Bookkeeping Basics for Beginners

Hey, Chris, this is Austin. Really love the pod and everything else you guys bring to the table here with business ideas, etc. Actually working on something myself based on something I heard on your pod. I just had a quick question as I start my first company. What's your advice on doing the bookkeeping and accounting? And how do you ever really get that started?

Great question, Austin. I don't talk about bookkeeping that much, frankly, because I hate it and it's the bane of my existence. But it's a great question and I'm happy to answer it. I look at bookkeeping as having three thresholds. Number one, Google Sheets. Number two, QuickBooks. Number three, bigger than QuickBooks. And honestly, I've never gotten to number three before because QuickBooks can handle businesses of over a hundred million dollars. Okay, number one, Google Sheets. Very simple. Revenues, expenses. You can export your bank account. I suggest Mercury and. Or bank of America, preferably Mercury. We like bank of America because they integrate with Zelle and we need Zelle for some of our subcontractors, and Mercury does not. But this is how I look at it. Personal checking account to start to validate the business. Okay. Once I see I've got revenue, this is going to be a thing. I do two things. I go file an LLC and get an ein number, AKA tax ID number, and then I will use those documents to go get a business bank account, preferably with Mercury. And then I will take the Google sheet that I use to track all the expenses in my personal bank account and I will true it all up. I will get everything in the business bank account and then I will run everything through that business bank account from that point on. Very strict. Even if, like, I have a business that's putting 30 grand a month on Facebook ads and it's really tempting to get a, a credit card to get 2% cash back or Amex points or something. I don't mess with that. I used to. But it's just like, honestly, if I had one business and I knew I was only gonna have one, I probably would do that. I'd get a capital one or a venture card or something to get points. But when I have a, you know, a half dozen businesses, I don't want a half dozen credit cards, a half dozen debit cards, a half dozen bank accounts, half dozen Venmo accounts, PayPal. It is an absolute nightmare. So I'll put everything in that Mercury account on the debit card, and then I will keep tracking everything in the same Google sheet. My debits and my Credits. And then the second threshold is when I'll find a bookkeeper. I used to set up QuickBooks myself, management myself. But it's not a good use of my or your time. So it's not hard to use. Anyone can use QuickBooks. It's just not a good use of your time. Even if you like it, don't do it right. You're better off marketing or selling your product or service. So get a bookkeeper. You can find thousands of bookkeepers for low hundreds of dollars a month. It's money well spent. They'll get in QuickBooks for you. They'll do all the hairy stuff. They'll maintain it. You just want a P now and a balance sheet every month. That's a P and L and balance sheet every month and every year, of course. And maybe quarterly if you're into that kind of thing. But LLC always. But don't forget, LLC is a pass through entity which means you are taxed on the profit of your business. You are not taxed on what you pull out of your business. So if you make a million dollars in net profit in your business, but you're using most of that for growth or for ads or for inventory and you only take home $200,000, guess what? Your tax bill is going to be almost twice what you took out and put in your personal checking account. So prepare for that. A lot of people are surprised by that. And you have to make quarterly estimated taxes, tax payments and that's a pain. And I hate everything about taxes and bookkeeping in the irs. And I have been audited and it was the worst period of my life. I wouldn't wish it on my worst enemy. But don't overthink it. Google sheet. One dedicated business bank account. Once you're sure this is going to be a thing and then find a bookkeeper. Don't pay them any more than a few hundred bucks a month, maybe 500 max, depending on how complex it is. We have a crypto business with all kinds of different accounts and crypto transactions that's a lot more complex. But if everything's coming through a bank account, very little cash, you shouldn't need to pay that much. You can find a virtual assistant that's really, really good to do it for you as well. Get everything categorized in QuickBooks and then everything will auto matically fall into their buckets. All right, that's it. Please give me a five star review. I need some five star reviews. Share with a friend. Love you guys. Really appreciate you. We will see you next time.