How I Manage Money In My Business

0:00It's a new year and we need to talk about money. I got a question from Mark who had a couple of questions, but this one was all about accounting. Now, before you turn off this episode because it's so boring, please I have to say this because I've said this in other episodes and I mean it. I think that accounting or just managing money is a core part of business and I know that sounds like no shit but I think when I think I broke it down in the four like there's four legs of the stool which is accounting, there's product, there's customer service and there's marketing. If you have all of those and they're well established, you have good systems in place,

1:02I think you're going to succeed in business. I think it'd be hard not to because I don't even care if you're like well I don't have a lot of analytics. I don't you know it's like who cares? If you have a good product, you have good marketing, you have good customer service and you have good bookkeeping, good account management, good money managing skills, you'll be fine, you'll be fine, you will thrive. And so I have three questions here from Mark that I want to answer. The first, when it comes to managing money, what internal processes do you have? So I have a few. Once a month, I guess let's let me not start with that because I kind of feel like there's the other, let me just tell you the three questions. Let's go there. What internal processes do you have? What software and apps do you use and why and what stuff do you do

2:08and what stuff do you hand off to your accountant? Let's just talk about the tools. Let's get that out of the way because I'm going to be mentioning them in the other two questions. So for accounting, I use QuickBooks. There are a lot, before in the past I've used a company called Zero, you're going to see a lot of other ones out there that are like much more simplified. Look, QuickBooks has been around for a minute. Is it the greatest? No. Is it the worst? No. But if you need help and you have an accountant, QuickBooks is the move. I'm sorry. Like everyone understands it. Every accountant has used it in some point. If you start going with like, you know, I think there's one called kick. There's one called zero. If you go with these like third party platforms, like you might run into some issues and they're going to be not going to be able to do things that

3:08you want them to do, even though they're simple. But you know what? Any accounting systems good, a fucking spreadsheet would be good. But get an accounting system. Get it get software. I use QuickBooks. All right. Now, if I, there's other things, there's other tools that I use. Another tool that I use is I use now a company called numeral. I used to use tax jar because we sell physical, we sell physical products. And when you sell physical products, you need to collect sales tax. And the issue that we were running into was setting up sales tax, collecting sales tax and paying sales tax through one state is difficult to do and requires some manual input. And tax jar is good. And it's cheap. But when you start to have to pay sales tax in different states and

4:13set up sales tax collecting in different states and getting licenses and shit like that, that gets crazy hard. This is not an ad, by the way. In fact, none of this is. But I started using numeral a few months ago. They just, it's expensive. But they handle all that shit. And if you sell physical products and you're not, and you're doing it through your own marketplace and you're not doing it through something like I think through Amazon, you don't have to worry about it. But if you're using Shopify, tax jar is an option. But numeral kind of takes care of it. It's like very hands off. And they'll open up and, you know, they'll collect your tax mail, they'll pay your taxes, they'll open up new licensing, they handle all that stuff. The other thing I, the other tool that I use is my accountant. I have an accountant that I pay on retainer. I taught him today as a matter of fact. I pay him a small monthly fee to just be there for me. He also, I buy my quick books

5:24accounting software through him. Now, I don't have to do it that way. But that's, that's, that's what we do. Right. And if, and if he decided to not do it anymore, or I needed to switch accounts for some reason, I could, I would still have quick books. He would just like hand it over to me. Now, I would just have to start paying myself. Another service is Gusto. Gusto is what I use for payroll. And I, I've never used any other payroll company. So I don't know. Gusto rules. And if you need to have a payroll company, I recommend it. I highly recommend it. So I highly recommend quick books, numeral for sales tax and Gusto for payroll. Those would be my, that, that, those are the tools that I use. And of course, I have an accountant. I'm not going to recommend him only because I don't know if he wants more clients or not. But I've been working with him for maybe seven years, maybe

6:30eight years. And I also, on a personal side, have a financial advisor that I, that I work with. So those are the tools that I use. All right. Now, the financial advisor, I mentioned him because I sometimes there's business decisions that get made with him as an advisor. But I handle everything. He's just a kind of almost like a consultant. All right. So, so those are the tools and the software that I use and why. So let's go over the internal processes. Every month on the first day of every single month. I go into QuickBooks and I personally categorize all of my expenses and income. You can hire bookkeeping services to do this for you. You don't have to be the one to do this. I personally, I've, I've, I've never hired a bookkeeper. All I've looked into it. But I've opted

7:35out of it. I've opted to do it myself. And the reason is not, I, I definitely have control issues. However, I find it incredibly helpful to see what money is going in and out and to be able to make decisions on whether or not we need to spend that money or not. I like having a handle on that. Now, obviously I could hire somebody to do it and then have a meeting with them every month and just say, Hey, was there anything that that stood out to you? I could outsource that job. The truth is, it doesn't take me that long. We're talking like an hour of all of my end of the month stuff, an hour a month. I, it's, it's not worth outsourcing. It's not worth handing off the, just the book keeping side. So that's just an ongoing thing that I do all year is I just go into QuickBooks and I categorize my expenses and I categorize my income. I also use a Google sheet

8:44as a budget, as like budget analysis. So what I do there is I, I try to look at my entire year. I was like, okay, what are, what are all of our expenses? Like the first, I have one sheet that's just expenses broken down into categories like tech and software, salary or employees or, or team. I have miscellaneous like health insurance, cell phone, internet, rent, per, you know, book purchases, shipping costs, all of that. This spreadsheet doesn't really change. It's really just like a, okay, what's the rough estimate that we spend and we break it down per month? And that just gives me an overall sense of like, are we profitable or are we not based on our projections?

9:45So this is a spreadsheet that only really I look at and I adjust if it's like, okay, we added a new piece of software to the mix. So I want to add that into our, to our budget or hey, we added this new income stream or whatever. And I just break it down over 12 months, rough averages, and then I just make sure that we're, you know, and I take the numbers that we made from, like, the income from last month, which is a different sheet. I have a different sheet for income. And then I have a dashboard sheet, which combines both them together, income and expenses and says, okay, how profitable are you? What's your tax bill going to look like? These are all just like general calculations. And I just update it once a month. I barely have to touch it, but I, but I've been doing that for, again, like 10 years. So that's been super helpful. That's a tool that I use.

10:46Both of those things I do myself. Once a month, beginning of the month, no big deal. All right. The other thing that I do is, numeral will send me an email that says, hey, your tax bill is ready. Review it. And I have to review it. And which takes two seconds. And I hit submit. That's it. Those are my processes. And when it comes to spending, I'm the only one who spends money in the company. And we spend everything that we can through a credit card. So I use one credit card. It's a chase card. And we just buy everything through that that we can. If we can't, we have to use a checking account that's fine. But other than that, it's always through a credit card. The reason we do it through a credit card, which this is not for everybody,

11:52this is what I do, is I am extremely good at paying off my balance every month. And I've been very good at that for, yeah, close to 10 years, if not more. And I use those points. I have not paid for a flight for like the last eight years. Because I just manage that credit card system so well. And that's another process is that I pay a credit card every month. Then I do quarterly payouts, which we're not really stuck to quarterly payouts. We do distributions, they're called. So basically like Steph and I were the two employees of the company. We go through gusto for payroll. That's how we get paid. But then we also do distribution. So if we make extra profit, we will distribute that to ourselves. And that only really happens in

12:58the summer. It doesn't really happen in the winter. The winter time, we just sort of horde all our cash in a checking account. We'll put some of it into a savings account, just if we know it's a kind of a surplus. And then we just kind of ride out the winter. And then summertime comes, we make more money. We could start to pay out the distribution. So it's not quarterly. It's like you know, couple lump sums in the summer. And that's it. Now I do all that. I do all that. What stuff do I hand off? So today I talked to my accountant because I do not do my own taxes. Ever since I started my own business, I have never done my own taxes. I always went to an accountant. Now back when I lived in New Jersey, I actually went to a account, I think it was my dad's accountant. You know, just not even a accountant. He wasn't an accountant. He just, well,

13:59he was, but I just went there for tax purposes. So once a year I'd go there, we'd sit down, we'd go over all my tax stuff. And then he'd prepare them. I'd come back, pick them up, sign them, whatever, pay my tax bill. And I was done with it. Now I have somebody who's on retainer, who does it once a year for me, kind of like automatic. So he called me today and was like, hey, I have some questions, answer those questions. He's like, all right, just getting my ducks in a row, preparing some stuff, you know, send me all the, you know, I collect all the W2s, 1099s, whatever, whatever. I'm not really familiar, but I put them all together, send it to him through a secured portal. And then he does my taxes, tells me what I owe and then does the direct deposit. And we're done. So I do not do anything with taxes personally. I don't fuck with that. I don't understand it. I don't need to understand it. I asked some questions. Okay, I'm not an idiot.

15:01I talked to my accountant. I'm like, well, wait, well, how's that work? What are you talking about? How's that right off thing? You know, it's like, I'll understand it and go, okay, I get it. You know, and my accountant is not an advisor. He's not going to tell me what to do. He just does it. And he is, there's no tricks. There's no loopholes. I don't fuck with that shit either. All right. Now I have an advisor who maybe can do some of that stuff. Again, we're very by the book. I don't like to mess around. I'm very by the book. I ain't trying to get audit it, dude. Right? When it comes, I mean, here's how much, here's how much by the book I am. I'm so by the book that when I go out to get coffee and work, I don't, I don't use my business card for that. I just pay for that regularly because I don't think that's a right off. The things that are right off, it's like, I know that they're not. So I don't write off very many

16:04things. The things that are like, absolutely, you know, like, Clevio, like spending $3,000 a month on, on, you know, email marketing software, like, yeah, I think that's an expense. I'm paying with a credit card for that. You know, going out to eat, when it's like, yeah, you did talk about business, but like, was it really for business? It's like, no, come on, don't mess around. So I don't do that. I track everything too. Everything's done through QuickBooks, it's done through the credit card. So that's why it works. I don't do cash shit. You know what I mean? I don't do under the table stuff. I'm not in that type of business anyway. I make everybody pay me through, you know, either, excuse me, if I do have any contractor work, I'm like, hey, I don't have a checkbook, which is true. I'm not sending you a check in the mail. We're doing something that has some sort of receipt, because I don't take pictures of my receipts. I don't

17:08keep them. Like, I think that's stupid. I'm like, it's paid through my credit card. That's the receipt. You can see it. It's very transparent. So I'll either pay somebody through PayPal, which is, which is good, or I'll make them set up their own invoicing system and like, invoice me. And then I will not pay with a check. Because if I pay with a check, and it's over, I think it's like $6,000 or something, then I know I have to put together like a W2 or a 1099 or something. And then I'm like, I'm not going through all that. All right. So I keep things simple. And I use very little tools. And I have pretty much just one person to keep me honest. That I pay on retainer. A couple hundred bucks a month. And that is just really insurance. That retainer money. I'm like, yeah, you know what? If I have a question, I'm like, should I do this? Not like an advisory role, but I'm like, I want to buy this thing. Can I write that off? Is that a tax thing? It's like, oh yeah, it is.

18:13It's like, okay, cool. Or like, no, like one time, I remember, I asked him, this is a while back when I was building this brewery that I'm walking in. And I was like, oh, I got this video idea, where I'm going to play this like rock star in the video. I want to buy sunglasses to wear in the video. And I wanted to buy like, I was like, oh, I want to buy a nice pair of sunglasses, like a ray bands or something, you know? Because I'm like, well, I'll buy it for the video and use it in the video. But then I'll have a nice pair of sunglasses. And he goes, well, are you only using it for the video? Or are you going to wear them for regular purposes? And I'm like, yeah, I'm going to wear them. He's like, well, then you can't write it off, man. It's like, oh, okay, got it. And it's like, same with the brewery. It's like, are you building the brewery as a place for only business? And I'm like, no, people are going to hang out here,

19:16I'm going to relax here. It's also for leisure. And it's like, then you can't write it off 100%. Can't do that shit. It's like, why are you going to the coffee shop just to work at the coffee shop? You can't write that off unless you're going there for a specific business purpose, not just to work. Oh, okay. Now, I know people don't follow those rules. They're like, look, I mean, I knew a guy. It's like, anytime we go out to dinner and the two of us have businesses, right? And I remember he had a business and he was like, and he taught me this and I sometimes do this as a joke. But like, we'll go out to dinner, big family dinner, right? Where he's foot in the bill for the whole thing. And then he'll just say what he does right before he, right before he puts his business credit card down to pay for this giant family meal. He just says, do you know what I do for a living? This is

20:18what I do for a living. Haha, business right off. I talked about business. Therefore, it's a right off. And I'm like, funny, but yeah, I wouldn't do that. So I don't do that. Now, if I go to the coffee shop to have a meeting with other people and we need to do that, because you know, the power of my house is off or whatever, then like, yes, that I will write off. If I go out to dinner and I take a client out for dinner, yeah, that's a right off. But if I'm just going out to dinner with my wife, and I'm like, eh, guess what? What did you do today for work? I go, we talked about business and put the credit business, it's like, I don't do that. I'll mess with that. You hear me, IRS? You listening? I don't do that shit. Anyway, so that's, I think my entire system,

21:18it's not that hard. Now, is it, it's a must, if you have to do it, I think, and I've said this in a previous episode, I remember talking about like, I track every goddamn penny in and out. I know everything. Now, if my, if my business was more complicated, if I had, you know, multiple locations and service trucks and, you know, retail stores and all, if I had a, yeah, no, no, no way am I the bookkeeper? No way. I'd have somebody in charge of that. Maybe even multiple people. If I was invoicing a ton, then yeah, I'd have somebody do that for me. But yeah, for my business, simple lifestyle business, you know, small team, you know, very few, like we don't, we don't do client work or you know, it's like the income streams are very predictable. They come from the same place every time. Yeah, it's fairly easy. It's fairly easy for me to just go, okay,

22:22that's where that came from. Okay, that's a, you know, that's product sales, categorize. Oh, that's affiliate income, categorize that. That's simple. Oh, that came from YouTube advertising. Okay, categorize that. Those are basically it. You know, we have a maybe, you know, 20, 30 subscriptions that we just sort of manage and like, I just try to keep in line. And again, a lot of rules are set up in QuickBooks. I have like some rules that just sort of automatically categorize it. I just double check it and then hit the button. So anyway, that's the whole setup. Not that complicated. I think is the one of the most important parts of a business. So if you have any further questions about it, I don't know if I think I pretty much answered them all, but I'd be happy to answer more. Shoot me an email. Just go to jiminacy.com, G-I-O-V-A-N-I-S-C-I.com. Sign up for my newsletter and shoot me an email. I'll talk to you next time.