ended up getting bored. And the next step in my career was for an irrigation company, where I was brought in to actually transform the systems from dusty paper and binders into proprietary software and into systems that were sellable. And I stayed with that company for about three and a half years before becoming a parent. And through that journey saw the sale of the company, trained the new owner and really, really enjoyed bringing everything out of paper and into clarity that could be used. Sharon: [00:01:28] Wow. So lots of data, lots of entry, lots of thinking, lots of thinking outside the box, probably. Sarah: [00:01:33] And a lot of part numbers that I still, for reasons, have memorized just because that's how my brain works. Sharon: [00:01:39] It's so funny. Technology is different. I can still remember my phone number back growing up, but I can't remember my daughter's phone number now. Like, it's so weird how things have changed. Gosh. Okay, so today's session, there's a few points that I want to touch on. So I would like to talk about is doing your own book work actually saving you money is one point. Another one I want to talk about is why waiting until the end of the year to see your numbers is like I put down here as like driving a car, looking out the rear view mirror. I always think that you need to know your numbers beforehand, before wait until you take them all to the accountant. I think it's important for that and how a bookkeeper can help you with that. And the best apps and software, there's stuff, like things are changing and there's ways of making our lives easier and our bookkeepers’ lives easier. So what may those look like? Those are a couple subjects that pop into my mind when I booked this podcast with you. Sarah: [00:02:26] Certainly. I feel like a lot of businesses will start by doing it themselves. Maybe an Excel spreadsheet or a simple app or something like that. And they might pour some energy into setting that up in the beginning of their company and the beginning of their sales and things like that. But as they increase into their money making activities, like the thing that they're actually doing, that just gets put for maybe next week, maybe next week, maybe next month, and it just gets put off and put off and then it's no longer kept up. So then it's no longer usable and then only doing bookkeeping for the purpose of taxation and year end, you're not having the data that can help you pivot. So for a lot of our course creators and people who are launching new products, things like that, if they launch something and they don't have data to show how it really did over that first 60, 90, 120 days, they can't make a pivot. Now, they might see the sales, so they might be on a platform like Kajabi or Shopify. If they can pull reports, they can see sales reports for things like that, but they can't see the expense that's coming with that and how that money is actually being utilized in their business. So they only have one side of the story. And I find that I encounter a lot of business owners who are like, oh yeah, I just pulled a report from Kajabi or Shopify, and that'll get you so far, but it won't get you the entire story. Sharon: [00:03:56] Right. Sarah: [00:03:57] So, so yeah, so really having that, that clarity in how my money is being used in my business, there's so much that happens in the upsweep of a business where you're adding one more software, one more thing, one more expense, one more. And by the time you look back over a year, you're like, there was a lot of one more things, wasn't there? Sharon: [00:04:19] Mhm. Sarah: [00:04:19] And how is that balancing towards what I thought I needed to charge for my products and services versus where I am? So yeah. Sharon: [00:04:29] It's true. Even like, so when you start… I'm an entrepreneur and I started doing my own. In fact, I took a course, in my defense, I took a course. Yes, it was an evening course. So back in the day I was a legal secretary. I worked for a law firm. Legal assistant. Correction, I got updated to a legal assistant from legal secretary. But anyways, I took an evening course on bookkeeping back then, but back then it was like, what do you call it? The T's, you know? So you have a T and you have your pros or your goodness, what am I trying to say? Sarah: [00:04:53] Debits and credits. Sharon: [00:04:54] Debits and credits. Thank you for that. So that's exactly how. Because it was before software, right? So I had to learn it that way. But I just did it to be able to add value to my work. Like that's really why I took it. So then fast forward and then I started my own business. I thought, I can do this. And then I took a QuickBook course in the city, but it's still not. You still don't know, like, yes, they teach you the software, but you still don't know things like chart of accounts, how to allocate those proper things. Can you talk about chart of accounts and why it's important to set it up right off the get go? Sarah: [00:05:22] Oh, absolutely. So for instance, if you have assets. So you go off and you buy a three or $4000 piece of equipment to do what you do to make money. A lot of people will expense that. And that's not how we treat something that's over $1,000. So you're actually going to put that into your chart of accounts as an asset because it becomes part of the valuation of your company. So if you were to sell your company tomorrow, it actually becomes part of the valuation because that item in how you create your products and services would go with the sale of the company, would go with the product. And that's a major thing that happens. What we also see is so much duplication, and we see a lot of people who don't always, if they've tried to do their own bookkeeping, we see a lot of not understanding the debits and credits system. So if it happened on a bank or a credit card, and then the expense goes to office supplies or cost of goods, things like that, and then GST, but we'll see like a little swoop where there's almost a duplication. So it goes from credit card to bank to bank to something else. And we'll see a lot of duplications when we do a cleanup. And that can cause like some massive, massive headaches in terms of understanding each person's mindset when they were doing the books. And sometimes their mindset is wildly different and they don't even follow their own rules and tactics. And so undoing, it's like a really knotted shoelace and just one piece at a time. And the categories in the chart of accounts, they really help you understand how you make your money and how you can get forward. So I'm just. Sharon: [00:07:00] Is that an asset now? I thought it used to be 500. Sarah: [00:07:03] And it was for a long time. And now, now what I'm seeing is a lot of accountants are recommending $1000. Sharon: [00:07:09] Interesting. Okay, cool. All right, all right. And even like for services, you can break those up too, I think. So that's like the expense side. But also you’ve got to be able to do your chart of accounts right on the receiving side. Sarah: [00:07:22] Absolutely. So like on your sales side, breaking up and understanding how your sales come in from different types of products and services or different types of customers, like long term versus short term customers, anything that would help you understand what's making me the most amount of money? What am I chasing that isn't making me money? Sharon: [00:07:43] For us, for example, we use, we have in our system because we offer different services here at It's Time Promotions. So we do silk screening, embroidery, in-house vinyl, all these kind of things. So we actually have classes if that makes sense. So we have so when a bill comes in or a cost of goods comes in or anything that goes against, it goes against that promotional, say, if I order travel mugs for a company. So I order those in and it goes against travel mugs. So that's my cost of goods sold. Travel mugs. And then when we invoice it out, it goes against promotional products as well. So then why we do that is because then each department in our industry is we can see which one is, I guess, the… by higher profit margin, like all that kind of stuff, right? So we're able to see the, the more value on those different things, the things we have to maybe change or increase or whatever the case is. So we break ours down. So I think when somebody starts a business and they start and think I can do my own bookkeeping, but you don't think about that kind of stuff. And I think having a bookkeeper, they can get you on the right track right off the get go, certainly. Sarah: [00:08:43] And you can also see trends and seasons. For a lot of industries, there's a seasonality and a push even in the nonprofit sector. So when all the grant money comes in, all of a sudden there's a push, right? And there's this moment. And so understanding those things helps you be in alignment with your cost of goods, your time, right? And also your marketing, right. So if you want to get ahead of that by a certain amount of time and push into the marketing to enhance that, these can all be interesting pieces to be following in your business. There's a seasonality to bookkeeping as well. There is definitely that January panic. And so we have to kind of plan for that. And that might be for anyone's business. There might be a time where they're like, no vacation for me in that month and marketing, right? Eight weeks prior. These are the things that are going to allow me to push into that moment. Sharon: [00:09:38] One thing too, you mentioned earlier when we talked about the accountant or getting your books done at the end of the month or whatever the case is. But I believe it's very important to be reconciled. Your account needs to be reconciled every month. Sarah: [00:09:50] Absolutely. That catches duplications and omissions in its tracks. So a reconciliation really is line by line to that bank statement and that credit card statement, that loan statement, every statement that you can possibly capture and line by line, do we have everything in there? And that's going to catch those problems before they get away from you. And before it's year end and all of a sudden, well, how come I have a duplication every month? And it's just because of an error in inputting it and not reconciling it to find that error every single month. Sharon: [00:10:28] Yeah. And some people have paid GST monthly. So that's important, right? Some not everybody pays GST monthly. I don't know how that works. Sometimes it can be. Can you choose when to pay GST? Sarah: [00:10:35] There is a little bit of choice. Often, sole proprietors we see get put on annual. And that kind of almost doesn't do them any justice because they don't always see it coming if they're not keeping up on their books and don't understand how to read a balance sheet that would show them what their GST or HST owing is. So that is something that we like to highlight to our sole proprietors so that they know that it's coming, right? I think that it’s in the back of their mind, but just keeping it kind of in play. One of the things too, is that we see a lot of small business running their business by the balance from the checking account. That's not always your money to completely work with. Some of that is put aside for GST, HST, year end tax, you know, maybe some growth into some product or service that would help you move ahead. And so just going by that is not ever enough to go by. You need those reports to really tell you what the full story on that number is. Sharon: [00:11:38] My bookkeeper will agree with you. Sarah: [00:11:40] Absolutely. Sharon: [00:11:41] She sends me... She'll send me text messages. There's X amount in there, but it's not yours. I'm like, fine. Like holy doodles. Sarah: [00:11:48] Yes, that is the podium, that is like the box we will all stand on shouting like lunatics on the street corner. Right? It's like, no. Sharon: [00:11:57] It's so funny, it’s in there, but it's not yours. Yeah. It's so true. And it's like, oh, start the car. What can I… I need a new asset for over $1,000. I'm gonna go buy a new machine anyways. So yeah. Sarah: [00:12:07] New software. I love new software. And that's always been a problem. Sharon: [00:12:12] Yeah. And you always think it's going to change the world or make things easier. And it does. It does, it does. As long as you have the time for it. One thing I want to talk about is, again, well, first of all, a little bit of a dig why I chose to do my own books for so long that I did do my own books. And even now there's situations where it's like, if I was just doing them, I would have caught that. There's things that and maybe there's a way around it. So this is more of a question. Sometimes we'll get a cost of goods bill from our suppliers or whatever the case is. Maybe it's a matter of, say it's a water leak that we don't even know our toilets run in. So all of a sudden the water bill goes up. But those I would find I would know that whereas sometimes a bookkeeper is just entering this stuff in and it gets overlooked and not corrected. Is that a thing or is that me not not letting the reins go fully because I am a bit of a control freak? Could that be that? Sarah: [00:13:00] It absolutely is. Those middle-sized businesses, it is hard for us to let go and just be like, okay, it's all, it's all okay. Nobody's like, you know, everything's categorized, everything's in. But this one little thing, like you said, like the, the water is running and something is getting away from us. Yeah, absolutely. So I actually really enjoy getting together with my clients. And I will get on a Zoom call and I'll pull up their profits and loss sheet and we'll actually drill into every category and they can say like, why is that high? And they will literally see things. And just doing that, you know, a couple times a year, we'll catch things. Oh, that software went up. You know, things like that. And it will allow them into that. And so... But one of the things is that we don't expect our clients to know how to use QuickBooks Online. And so we do it for them. And I love catching up with them anyways. In those meetings, I often find out that they've got this new idea that they're chasing, or they're going to pull back and take some time off. I find out all manner of things about them and their business and what to expect over the next coming months, but they can also look at those reports in a little bit more detail, because I can bop around really quick and take notes and go and fix some things or whatever they need. Sharon: [00:14:22] Because I find like, especially in the trade or they're out hitting the ground all the time, those guys that are just work, work, work, work, work. I mean, not saying I don't work, work, work, but I sit on my butt and I have three monitors that I'm looking at, right? So I'm able to open up my QuickBooks. I'm able to do like a comparison to last year, this month, or whatever. And even now, QuickBooks Online has a AI feature where it'll actually has asterisks. Like this is different. So I will actually click on it and monitor it. So I get to do that. So for me to let go is a little bit easier because I'm on top of it. But there's people that don't, they trust you to catch those things. They trust you to be monitoring those. So I believe that sitting down with them and talking with them regularly, that's your hard earned money. And I think taking the time is important to do that. Sarah: [00:15:04] There's so much trust placed in us as bookkeepers, so it is definitely one of those things that just having a conversation, it will always just kind of level the field. We're talking money here. I love when I get on an intake call with somebody, they're just kind of kicking the tires as to whether or not they want to work with us, and their shoulders are up around their neck and they're just like, oh, I don't even want to talk about this. And just like, bring that ease and be like, it's all just money. We're just going to talk about it like it's nuts and bolts because that's what it is right now. And when you feel more in control, you're going to feel better about it. And that's, that's one of my happiest things to work through with somebody is for them to really feel like they're not giving it all up and not understanding it, but they actually have the understanding, which can like unclench that jaw, drop those shoulders, and be like, okay, we've got this. Because that's what bookkeeping should do for you. It should allow you to feel like you're running a cohesive business and that you have an eagle eye view to what's going on, and so that you can go forward with your products and services and go make your money. That's what bookkeeping should feel like. Sharon: [00:16:15] And I find if you get behind on books, been there, done that, you're starting to lose sleep. You're starting to get stressed because you got to get that stuff done and it's taken away from what you're supposed to be doing. You're supposed to be going out and working and doing your job that you're good at. So let somebody else do their job that they're good at is how that works. So talking about numbers. So you would meet with your customers regularly. Is it pre-scheduled or is that just something when they reach out, hey, can I get an update? How does that work? Because I think it's important to meet before, like I say, at the end of the year, looking through your review mirror. Sarah: [00:16:44] Yeah, we have some clients that we meet with quarterly. It isn't always exactly on the button for quarterly, but somewhere in there and we have some that we meet with less, right? That sometimes they're quite comfortable with what's going on in their business, or they haven't really had a major change or anything like that. So they get the reports and they're like, yeah, you know, it kind of looks the same, and I'm happy and whatnot. But we generally hear from our clients a lot more in times of change and growth. And we really wish that they wouldn't hide when they're struggling. Right? So we… Sharon: [00:17:21] We do that. We do that because we're, I'm not ashamed of… we're focused. We can do this. We get determined. We're focused. And yeah, yeah. Sarah: [00:17:28] You know, honestly, we have a client right now that's kind of hiding from us. And it's a cash flow issue. And it's like, yes, and we can help. Yes, we see it and we can help. Sharon: [00:17:37] That's perfect. Okay. In our last coffee that we had, we talked about a portal that you have. So tell me, tell me about that. Sarah: [00:17:45] We use a lot of apps. So we love a receipt-capturing software called Hubdoc. And so it's an app on your phone. You can take pictures of receipts on the fly. You can email to it. You can drag and drop. And it's amazing. And so our clients really like it because they're not flying around looking for paper. And really like once they've photographed the paper, they can just kind of put it in a grouping for the year and they don't have to get finite about their filing. Sharon: [00:18:10] I throw mine in the garbage. Sarah: [00:18:13] The CRA will tell you that you're supposed to actually have the paper. But here we are. Shhh… You know, but that gives us more detail than just the bank statement. Right. So we can see the GST lines and we can see if it's, you know, cost of goods versus an expense. And we can, we can get quite a bit of information off of those receipts and pieces. Sharon: [00:18:35] Things like say, for example, if I go up to a restaurant and it's just on my, if I don't give you a invoice. Well, part of that's a tip, that has to be allocated differently. Again, so you go back to your cost of goods sold. So this way if you upload it, it gets imported into the software, which is super cool. I always thought that was my cover. So I don't have to keep a copy because it's in the freaking software, so I don't have to pull stuff. No? Sarah: [00:18:57] Yeah. CRA hasn't quite gotten with that program yet. Sharon: [00:19:00] I was so excited not to have to file everything anymore. And I'm not going to start, anyways. Sarah: [00:19:06] Yeah. And then we also use a portal for month end questions, right? So if we're going through the books and it's actually a, it's a software that is actually connected to your QuickBooks Online file. So it's reading questions and errors. And so we can go through each error line and it's like, we don't have a category for this, or we don't know if there's, you know, cost of goods on this or whatnot. So we can actually push a question through those portals rather than constantly emailing you. And so, they're all kind of grouped together. And when you have a chance to get in there for a couple minutes and answer all those things, it isn't in your email inbox all the time, so… Emails get lost. Sharon: [00:19:47] Does like I have, literally, if, I don't even want to look, I think I have like 160 unread emails right now. Like that's a lot. And it's things that I have to deal with kind of, but or whatever review or something like that. So they will get lost. And also I find when they're in a portal like that, you can delegate like a Saturday morning with a cup of coffee in your pajama pants and deal with that stuff, right? So it's not as like bam, bam, bam. You're focused on that. You're not jumping around on your emails and your brain's like, oh, like a yo-yo all over the place. You're focused on that job. Sarah: [00:20:16] Well, we understand that the business owners that we work with do go through periods where they're just absolutely killing it in what they do, right? So they’re off putting a ton of energy into that. They're chasing the next revenue stream or whatever they're doing. And so sometimes we have to wait. We have to wait for their energy to kind of come back and have that catch-up morning with the coffee cup. And so if you don't answer your questions one month and it's not year end, we're not gonna fret. We're gonna send you your reports. It says, hey, there's still a couple questions on file, but here's your reports. And if you get to it next month, then we have two months worth of things that we have to answer. That's okay. Right? We understand what you're trying to do. We're not trying to be, you know, stop you from those energies. We're not… So basically, we're not going to chase you in times that we know that either you're taking a break or you're pushing hard into your revenue streams. Sharon: [00:21:13] I think days, and days is different now too. I think that as entrepreneurs, we’ve got to embrace technology in this, in this environment, it will it will help you like the QuickBooks Online or whatever. There's different softwares, whatever one you choose. I can't think of off the top of my head what I like about because we obviously we use QuickBooks Online because that's all I talk about, because that's all I know. But what I like back in the day, even when I used QuickBooks Desktop, we had to like lock the platform, lock the platform. But now your bookkeeper can work seamlessly behind the system. You can still go in there if you want to, but also at the end of the year, the accountant just keeps, takes it and just, you just keep going, like you don't, you're not locking your software anymore. Like it's pretty seamless. Can you am I wrong on this? Is all software like this? Sarah: [00:21:55] I know it's great. So QuickBooks and the other one is Xero with an “x”. Sharon: [00:21:58] Zero. And that's what I think of. Sarah: [00:21:59] That one is massive in Australia and New Zealand. It took off there, and QuickBooks seems to be the North American favourite. They're very, very similar softwares. And so it really just is preference. So QuickBooks yeah, we can all be logged in at once. So you, the business owner, could be writing an invoice to a client. Your administrator could be receiving payments from clients. You know, my team could be in there categorizing things and readying for month end. And the accountant to be in there taking a peek all at exactly the same time, and we wouldn't be doing anything to one another. We're all doing different pieces. And so it's so amazing that, yeah, we don't have to stop anything in order to get it prepped for month end, year end, for the accountant, anything like that. Nothing has to stop. And that's really helping a lot of folks. Sharon: [00:22:55] It's genius. Even like I'm just thinking of the people in the trade. You can even do like a quote. I should get like funding. I should get a commission for QuickBooks Online. Anyways, you can even do a quote on your phone from QuickBooks Online. Sarah: [00:23:07] Yes, absolutely. Sharon: [00:23:08] Like so you can be meeting with a customer, here's your quote. Done. Like it's. Sarah: [00:23:13] Yeah. And the quote turns into an invoice and the invoice turns into the payment. And yep. In it goes, right? Sharon: [00:23:19] So yeah, my take on that is embrace the software. Communicate with the bookkeeper. And so that's the thing, so bookkeeping. I have a bookkeeper that's been with us for almost since the birth of Christ, since time started. So it's been a long time. And she's amazing. But now because of QuickBooks Online, she gets to work from home. When I say gets to work from home, it's actually beneficial. I think hiring a bookkeeper remote, much like yourself, is beneficial because back in the day, she used to be at the office. All of a sudden she's pulled because, oh, we're busy up front, can you come help out front or there's shipping. We’ve got to go unload that truck. Can you go do that? Or, oh, let's go get the mail or whatever the case is. Like she's always pulled in different directions. So I like the fact that she gets to focus on what she's doing at home without interruption. And these software programs will allow that, which is awesome. Because you are remote too, right? You work from home? Sarah: [00:24:11] Yeah, I work from home. My entire team works from home, and we're all remote and yeah, absolutely. And, and yet with tech, it feels like we're occupying the same space together. It's great. Right? So, you know, it definitely has its benefits for sure. So yeah. Sharon: [00:24:28] Is there different levels of bookkeeping? So like, I just take for granted my bookkeeper cause we've been working together. So is there different? Tell me a little bit about, do you have different platforms or different services for different levels of customers? Can you tell us a bit about that or how that works? Sarah: [00:24:43] Absolutely. So we have, like the basics really will get your receipts and your invoices entered and reconciled through to what's occurring in the bank and credit card statements. That's the basics of what we need to get done. Come out with that GST report, those sort of activities, right? When you start adding on things like payroll, payroll tax, you've added a complexity, right? You've also added T4 slips at the end of the year, right? There's a lot of other pieces and parts that kind of blend in between bookkeeping and administrative work that sometimes we're just called to do. So, subcontractor payouts. So if your subcontractors are paid a percentage or hourly or some other portion of sales, sometimes we're called to actually reconcile the sales so that we can find out how much that subcontractor might get paid. So it kind of blends between bookkeeping and admin, but it's an important piece of some companies. We also look at job costing and budgets and tracking in some different ways. So, for instance, working with somebody who does renovations or building of any manner, like really digging in, because those products… a piece of lumber can change price one job to the next. So making sure that they have all that job costing so that they can really keep in alignment with how much did this work actually cost us? Sarah: [00:26:13] And so leaning into those reports, some clients will call on us to actually pay the bills as well. There's some pretty cool softwares out there. So sometimes we have bank access and we actually just go in and send e-transfers and do what needs to be done. But sometimes they'll use a software. There's a quite a favoured one called PLOOTO. It's PLOOTO and it hooks onto your bank and it's like an extra administrative software. And so you go in there and you can put in, so say you've got six subcontractors that you pay. They're all kind of by e-transfer. You need this done weekly, right? So that's something that a bookkeeper could do for you. So they're figuring out how much the subcontractors are paid. They're entering it into Plooto. And then Plooto is going to draw the money from your bank and distribute it to the subcontractors. So it's a great way to kind of keep up with things, especially if you're in trades and need to be out speaking with your customers and being on the tools and leading your team, you don't need to be doing their spreadsheets and their amounts. You need to be their leader and working into that realm. So it just kind of keeps you a little bit more agile. Sharon: [00:27:23] I need to know a little bit more about Plooto. Sarah: [00:27:26] Mhm. Sharon: [00:27:27] I looked at it years ago and actually, because you pay for it, it's a service that's paid for, I believe, with QuickBooks and it pays bills. So you talked about it'll send money to their contractors. So how is it different than just sending an e-transfer? Like why, why would I pay for Pooto when I can send an e-transfer? Sarah: [00:27:43] Because there's different security settings. And so it's allowing a bookkeeper to have access to funds without actual access to the bank. So it's like a little bit of a safety period. And it also allows for... So I could set up all the e-transfers and then the signing officer could actually hit the go button and say, yes, I approve. So I don't actually have any access to money, is the thing. And so, so it's just another level of control, right? So remember the days of writing out cheques and the, you know, the person on the desk would write out all the cheques, but then the signing authority would sign them. Sharon: [00:28:20] Gotcha. So it's just like that. I was always wondering what that was or why that was. Gotcha. That makes sense to me. Okay. So I think, I just wrote a couple things down here and there's random… So do you work with… So you talked about remittances, T4 slips, payroll, and a bookkeeper can do that. So we just actually for ourselves and I don't know how that differs, but my bookkeeper still looks after it. So maybe she does everything. We installed the software, we're embracing a software called Whomi, which is now Employment Hero. So they do our T forms. They're basically our HR. Have you ever heard of such a thing? Sarah: [00:28:51] I've heard of the software. I have not explored it. Sharon: [00:28:54] What I like about this particular software, it's not just for... So because we have multiple staff, multiple locations, which is fantastic. So they come in and they log in and they use this app for tracking hours. So then it goes into there and blah, blah, blah, blah, blah, off it goes. So we know how much we're paying for them and it has all their credentials in there. But on top of that, we can also use it for like human resources. So it's actually training software in there too. So we can upload a training software and it gets distributed to all our team. And we can see when they've actually read it and signed off on it. And, and so now we're, it's migrating over to Employment Hero, I think it's called. Oh, I hope that's right. And now we can actually do like tests, so we can ask it questions after. And then anyways, it's a kind of a cool software, but that gets to the next level of that. What about working with accountants? How does that work in your department? Sarah: [00:29:40] So like we talked about earlier, accountants typically have access to the QuickBooks Online file, which is great. So really they're just asking us questions. And then, you know, if they've got a few pieces and parts that they need at year end, and then they just offered their year end package, which might have some adjusting entries at the end. So it's rather seamless with a lot of our clients. So they get into a groove with a great accountant, and we just come to expect the timelines. And it's really great because it's just, it's such a seamless pass off. It's, you know, we just kind of pipe up with the accountant, go, hey, we're ready to pass it off to you. And then they have access to everything. Sharon: [00:30:24] Yeah. I always liked when my, when I get back those adjusting entries, when my sheet’s really small, it's like, yes! It's like a, it's almost like a report card for a bookkeeper. Sarah: [00:30:33] Yes. So close. Right? Sharon: [00:30:35] So close. Yeah. That's always exciting for sure. But usually again, so just if you're an entrepreneur and you're thinking you're going to do those books, just imagine how many adjusting entries that you're going to get back at the end of the year from that accountant. A bookkeeper does it right. And hopefully there's just a few and they learn from it. Sometimes it's like, it's just, what's the one that always… depreciation. You don't know that anyways, huh? Right. So those are typical adjusting entries that we would get and it has to be allocated. So a bookkeeper knows what they're doing and it's done properly. Less stress. Sarah: [00:31:06] Yes, absolutely. Sharon: [00:31:08] Less stress. So we did talk a little bit. Is there any other apps or software that you would recommend for our listeners that would help them on their journey for bookkeeping? Sarah: [00:31:18] We're leaning into reporting that goes beyond the profit and loss. So for a lot of people, especially creative professionals, a profit and loss just looks like a bunch of lines of numbers and it's overwhelming. And so we're leaning in on some highly graphic, basically explaining every category. And so showing in whether it's a bar graph, a chart graph, a pie graph, things like that, in bright colour, your expenses versus your income over time and seeing things that way is really, really helpful to a lot of people. And so we're really leaning into some of the reports that can pull the data from QuickBooks and use, it is using an AI that just broadcasts into more of a chart and especially doing comparatives. So doing Q1 this year, over Q1 last year, and being able to see instantly what your breakdown was in a visual manner is so great. And it's just so much more information to work with. Sharon: [00:32:21] So back in the day, well, even till today, I ain't gonna lie, I can open up QuickBooks right now and I look at the bottom number. Like, I still look at that bottom number. We all do because like we want to show a profit at the end of the month or whatever the case is, however often you reconcile. But one thing is different things to focus on. And I think you talked about the chart, so I don't know what those charts all look at. But for me, because we're growing really fast, which is awesome. So my staff, I keep hiring and keep hiring, not firing. I gotta, you know, we keep growing, but I'm always trying to focus on my number that I really watch is I want 30% of sales for staffing. That's my go-to. Like if I go over top of 30% of payroll, then I'm starting to get a little bit stressed out about that. So things like that. I think there's different ways a bookkeeper can kind of assist that maybe a little bit. Is that true? Like those numbers behind there? What do you focus on? Or maybe the fact like before I was running at 21%. Well, I'm overworking my team. Like, that's not even fair. That's not fair. Like I'm overworking them. They need to, I need to get that number up. So there's different numbers. What kind of numbers pops into your mind that customers or your clients like to view? Sarah: [00:33:34] Sometimes the highest categories and where they change and, and how they change. So for instance, creative professional, using Kajabi and making courses, their main cost might be in softwares. And so just kind of watching how software kind of changes over time. Certainly watching things like bank fees and processing fees over time, and definitely watching subcontractor and employee costs. And so seeing how that breaks down and and when you flip it back. So some of my clients are actually tracking how their sales come in by category. And then they know which employee or subcontractor also goes with that category. So then we're actually able to draw reports of your sales of this variety. And then these two employees or subcontractors service that. And so then they can start to see the correlation between the growth or loss in those categories. Those reports can be a lot of fun to build. And I hope that they're being looked at every month. Sharon: [00:34:38] Because sometimes like, we'll get a report and it's like, until it is explained to you, right? So as long as they, you know, you go over that and you meet with them, which you obviously do because you mentioned that already. So it's important, I think, for people. Once they get it in their brain, then they can figure it out. One thing we didn't touch on, I think, and it's really huge to have a bookkeeper in your corner, there's so many, like yes, you can kind of do your bookkeeping by yourself. Yes, you can kind of plug away with it, but it's not, it's not the… I don't believe for me, I needed to let it go because I was overworked myself. I was getting up at 4:00 in the morning to hammer out books like I couldn't maintain it. And I wasn't doing it properly. But one thing that's really we didn't talk about is paying the flipping government. You can't mess around with that. Sarah: [00:35:21] Yeah, yeah, truly. I will say to doing your own books, what do they say where energy goes, money flows. Right? Sharon: [00:35:30] That's true. Sarah: [00:35:31] Are you in business to keep doing your own books, or are you in business to go and chase the things that you said you wanted to chase? So, go get them, right? Sharon: [00:35:43] Do what you're good at. Yeah, yeah, yeah. Sarah: [00:35:45] Right? And really just allow people who, you know, for somebody like me, it's the thrill of the puzzle and the thrill of the hunt in these things. And people just look at me like, you know, that's crazy. But I've always just kind of enjoyed this kind of work and enjoy the end product and so allow someone like me to get in there and get into our happy place so that you can get into your happy place and move forward in your business. And then, yeah, then there's CRA and nobody wants that's nobody's happy place, right? Sharon: [00:36:17] Because if you're busy, if you're and your books aren't even close to reconciled, you have to like literally try to hammer that out, get that check over to the government in time. Yes. You can't pay them on the 31st, because that's late in their world, right? Or whatever the thing is. So yeah. And the remittances, you don't want to be late for that. Because you talked about interest fees and how much interest they charge if you're late. Like it's astronomical. Sarah: [00:36:37] They will hit you. They will hit you hard for sure. There is also a hierarchy to CRA and what they will come after you really, really hard for, and what you can usually negotiate a little bit longer timeline with. The number one thing is your payroll remittance. Get that in, get it in by the 15th of every month. Don't play around with that one. And that is literally somebody else's money. You cannot think of that money as yours. So if you pay your employee $1,000 and 22% or whatever their tax rate is, that is not yours. And just because it's still in your account until the 15th of the month, does not make it yours to use or be late with or anything else. It literally is the taxes for your employee. Let it go. Pay it on time. The next one is definitely corporate tax is one of the next ones that they will come after you hard for. And GST seems to come in third in terms of how hard CRA will come after you for depending on your level of, right, expense and how much is going on there. But I find like with our sole proprietors that come in who have been doing their own books are behind, often we get them and they are 2 to 3 years behind. CRA is mad at them and would like that GST and things like that. They are stressed, but CRA also understands the sole proprietors and understands that they really just take a little bit of handholding sometimes to get to that end point. So as soon as they see that you are working with a bookkeeper, GST will take that and be like, okay, what's the timeline? When can we expect some movement on this file? So staying in communication with CRA, don't hide from them. Don't hide. Just call them and talk to the human on the other end and say I need six weeks. Right? And just let them know that. And yeah, it's just one of those things, right? Life, death, and taxes. We just need to get er done. Sharon: [00:38:43] Yeah. I forgot about the corporate tax. My bookkeeper too, which you probably do too. She automatically just keeps ahead of it and keeps sending it over there just for year end and the remittances is so important. So, so very, very important. And that's probably the phone call that she's always or the text message: that money in there is not yours. Okay. Whatever. It's definitely the tax man’s. So anyways, those are the phone calls I get from her. Don't touch that. That's not yours. Yes. Anything else that you want to talk to our listeners about? Because I can talk books all day long. It's very important to have your books clean. It's very important to have them so you can understand them. It took me a lot of years to comprehend that. Again, I used to always look at the bottom number, but there's much more going on there than that bottom number. Sarah: [00:39:24] Yeah, I think ideally we want to just be a part of your success. So just doing the books for the object of the game to just be your year end taxes is really just not utilizing everything that we bring to the table. And we really just want to be able to give you the information that you can pivot on or make choices on throughout the year. Why are you waiting till the year end? And even those reports, I mean, if you needed to discuss something with your accountant, you can take those reports mid-year and go and be like, I have this idea. And what's the valuation of my company? You know, like anything you need to ask. So ideally, we want to keep in touch with our clients throughout the year and just be a part of those changes and successes and sometimes failures. But we just want to be kind of in the pocket with them and along for the ride. Sharon: [00:40:25] You talked about those reports. Like even myself, so we just bought one of our locations out in Provost, whatever the building. But it's just a matter of, okay, well, my month end or year end is not till May 31st, but I just needed to submit three reconciled months. That's what they needed. So if your update every month by your bookkeeper and you send it to the wherever you're dealing with, they're happy with that. They're happy with that. Like, you know, that's pretty cool. So just reconcile them. Sarah: [00:40:50] Exactly. So if you need to go in for financing or something like that, and you have ready to go reports every month, it's gotta look great for your financer. Sharon: [00:40:58] Absolutely it does. Well, it worked for me anyways. Okay, so the accountant's bill. So at the end of the month, if you take your… I know this for a fact. If you take your shoebox or your chaotic books that you did by yourself to your accountant, at the end of the month, you're going to have a hefty tax bill. Sarah: [00:41:15] Yes. Sharon: [00:41:15] Or accountant bill. CPA bill. But if you deal with a bookkeeper, it helps that a lot. They charge a lot more than a bookkeeper. Sarah: [00:41:25] Yeah. Accountants do charge more than bookkeepers to get this product done. We're also going to save you in those remittance, overcharges, and things like that, like being late with your GST, like we talked about, you know, and then hopefully add a lot more value as well in catching things before they fester, before things get too far away from you, and allowing you to have that information to lean in where something is making you a lot of money. Sharon: [00:41:52] Mhm. Yes, I agree 100%. So say, for example, you have a customer and you probably have right now. So you have a client, you probably call them client, not a customer. And you set them up properly into whatever platform you're going to use. Can they do some of the work themselves to cut down on bookkeeping expenses? Is there something that you would let go if it's consistent? Sarah: [00:42:13] Absolutely. So we've got clients where we've literally trained them how to use QuickBooks to certain facets, right? So if they want to get in there and start making those quotes or estimates for their customers and then turn them into sales and then mark the payment, we would love for them to be able to control that on their own. And so there are certain aspects where absolutely. Now, when it comes to the actual categorization and matching in the bank feed, we prefer that not too many fingers are in that cookie jar. And so we actually prefer that that's our zone. Sharon: [00:42:50] Absolutely. Because it could go wonky really fast. Finding the one. When someone is out there looking for a bookkeeper, what criteria or expertise should they be looking for? Sarah: [00:42:59] Okay. Sharon: [00:42:59] Because anybody can say they're a bookkeeper. Sarah: [00:43:01] Exactly. It's an unregulated industry and that's a little bit difficult. So definitely look for some experience. There is certifications through QuickBooks and Xero that at the very least mean that, you know, the software in and out. It doesn't mean that, you know, the entire bookkeeping realm in and out. You can definitely ask some pointed questions surrounding CRA knowledge and things like that and being in a live call. Right? So I actually do my intake calls live so they can ask me things and I don't have time to ChatGPT that. So, I have to actually know it, right? So I would say that having an actual face time with a prospective bookkeeper and really just getting a sense of who they are, how they communicate. I think the number one breakdown between bookkeepers and their clients is communication. Where did they go? And that is a number of clients that have come to us have been like, we don't know where our bookkeeper went. Just get ghosted. Again, unregulated industry. Somebody did it for a while to make some money, and then all of a sudden took on some other gig and they're gone. So look for a company maybe that has some staying power, has some time behind them. Right? You know, definitely check a few things before you sign in with that. Sharon: [00:44:29] I think so too. It's important. Check those Google reviews people. But even like, so like, you got to know things like as so for example, you say, ask those questions, but as an entrepreneur, sometimes we don't know those questions. Like we don't even know what to ask. We just assume that you're putting those things into the right categories. You're putting, you know, your chart of accounts is correct. You're hoping that you're allocating an asset over $1,000 because people don't even know that it's incorrect. Sarah: [00:44:52] But like we talked about in the beginning, where you would know something just because it is your business and you know things about your business, about the receipts and things that come through that if we got on a call and we went through a profit and loss with you, and you were like, well, what's that doing over there? It would flag for you, especially like names of softwares or things that you purchased or whatnot. You're going to see that in your profit and loss to be like, why is it over there? Right? And it's like, oh, okay. Well, you know, so again, communication, right? Being able to see beyond just the profit and loss sheet, go into the categories and see what's there. Sharon: [00:45:31] Yeah. So make sure whoever you're out there looking for that, they do do that because it's important. It's important that your stuff is being allocated properly, and the proper bookkeeper like Sarah is the way to go for dumping down that road. Okay, one more thing. The cleanup. If someone uses a blue book, a shoebox, and you talked about people doing their own for a couple of years, then you have to clean that up. What does that process look like and how long? I guess it all depends on timeframe. I guess there's not really a time frame, but why is it important? Maybe we'll talk that. Sarah: [00:46:01] That process becomes very, very important. When you have gotten to such a state that you cannot come to any consensus of what you should give to the accountant and what you should give to CRA. Like, you're at a stalemate. So it is the giant tangled shoelace. And we, one piece at a time, we start bringing it out. We typically start, we have to onboard you into our software. We need you to come into kind of our virtual realm. That is sometimes one of the hardest things for people because they know the volume of what is to come. They know. Right? They've got shoeboxes, it's everywhere, banker boxes. It's a lot. And they know that and it is very chest constricting feeling. But we try to go as easy as we possibly can. What we typically start with is income. How did you make your income? Where are those items? Sometimes it is handwritten notes. Sometimes, like we have dealt with almost everything, right? So we will start with that. Then we will start getting all of those expenses that are in every shoebox and your inbox from three years ago. Everything else. We need to start getting that into our apps, which we use Hubdoc. There's a few apps out there, but we use Hubdoc and we need to start getting all of those items into there. And the glory of that is they don't have to be in order. They don't have to be date set. They don't have to be categorized, they don't have anything. Sarah: [00:47:25] Everything comes in and we can see it all and we can sort it by name, date, all things. So we don't need you to sort, we just need you to enter. And that's often takes the stress level down quite a bit, is it's just paper. Just process it through. All good. And then we just start with the biggest pieces that we can see, start getting the biggest pieces out of the way and get down to the smaller pieces, the smaller pieces we might have questions for, and we just start trying to thread everything together. The longest we have ever done, we had a client come to us who was six and a half years in arrears. I don't know how she got to that point with CRA not banging down the door, but here we are. The brown envelopes were stacking up and so we got in there with her. She offers online services and she sells them North America-wide. And by the time we finished, we finished seven complete years because it took us about six months to get through the backlog. And so we finished seven complete years and the following year, so she got through all of her taxes. Luckily, she did have a large cushion saved up for the tax payable. So she was in very good shape that way. But she went on after that entire process was done and doubled her income. Right? She was free. The chains had broken. She is still a client to date. Sharon: [00:48:42] I couldn't imagine the relief. Just saying, here you go. Here. Fix this. Like what a huge, huge relief that would be. Sarah: [00:48:49] Absolutely. So, yeah. Sharon: [00:48:51] One thing I'm going to ask is, so you're all virtual. It doesn't matter where your clients are from, but do you focus more so Alberta? Do you do PST because as soon as you get to different provinces, they’ve got different… Does that matter? Like what happens? Do you focus more so in our area? Sarah: [00:49:07] We work with clients across Canada. We do typically have more clients in B.C. and Alberta just because of my location. Right? So I'm based in Edmonton, but I'm actually from Vancouver area. So I actually had some contacts and things from my world there from when we moved to Edmonton in 2019. Sharon: [00:49:27] Gotcha. So, but if somebody wanted to reach you from different provinces, are you up to date on the PST and all that kind of stuff? Because there's different. Yeah. Yeah. So that's fine. They can do that. Okay. Okay. Perfect. Okay. All right. The world is different, hey? Like now we can reach so many more. And as long as… you talked about connection and communication, you got to be able to… like my bookkeeper, Andrea. She's my person. And we've always like, when we get together, we laugh, we cry. Like it's just. You know what I mean? So it's important to have that relationship as well. So it's great for our listeners to reach out to you directly, doesn't matter what province they are in, in Canada, as long as you have that connection, you have that relationship. And if they do have that shoebox or they do need to use Hubdocs, we use Dext. You know, there's a way that you can help them. So that's very important. Okay. Sarah: [00:50:12] Mhmm. I think that bookkeepers want to be your cheerleader as well. When we start seeing things change in your books month over month, we're going to cheer you on. Sharon: [00:50:22] That's cool. Sarah: [00:50:23] It's so fun to watch. Sharon: [00:50:24] That's so funny because you're nerdy in your world and I'm nerdy in my world. Like, I get so excited when our customers like grow. Or even this podcast. I just want to help entrepreneurs. I'm a very entrepreneurial spirited person. I just want to help people. And it's just so rewarding to see that. So you're the same person actually in a different world. That's so freaking cool. Okay, so I always ask our guests a specific book to recommend to our listeners because I believe that we can grow by listening and learning. So what's your book? Sarah: [00:50:53] One that really hit me this year is called Micro Joys by Cindy Spiegel. And every chapter is a short story on an experience that she has had in this world and how she dissects it into just experiencing the underlying joy in each piece. It was really, really beautiful. Sharon: [00:51:12] And so Micro Joys. So it's more for mindset. Is that it, that book? And that's important. It's so important. Mindset is so important. Sarah: [00:51:21] It really is. So and really just being able to break things down, it's like, why does that bring me joy? And, you know, sometimes we go through an experience and there's a smile on our face. But what's underneath it? And you know, it just was, she's a really great person to just kind of expand on. And I just, I found a lot of, even her sentence structures just really profound and sitting. So it was good. Sharon: [00:51:47] You said you listened to the audio of that version. Is that the one you listened to audio? Yeah, yeah. So it'd be good, good driving one, especially with the short stories for sure. I think that it is power of the mind for myself, even like, sometimes it's, you know, you get heavy, you got so much going on, you get, but you got to look for the good, you got to look for good. And I get teary eyed when I think about it. You got to look good in everything. There's something good. You just got to find it, right? And sometimes it's easier to jump over that. Okay, Sarah, how can people find you? Tell us your websites, your emails, what you got going on there. Sarah: [00:52:17] Profitsandcoffee.ca has got the most amount of information. I definitely hang out on LinkedIn and Instagram @profits.coffee and yeah, always up for a cup of coffee or a zoom with my favorite little red cup. It's everywhere, this red cup. Yeah. Sharon: [00:52:36] That's awesome. It's so funny. I'm a coffee drinker. So like, I don't have it with me because I've been up since six, but I'm a coffee drinker. So like once you get your favourite cup, like seriously, it goes into the coffee or into the dishwasher and it comes back out. Like it's, it's with me all the time, the same cup over and over and over and over. Sarah: [00:52:50] Yeah, yeah. This one is actually photographed and on my website. Sharon: [00:52:54] That's awesome. What happens if it breaks? What then? Sarah: [00:52:57] I have two. Sharon: [00:52:58] Okay, you gotta back up. Okay. All right. Well, thank you so much for joining us today. And I really hope that people out there that, you know, yes, do your own books, if that's what you feel like you have to. But when you get to that spot where it's overbearing or overwhelming, just focus on what you do best and let those people like Sarah help you. And it will excel and it will grow and it'll be done properly. If you're listening to this podcast, please subscribe. We've actually reached, what did I say, over 25 countries, I believe, downloads galore. So we're really making some progress and we're really, our guests are helping entrepreneurs around the globe, literally. So please subscribe, please share, share. And we actually go on virtual as well. So we have a YouTube channel. So subscribe on YouTube as well. This one will be video as well on YouTube, Sarah. We just started, I think this will be our third video on YouTube. So it's very exciting. So, please subscribe, please reach out, and thank you so much for joining us today. It was, it was very eye-opening. Sarah: [00:53:50] Thank you for having me. This was great. Sharon: [00:53:52] It's a lot of fun. It's a lot of fun. Okay. If you've encountered a learning curve you want us to talk about, or if you have questions you'd like to have answers to, please reach out to us. And listeners, if you have a topic of interest that you are willing to share within our community or something that you've stumbled across that you would like to help other listeners out there, please reach out to me directly at sharon@promo.ca. Stay curious, stay adaptable, and keep building something that makes an impact. It's time for your success. Thank you, everybody.