Enthusiastically Self-Employed: business tips, marketing tips, and LinkedIn tips for coaches, consultants, speakers, authors, solopreneurs & small business owners
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Enthusiastically Self-Employed: business tips, marketing tips, and LinkedIn tips for coaches, consultants, speakers, authors, solopreneurs & small business owners
Keeping Accounting Records Up-to-Date for Easier Tax Prep with Michelle Carley Ep 151
Keeping Accounting Records Up-to-Date for Easier Tax Prep with Michelle Carley
Where do we even get started with this process?
What do we need to know about our accounting records as it relates to getting things ready for tax prep?
What advice would you give to someone who's just getting started?
What about somebody who's already well established, working with a CPA?
Who does a good support team consist of?
Could you give us some examples of what a startup cost would be compared to what is an operating cost?
What are those common mistakes or pitfalls that we need to be avoiding?
What do you recommend for someone who hasn't done their mileage yet and needs to before tax time?
Do you recommend people try to do their taxes themselves?
What's the difference between cash base versus accrual base?
In this replay of a LinkedIn Live episode from Summer 2024, Brenda Meller speaks with accounting expert Michelle Carley. They discuss the importance of keeping accounting records up-to-date for easier tax prep, particularly for the self-employed, such as coaches, consultants, and small business owners. Michelle, CEO and founder of Big Easy Bookkeeping Company, shares valuable tips, including knowing your numbers, scheduling regular bookkeeping time, and distinguishing between startup and operating costs. They also explore common pitfalls in bookkeeping and the benefits of having a suitable support team and a well-designed bookkeeping system. Michelle offers resources like a startup checklist and a list of tax-deductible expense categories, aiming to help solopreneurs manage their books effectively and confidently.
00:00 Introduction and Episode Context
00:33 Meet Michelle Carley: Bookkeeping Expert
01:43 The Importance of Organized Accounting
07:17 Top Tips for Tax Preparation
10:40 Advice for Solopreneurs and Established Businesses
16:36 Common Bookkeeping Mistakes to Avoid
21:15 Cash Basis vs. Accrual Basis Explained
22:10 QuickBooks: Overkill or Essential?
22:35 Navigating QuickBooks Challenges
24:01 Live Q&A Session Begins
25:23 Mileage Tracking for Self-Employed
27:25 Tax Preparation Tips for Self-Employed
29:22 Profit First: A Money Management System
31:37 Free Resources and Offers
32:32 Connecting on LinkedIn and Final Thoughts
Originally aired in July 2024
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My name is Brenda Meller. I'm a LinkedIn coach, consultant, speaker, and author. My company is Meller Marketing and I help business professionals get a bigger slice of the LinkedIn pie.
Visit mellermarketing.com
Let's connect on LinkedIn: linkedin.com/in/brendameller
(click MORE to invite me to connect and mention you listened to my podcast)
Welcome back. This is a replay of a LinkedIn Live episode that occurred back in the summer of 2024. And as I was looking for shows to publish on my podcast, I always look for past LinkedIn Live interviews from my vault, and especially right now we're coming up on tax season here and I thought this might be a very timely episode. So this is a discussion I had with my friend and client, Michelle Carley, where she gives some great advice about keeping your accounting records up to date for easier tax prep. Hopefully this will help you out in the next few months and throughout the year. Enjoy the show.
Speaker 1:Hey, good morning, good afternoon, good evening. Welcome, wherever you're watching from in the world right now. My name is Brenda Meller and I'm welcoming you today to my show, which I call Enthusiastically Self-Employed. For those of you who are self-employed, whether you're a coach, consultant, speaker, author, solopreneur, small business owner, wherever you are in that cycle of doing business, we are here for you and I'm excited because we're gonna be talking about accounting today and I brought on with me a very special guest, Michelle Carley. Hey, Michelle, how are you doing today?
Speaker 2:Good. How are you, Brenda?
Speaker 1:And folks out there. Yeah, I'm delighted to see you. We've been talking about doing this show for a while and I'm excited. The day's finally here. So, hey, I want to welcome our audience. Be like Lisa, who just dropped into the comments that she is watching hashtag team live. She's watching us with us live today and, by the way, if you do drop a comment, I bring your name up on screen so you get some additional visibility. And right now, Michelle, we are live streaming on three networks we're on LinkedIn, we are on YouTube and we are also on Instagram. So if you're watching on any of those networks, do let me know and I'll be pulling your comments up on screen Now while we're waiting for those audience comments to start coming in. Michelle, why don't you tell us a little bit about your background? So tell us your name. Who do you help? What do you help them with? Give us a little bit of that background, Okay.
Speaker 2:Yeah, I'm the CEO and founder of the Big Easy Bookkeeping Company and I help a few small businesses by doing their bookkeeping for them, but the majority of my clients are using a do-it-yourself accounting system that I designed. So the people we help are like small nonprofits groups, clubs, small businesses, consultants, solopreneurs, service type providers. We help them to master their bookkeeping without stress using our easy do-it-yourself system. It's a Google Sheet, actually a Google Sheet system. It's all in one simple to use bookkeeping program without the hassles and headaches of QuickBooks. And just to give you a little background on me, I in school, I grew up in Detroit and I I could not read, and this was before they figured out I was dyslexic or something, but so I was good at math though, and so when I graduated from high school, I went on to work in a little factory and they wanted me bottling windshield solvent and then muriatic acid.
Speaker 2:And I'm like, wait a minute, is there any other jobs I could have? So they said, sure, in the office. So that's how I started in bookkeeping. I got into the office and I started doing books there, and then I went on to other companies and from there I became the controller of two different companies and I didn't have a degree, so I hit a ceiling and so I went into my own bookkeeping service. And that's when I started working with small business development centers and found that people struggled with their bookkeeping to reconcile, to determine a profit or loss.
Speaker 2:So, that's why I came out with my bookkeeping systems. Yeah, that's a little background on me.
Speaker 1:Yeah, I love it. I always love to hear the backstory about how people came to be where they are, and I think that's an important part of we're calling this show enthusiastically self-employed, because sometimes it's not a linear path, it's more of. Sometimes life puts you on a path or there's two paths to choose from and you start going in different directions without even realizing this is maybe it's all part of the big master plan, but I think we discover, as you did, michelle, what we like doing. You like accounting, you like working with numbers. And I see Lisa I love your comment, lisa, because she says I'm not interested in DIY.
Speaker 1:The good thing is there are people out there. There's the analogy of teach Amanda fish and he'll never go hungry in a lifetime. And I have a modification of that, which is sometimes people want to pay for the fish, like they will pay you to get the fish for them and they'll pay a premium price for that. Is that part of what you do in your business? Do you do bookkeeping for people in addition to showing them how, or is it mostly the do-it-yourself and you're coaching them?
Speaker 2:It's only for a few clients that I do the bookkeeping. The majority of the clients are using this do-it-yourself system, yeah.
Speaker 1:Good to know. All right, awesome. So we're going to jump in today and I'm very excited as a marketing person, I am not an accounting person full disclosure and we're talking today about keeping accounting records up to date for easier tax prep. So we're just going to jump right in here and I'm just going to ask Michelle, like where do we even get started with this process and what do we need to know about our accounting records as it relates to tax prep?
Speaker 2:Yeah, what I have found with the people that I talked to they're just very unorganized with their records and it makes it so difficult for them at tax time and they never know how much money they have coming in, where they spent it, how much money they have in the bank account. They can look it up, but most people just don't have a handle on where all the money is going. And another big problem I see is that you don't wanna mess with the IRS, so you really wanna get your taxes in order, so your estimated income taxes are determined by your profits. You want to have good records for that. You don't want to pay fines and penalties and tax returns that need to be accurate, and to do that you have to have accurate reports from your accounting systems. And plus, you want peace of mind. That's why we do what we do is so that if we're ever audited, we have backup. We're settled about it. You need an easy to use system to get organized, to prove your records are accurate and not to leave money on the table.
Speaker 1:Yeah, I put the statement you just said. I feel like that could be a bumper sticker for accountants you don't want to mess with the IRS.
Speaker 1:It has a little bit of a rhyme to it. Maybe you don't want it on a coffee mug to see that every day, necessarily, but I love the point of knowing what you need to do and having backup so that you don't have to worry about it. I was always the kind of person in school growing up I always wanted to do things by the rules so that I wasn't worried about being tapped on the shoulder and called up to the teacher's desk or brought to the principal's office, whereas I think some people they're like I'll live on the edge with this and look, we'll get. There's some gray areas within taxes and loopholes and I'd rather be on the up and do everything. But for many people, this whole concept of getting materials ready for tax prep can feel very overwhelming. So what would you say, michelle? What do we need to know about our accounting records as it relates to getting things ready for tax prep?
Speaker 2:Yeah, I would say that for one. I've got four tips here, four tips my top tips for tax preparation. I'd say know your numbers. I've got four tips here, four tips, my top tips for tax preparation. I'd say know your numbers. So what I mean by that is you want to be able to generate reports and look at these reports and say, wow, my utilities were 300 every month this year, except for this month. They're 800. Like why you want the numbers to tell a story and to tell you that everything's in place and everything's right and anyways. Another tip is that you want to know what you can or cannot deduct in the way of expenses.
Speaker 2:And on our website we have a list of tax deductible expense categories 35 different ones for different industries. So you're welcome to anyone's welcome to go and get a list that way. Another tip is this is a big one that I think people don't get we all meet with people all the time and we schedule a day and a time when it comes to our record keeping. We don't do that. We wait till three months or eight months or the end of the year, and that's that doesn't work very well. I would say a tip is to schedule an hour every month that you will get your books done. Put it in your calendar, schedule a day and a time. So that's one of my tips and one of the things with our system is anyone used in our system, they're going to be able to get on a call a Zoom call, like what we're doing here, and everyone's going to be doing their bookkeeping by themselves at the same time and I'm there to help.
Speaker 2:So that's one thing that's coming up in July.
Speaker 1:So it's like a group coaching get access to an expert, but you can also learn from other questions too. Is that fair to say?
Speaker 2:Actually they'd be doing their bookkeeping, so they would have maybe their CSV file with all their transactions. They're entering it into their own system in their own office, but I'm on there with the group and I could go into a side chat and help someone if they ran into some troubles. Okay, yeah, the other tip. I was thinking you want to find a system that works for you, so tax time is a breeze. Nobody wants to come to the end of the year and have to recreate records. It's just a big mess.
Speaker 1:Yeah, it reminds me of, like, my first few years in business where I'm like I'll do it later, I'll do it later, and then it comes to January and I get the. I'm working with the CPA now and she's here's what I need from you and it's she does our personal taxes for myself, my husband, our household but she also does my business taxes. So when we get into the business taxes, it's little things like mileage that when I worked in corporate, I would have to submit a mileage report and get reimbursed for miles, like every month throughout the year, and they really stood on top of us. And when you're self-employed, nobody, there's no accounting department. That's saying you need to get your expense reports in and I get to every year.
Speaker 1:I do this to myself every year, michelle, january, february. I'm looking back and luckily I have everything in my Google calendar places I've driven to but I'm spending hours and days catching up. I love your tip of like booking an hour a month just to yeah, I think that's a great tip just to keep it up, yeah, so those are my tips, yep.
Speaker 1:Yep, good Well, that's awesome. And there's probably people that are watching that are in different phases of their business. I say watching, they could be listening to this on the podcast later. So is there different advice you would give to someone who's just getting started? Let's talk there first. Someone who's just getting started. They've not made any mistakes yet, they haven't had any processes in place. What advice would you give to them as getting started with the process? And then next I'm going to say what about somebody who's already well established working with the cpa?
Speaker 2:like what might be different there. Okay, so a solopreneur, you're just getting started.
Speaker 2:I would say you don't know what you don't know, it's good to go and follow like a startup checklist of things you should have set before you actually open the doors. And we have a checklist that's free. If anybody wants to get that. It's got, I think, maybe a dozen things. Choose your business structure, whether you're going to be a sole proprietor or S-corp, and things like open a separate business account and keep all your startup costs separate, because they're handled separately, differently on. Your want to keep those separate from operating expenses, so the accountant is going to want to see that. So, anyways, that's one thing.
Speaker 2:Another thing for solopreneurs I'd say, starting up, you want to choose, obviously, a simple bookkeeping system so that you'll be organized and ready from day one. Don't want to miss expenses, because if you miss expenses you're going to pay more in taxes because your profits will be higher when they should have been lower because of those expenses. But I wanted to mention that way. Back when I first started creating these systems, I created a paper bookkeeping system and that system was used by and you probably know the name two men in a truck Mary Ellen Sheen. She used it for two or three years. In the beginning she said it was a godsend, it was just something she needed to get going and obviously she outgrew it very quickly.
Speaker 2:She's like an international franchisor now, anyways, and then one other thing is build a good support team, someone that you can get answers right away, because if you don't have a support team in place when you've got the questions, you're going to be behind the eight ball. So, those are my little tips.
Speaker 1:Okay, so I have a couple of questions related to some of those statements too. I love them. Let's start with build a good support team. So who does that consist of? Is it like a CPA? Is it fellow business owners? Who is?
Speaker 2:it who's?
Speaker 1:your support team.
Speaker 2:It depends on your type of business, but I would say, obviously you want an accountant, a CPA, you want maybe even a lawyer, maybe a tech person. I value my tech person a lot because I've got a tech writer and he's really good. He can put together things that I just you know. Anyways, yeah, you have to have a team. Yeah, those are a few people that I would say you should have on your team.
Speaker 1:Okay, and then when you talked about startup costs versus operating costs, now I think I know what you're referring to and it sounds like those are treated differently, as it refers, as it relates to tax time, but could you give us some examples of what a startup cost would be compared to what is an operating cost?
Speaker 2:Well, a startup cost okay, it's before you're operating. Your business is before you've opened the business. So you are, let's say, you're, doing research and that could be a valid expense. If you open your business, anything that you purchase in the way of equipment it might have to be written off as a startup cost. So that's something that accountant would have to tell you, but tax preparer.
Speaker 1:Okay, so it could be things like if I buy a desk for my home office or a laptop, um, for my business, that might be treated as a startup cost versus an operating expense. But my CPA would help me with that.
Speaker 2:Is that fair to say Exactly?
Speaker 1:And I know we're putting you on the spot here and I feel like I should do the legal disclaimer right now. This information provided in this podcast and this episode is only for informational and educational purposes. We always recommend that you talk to your CPA or lawyer to make sure that the advice that you're hearing is applicable to you, because this is more general in nature, without understanding different implications of your particular circumstance. And then I did pull up on screen and I put it into the comments as well. You had a couple of resources that you gave me in advance of the call that we might talk about, and you mentioned the startup checklist. So that's a downloadable document for free that we can get. Is that right?
Speaker 2:Yeah, you just have to sign up for it and yeah, you put in your email and then that'll be sent to you. Yeah.
Speaker 1:Okay, and then talk to me about the list of tax deductible expense categories for your industry. If I were to go to that webpage right now, I could find the industry that best fits me, and then there's categories, rather lists of expenses.
Speaker 2:Yeah there's 35 different industry lists there, or you could just choose any small business and that's going to give you the general list and you're still going to have to tweak whichever list you pick. But those lists actually get imported and set up in our system when people use that.
Speaker 1:But yeah, it's the same list.
Speaker 1:Okay, good to know and I'm noticing. I have this and I've got like a dual monitor and I'm watching my Instagram feed and the page on the other side and I just noticed the web addresses when I show them, it's really hard to read them on Instagram. So I'm just going to advise the people if you're watching this on Instagram and you can't figure out the link to type in, just go to the big easycom website homepage and you can. I think you can get to those pretty easily, if I'm remembering correctly, from there.
Speaker 2:Sure, there's a free offers page and resources, so those are the two pages. Would have both of those, okay, yeah.
Speaker 1:Awesome and you've done such a great job of organizing your website. I'm like I'm sure she has it on here, but I'll just mention that to her. Let's talk about common mistakes or pitfalls to avoid, cause I'm sure you see a lot, and sometimes the mistakes have already been made, when people are coming to you or you're looking at helping them untie the knots that they've gotten themselves into. So what are those common mistakes or pitfalls that we need to be avoiding?
Speaker 2:Okay. So some mistakes that I've noticed. Most people don't know how to keep accurate books and they're afraid that they'll make mistakes and that will cost them, which probably true for a lot of people. They feel like, oh, I'm not good at accounting, I'm afraid I'm going to make mistakes. But there's ways to find errors, like in our system. There's three different ways that you can find errors. If you forgot to categorize something, it's going to say, hey, on this row, on this column, you forgot to catch, so it points you in the right direction, but so you can build some confidence that way. Another thing is not knowing what to track people. They might not know they need to track sales tax or mileage or certain expense categories. That's another thing. Another mistake what else?
Speaker 2:That they're using cumbersome systems that are wasting time, and it doesn't need to be that way. So if anyone has and wants to put in the chat some of the reasons that they don't feel confident to do their own bookkeeping, that would be good.
Speaker 1:Yeah, there might even be people that are like this is all brand new. So when I hear bookkeeping, I'm thinking of an accountant, a CPA who's doing the process, but you're saying like we can do this on our own and we don't. It sounds like you've got a good process or system that you're using. It should guide you through so you can do your own bookkeeping and ultimately, bookkeeping helps you to prepare for tax time, to make sure that your business is doing everything on the up and up Is that, true, true.
Speaker 2:A couple other things I would say is, depending on how you learn, you should get a system that is going to have the support you need. So if you're the type of person that likes to watch videos, and make sure that the support that they have, whoever is offering the software, they have videos for you or a user guide you like to read, or that are a video chat if you run into troubles or a phone call. Everyone learns in different ways, so I think that helps to get people a little more confident in in doing their own books if they have a really great support system.
Speaker 1:Yeah, and sometimes you don't know. If you're just at the beginning part of the process and maybe talking to people who are just getting their business started, they're like I didn't even think about this and we probably all started off the same way. I'll just use my own. It was in an Excel spreadsheet because you're curious, gosh, I'm starting to make money coming into my business. And then for me in the beginning, michelle, I was only doing this as a side hustle until I found a job. So I did have an LLC set up. I had a separate bank account at the time, but it was. I was only doing this until I found it found a job. But then I started going wait, there's potential here. So I started tracking things in an Excel spreadsheet and my income and my expenses.
Speaker 1:And then it got to the point where the Excel spreadsheet just got a bit unwieldy and I had my bank state and I'm like I don't know what to do and I asked around and there's a lot of different accounting software and bookkeeping software and things out there. I ended up using QuickBooks. I've been first using the desktop version. Now I use QuickBooks online and I have access to it from my mobile app and I can share it with my CPA. For the average person, though, starting out you might not need a full QuickBooks, or there's a lot of different versions of software out there. You could work within something that is a free version, like a Google Sheets, or it sounds like you've got a system that helps people as well If they want to opt into that. Is that right?
Speaker 2:It works in between, like doing your own bookkeeping on Excel and doing it in a QuickBooks QuickBooks a lot of people need for one. They need to set it up correctly. Okay, I've seen ones that are not set up right and it's a mess and that doesn't work. So, yeah, it works well if it's set up correctly, but I think it's overkill. It's like way too big for some companies. Way too big for some companies as long as you don't need to print checks or as long as you don't need to operate in an accrual system instead of cash, because this, the system we have, is cash basis which most services service businesses can use, but manufacturers, they would definitely want to use something bigger than what we have.
Speaker 2:But service businesses. It's ideal for a lot of them.
Speaker 1:Let me back you up into, because you just said cash based versus accrual based and I think I know what that means, but there's probably a good chance if I'm curious about it. There's probably somebody else who's confused about what that means. So can you break that down and explain what's the difference between cash based versus accrual based?
Speaker 2:You know, cash-based is like you're recording your expenses, like if you write the check today, it's Wait, let me see how I should say this. Let me look at the accrual system. The accrual system is, let's say, you bill something today but you don't get paid for two months. It's still going to go in today's, but in a cash system it's going to show up two months from now when you get the money. So that's the difference. But with an accrual system it's more elaborate. You have receivables and payables and you have aging reports and you have maybe you track inventory and it's a big program. Yeah, it's a big program, but not everyone needs that. I feel like the programming behind QuickBooks.
Speaker 1:You could fire a rocket ship with all the and there's probably so many things I don't use inside QuickBooks and I'm one of those people.
Speaker 1:Like when I first set it up I went through the tutorials and videos and did, and then at some point I'm like I messed something up and things were duplicating in the ledger and I couldn't figure out why and I started asking around can somebody help me? I didn't want to outsource it completely, I really wanted to learn it myself, but I needed somebody to untie the knots that I had created and help me to fix it. So I was working with a QuickBooks coach for many months and then he was helping with my account reconciliation every month and then I realized I could do this myself, and from time to time I come into a QuickBooks question where I need some help. But I would tend to agree with you Sometimes I feel like all of the bells and whistles I have access to in QuickBooks are way too much for what I need. But it's like sometimes you get into the system and it's just easier to keep going with the system that you have.
Speaker 2:Absolutely. I hear that all the time. Yeah, it's like it's hard to switch out. It's hard even if you're having some real troubles. It's like I I'm just going to keep going because I don't know what to do. And one thing we do have for our new clients is we have a three-day setup where we can set up your system, we can transfer over your categories and your beginning balances and that kind of thing. So we have a three-day free custom setup. So if anybody wants to try to downsize their accounting and not use such a cumbersome one, I just want to mention I had this tornado come through a while back and I told the tree trimmer that's coming to show up after one o'clock. They're here. It's like this life, this is live people. We are not. Yeah, anyways, one o'clock. I told them okay, no, that's okay, it all happens.
Speaker 1:Yeah, what I would like to invite our audience. We're going to open this up for some Q&A change gears a little bit here. I've already been asking Michelle a couple questions, but I want to invite our audience. If you have any questions, please, please, submit them into the chat. Whatever network you're watching on and again, we're on LinkedIn, we're on YouTube or on Instagram.
Speaker 1:Linkedin and YouTube feeds the videos into StreamYard so I can pull them up and read them up on screen. And I always double check, michelle, because sometimes StreamYard drops the baton on transferring comments over to LinkedIn, or maybe it's vice versa. Linkedin drops the baton. So I always like to double check and I have my LinkedIn open in another window and I have Instagram open, because right now Instagram isn't giving the comments to StreamYard that are coming in, so I have to manually go out there and pull those in, but YouTube comments are coming in here as well. So it does take about 30 seconds from the time I say submit your questions into chat until the time they hear it, and then it might be another 30 seconds to a minute, michelle, before we start seeing those questions that are coming in. So that's why I always like to have a couple of questions of my own that are prepped and getting in here and as a reminder for everyone, we're here today talking about keeping accounting records up to date for easier tax prep.
Speaker 1:I'm going to give you a question, michelle, and I'm going to use a technique that Joey Himmelfarb and I will frequently use this technique and we'll say I have a friend who, so I'm going to use my I have a friend technique. I have a friend who hasn't done her mileage and she's self-employed and it's now July 2nd and she hasn't done her mileage for 2024. What do you recommend? Should she do a month at a time? Should she block off an hour a month for the rest of the year and get caught up? Should she block out the better part of a day to do it? What's the best way to get caught up if we're nearly halfway through the year and we haven't been doing some accounting for mileage year to date?
Speaker 2:It depends on how she's handling that mileage. It depends, I would say, to take a block of time and try to get caught up through the end of June, even if she has to do just a couple months today and a couple months in a week or two. But she must drive a lot if she's got a lot to do like that, because my mileage I'm able to. You know it's a quick and easy thing, but there are some apps that you can use for mileage. I don't use one, but I've heard of those, so you might, after you get caught up, switch into something that helps you to keep track of it a little bit better.
Speaker 1:That's what I would say. That is a good technique. I will share that with my friend, whoever she is, and this is like a common. I'm sure this is common with other people. What my friend ends up doing every year is she does everything goes into her google calendar so she sits down and if she has the address location, she pulls up google maps and does the mileage from home to there and prints a pdf, records the mileage in an excel spreadsheet and kind of goes through day by day, month by month. So it ends up being typically a Saturday and Sunday project for her in the February March timeframe to get caught up for the April tax period.
Speaker 1:But I have heard of some of those apps. If anyone's watching has examples of apps that they're using for mileage tracking, please feel free to share them, and I will share them with my friend because it might be helping people out along the way. Let's see any other questions. So if you are self-employed and I'm, we're talking today about keeping accounting records up to date for easier tax prep. The information that you've been sharing with us today, michelle, are you assuming somebody is going to a CPA or an HR block or one of those places to have their taxes done? Do you recommend people try to do it themselves? Do you have any advice there at all?
Speaker 2:And when we get to the tax parts, yeah, most people won't tackle that the tax returns but you can. There's the TurboTax and a lot of people will go to their accountants, at least for the first, maybe year or two, just to get a feel for what things they really need to have a handle on. So that's it depends.
Speaker 2:You mentioned new businesses, but I was going to mention that established businesses. They usually have a CPA in place and they usually have some history and they're in added advantage than over the new people because they can come up with budgets, because a budget is really just figuring out what your future is going to look, based on the past. So that's one little tip I was going to mention earlier. But but they, yeah, if they're working with a CPA, that CPA is probably going to do their tax return for them. But I'll tell you something there's a shortage of accountants out there I don't know if people are aware of that so that you might be paying a little higher price if you want accountants to do the bookkeeping part, but they're definitely great at doing the tax returns yeah.
Speaker 1:And I love the thought there of even working with someone your first few years so you understand tax strategies and how to line everything up and get and then maybe go on your own my cpa. I usually work with her once a year on our taxes, but we usually get together either before taxes are done or sometimes sometimes both before and after to talk about tax strategies for the year, because if you're hit with a big tax bill that you weren't expecting and I do the prepay quarterly and then we got to the end of the year and we said, oh, there's some more money that we owe, luckily I use I don't know if you're familiar with Mike Michalowicz Profit First. If you're familiar with that, it was a book that was recommended to me by a friend, tammy Prayer I'm going to give her a shout out when I first started my business and it was basically a way of setting up your money that's coming into your business so that it's almost like an envelope system. Mike Michalowicz's teachings and profit firsts are really great. So every dollar that comes into your business gets split apart and you basically set up multiple bank accounts. So you got to find a bank that allows you to do something like this and sometimes they'll have minimum thresholds that you have to keep in each account in order not to get hit with the monthly transaction fees.
Speaker 1:But basically, for every, say, $100 that comes into my business, 50% of that 5% right off the top goes into my profit hold account, so that's just my profit that I'm taking off. 50% goes into my owner's compensation, so that goes into my paycheck essentially that I get paid myself. 20% goes into my operating expenses and 25% goes into my tax hold account, so that I'm setting money aside for taxes all year long and pulling money out of that. So it really my income account is just a place that money comes into and then twice a month it gets split out into these different accounts. So what that helps me with is, as a marketer I'm not an accounting person If I see I have this amount of money, I think I have that to spend.
Speaker 1:I really don't, because I've got operating expenses, I've got taxes, I've got my paycheck. So if you split it out, then the money that you're looking at in your owner's compensation account is all you have for your paycheck, and then it helps you with your operating expenses as well, because I've seen friends that are self-employed that outsourcing this. They have a VA, they've got this and the others and they're eating away and they have no paycheck for themselves because they're paying for all these outsource services. So his system has taught me, and I know many others on a better way of managing money flow for your business, so that you're only spending to the extent that you have money in your operating expense accounts and you pull back in months that you don't have as much on there.
Speaker 2:That's excellent. That's excellent. I'll have to check into that because it sounds wonderful. Yeah sounds really good. And you said a paper like an envelope system. I wanted to mention to people. I don't know if we're getting close to the end, but I have a receipt storage like organizer, a receipt storage book that I'd like to give away to anyone who might want to take a Zoom call and take a tour of the software. Just mention this.
Speaker 1:Yeah, you know what? I'm going to drop that up on the banner up on screen.
Speaker 2:Let me just put that up on screen and I'll put this 12 monthly envelopes that you can put in per month, those little receipts that you'd never know what to do with. Or by category, I guess you could separate them.
Speaker 1:Yeah, there you go, so I'll put that up on screen. I do also have your, and I'll put that in the playback link in the show notes as well, so those that are listening to the podcast later can come in and check that out as well. So I pulled up on screen, michelle, your LinkedIn profile. I love that you've got the big easy bookkeeping logo and it says we make keeping your books easy. I guess it is easy. Are you open to accepting connection requests for people on LinkedIn and, if so, any instructions?
Speaker 2:Oh, absolutely. Just go ahead and connect with me. Yeah, that'd be great, that'd be great.
Speaker 1:All right, and I'll just let all. It's Michelle Carley, and her first name is M-I-C-H-E-L-E, last name is Carley C-A-R-L-E-Y, and you'll have the link in show notes if you want to visit her profile. And then also, I want to pull up your website up on screen real quick. Here too, michelle, and is there anything you want to point out to us on the website that we've already talked about today?
Speaker 2:and any resources you want to share. I do have the monthly Ask the Expert Do-It-Yourself Bookkeeping webinars, if anyone's interested. It's the third Wednesday of every month, so that's coming up. What else? I think that's it. The resources page and the free offers has our 14 day trial, if anyone's interested, and it's a Google sheet so you can collaborate with people. It's quite nice. We came out with it just before COVID. Yeah, that was interesting timing, but anyway.
Speaker 1:Yeah, I'm going to pull this a little bit larger. My eyes are getting harder to read the screen. I'm sure the audience really appreciates that too. So I can see there's a couple of things in your top menu bar. My eyes are drawn to free offers and resources especially, so I think we should spend a little bit of time poking around in there and figure out if there's anything that can be helpful for us.
Speaker 2:Would you agree with that? You could click on the free offers. We do have another thing. That's our free forever free invoicing tool, especially for people who are slow in getting billings out. You need to get those bills out so your cash flow is good and you can track payments in there as well. And yeah, so those are the free items the invoicing tool, the startup checklist and the tax deductible expense category list. So if you want to click into resources, I could show you. There's a whole list If you click on the tax deductible expense.
Speaker 1:Oh yeah, that was the thing that we had talked about earlier.
Speaker 2:Yeah, there's a huge list of different industry types. The interesting thing about what we provide it's for clubs too, like the Boy Scouts use this, so it's like you're not even in business. You just are the treasurer and you're trying to get some good reports to people, to your board members or whatever.
Speaker 1:Yeah, this is great. What a great list of different organizations and you split it out in here. You probably you're thinking about the things that we haven't even thought about, and I'm guessing the list was created probably because you've done work with some businesses in each of these categories. Is that fair to say that?
Speaker 2:is fair to say yes, and we're really passionate about wanting people to be able to keep their own books, because you're going to save a ton of money and I'm hoping that people that save money on not having the accountant do the bookkeeping. They could use the accountant for those advanced reports hey, how well am I doing compared to other businesses like me? So, or tax planning or that kind of thing. So, yeah, yeah yeah, tax strategies.
Speaker 1:That's awesome, yeah, great. Thank you, michelle. I want to start to wind down our conversation for today and I want to thank you so much for joining us and if you're just watching, just coming into the video or the live stream right now, we were talking today about keeping accounting records up to date for easier tax prep and as soon as we're done watching, you'll be able to re-watch it again on LinkedIn and on YouTube. The Instagram is only going live, but you can watch it back on my YouTube channel later, certainly, and I just want to give you any opportunity for any closing comments for us for today, michelle.
Speaker 2:I just want to say thank you for having me on and I think I've contacted you once before for some LinkedIn help because I'm really new at LinkedIn and your help was really very valuable and I just wanted to give you a shout out, because I think it's wonderful the work you do to help people get LinkedIn going right for them.
Speaker 1:I'm so proud of you and your profile when I pulled it up on screen. I know you've made some tweaks and modifications based on what.
Speaker 1:I've given you. So when people do the work, it makes it exciting for me to see. I'm like, wow, your profile looks great. It's very exciting. I just want to thank you for that. I worked on it a lot. Yeah, you did a good job. Thank you again, michelle. This has been a great conversation. I know the advice you offer today is really going to help out a lot of people. So thank you again for joining Right. Thank you All right Wonderful, and for our audience.
Speaker 1:If you enjoyed the conversation, do us a favor, because Michelle and I, we are self-employed. We no longer get performance reviews. So if you found the conversation helpful, we'd love it if you could drop us a comment and let us know. And if you're also finding great value in the video today, we'd love it, as soon as the video is done playing, if you could click on share and share it as a LinkedIn post. This is a really great technique if you're struggling with content like what do I post on LinkedIn?
Speaker 1:Share the videos that you're watching. Do this with all the live videos that you watch, and when you click on, as soon as the video is done playing, you'll see a share icon at the bottom and you can just share that along. Tag us in to tag, use the at symbol and type in our names. That way we'll get notified that you've tagged us in the post and then we'll both comment back and help you to get some additional visibility with that. With that said, I want to thank everyone so much for watching today. We hope you enjoyed the broadcast and looking forward to seeing your results on LinkedIn. In the meantime, stay enthusiastically self-employed and we look forward to seeing you on the network.
