#1 Thing You Must KNOW! Is Profit-First Useful for Lawn Care Business?

Hey everyone, it's Mike Andes with Landscape Business Course.

And today we are going to be.

Talking to someone who's been running their lawn care business for quite some time, but they don't know their numbers. They don't understand their numbers, but not even understanding, they don't even know what the numbers are because they have given their numbers to their bookkeeper and just kind of just left it alone and they don't understand things. So we're going to be talking about the day, we're going to be talking about profit first, the method by which you split money into different accounts, when you should use that, when you should not use that. And really just going over the importance of knowing your numbers, and I don't even mean understanding them and be able to interpret them and have reports, I just mean knowing them. Like what was your revenue last month? How much did you spend on fuel? These are all things you must know if you're gonna make good decisions for your business. So Carlos, really appreciate his vulnerability and his acceptance of being able to share this information with you because we actually show QuickBooks, we show his numbers, we show a lot of kind of sensitive information and so really appreciative of him being able to share this with the lawn care community so we can all learn and know to know our numbers. Now I know there's gonna be some people in the comments that will go off on me about how I'm oversimplifying the accounting for Carlos and telling him that he should strip some things down and you're gonna get really mad and you're gonna give me some GAAP Generally Accepted Accounting Methods principles and you're gonna try to throw those in my face and that's fine. But I promise you, having every single T crossed and I dotted when it comes to the accounting principles, what's correct and all the rest of it is going to be far less valuable to him in his small business than knowing what the numbers are in general. Alright? So keep that in mind. This is not what I'm saying. The advice I give Carlos today is for small businesses. You're not gonna get away with what I talk about today if you are in big businesses. And when I talk about today, I talk about reducing the number of categories you have on your profit and loss statement simplification just so you can understand and get data. That's the thing that's most important for us as small businesses, business owners. And so if you've just been relegating your expense categorization to someone else and getting reports from them every quarter or a month after the transactions have actually gone through. I promise you there's things leaking through the cracks, not only at the accounting level, but also the fact that you are not getting good data to be able to make decisions in your business. How much you should grow, whether or not you should employ another person, whether you should buy a truck or piece of equipment, whether or not you should hire someone else. These are all things you need to know your numbers for. And so I'm gonna give it pretty straight to Carlos, especially towards the end. You're gonna see me get pretty fired up about what he needs to do to simplify things. This is really important for people to overthink things. And because they don't feel sufficient enough in terms of numbers or maybe accounting, they give it to someone else. But then they just overthink everything. But they don't actually have information that they need to run their business. It leads to a lot of issues in the business. So let's go ahead and jump into this one. This is actually a one on one call I had with Carlos. If you wanna book your own one on one call in the link down below in the description, just click the link and you can schedule a time to book a call with me directly. Also, last thing is, make sure you sign up for Landscape Summit 2021. It's January this coming January for three days. You can go on the website landscapebusinesscourse.com conference. Make sure you book your ticket. We're gonna be running up against our max capacity due to social distancing and I don't know exactly when that's going to be. So please, if you plan on coming, book your ticket. Book your ticket to the conference and book your room. Cause both of those things are gonna fill up very, very quickly. I just don't know how fast simply because it's depending on how much they restrict us on social distancing. So I'm gonna be trying to figure that out, but it could be pretty soon. Please book your ticket if you really wanna come. I can't guarantee there's gonna be tickets to the end, so please make sure you book that. So without any further delay, let's go ahead and jump into this one with Carlos Rodriguez. He has a hundred lawns right now, about 30 lawn properties. That is bed maintenance. And I really think you're gonna get a lot out of this one.

Here we go.

Mike.

Hey, Carlos, how's it going?

Hey, how you doing?

Good, good up there. I can see you now.

Yeah, man. How you Been good.

Good. I just realized because I've been on the phone for the past four hours that you sent me your financials. So let me just try to pull those up real quick.

Okay. Okay. You know a lot of these calls.

Yeah, I had. I've had six of them this morning, so.

Wow.

See here.

Gotcha. Here it is.

Yeah.

I don't have a good grasp on what it is, like the.

Like the bookkeeping side of the business. So I don't really know. Like, I sent you also, like a. I was talking to someone that has a landscape company that's like how he organizes his company, because mine is just like. I just pay someone, maybe the bookkeeping, but I never know what it means or anything. I'm sure you've heard people say something like that. So that's. That's what I. I mean, that's what I'm in right now. Seeing how I can be more organized and see. Understand my numbers better.

For sure. Let me pull this up. I don't know why it's taking so long.

Cool. While these are loading up, kind of fill me on kind of where you're at since last year when we talked about, did you end up going out of town or anything like that.

You know what? I haven't even taken any vacations at all. I mean, you know how a business, being a business owner, sometimes you just. You can't really. You have to be there, you know, especially when the business is small, you kind of. You have to put in a lot of time. So right now I've had like a mess, like with the equipment, like just mowers, you know, breaking down. And I had actually a trailer that went out, and it's gonna take six weeks to get the trailer back. So.

I had people. Two people lent me trailers, and both of them didn't work for us. So I had to buy a new trailer just because I had to, or else I couldn't continue mowing. So I bought that and I had five people in the beginning of the year, and now I just have two people because just. I mean, we were giving. We were doing cleanup quotes, but, I mean, kind of just died down. And I just thought, okay, I'm just going to focus on recurring. You know, all I have is weekly mowing, like a monthly bed maintenance thing that we're doing now. And that's all we did with the two guys.

And then.

So I've really. And also I've been able to kind of get in the field and see, like, how to fix things, like how to find efficiencies and how to improve the business. So I've been. That's pretty much where we've been at for this year. And I'm sure, like, the revenue is less now because.

Because we're just doing just, you know, two guys, you know, it's not like the, you know, last couple years we've always had four guys, you know, and this time it's just two. So.

I don't know. But it's been kind of cool to see like, let's see the bis and it's, you know, and it's, I guess its possibilities of what it can be, you know, in the future. So I'm kind of interested in. See what I can do to.

Kind of provide something good for the employees so that, you know, they have like, initiative of wanting to be here. You know, sometimes I feel like it's kind of like the, like the interaction or relationship I have with. With them is kind of like. I don't know if they see me as like someone that just like wants them to make. To work a lot, just work and then. And then me be like the guy that's rich, which is not the case, you know, But I feel like that's what happens there. So I don't know if there's like a way to kind of just like grow together and have like a good relationship, whereas, like, you know, we're like going to the same goal, you know, and we what, we all want to grow and make money, you know, but have a good relationship, you know. So that's kind of like where I'm at right now.

Perfect. Cool. So I got these numbers download. So it looks like year to date you're at 211. Last year we did 234 total. So this year you think you'll probably do what, like 250?

Probably? I. I'm thinking. Yeah. I mean, we still have. We're still getting a lot of. We're getting like leaf removal. We do one that's like weekly. It's just like with the mowers then one that is monthly. I'm just trying that. We usually just do the monthly, but we're trying the weekly thing out now, which is pretty cool.

Got it.

So.

Yeah. So you used contractors quite a bit last year?

Yeah.

Not so much this year though.

Yeah, yeah. And the subcontractors, I think that was maybe when I couldn't, like, maybe I wouldn't have the employees in and it would just be me paying them.

Like for the day, you know.

Got It. Got it. Okay.

I don't.

I don't.

I don't use, like, subcontractors for work I can't do. I don't do that.

Okay. I'm just looking through. So do you do everything on credit cards, I'm assuming?

Yes.

Okay.

Yeah. Since last year, I think. So it's that they do take some money out a lot probably.

Okay. Legal and professional fees. $9,000. What was that? That was this year.

That was this year.

Okay.

I know someone was kind of doing some coaching with me.

Just in general, so I think I just added that on there.

I don't.

I don't know what else is on there.

Yeah. Okay. And then gross expense, 75,000. Okay.

Got it. So at least this year looks like gonna be more profitable than last year.

Yeah. Yeah. And I end off with. I've been two guys for a while, so it's like I'm making almost the same. Like, I've been two guys for, like, four months or something like that. So it's like I'm making this maybe the same amount of revenue or more and. But more profit, I think.

Okay, cool. Cool. And then for next year, do you kind of just plan? Not necessarily growing, but you're really focusing on, like, profitability and, like, have you implemented P4P at all or anything like that?

I'm looking at that. I'm looking at them. I know it's. I'm not a numbers guy, so I did try it. And it's interesting, though, because sometimes it looks like they worked fast. So if I either just give them just the eight hours because they work fast, or if I just pay them the hourly rate of what they worked. I see sometimes, like on, I think a day like last week, they make. They made more on hourly than if they were doing.

Because I guess the drive time was taking up time. So they made. It was like a longer day because of everything together. But if we just account for the jobs.

They would have made, let's say 130, and if we include the dry training, they make 140, 150. So I guess I would pay them that, right?

Well, yeah. Like. Like, the thing is. Yeah, P4P. Like, if they're switching actually to P4P, they're only getting paid when they're on the job. Right. And they're getting a percentage of that revenue. And it's not, like, based on eight hours a day. It's just based upon how many hours are on each and every job. Right. But, you know, you're still small enough. I'm assuming you're out in the field too. So it can be tough sometimes to implement P4P when you're out there as well.

Yeah, I mean, right now I'm trying to let them do like work as much as they can on their own because I want to, I want to focus on trying to, you know, work on the system and stuff. But sometimes I'm out there when I want to also.

Kind of perfect or work on, on new services or how we offer them. So.

Yeah, like in my mind, usually until you hit four employees, it's okay to be like, honestly, you know, working quote unquote on your business when there's only a couple, like two, three employees. There's just you're not moving the needle enough. And if you are moving the needle, you'd make more money than what you're saving if you just worked out in the field. Right. So I agree with that.

Working out in the field, I think that's a. I think especially when they really need it, I think that's a good idea. I mean, just trying to make some money off of them to working. I won't make much. So I think that's it. I think at least for this year, I should end off the year working out in the field and then next year have a goal to have. My goal is to have. I already have one crew of like a hundred lawns and then I want to do another crew with something like that and then another crew with just bed maintenance.

Right.

That's my goal for next year.

So do you have a hundred lawns right now then?

Yeah, like 100 lawns and then we have like 30.

Bed maintenance.

Got it.

Cool. Cool.

All right.

And then in terms like employee incentive, you'd mentioned kind of like that perception that they have right now. Do you do open book management? Like do you show them the numbers or anything like that?

I mean, I don't even understand them. I can't. How would I. I need to be able to be like confident in what I see and what I know. So I don't know it. I don't. Honestly, I've never taken any schooling in business, so I've always liked, you know, work, like work mowing lawns, you know, my whole life, but I don't know anything about it.

So right now, like for example, this is obviously coming from QuickBooks. Do you just send your numbers to someone or did they have like access to your service, autopilot or how do you do that?

Well, basically right now it's just a bookkeeper that whatever comes, like they have the banks like linked to QuickBooks so whatever comes in, they just document, you know, that's all.

And then do they, do you get like a monthly statement or anything like that?

Yeah, I think it's like a month after.

Month after. So like for example, let's say do you, did you just get October, September's then recently?

Yeah, that's how it work. Yeah. Probably beginning.

Yeah. Yeah. So that's three weeks afterwards.

Yeah, I guess they have like a lot of council. They like finish it and then they have the like beginning of the month.

Yeah. Why, what do you have? Do you think you could do the expense allocation part which is.

I don't know what, I don't know what that is. I just don't know. Training on that.

No, you're good, you're good. So like, honestly, like I would really encourage you just so you can know your numbers. Yes. Three weeks even like is just too long because you're getting data from the month prior, which means now you're talking seven, eight weeks ago. The transactions that happened when you're finally actually looking at your statements, like you really need to be able to look at QuickBooks and know exactly where you're at right now.

Yes.

Week for this, the month to date, last month versus this month. And like in my mind the only way to do that is if you do the expense allocation.

Which allocation does that mean? Just like, like name putting everything in its. In its. In its place.

Exactly, exactly. You don't even need to run reports. You don't need to do taxes, you don't need to do payroll. They can do that side of things for you. But if you go into QuickBooks, like if they give you access to your account right now, literally all you're going to do is, is as transactions pile up, you're just going to say, okay, that's categorized as fuel. Fuel expense. That's categorized as insurance. That's categorized as payroll expenses. For every single expense, literally it'll take you max, five minutes twice a week.

Are you sick? So the thing is that they send me a bill like they charge $75aman hour and they charge me, they send me bills of five, six, seven hour. Can you imagine that? Like I get something 300, 400, $500. And that is so much I believe I don't know what they're doing there.

Yeah, like $75 an hour isn't so bad. But the bottom line for your size of business, they shouldn't be spending More than an hour a month on expense categorization.

Like $150 tops.

Right.

They should be charging.

Oh, yeah. Well, the thing is, the thing is, if they're doing, you know, payroll and doing other stuff for you, like, that might add up, but if they're just expense category, that's crazy. So if you're spending four to eight hundred dollars a month on that, I would highly recommend just YouTubing, you know, QuickBooks Online. And do you have access to your account?

Yeah, yeah.

Like. Like, did they own the account or do you own the QuickBooks account?

No, it's my QuickBooks online account.

Yeah, perfect, perfect. So, like, if you're able to log into there and then they would probably have a separate user, you could always block them out once you're comfortable with it. But honestly, just go into YouTube and like, search, you know, expense categorization, QuickBooks online. So expense categorization.

Or like. Yeah, anything along those lines you'll find. You know, even just organizing expenses, I'm.

Not going to mess everything up for taxes. I'm not going to, like, I won't make a mess.

No. And honestly, like, do you have a good relationship with your accountant or bookkeeper right now?

It's, it's. I mean, it's just a business.

Not.

It's okay.

It's not the best.

Do they do other stuff for you besides expense categorization?

I mean.

I think they do, like, some things.

Payroll? No, no, no.

Just sometimes with loans or they do like appreciation or stuff like that. Like, I don't understand taxes. They do some stuff that, like, with loans that I don't, I don't know how to do.

Like, honestly, you get a good CPA to run your taxes at the end of the year, they'll do that appreciation, depreciation stuff for you. Because that's the only reason it's necessary is when you're doing your taxes, when you're small as you are, you're running your monthly reports, you don't need to take that into account. What you need to know is where your money's going.

To.

Yes, yes, I need to know that.

So, like, especially if they're charging you that much, like, I just told a franchisee of ours, he was spending $300 a month on getting his expenses categorized, and I told him to pull the plug on them. I'd tell you the same thing. I can guarantee you it's going to take less than 10 minutes a week for you to do it because you know where you spent all your money.

Yeah.

Right. The thing that takes them longer is they got to figure out based upon just random information where the money is going. Whereas for you, you know, where you went to Shell for the gas and that, you know, from State Farm, it's. It's from. That's for the insurance. Like, you already know. You can literally do expense categorization, like in seconds.

So. So, and I see. I know you saw the one that I had, like how it's categorized right now. Like, I don't feel like it's that friendly to see. Like, like the way it's labeled. It just seems like it's not really, like intuitive. Did you see?

Yeah, I did. And like, I would recommend just consolidating some of the. What's called chart of accounts or the categories. Like for example, you know, under office expenses, they had that split out into like 10 different things from like computer to stationary to a general office expense to interest expense, legal expense. Like, I would just put those. Office expenses.

Yes.

Payroll, for example. Similarly, you could. That stuff is broken down decently. But like for utilities, you don't need seven line items or categories for utilities.

You know, what is that, like electricity.

Type of thing you got? Right now they have storage expense, postage and delivery, which I don't know how that's utilities. Telephone, then they got. Cell phone is separate than telephone. So like, I would just recommend consolidating them to make it where when you look at these numbers, they mean something to you because right now they're just spread out so much.

And consolidating means like putting it into one category.

Here, I'll show you. So, like, did you, did you look at any of the videos I did recently?

Yeah, I saw one that you showed something like, like something. One of your, one of your locations.

You did something like, you notice it's probably like, you know, yay, big page. That thing was awesome.

Yes.

I'm looking at yours like it's two colleges and it doesn't. It doesn't tell a story because I got to look through it. So detail, right. Because I've got. I've got an entire line item for a 7122 expense. I've got line items that are blank, have zero. Like literally, you're not using them. I have a 4462 line item on my year that's on my P and L. Right. Those things should be grouped into things, for example. Right. It's too specific right now. And as you grow, as a company gets bigger, you get more and more specific. But at your Size, I'd be focused on how do I consolidate, how do I make less categories. So that way I can actually look at a P and L and understand, oh, third of my revenue went to labor. Like, that's really easy if it's categorized correctly. So if I go ahead and.

So you, you think it, like, how specific do you think I should have it so specific to know? Like, like, can you see the, the on Facebook, the picture of, of the one that my friend sent? Did you see that one?

The Excel document?

Yes. You see how he's like, he, that's what he does. He has, like, a pretty good sized company. That's how he does it. You think it's something like that? That I should be. Or is that too much?

Way too much. No. And this is requiring imported data. I would just stick to what's on QuickBooks. Their, their reports are. It's very, very simple. Let me actually pull up my QuickBooks for the Mount Vernon location to show you how easy this is. One second. But yeah, like, in terms of that Excel document that, that your friend. Let me just see if I can pull. So we're looking at the same thing here. So in terms of this here, like, there's just too much information that you're going to have to manually input or you're moving information from QuickBooks or Service Autopilot into this. Right. It needs to be very fast, simple for you to look at numbers and be able to tell a story, be able to make a decision like, should I buy equipment this month? Well, I don't know. I don't know how it needs to be like, oh, okay, I have, you know, I have 20, $20,000 in profit. Like, yes, I can afford that or no, I can't. We're running really skinny this month. Right? Like, this is just too much information for your size of business. Like, if. If this was a $3 million business and you wanted to take an hour a week, that's what you would be doing here, right? Yeah. So now let me just minimize that. Let me.

So you think, you think me just by going on YouTube, I could learn enough to take over that. The bookkeeper's job.

Like, I'll open up mine. Right.

I'm not going to mess up my whole bookkeeping and.

No, that's what they want you to think. Okay, okay. Okay. Honestly, like, if you have. This is what, like, if you know of a bookkeeper, be like, hey, I want to come in once a quarter for one hour. What are you going to charge me for that? Like, that's what I would do if I was you. They can look over everything you've done, see if there's any issues or you mess something up. But you're going to pay maybe 100 bucks for that hour with them just to look over your books. And maybe create a quarterly report for you in that hour. And you can do all the expense categorization on a daily or weekly basis.

Okay.

And I check it. How often do I check it?

Like, if you do it twice a week, you're just fine. So, for example, some people think you gotta be crazy to be doing your expense categorization. I'm a huge fan of doing this until you're extremely profitable and you're not in the business at all because you just know your numbers. Right. Like for the franchise, for example, I still every single dollar spent at the franchise I see on QuickBooks and I expense categorize that because it's not. Go ahead.

Oh, you categorize. You mean like the whole franchise business.

For Augusta Lawn Care? Okay. Yep. I don't do the individual locations because they're running with, with managers. And I'm out of day to day operations when it comes to the franchise because it's still growing and because it's still not profitable. Every single month in every area, I need to know those numbers. Right. And so if you're trying to increase profitability, you need to know these numbers like off the top of your head. You can't wait like six, seven weeks after.

You ever think having a bookkeeper is like something that you should have? Or is that like later on or how does that go?

I would recommend meeting up with a good bookkeeper that was willing to meet with you quarterly. Right. So, for example, I have a bookkeeper. They do payroll. But then I will once a quarter have a meeting with her. And I want to go over all the expense categorization because I don't do all of it. Like the gym, for example, the manager does the expense categorization. Bellingham location, they do the expense categories. Like it's all different there. And I need her to just to look over everything, make sure everything's good. I'm Talking about like 30 minutes for all the businesses every quarter.

So that you do that every quarter someone looks at your. Your books like the bookkeeper.

Yep. And then at the end of the year, I'm going to pay someone a CPA a lot more money to actually do the taxes and make sure everything's good. But there's not a lot for them to do. If I've stayed on top of it every week doing the expense categorization. And every quarter I've met up with a bookkeeper and just got their thumbs up on it and made sure everything was good. And at the end of the year is very little work for our accountant to do.

And I get big bills too. I got from the accountant. I still haven't paid it. It's like 1,700. I don't know if that's a big bill, but that sounds big.

Yeah, that's a lot.

Yeah. I don't even feel like paying it right now.

The thing is, if you keep track good throughout the year and you know what's going on in the business, what when it comes to tax season, they'll be able to ask a question. And instead of you saying, oh, let me go ask my bookkeeper now, you'll know the number right off the top of your head. Right. I paid less than $1,700 last year. All of my tax returns to be done. Right. Including all the businesses. Now I paid more money for my accountants to set up other stuff like accounting fees are a lot more. But for my taxes, that was less than 1700 because though of staying on top of it. Right. Obviously, the quarterly helps somewhat with the bookkeeper, but honestly, 90% of it has to do with me checking or one of the managers checking every single week, twice a week, three times a week, making sure those expenses are categorized. I'm going to actually up.

The expenses are categorized.

I'll show you our QuickBooks. This is the Mount Vernon location. The smaller one.

Is it your brother or.

Yep, yep, he's the manager. So I haven't been down there in a long, long time. You'll see like, for example, this is QuickBooks. This is inside of his QuickBooks. You'll see he's losing money, $2,000 net for October. And that's because there was a $7,000 worth of profit sharing this month. Right.

So worth the profit between him and someone else.

Just him for quarterly. Because he's the manager.

That's. That's, that's awesome.

Yeah. We'll talk about that in just a second for your employees. But like, so that's why it looks negative. I know that by the end of October, once they collect on, it'll be positive for the month and everything. But Anyways, this is QuickBooks Inside. When you go here, the same thing is going to happen for your with your accountant. They're going to have your accounts up here. So for example, we have a gold American Express card that the employee is happy. Tim. And this is the bank account, right? So, yeah, you can see how much is in the bank account.

I have. I have like all these accounts because I heard like profit first and it's just like I have all these things. Like, is it good to just have one account or what would you recommend.

Do right now if I asked you, do you have five accounts?

I have. I have one that's income. That it all goes into income. Then I have one that's payroll and then I have operating. Those are like the three that I use.

Okay, how much do you have in each.

Right now?

Let me see.

I have.

I know on payroll when it's. Whenever it's payroll, I just put. I just move the money over.

I don't even need to know how much. I don't even know how much. What the concept is you need to know that number.

Right. And so if having three accounts is keeping you from knowing that number, then I'd scratch the three accounts. Profit first works great. But if it's going to prevent you from knowing your numbers because you just literally money goes into these accounts and you're like, you don't really know how much is in each one and you have no idea what's going on. I would completely scrap it and just deal with one account.

Maybe that's why it makes bookkeeping more expensive too, is because they have to do three accounts.

They have to move stuff around, all of that.

Maybe if they just had one, it would be less expensive.

Like what we have right here. Right. So we got our bank account, we got our credit cards, right. I know that. All of our expenses. So let's see here. See if there's anything to actually update.

So this is literally what you would see, right? You put your accounts in here. You click update, which. Which is doing right now. And then it's going to bring up new transactions since the last time you updated. So, for example, this was done like five days ago, I think, in terms of being categorized. But there's just one transaction on the bank account. So I scroll down to this. I see $151.90 was a mobile deposit. I know that. Sales because Tim the man's access to the bank account and can do mobile transactions, depositing checks. Right. So I just confirm. Boom. It's already. It's categorized just like that.

And the category, like, how do you. How do I.

Could we look at it through my point through my screen to see how I could go through it?

Yep. Can you share? Do you Know how to share on your screen.

Let me see. I share screen. I see it. Let me try that.

Go ahead and click that and then open up the window, which. Or click on the window, Whichever has your QuickBooks. So probably Chrome or Safari or whatever.

You'Re using right now says host disabled attendee screen sharing at the moment.

One second, one second.

Yeah, I'm going to make you the host for just a second so you can share your screen. Okay, go ahead. All right.

So I will click on the one that. Okay, let me know if you see it.

Yep, I see it. Perfect.

So do you see all those? I think those are the counts.

Right. So these are just the expense categories. These ones in the middle right here. Expenses. So, yeah, this is expenses for last month. Your total expenses was 27,000 and then 16,000 of that was payroll. 2500 of that was legal, et cetera, et cetera, et cetera.

1400 subhan. No idea. Everything else. Right. That just sounds strange.

This is the big red flag I'm seeing right now. Carlos is down in the left hand Corner. You have 21 and 53 to review. They are literally doing expense categorization once a month.

Okay.

And then, so let's, let's just show you how to do it. Go up to banking in the top left there.

Right.

Go to banking.

Click on the banking. Okay. And it's going to open up. We're just looking at online, right. So. Well, I would recommend, you know, if you want to make this simple, is to go down to one account right now down the road. If you want to implement profit first, awesome. But you need to know your numbers first. Right. So but in terms of what's going on right now, for example. Oh yeah, I can see what's happening. So scroll down, scroll down a bit. I'm assuming, see these online transfers, I'm guessing this is what's breaking the money apart into different accounts. It's that, right?

Yes, yes.

Okay. Because like I can see was 150, 150 and 650. Those are probably going to three different accounts then. For example, though, like, this is pretty simple, right? So we got return authorized from Home Depot. You could just, you know, add that to job materials. I wouldn't do it yet. Just in case. You're going to let them keep doing it or not, but if you're dead set on you taking over, I'd go for it.

Okay. All I do is just put add. Is that correct? How. It's how it's labeled.

Yep. So right now, when you clicked add. It disappeared.

Right?

So scroll up a little bit. Scroll up and see how right now you're on for review. To the left a little bit. Left, left. See the for review tab.

Right to your left, down right there. For review. No, sorry, I. You can't see where I'm pointing. I know. Click, click your. Just click once just so that thing goes away. Yeah.

Oh, I see. I see it go away.

Yeah. So see where it says for review? That's what we're looking at right now. But now go to categorized.

Okay.

And now you're gonna see on the very top there, that's where your Home Depot return is at. Now that. Right, that you just authorized. No, down below.

Return.

That's the. That's the one you just added.

Okay.

Okay, so what. Basically what happening is when you go to for review, these are the transactions you need to review and. And allocate them in the correct category. Once you've done that, it goes to categorized.

So, okay, so if I have the return authorized auto zone, what would I do? Is that. Is that fine? I mean, that's.

So this looks like a return. Is that correct?

Yeah, yeah. I bought. I bought like a hitch.

Yep. And because I can see like four or five down there, I see at AutoZone or. Sorry, five or six down. I see AutoZone for 3709.

Yeah.

And then I see your 15. Oh, the one you're on. Exactly. So I would see it says auto expense.

Where your cursor's at. Was this an auto expense or was this a job material?

It was an auto expense.

Okay, so the one you're on right now, let's add that one in. Okay, but then on the return, go up a few.

Return.

Oh, 1589.

Here.

Don't click that. Don't click that. Because see, it says on the category, it says job materials. So click on that. It's gonna do a drop down. And now you can just change the category to auto, expenses, expenses.

Scroll up. Scroll, scroll, scroll, scroll. You could also just see where at the top of this drop down. Yeah, just type in auto.

Oh, sorry, my bad. Click the little X next to there. Sorry, you were searching the expenses. Yeah, exit out of that. Go down to here. Go down the drop down again for the job materials. We're changing that to auto. Nope, nope, sorry. There you go. Sorry. Keep pointing. And now. Yeah, just right now. See how the. On the thing, it has a blue on job materials. Okay, just start typing. Just start. Just type. There you go. Then the auto expense. Perfect. Now it's changed. Now you can go and add that.

One second.

Add. Perfect.

So it was added. And so even if it's a return.

You still add it to, making sure it's going to the same category. Right. Because the debit and a credit, basically money in, money out. And so if you. So for example there, what we effectively did there, $15 went in, like, was an expense. $15 came out of that category. The net effect was zero. But we want to make sure we keep track of those expenses and those transactions.

Because in the computer, it'll, It'll know. It'll. I guess it'll affect your. Your, your materials cost.

No, that wouldn't. Because we're effectively making it zero. But we want to keep track of it.

You want to keep track of it. Okay, how about. How about this? I have no idea what Home depot.

I'm sure $78.

Yeah.

I think it was screws.

Okay, so click on it. No, no, no. Yeah, just click on that. See, now the memo. Yeah, I would put screws in there. Do you know what you use the screws for?

It was.

Screws for.

I think it was like actually bolts for the mower.

Yep. So do you just type that in? Bolts for the mower.

Which means it's not going to be a job material. This is going to be maintenance.

Maintenance.

Okay, so look, do you have an equipment maintenance or anything like that in here?

This is like the first time I've actually looked at this.

You're good.

I don't know.

You're good. So just type in there. Repair, maintenance. Let's go.

I'm just going to add that in. So I can guarantee you right now things are getting misallocated because your bookkeeper is doing this once a month or maybe once every two weeks. I would highly recommend doing this twice a week because then you're only going to have like, I had one or two expenses that you know exactly right away where those are supposed to go to. And you can add more information. I promise your CPA has to work less if you got this level of detail. Like bolts for the mower. Not just. Oh, like there's a charge to Home Depot.

Right, right. Okay. And this one, if it's also some.

If it's like. I think it's just also like screws and bolts that we need for. We're doing like a project on the mower. Like, we're trying the X blades out. And so that would be also.

That would be under.

Maintenance and repairs.

Oh, okay. Okay. Okay. How about stuff like disposal? Like the trash.

Yep. So click that. I bet you have a dumping fee. So click that. Go ahead and type in there. Just do dumping. You don't have that, do you have.

Honestly, in the past, they probably put this under something stupid like miscellaneous. So just keep scrolling.

Yes.

Keep going. You're in equity income. Keep going down. Like right now you have so many income accounts too. Like, I just put everything under one thing. Like service income, for example. Right. Okay, so you got cost of goods. Keep going down.

That's it.

That's the end.

Yeah.

It'S not good. Scroll. Sorry. Scroll up again. Scroll, scroll, scroll. Keep going, keep going. Go, go, go, go, go. Keep going. We're still in equities equity category, so I want to go up to expenses. So keep going, keep going. See, on the right hand side there, it says like different, like credit card fixed ass. Like I want to go up to expenses. Oh, there you go. Perfect. Okay, scroll up. Now.

Disposal fees. What.

What did we put in there?

We put.

We put something like that.

Oh, no, we put dump, Dump, dump. Yeah, you'll get to know what your categories are. Right. And when you. I would recommend January 1st, go in here and reduce the number of categories that you got. Right. So go ahead and add that one.

Okay. Okay, I got you. So category would be like putting. Just office for everything or putting labor. Would I do that or.

No, I would just. So for example, go over to your left hand side. Go to accounting. Okay. Here. Yep. Chart of accounts.

Okay.

And by the way, I'm gonna send you the recording of this video so you can see this later too.

Thank you.

So scroll down. These are all your, your categories that they've created for you. And half of these need to be deleted.

Wait, so the name, like each one of these is a category for.

Okay, Correct. And then the type is like your bank accounts. Then you got asset accounts. Keep scrolling.

Keep scrolling. Then you got credit cards and they have liabilities set up for you. Keep going.

Yeah, I just don't know. I don't know what, like how I would do garnish or net salary payable. I don't know where I would put. Would that just be payroll?

Well, look, it hasn't been used. See all the zeros they're not even using on their right hand side ones that aren't used.

Just like get rid of those.

Well, like for example, like unless you're, unless you're having money like payroll tax payable, you don't need to keep track of that right now. Just when the money goes out. Expense, categorize that into payroll tax. Gotcha. Right, so see, a lot of these could be, you know, reduced, for example. Like, scroll down a little bit more. See all these income accounts?

Yes.

You just need to have one. You need to have service income. Right. Or sales. Either one. Oh, you only need one. Like basically any money, time, money comes into your business, you know what it's coming from. It's coming from your services. Right. Inside of service autopilot. You can keep track of, like where you got the money from from whether it be landscaping or trees or lawn service or treatments or whatever, you can keep track of that in service. All here. We're just trying to get a good P and L that's simple enough for you to understand.

Okay. Okay.

So I wouldn't do all the changes on this part until January 1st.

So after January 1st, I can start doing that. And do you think. Do you think I could still take over now, though?

Yep.

Okay.

It's just gonna take a little bit more scrolling to find like the categories that they've created. And then like, if they're a good company, they will agree to one hour per quarter for you just to come talk to them. That's all you ask for. Like, look, I'm going to take over expense categorization and all the bookkeeping, but can I come in once a quarter and just show you what I've done and go over it? Like, you're doing the hard part, which is payroll. Looks like you do it through adp.

So like the. That's the hard part. Honestly, compared to this, like, this is simple. So at the end of the year you can delete some of these categories if you want to. Or maybe you get in the groove and you start to figure out what they are doing throughout doing it yourself the next few months for asset or expense categorization.

So, so, and where does the cat. Like the categories, these categories, like where does that reflect? Or is that when I'm trying to allocate it to.

Exactly. When you're scrolling down, this is what's showing up.

So. So if it's like, if it's like a lot less, if we have it condensed and it'd probably be like 6 or something like that or say 10 and so whatever. Like if it's dumping fees would just be dump or if it's a sale, then just like that simple.

Yep. Okay. Okay. So like scroll down. So for example, you see the types. These are all other stuff that they have in there. But if you scroll down, you'll hit expenses eventually.

Okay.

Okay, keep going, going, going, going. There you go. Now we're in expenses. Right. So these are the expense categories that they have and you can create new ones. Right. So like if you scroll the very top of this page.

What, here?

Yep. All the way. See which has new.

Yes, yep.

So just don't do important, just new. Yep, perfect. Click that new. This is where you could create a new one. And I wouldn't do this till January 1st because you're going to mess yourself up. So for example, if you want to say, hey, I'm going to move, you know, employee related expenses, you know, into one, I'm going to do wages under another one, I'm going to do employee taxes, another whatever. This is where you'd create them. Right. So under account type, you could just select what type of category this is going to be. So it's probably. Most of them are going to be expenses. So if you scroll down a bit.

Okay, Expenses.

Yep. And then you're just going to create a name for. On the right hand side and you're off to the races. Right. And your detail type. Sorry, keep pointing. It says advertising and promotional. You just change that to kind of whatever closest is representative of the thing you're going to add. So for example, if you're doing.

Your labor, I do cost of labor. And then the name could be whatever you want, cost of labor. Or it could. You could change it to employee wages, whatever it might be.

So, so this goes inside of expenses.

Or this would be. Right now you're creating a category of expenses so that when you do that drop down and you're allocating them, you have something else to put it into. So what I would do if I was you, if you exit out of this, I would January 1st, go through this page, the chart of accounts, figure out which ones you need to delete.

Yes.

And then start new ones.

Right. Okay. So it wouldn't affect anything because it's the new year.

Right. That's why I would do this literally January 1st. So that way you can run your taxes for 2020 and then starting in 2021, as you allocate your expenses, they're all following in the simpler categorization.

Okay. Okay. And that's just based on my needs of how I want to categorize it. Like, I don't.

Okay. Yeah. And honestly, if I was you, because, you know, your current, you know, bookkeeper is probably gonna be a little bit sour that you're not doing services and they're not gonna be able to rip you off anymore. I would go to, you know, just go shopping around locally and say, hey, I want a bookkeeper, but all I want from you is one hour every quarter, two hours, let's say two hours per quarter to sit down with you, go over my books and see if there's ways I can improve. And they might say, hey, like we should add another expense category. I say we should split up fuel expense for the trucks and for the equipment or something like that. And that's fine. They'll give you good advice. But I just truly believe that it's. I'd rather you lose on a couple deductions on your taxes then not know your numbers the entire year. Right. And so you know, when a bookkeeper gets paid by the hour, it's there in their best interest to complicate things as much as possible. Our goal is to know our numbers and simplify things as much as possible. So I'd rather have you oversimplified and maybe miss out on a couple fine details of your accounting method.

If I just make it one account now, will that mess things up or no?

Does everything from service autopilot go into one account?

All the ink? Yeah. All the sales? Yes. Yeah.

Okay. And then your payroll, does it come out of that other account though?

The payroll account? Yeah.

So you just want to make sure that everything is lined up on one. So what I would do if I was you, I look at your payroll. So, so if you go to banking and then go to banking again on here.

I would go to the payroll to see the three boxes on the right hand side, there's that arrow that go. Keep going. Or is that it right there.

The payroll one?

Or. Oh, keep going. You got income, you got operating expenditures. That's pr. Is that. What's the PR one?

Hey, Payroll.

Yep. So click on that one and then you're going to be able to know, scroll down, which kinds of expenses you need to get changed over. So whether it be coming from adp, whether it be. If you're writing checks out of this, you just need to know that if you're going to switch to the other account, you don't want money being trying to draw from this account. So you probably change like payroll, for example, over to the other one.

And same thing with like your credit cards. If they're getting paid out of OP X, you might need to change that to the other one account. Right.

Where are you seeing that?

Scroll up.

OP X is far left. It's another account you got. Yeah.

So what, what do you, what's your, like what are you thinking about that then?

Are you.

I didn't understand.

Yeah, I'm thinking that if you're going to move to one account, you just need to look at the other accounts that you intend on not using and making sure that whatever transactions are coming either in or out of them are changed. So, for example, adp, you need to go in there and say, hey, I don't want you drawing from this account anymore. I want you drawing from this account.

Okay. So basically you're just, you're saying like, keep an eye out on the, on the other one still, but just. But it's okay to do everything from one account?

Yeah, yeah, pretty much. I just don't want you to.

Forget about like payrolls coming out of that other account. And in your mind it's. You're only on this other one account. Right. So just making sure that everything's transferred over to that one account, basically.

But I mean, when everything is transferred over, that's, that's fine. Like we'll just do that one and.

Okay.

Do I need to keep it though, like, up for. Until the end of the year though? The other accounts that were there or.

I would just keep them open. Honestly, there's no reason not to have them open.

Is that just for this year?

It doesn't matter really because these are probably just checking accounts, right. So unless you're paying for them, you could literally just let them stay open.

I probably. I mean, what is your. What do you think about, like, for, for accounts like, like savings, you just always just keep all the money of the business in one account.

We do again, for simplicity sake.

Yes.

Split it up. I don't know why you'd want to split it up other than down the road. If you do implement profit first, that's a great method, but right now you need to know your numbers first. You need to know these things first in my mind.

So just one account. Okay. Okay.

Because for example, if you go to the income account, you're gonna see money being transferred to other accounts simply to get money in the other accounts, not because there's an expense.

So if you click on that, what's.

Up, it just creates like what you're about to say. There more work. Right. So if you go to the center account there, the income one. Sorry, go up, then one in the middle. Where? As well as far as your income account. So this is where the money is coming in. But see where it says spent and there's money going out. This 15. Sorry. Yeah, the 150. The 150. To 650. That's just money being moved to your other accounts. So that's why that's not going to show up on a profit and loss. That's why. On the far right hand side, see how it says transfer instead of add transfer?

Yes.

That's because it already recognizes, hey, we're just moving money from one account to another account. So when you click transfer, that's not going to actually show up on your P and L, which is fine. That's good. But we can reduce the amount of all this stuff happening by simply taking away those other accounts.

And that's fine. To just click transfer on all those.

Yep. Because you're not really doing it. You're just. It's just acknowledging that money is going from one account to another.

Wow. They probably just. Can you imagine spend, like spending five hours just doing the clicking? That's just, like, not right.

Yeah. So, like, all of these are basically either coming from clearance, which is your sales, or they are just money being moved to other accounts. That's all this is.

Okay.

Okay.

And is that necessarily what they're charging, or is this the sales?

It's received. Received. Okay. You have. You're in the receive column there. So that's. That's money coming in.

Okay.

Okay.

Yep. You're right. Spend.

Okay.

All right.

Yeah. I mean, I should probably start getting, like, really, you know, start working in here in QuickBooks to kind of get familiar and then find out what I need to learn.

And what I would do, honestly, if I was you, Carlos, is I would shop around for another bookkeeper, say, hey, I need two hours of your time to help me on cookbooks, to know how exactly. I need what I need to be doing every single day to make sure this is good. And then I need two hours of your time every quarter. And I'm going to pay you $100 or $150, and you can just look over what I've done and make sure it's all good. So that way, at the end of the year, everything's good for taxes.

So you're saying like the first after, like, like when I'm doing thing, like, to start off for him to, like, look at everything to make sure. Like, together.

Yeah. I would say, hey, look, I'm trying to just be honest. Like, look, I'm wanting to take over the expense categorization for my business. So I understand.

And this is.

You're going to a different provider now. You're going to different. Not the one that you're currently using. And you're saying, look, I want to. You guys use you guys, you know, I need a couple hours with you sitting me down and going over all of my cookbooks. And then every quarter, I want to go over everything that I've done in my QuickBooks to make sure that I'm doing it correctly.

So in the first time, what is he gonna be? Is he just gonna be, like, taking a look at everything or what?

He'll do exactly what I'm doing with you now so that they understand how you're doing. Experience, expenses. And they might say, hey, if you could do this to make it our job easier, if you could just make, you know, change this category, like, they'll walk you through that. But you do not want someone to take this over for you. You just simply want someone's opinion and advice quarterly. And to get them started, they just need to see inside here, know what's going on and how you kind of run the business.

And I'd have bookkeeper do that even now that I don't have.

That.

I don't have, like, the categories, how I want it. Like, I'd still do it. Now.

They can help you do that. They can help you do that and make sure that you both are on the same page in one consultation meeting that does not take five hours. You know, we've spent, you know, 50 minutes and basically, you know, got a lot accomplished in two hours. They would be able to help you delete out, you know, old accounts, merge them together, whatever is needed, get you on the right path, and then if you ever had a question, they should be someone you can reach out to, but you're not paying them $500 a month to do nothing. Because if you scroll down, I can almost guarantee you, yeah, they're doing this maybe once every two weeks. And I can promise you they're spending 15 minutes each time, if they're good.

Yeah, I mean, doing 15 minutes. Doing what? Just add. Oh, that's easy, though. I mean, this is really easy. It's just pretty much just classifying where you're.

Yeah, okay.

And it can be simplified a lot once you start closing down other accounts, because a lot of these transfers are just to other accounts.

Okay.

So it's okay for me to do what? Change everything, like, all my expenses and everything, and just have it one account right now?

For now. Yeah. I think down the road, it might be a good habit to get using profit first, if that's something. Something you've adopted and think that's great, to kind of give yourself Some discipline on finances. However, if you don't know your numbers, I don't care how disciplined you are, that money's floating around in oblivion and you don't know what's happening to it. And just moving it between different accounts doesn't make you any more aware of your numbers. Right.

Yeah. So I'd focus on getting your numbers and then focusing on. If you need to discipline yourself financially, use profit first. Okay.

Okay. That'd be great.

Definitely. So I've. Okay, so you said. How long. How long has it been right now?

It's been 55 minutes. I got, like, three minutes. I gotta hop on it. Okay, let me.

What I. What I'm thinking is I definitely. Are you gonna continue doing this?

Oh, like the calls? Yeah. Yeah. If you ever needed me. Yeah. Like, I really think in terms of the. Of the quickbook side, I. I'd really encourage, you know, trying to get with a new bookkeeper because they're gonna want to earn your business. They'll be more flexible. If you try to do that to your existing person, they're gonna be like, oh, no, we need to do this and all that. Right. So that's why I'd go try to find someone new. Right.

What I was trying. What I was saying is kind of. I like the way you, you know, think about business, and I don't really have. You know, I need someone that can help me, you know, in the. In, like, in these stages. Like.

It. Would it be possible to, like, do that again and. But, like, kind of have, like, help me, you know, get towards where I need to be so that the business is kind of more of like a. Like, it's this, like, how the business works is kind of. It's more like. How would you say that?

Like, systematized or.

Yeah, yeah. I mean, where everything's kind of in place, you know, like, with employee stuff, with just kind of like. And also kind of direction. Like, I don't know where. What direction right now. I mean, but maybe you could.

Yeah, yeah. Like. Like, I'll have these type of calls where you can, you know, pay and book for them, you know, for the next while. And if I ever am going to close it down, I'll let people know on the podcast first.

But, like, I think the biggest thing is, you know, when you listen to the podcast, when you listen to the videos, you know, a lot of what we even talk about here, like we've said today, it's in there. It's just. I don't. I haven't been able to step into your cookbooks, right? But like we talk about their knowing your numbers. If you don't know your numbers, we've got to figure this out, right? And when we talk about like P4P, for example, on the podcast and it's in the course and everything else, like it's, it's there, right? And so, you know, I'd really encourage you, you know, do obviously, like, don't think you're going to change your business overnight, right? Like, doing this is a great step. If you did this, if this took you the next few weeks to kind of solidify, understand you're Saving yourself like 500 bucks a month as a great first step, right? Maybe next spring you're going to implement P4PMaybe you come for conference in January and learn profit sharing and culture stuff. Like those are all steps you can take, right? And just do it one by one.

And I think this is a big, big, big thing you gotta fixed on that is knowing the numbers. Like literally someone wake you up at 2am, ask you how much you made yesterday, how much you're profiting this month, year to date. Like, you need to know those things, right? Otherwise you can't make decisions. And like your bookkeeper doesn't make decisions in terms of how much you're growing or where you're marketing or where you're spending your money. So them knowing your numbers doesn't do you any good. You need to know your numbers. Wow.

Awesome, man.

Awesome.

Thank you. Thank you. I appreciate that, man. Hopefully we stay in touch and maybe when I get everything going and everything, maybe we could, we could, you know, connect again and, you know, go over some things.

For sure. For sure, brother. Like, a lot of people are in your same boat, right? And first of all, they just kind of blindly like give numbers to a bookkeeper and say, hey, take care of it. When in reality, if they could take that control back and understand their numbers, they'd be able to make good decisions for their business. Without that information, you cannot make good decisions in the business, whether it be P4P, how much money you pay your employees, how, what your cost per hours. You got to know this stuff. Like how much money do you spend last month in fuel? You got to know that. Why would I bend over backwards trying to create an efficiency around fuel if it's. If my whole fuel expense is only $500 a month, I'm only gonna save 50 bucks. Yes.

Yeah.

That's the things you need to know to know where's your time best being spent and numbers. You just have to control those. Wow.

I agree. Totally, man. Thank you.

We'll stay in touch, brother. I'd love to see a conference or, like, whenever we stay in touch, you send me an email or anything like that.

Yeah, that'd be cool. To go to a conference. You're getting ready for that?

Yes, sir.

All right, man. We'll stay in touch.

All right, brother. Take care.

You too.

Bye. Bye.