Episode 76: Accounting Basics for Entrepreneurs with Jody Padar

So you are listening to the Profit.

First podcast, episode 76. Oh, I messed it up. That's my fault. That's my fault. I wasn't prepared. I didn't rehearse that one.

Welcome, everyone, to the Profit first podcast. We sort of like trip and stumble into every episode, don't we?

It's, you know, you know, acd. See how they end every song with. It's just pure mayhem of the instruments. Right. We start with an ACD and AC DC ending.

That's right.

Not a bad way to start.

It's awesome. So welcome to the show. You can find our show in itunes and Stitcher and Tunein Radio and our website, profitfirstpodcast.com and I forgot to say who I am. I am Chris Curran, founder of Fractal Recording.

Yeah. And I think we're going to be on Google Play at some point. And I'm Mike Michalowicz. I am the author of Profit First. I hope you've read that book by now. I'm joined in studio yet again by my colleague and office organizer, Christina Boldo.

Thanks for having me back.

And you are listening to the Profit first podcast. This is a show where we explore all aspects of profitability. We had an amazing journey last week with Michelle Villalobos in discussing kind of the trials and tribulations of starting a business and the cataclysmic dive she had to near poverty and how she kind of climbed out of it. Today, whole fresh perspective. We're going to talk about the advice that CPAs are giving you, but we're going to the ultimate advice giver, the CPA that CPAs go to. So we'll tell you more about that in a few seconds. So what have you been up to, Chris?

Oh, well, you know, I got. I landed my biggest client ever recently and it was. I was working on it and I think we mentioned it last time, but. So I'm excited about landing a bit huge client. But I'm. I'm equally. Well, not really equally, but I'm also kind of excited that I've implemented Profit first and I have my different accounts and when this money starts to flow in, I know where to put it and I know what to do with it.

Yeah, yeah. Because you know, the mistake that so many businesses make, you're starting to experience the. That second stage of business growth. First is the concept and the idea. Then it starts getting legs. And this is where many businesses go awry because the, the money flows in and they say, well, we gotta pay for everything. We gotta Keep this momentum going. We gotta invest and grow. And those are usually the I call soft terms we use, invest, grow. But we forget about the profitability, which is our sustainability. And very quickly, when the next big project doesn't come in, now you have all these expenses looming over you and disaster can strike and panic ensues, and then we pursue the next client. So I'm telling you, brother, you're doing the right thing. Tuck away your profits first and that will bring about the sustainability. And you will still find a way to support the growth because you have to become more innovative.

Right?

More efficient.

So what have you been up to?

Congratulations to you.

Thank you, Mike. What have you been up to?

Yeah, me, I. I got a cold that's kind of lingering back and forth. My wife's had it for literally eight weeks.

She's been sick for a while.

You've actually sound like you recovered.

It's still a little congested.

Oh, I have it now. And I woke up this morning, I was like, finally, I have it kicked. And then I can hear it going. My voice again. I can feel it. It's a weird cold.

Lingers.

Yeah, I don't know. So that's what I've been up to.

You need Obi Ron to use the Force on you.

I want to take that lightsaber and jab it into my viral infected nostrils to clear them out.

Just burn all the follicles.

Well, you got a little hint on. That's like the visual. You got a little hint on what we're gonna be talking about today. But first, I want to thank our corporate partners that make this show possible.

We love them.

We love them. We actually love them.

They're not just like sponsors that, you know, big companies, we take their money. These are people, you know, Ron parties with these people. I mean, come on.

Yeah.

Yeah. And right around our corner, we have our Mastery Meetup. So Profit First Professionals, our organization, we're inviting our Mastery members, these are the highest performing members in for an event and all of our corporate partners, actually plus one, and I'm trying to convince her organization to join us on the show. Plus one are going to be attending the event. So it's just cool. And by the way, I just called him up, said, do you want to be there? They said, we wouldn't miss it for the world. And this isn't like a big, like 7,000 people coming. It's our mastery members, maybe 20 people. Yeah. It's a small event and every single one said we would miss it for the world. So that's what kind of friendships we have with these folks. They are Fundera, Tsheets, nextiva, and Fundbox. We'll tell you more about those in a little bit when we wrap up the show. But now it's my privilege to enter to interview, to introduce and interview our guest. Her name is Jody Padar, and she is one of accounting professionals, foremost visionaries and pioneers. And that is, without a question, a fact. She is the CEO and principal of New Vision CPA Group, a public accounting firm based in the great city of Chicago. And Jody is also the author of the Radical cpa. Now, as an entrepreneur, maybe you haven't heard of it as a, as a accountant, if you haven't heard of it, what rock are you living under? That is the book that talks about the new movement in this, the movement that's going on in this profession and what you would need to do right now. Well, to give us insights on what you as an entrepreneur need to know and what CPA should be telling you at this time of year, it's with my absolute privilege to introduce to you Jodi Padar.

Awesome. Thank you.

Hey, Jodi, welcome to the show.

Yeah, no, it's great to be here. I'm so happy to be here. And I'm talking with you guys today.

Yeah. Welcome, Jody. So, Jody, here's the question for you. What is the biggest piece of advice that CPAs are giving this time of year to entrepreneurs?

So usually it's not quite advice. It's a response to a year of activity that the accountant hasn't been involved in. Right. So what happens is it's tax time, and all of a sudden now you have a surprise. You either know what your tax liability is and you owe, or you're getting a huge refund because you haven't had a conversation with your tax professional for a whole year. And it's like a surprise to you. And you can't do tax planning in March. You can only do it before year end. So really, the biggest piece of advice that they're giving you right now is probably no advice, which is not a good thing. And if that's the professional you're working with, it's time to find a new professional. Because if you really want to run your small business well, you need to be talking to your professional all year long and not just at tax time, because there's so much more value that we can help you with than just at tax time.

It almost sounds like you have, like, say, an Olympic coach, like a running coach or something. And you do a sprint now you're past the finish line and the coach is saying, oh, right before you get to the finish line, here's what you should do. It seems like it's almost too late. It sounds reactionary.

Oh, totally, totally. And that's kind of the old school way of doing things with a cpa, right. It was just a once a year tax visit, preparing a compliance document. And that's really not helpful for small businesses or entrepreneurs at all. And so the advice that most accountants are giving their small business owners now is it's moot because you can't do anything for last year. The only thing you can do is really connect with that accountant and say, hey, how can we work together more frequently throughout the year so that you, you know, I'm getting real time advice and getting help from you all year running my business.

Okay? So, you know, the folks listening in the show, they're entrepreneurs of all different types, all different size businesses. I'm hearing it's a red flag no matter what type of business you have or size business that if, if you're having a massive refund, which seems like a blessing. It really isn't. That means there was poor planning or if you have a massive tax liability, that's poor planning. They sound like red flags. What can I do as an entrepreneur or what questions should I be asking my CPA to make sure that they are proactive and addressing needs before tax season?

Right. So the first thing I think you should do is you should get on a regular schedule with your CPA or accountant or whoever's advising you and say, okay, like we need to be checking in at least quarterly, if not monthly, and figuring out a game plan for the whole year, not just at tax time. Right. Because compliance isn't really helpful. It's just something you have to do. I mean, you have to file a tax return, but it really adds no value. And truly, where you're going to be getting value from the professional you work with is in the conversations you have throughout the year. And a lot of small business owners don't understand that that's an expense. But really it's probably the biggest investment that you can make in your own business is talking to that professional throughout the year and not waiting till tax season. Right. Or till that once a year visit. And just most small businesses don't see it. They say, o, I got to pay someone to do this. But it's that not knowing that actually causes more detriment to your business than paying a professional to help you throughout the year.

Yeah, it's the old Pennywise pound foolish. You know, an ounce of prevention is worth a pound of cure. So, okay, so say I call my accountant and say I want to meet quarterly. She says, great, mommy, quarterly. What should I be asking the account? I know they should know, but I really want to arm myself. I want to be at the knowledgeable consumer. What kind of questions should I be going and asking them?

Well, so I think it starts with just basic understanding of financial statements, right? So let's start at the beginning, because I think a lot of CPAs sometimes talk above their small business owner because they don't realize how much the small business owner doesn't know. And the small business owner doesn't want to look stupid. So they don't ask very good questions. So I would start with a basic understanding of a financial statement. And even if it just means going account by account on your balance sheet and understanding it. Right? And when I say balance sheet, I guarantee half the listeners out there don't even know what a balance sheet is. Right. And how it doesn't affect your profitability at all. Right. And so I would start with a balance sheet, just a general understanding of a balance sheet. Then I would go to an actual profit and loss statement. And then I would say just start going, you know, statement by statement until you get an understanding of it, or account by account until you get an understanding of it. And then I would even take it to the next. So that, that's like the first session, whatever. Then the next year I would go, or the next, the next meeting I would go and like dig into an account and really understand what's happening within those accounts and how they're connected and then ask them for help and trying to understand the variables that go into these statements. So financial statements are only as relevant as the data that you pull from them. So if you just get a profit and loss and a balance sheet, like probably that information on the financial statement, it's going to be somewhat helpful, but not like totally helpful. The information that you want to start pulling out is stuff that's specific to other specific variables. So let's say you're going to do some sort of new advertising campaign. Do you have a way to figure out was that advertising campaign actually profitable or did you just go by gut? Right. So try and figure out what you should be tracking so that you get metrics and good things to go back to as far as data to give you actual insight into the operating piece of your business. So it's really Looking at things from a managerial accounting perspective, which is very different than looking at something from a financial accounting perspective. Hopefully I didn't confuse your all just there.

Well, you confused me a little bit. So we're going to actually rewind a little. So what I'm hearing is step one is once I have these regular meetings, step one is understand the information I'm looking at and then start analyzing information. But that understanding tell us exactly really what is a balance sheet or what's the summary of the benefit of a balance sheet?

So a balance sheet is the position of all your assets and liabilities as of a point in time. Right. So it says as of, you know, March 31st, my total assets are this and my total liabilities are this. And if I were to subtract them, I would get my equity. So what my business is truly worth today as of this point in time.

Okay. So it's an assessment of the things that I own or are owed to me versus the things that I have to pay or responsibilities I have to others. Right. Is that kind of the balance? Okay? Yeah, and it's broken down in detail. Right. So I guess all assets are the same. It could be money I have in my bank, for example, or it could be a possession, something I own, could be something else.

Yeah. So it could be like a cash account or something like that. It could be a fixed asset. Maybe you own some machinery and equipment, maybe you own some furniture and fixtures. It could be someone owes you money, right? So you have a. And that's an asset that's coming in, Right. So someone owes you money, Right. So that's sitting out there and then it goes into liabilities, which would be like your credit card card debt or if you had a long term note that you were paying on and then that just goes into your owner's equity, which is really accumulation of all the profits and earnings you've had over the last number of years since you've been in business.

Okay. So the equity is kind of the end take or what's accumulating to your benefit. And then liabilities is what you owe effectively and assets are kind of what's owed to you or you possess. And when you understand this balance sheet, what's the perspective gives you about your business? Can it tell you if you have a healthy business or an unhealthy business? What should I be asking my accountant?

Well, I mean, I think you need to understand it, right? And I think there are lots of things that could make it healthy or unhealthy, but I think the biggest thing is just this blind look that nobody even understands what the assets are or how they're affected in day to day cash transactions and cash flow, etc. So one of the biggest things that comes up, especially during tax time, is like the distribution account, right, that you may or may not have. And if you have a distribution account and you're a small business owner, you're paying tax on that distribution account and yet you may or may not have taken the cash out of your business, right? Or well, if it's distributed, you took it out. But you may or may not realize that there's a tax implication there, right? And so what happens is people say, well I, you know, why do I owe all these taxes? I didn't make any money. Well, you did. Maybe you left the money in your cash account and you're not paying, you didn't actually take it out. So there's, but there's still a tax, a taxable piece of it, or maybe you took it out as a distribution and it never hit your profit and loss statement. And so because of that you're like, well, like, why do I owe, you know, I owe tax on that. So I guess that's one of the biggest things that most small business owners don't understand in regards to flow through entities.

And I think there's also this mishmash of words. So when you say account, you're not referring to a bank account yet, at least I don't think you are. And I know entrepreneurs. When I hear an account, I think you're referring, oh, my distribution bank account. What's the account you're speaking about and how's it different than a bank account?

So I'm talking about just money that you've taken out that hasn't gone through payroll, right? So if you haven't paid taxes on it via payroll and you've just taken money out of your bank account, right? So because there's, there's, there's cash in your bank account and you say, okay, I don't want to, like, I don't need to pay anything else out of my, any other business expenses, whatever, I'm just going to put it in my pocket and go home. Right? And so, so there's, so you've actually taken the money out, you've spent it, but yet now you have a tax liability on it because you didn't understand it.

Now tell me about the P and L. What, what exactly is the P and L report to an entrepreneur?

So a profit and loss statement is Obviously, the income that came in, minus your cost of goods sold or what it actually took to make whatever it is that you make, minus a bunch of other operating expenses, and then that goes down and gives you your net number.

Okay, and what's the purpose of it? What do you use it for?

Well, it should be to show you your profitability. Right. But it's a very global type of statement, so it doesn't necessarily tell you everything that your business did or didn't do. It does in total, but it may or may not have the breakout that you need it to. Right. So it may not be based in one specific line of business. So, you know, you could be selling shoes and sweatshirts, but if you don't have that detail broken out in your profit and loss, all of a sudden it says that you were profitable this year, but you didn't realize that you really lost your. Yourself in the shoes and your sweatshirts were making money, but together it looked like a really profitable year. Right. So it doesn't give you that detail. It may or may not, I should say.

And I found here that the language gets confusing too. So when I found, when I asked an entrepreneur what profit is and actually how I define it, my book, even when I go to an entrepreneur and say profit, they. They hear it's. It's the cash in my bank that I get at the year, at the end of the year. Yet the accountant's definition of profit is the accounting definition. It's a radically different definition. Do you find that entrepreneurs, business owners, and accountants often get confused in what the definition of the words are?

Oh, for sure. I mean, I think most, and I think most accountants talk to other accountants. And maybe that's what I sound like to you guys too, Right? But we come to the table assuming that our small business owners have an understanding of, of financial statements and they have an understanding of how all these accounts interact with each other. And chances are they don't. Chances are they went into business because they were an expert in their field or they liked what they were doing. And they may be technical in their specific subset of what it is they do. Like, you know, a plumber who leaves and says, who leaves a bigger plumbing company and says, oh, I'm going to go be a plumber by myself. He still doesn't understand financials. He understands maybe the cash flow perspective, maybe yes, maybe no. But he usually doesn't understand how all the financial statements come together to produce all the information that he needs to do his tax return at the end of the year.

You know, I think our listeners need to pay attention to this. Another analogy I would use is doctors talking to doctors. There's so much technical conversation going on that many doctors, when you meet with them face to face, they stay in that technical conversation. We have to be advocates for ourselves and go to that doctor saying, well, I don't understand what you mean. And Jody, you said right in the beginning, entrepreneurs are getting intimidated and feel uncomfortable saying I don't know what a GL account is, I don't know what a balance sheet is. But it sounds like we have a responsibility to say that because it's not ill will of the accountant, it's just that's the technical conversation that they're having. Right.

Well, and I think too like we've kind of like the, the profession as a whole has kind of set it up for this. Right. And I this is how everything's really changing now in the profession as well as how CPAs and other accountants work with their small business owners. So before we used to spend so much time in the data just getting the data right that we really had very little time for conversation. And or when we did have time for conversation, it was so expensive for the small business owner to actually talk about it because we had already charged up a huge bill for the accountant just getting or for the small business owner just getting the data right. And now this is where like automation in the cloud and all that stuff really comes together to close that gap because now the data is much easier to organize. And so now as advisors we really can add a significant amount of value for I don't want to say a fraction of the cost, but for the value of the conversation that it's worth. Because I think CPAs had always been willing to give out that information. They're truly, you know, the most trusted business advisor or. But a lot of time they were just caught in collecting and organizing the data so that it was right that they didn't necessarily have the extra time to really spend with the handholding of the small business owner and really giving them that additional insight that they crave and need and want and can really do more with their business. And because of the change that's happening to the industry today, we really can change small businesses world in working with our small business owners in a new, a different way than I'll say what an old school accountant does. And that, that's kind of where I go off into like my radical CPA mode. But really the end game, even though you said I was the accountant for the accountants, really what I am is trying to change the industry so that accountants can really change small businesses lives. Right. So because if I spread the word and get more accountants working with other accountants in new and innovative ways, because we don't have the, we don't have to wor so much about just getting the data right. It just gets right because of the technology that has changed in the last 20 years. Then we can really help small businesses grow and be crazy good at what they're doing and help the economy and do all kinds of other things. So. So really that's kind of the end game. Right. So if we can change all the accountants to help their small businesses better, think about what a better world we're going to live in.

Oh, my gosh. Yeah. And so now you have me through some of the key steps. I, the red flag was raised. My accountant wasn't talking to me that frequently. I'm now meeting with her quarterly. I have an understanding now of the balance sheet, the P and L, other functions. Then you said to analyze the accuracy of the data. How do I analyze the accuracy of data? How do I know the numbers are in the right spots and categorized correctly or not?

Well, so that's where you're working with that accountant. Right. So the accountant should be like kind of going through it, making sure that the data is in the right bucket. Right. Because you, you can't do a metric if the metric's incorrect. Right?

Right.

I mean, like if the, if the initial data is not good. Right. So that accountant should be kind of just proofing those statements and making sure they, they look reasonable and whatever. And then what you can do is you can actually do bigger or not bigger, further analysis on specific accounts. Right. And create new metrics for actually running your business. So what's really important to your business to see if you're tracking it. Right. Or to maybe just start tracking it. Right. I would say, because I always think, oh, well, they're already tracking it. But usually small business owners aren't tracking anything. Half the time. They don't even have financial statements created. So, you know, the first step is like getting good financial statements and starting the conversation. The second step is now looking at that month's profitability and seeing what happened, what went wrong, what didn't go wrong, how did it compare to last year? Do we know why it went up? Do we know why it went down? And all that good stuff. And to me, a lot of it is just like stepping on the scale. Right. It's like all of A sudden, now that you have data, you can be accountable to it. Because too many small business owners live their lives in their cash account, which is the absolute worst thing you can do for running a business. And they think they're profitable if they have cash. And if they don't have cash, then you know it's bad. Right? But instead of really looking at the data to see how it moves and then throwing on the perspective piece so that you can actually go into forecasting and seeing where you're going to be in the next month. Because most accountants only look backwards. But backwards is a starting point. And then you have to do forecasting and to put that piece on top of it so that you have the ability to change midstream if you need to, so that you're not six months in the hole that now, you know, you know, if you change one thing now, you can sell more next month, then it'll change your whole year.

So I love it. So now there's very, there's a very clear outline, there's a trigger if you're not getting the most out of your accountant. It's, it's simply the, what, what frequency are you talking and connecting? Are you being proactive against this quarterly basis of, of meeting up? Then you're saying, make sure the data is accurate. Garbage in, garbage out. Once you have clarity there, start analyzing basically the weighing yourself. Now you can start doing comparatives. And then the ultimate phase is you get into forecasting where you flip the formula from looking at the past to looking forward into the future. What's been the impact? I know you've done this with entrepreneurs, transitioning them from this kind of reactionary year end thing to becoming kind of a forecasting type based business. What's been the benefit or the, what have you seen happen to customers when they actually go through this experience?

Well, I think it's just clarity, right? It's like all of a sudden now they have, they have an awareness of their small business and they can make decisions. So it's really hard to make decisions. And maybe they were already making the decisions based on intuition, but now actually they have the data to support it. Or maybe their intuition wasn't exactly right, but it's the clarity around decision making. Because the biggest thing a small business owner or the biggest challenge a small business owner has to face is daily decisions. And those daily decisions based in a vacuum are very hard. But once you can put clarity around that, it allows the small business owner to make decisions faster and to really move forward with their Business. So then they can grow. If they want to grow, they can grow profitably. Right. Because not all growth is good growth, but they can grow profitably. And then too, I think it just gives them a sense of ease that tax time is no longer like this biggest. The biggest freak out moment of their life. Because we've already done the planning before year end and now it just becomes like, oh, okay, I have to file my tax return. Like whatever, whenever I do it, whatever. It's all good because they're engaged with their data all year. And. And that's where like really, us as accountants should be offering value.

Yeah. Because you know what's coming. Jody, this two weeks in a way row, we just blew through the interviews. Our time is wrapping up here. Jody, for all the folks listening in that want to learn more about you and your organization, where can they go?

So my firm is new vision cpagroup.com and we're outside of Chicago, but we serve clients all over the world via the cloud. So it doesn't matter where you're located. So you can connect up with me there. I'm on Twitter. Jody paid our CPA or LinkedIn, follow me there or Facebook, whatever. I'm all over the web, so you should be able to find me.

You'll find her. It's paidar like radar P A D A R. Jody, thanks so much for being on the show.

You're welcome.

Thanks, Jody.

Great job.

You know, Chris, these shows are. And Christina, they're just blazing through another page of notes. Yeah, I'm losing sense of time. And. And this one is a technical deep dive. And I wonder if some folks listening in start to glaze over a little bit and say, I'm a little bit overwhelmed. If you did feel that way, that is your call to arms. That means go to your accountant now. Because if you couldn't stick with this, you don't have the basic accounting understanding. And there's no excuse not to have at least that. Chris, we got a lot of stuff to discuss, what we learned today. First, I want to thank our corporate partners.

I love it.

Corporate partners. We should have a little jingle for them. Wouldn't that be fun? Corporate partner shop.

Do you want game show music.

Now? I want your own little jingle. Could you sing something for us at some point?

Let me see if I can write something.

Yeah, see if you can write a little something for us. Yeah, the more cheesy, the better.

Okay.

I'll say their name, you say what they do.

Okay.

Is that fair?

Yes.

Okay, we'll Start off with nextiva.

Okay, nextiva, Voiceover ip.

Right.

It can't get any simpler than that. Right.

It's a voiceover IP phone system. And what I love about the functions is that it we've. Right now we have dual ring set up. So I've called you at some ridiculous hours at an airport saying, my limo's not here, Christina. Tears coming down. Not from you, from me going, I don't know what to do. And you're like, hang tight. But all I did was called your extension here. And it, it rings simultaneously at your home office and if you're not there, it goes to your cell. So you've no excuse.

I can't run.

Once. Once. You were at dinner with your father. I was like, embarrassed.

No, you were at the, you were stuck at the airport, though.

I was totally stuck. And there was tears everywhere. People are like, why is this guy crying in public? Just leave me alone.

Is he clutching that profit first book and crying?

I know. Why is he clutching it like, my baby, my baby. I'm like rocking back and forth. And the limo, by the way, the driver was like right next to me. He was the guy who was coddling me as I cried. I was like, he's like, it's okay. You'll. You'll find your limo driver. I'm like, but you are the limo driver. Fundera was Fundera.

Fundera. They will fund. No, I'm sorry. They link you to businesses that will help fund business. Right?

Yeah. Loans. Yeah, fund your business through loans. So if you need to make a capital purchase some serious equipment. We just bought some equipment from our office a couple weeks back. They will finance that. It's a one stop shop. So you used to go to the bank or maybe you go online and try to shop out all these individual places. You go to them, they do this. Exactly. They do it for you. Okay, next one we're going to get tricky now. Okay, Tee box, which is the combination of T sheets and fund box. Now.

T sheets.

T sheets. Screw me up here. TSheets, time tracking, literally the easiest thing to use. It's all online. You can text in your hours. They have the gps. You don't have to sit there and add everything up. They do everything for you. It takes two seconds.

Yeah. The reporting is extremely powerful. Very powerful reporting. We use that a lot. And it used to be, we used to manual entries. When you start here, a piece of paper and it's like, I don't want to invest in T shirts. And I'm like, let's Just do it. It saves me for the reporting. Easily an hour. I used to be tracking everyone's time, adding it up. Now it's done in seconds. But what's cool is, along the way, it gets approved. So Ron manages Aaron and Jackie. He's approving time. Sometimes he forgets, and I can go back to him and tell him, but he approves time as they're working. So when it comes to the final review, it's just a snap of the fingers. Yeah, Ron saw it, and so forth. All automated, simple, easy. Last one's Fund box.

Fundbox. If you have a client that is a little hesitant about giving you money, but you need it now, go to them. They'll upfront the money. Then when you get the money from your client, you pay them back.

Oh, you nailed that one. Exactly. You invoice your client, they're not paying you. Fundbox will pay you. And then when you get the money, you pay back Fundbox plus their nominal service fee. All right, Kris, what did you learn from today's show?

I especially liked her analogy when she said, it's like stepping on a scale. Yeah. Because it's like. Yep. You're gonna look down, you're gonna see what the scale says. I mean, you can. You can walk circles around a scale and say, oh, I only weigh 150 pounds, or I weigh 180 pounds, or I weigh 104 pounds. You could say whatever you want. You can talk with your friends. You can go to bed and dream of £98, whatever you want. But the moment you get on the scale, it's like, ba boom, clarity Baboon.

Yeah, hopefully it's not baboon, but it could be. Yeah, exactly. That's cute. That's cute, Chris. Nice one there. Well, that's what Weight Watchers actually does. They force you when you arrive, you get. You weigh in. Right. Because that's undeniable. And we can tell all the stories we want. You can't deny it. So I like that. What was the tip you took away?

First thing she said, plain and simple. Get on a regular schedule with your cpa. Don't just see them when it's tax time. They need to know what's going on. You need to have a game plan for the year for your business.

Yep. I mean, huge takeaway. That's the number one tip is really easy. You don't even. You don't have to wait more. Second, you can do wirelessness podcast. You can say when. How often am I meeting with my cpa? Once a Year too infrequent for me. You know, the takeaway was something that I really didn't think about. She said we, and she's referring to accountants. We don't need to get data. Right. It just gets right, you know, that points to the advancement of. There was an ant on my desk again, that points. They're all over.

They're coming.

Oh, you see them?

Yeah. They were calling down.

Oh, oh, yeah, there's one there that's on the wall. Okay, we're gonna have to get this taken care of. So what's fascinating is it shows the advancement of technology that accountants aren't spending all their time entering day anymore because they don't have to. But this is offered the opportunity now for you to get consulting services from your accountant. But maybe it's. I don't know. I think that's a call to action for the entrepreneur. Call your accountant. They have the time available, and it is an ounce of prevention's worth a pound of cure. It's worth talking to them in advance. So fascinating insight.

So people are shocked sometimes, Mike, right. When they see their statements for the first time, they might be like, oh, my God. Right?

Oh, my God. Tax season is the worst season for many entrepreneurs because usually it's not the big refund. Inevitably it's the big bill that's due. And then the panic ensues, like, I don't have the money. And they get angry. They often get angry at the accountant, the messenger, right. Who's just making you abide by the law, by the way. But one thing we do with profit first is the experience of paying taxes forms what's called loss aversion. And the analogy I use, Christine, if I gave you $10 in singles and I put down for a set, you'll be okay, thanks for 10 bucks. I'm like, oh, I need $7 or $3 back. There's loss aversion. You're like, hold on, you just gave me 10 bucks, and now you're taking three back. Like, what's going on here? If I just gave you $7 and said, Enjoy the money and walk away, you'd be like, wow, cool. Thank you. Yeah. So it's interesting. Once we get something, the net effect is same at $7 either way. But when the money is pulled back, there's a negativity associated with it. And often we do illogical things. So with taxes, what happens is that money was granted to you by a customer. You are a legal agent, basically for the government that's owed to the government. But it was put in your hands first and now we're hesitant to give it to the government. So in Profit first with a real simple system, when the money is the check is made out to you by the customer, immediately allocate a portion of your tax liability out to a tax account so it's reserved before it even gets into your hands. Now you don't have loss aversion, the money set aside. And when working in conjunction with your accountant, that money you'll turn over to the government and everything will be hunky dory and there'll be no bitching and moaning when tax season comes, no weeping.

Well, this has been awesome. Again, you know what? If you want to, you can find us our show in itunes and stitcher and give us a rating or review. Did you know you could do that? Because that would give clarity, help us have clarity for our own show and help.

Yeah, tell us what you think. Tell us what you think. The emails are coming in. One of the best emails I've. Or actually wasn't even an email. It's a letter. Which. Where is it? It's right to my right, left. This letter. I'm going to read some of it on our next episode because I called Keith, the guy who wrote this letter to us, and said, you got to come on the next episode. You got to come on Profit first podcast and share what you experienced. Reviews are critical to us and this is a gentleman who reviewed the book. He was hesitant to do Profit First. It took him a year after reading it to finally say, I give up. I can't keep living my running my business the way I'm running. I'm going to try. Profit first had a nothing short of miraculous turnaround as achieving profits like never before. And the guy's in the balloon business, the hot air balloon business, and he's crushing it. You're going to discover how Keith did on the next episode, so be sure to join us for that. Yeah.

And Mike, Profit First Professionals.

I was doing the out.

How could you forget? Jesus.

What is this amazing company you're talking about? Profit first professionals dot com. Listen, there's nothing more important to your business than profitability. The whole reason you started a company was for financial freedom. To express yourself, do what you want to do and be financially free. That's called profit. Our members, their accountants and bookkeepers and coaches have they used the Profit first method, the book I wrote to drive profit in your business. Yes. They're accountants. They do exactly what Jody said. They're the best of the best accountants and bookkeepers and coaches out there. But they have the added significant component of being able to drive profit in your business. If you want to achieve the highest degrees of profit you ever experienced, go to profitfirstprofessionals.com right now. Click on the find button right now and fill out that little form and we'll hook you up with someone that will drive profit in your business.

Today there's an idea. Drive profit. Thank you. Love it.

Cha chinga.

All right, so thanks, everybody for listening. Thank you, Mike. Thank you, Christina. Thank you, Jody. See, I dropped it there. You heard that, right?

I do.

When I worked on rap music in the 90s, we used to do drops like that, too. Maybe sometime I'll demonstrate that on the show.

O.

That's pretty cool. All right, thanks for listening, everybody. See you next week.

Goodbye.

See you.

Sa.