MBA1065 Q&A Wednesday: Do you do your own accounting? How much time do you spend on it?

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Hey oh. Welcome to the Hundred Dollar MBA show. Answers to business questions you have with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of the $100 MBA, a complete business training and community online. And today's episode is a Q and A Wednesday episode on Q and A Wednesdays. I answer a question from you, one of our listeners. If you have a question you want an answer to, just email me over at Omar MBA Net. Today's question comes from Gloria and Gloria asks do you do your own accounting and how much time do you spend on it? Solid question Gloria. So in today's episode I'll be answering that question. How we deal with accounting in our business? Do we use an accountant? How we found our accountant, how you can find one yourself, and how much work do I have to do to keep all our accounting on the up and up? Accounting is one of those things in your business that you just got to do. You got to get it done, but you also got to make sure that it gets done properly. It's going to save you a lot of headaches when it's done properly. So I'll be answering Gloria's question about accounting, how we deal with accounting in our business and how Much time I dedicate to it. So let's get into it. Let's get down to business. So Gloria asks in today's Q and A Wednesdays question, do you do your own accounting? And how much time do I dedicate to accounting in our business? So, number one, we have an accountant for our business. Our accountant, Nick, is a fantastic accountant. He's thorough, he communicates, and he takes care of most of the big accounting tasks that we have to take care of. But there's work that he has to do and there's work that I have to do or we have to do as a company. Now, I want to detail exactly who does what, and then I'll go into how I found Nick and how you can find your own accountant as well. Before I get into the views, I just want to say just off the bat, having an accountant is probably one of the best first hires you can make. And later you'll realize it's not that expensive. It's so well worth it, and it gives you such peace of mind, especially if you have a great accountant. Number two, having an accountant could save you money, meaning that the money that you're going to pay your accountant will probably be less than then how much money you're going to be saving and whatever tax incentives he can find for you or tax deductions. So that leads me to Nick's duties, our accountant's duties. So Nick does most of the heavy lifting when it comes to the accounting. He does all the paperwork. He does all the taxes for the business as well as our personal taxes. He keeps track of the receipts that I give him, and he kind of crosses the t's and dots the I's and makes sure he fully understands what are deductions and what are expenses as well as the income that you're making every year. He also handles what is called sales tax or in some countries, gst. You may get a GST or sales tax rebate because, hey, you might be charging upfront or you're being charged for your from your payment processor. And your accountant will make sure he or she will make sure that you'll get that money back in tax time. Company might also be charging sales tax or GST in some countries. And, you know, GST might be applied to your own customers in your own country, but not apply to people from abroad. You got to take a look at what's going on in your business, the way you're charging your payment processors, but your accountant can really take care of that and make sure that if there's any money that you can get back from taxes because of those charges that that actually happens. Now, accountants, they have to work with something. They gotta have a middle system to work with you. And usually that's software. The software we use is called Xeroxero. They were a sponsor of the show, actually. So if you're looking for a discount, just go to xero.com MBA should find a discount over there. And Xero is like the accounting software that tracks your expenses and your income. You'll link it up to your business bank account so it could track all the money that's coming in and coming out. Now, your job is to make sure you describe what each transaction is. So when you get a payout from your payment processor, you have to kind of earmark it and say, hey, this is the payout for this product. Same thing with an expense. If you're paying payroll and you paid somebody that expense or that, you know, withdrawal from your bank account is going to show up in Xero. Now, the beauty of Xero is that if you have consistent expenses and consistent revenue, it's going to remember what you keep earmarking and it's going to do it for you. You only have to do it more than once. If the numbers are different, the amounts of dollars are different. Now you're going to have to do that. The reconciling, I spend time on that. So I spent about, I would say, 45 minutes every month doing some form of accounting with whether it's reconciling or making sure that our receipts are organized. We have a Dropbox folder that we share with our accountant. And anytime I buy something for the business, I snap a picture of it on my phone and I drag it into the folder in Dropbox so that we have a receipt, a digital receipt of that expense. We also use a phone app called Receipt Bank. This is an awesome app where basically anytime I get an email with a receipt, I can forward it to my special Receipt bank email and it goes into Receipt bank and it syncs with Xerox. So this is even faster than snapping a picture. So if I have a receipt for, let's say, a flight that I booked for a business trip, I could just forward that receipt to my Receipt bank email. It's going to go to Receipt Bank. They're going to process that receipt. They're going to read all the information they receipt and pop it into Xero for me.

Pretty awesome.

So I spent about 45 minutes a month on, you know, I would say, bookkeeping and making sure. You know, Nick, our accountant, has what he needs and then Nick takes it from there. He tracks our expenses and then he gives us annual reports as well on how we're doing, if we operated at a loss, if we were profitable, how we did compared to last year, all that kind of stuff. And the best thing of all, I don't have to worry about anything legal because our accountant takes care of it. He actually takes care of a lot of things other than just the taxes, you know, he takes care of. Also, if you were looking for a rebate or looking for some sort of R and D fund, research and development, or some sort of grant, we also make sure that, you know, our business license is, you know, up to date. If we need to make any changes, like our business address, you know, we make that change. He helps us out with that. So he's really fantastic. So you want a really all around accountant. So how do you find one? Well, first of all, there's plenty of freelance accountants out there in our accountant. We found them in a co working space. So if you go to your local coworking space, there's definitely going to be an accountant there that takes care of a lot of different clients in that coworking space. See if he or she's got availability. And you might be surprised that their rates are not too bad. Most accountants work on a retainer, meaning that they get charged every month a certain fee and they take care of all the major things that you have to do throughout the year. And they're there for you if you have any questions. Some accounts are pretty affordable at 300, 400 US dollars a month. I think that is really good value for the peace of mind you're getting. And someone is going to help you through something that maybe you're not an expert at. Our accountant just sat us down and had a coffee and told us, here's what you're gonna have to do. This is what I want you to do. This is where you're gonna put the receipts. This is how you're gonna do Xero. He showed me how to do it. Then we kind of meet with him every six months. I check in to make sure everything's okay. There might be some new technology or new ways to do things to make things more efficient, and he puts us in the know. Well, there you have it. Now I know that he probably does a whole bunch of stuff that I don't know about, and that's fine. He takes care of business and that's what we hire him for. But in Terms of what I have to do, I got to reconcile things in Xero. I got to make sure that everything in terms of receipts and expenses are stowed away and filed in the right folders in Dropbox. And that's pretty much it. You're going to need to sign some papers during tax time and all that kind of stuff, but hey, pretty simple.

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Have an account and manage finances in your business is huge. But they also can help you out with other areas in the business and also in your personal life. They can really help you out with financial planning for the business. It's really helpful to sit down with your accountant and tell them what your goals are with the business. How do you want to grow? Do you want to open up another branch? Do you want to hire five new employees? He or she can sit down with you and carve out a plan. How are you going to get there? Well, let's take a look at your revenue. Is there a way we can invest that revenue somehow to make some money? What do you need to increase your revenue? What are your revenue goals? All that kind of stuff. What about you personally? What are you doing to plan for retirement? They can help you find some retirement plans, some saving schemes, something for you to really rely on when it's all said and done. I would also sit down and speak to your accountant about some of the things you're going to be spending your money on in your business. What whether it's marketing, whether it's going to conferences, whether it's recruiting, there may be some way or some tax incentives that he or she can kind of outline for you. You might be able to get some rebates. We're not in the know about what's going on in terms of some benefits that are available to us. But accountants do they know what's going on? They know, hey, you can actually claim back X amount of money on any foreign marketing you're doing. So share this information with him or her. You might be surprised. They might be able to make you some money, not only save you some money. Well, there you have it. That wraps up today's Q and A Wednesday. Gloria. I hope that answers your question and if any of you are listening have a question, just email me over at Omar00 MBA net. I would love to answer your question right here on the show. Well, that wraps up today's episode. Thank you so much for listening. Before I go, I want to leave you with this. One of the beauties of being an entrepreneur is getting to hire and work with experts. People that are great at what they do, people that can do your job better than you can do it or parts of your job. You just can't do it all. At the beginning, you probably do it all. You know, you hustle and you do every aspect of the business, but that's not sustainable. You got to get some help. You need to build a team, and getting an accountant is a critical part of, you know, growing that team. Find experts, rely on experts, and it's going to give you peace of mind and allow you focus on what you do best. Create a great business and product. All right, I'll check you in tomorrow's episode. I'll see you then. Take care.

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