065 The Magic Number is Zero: Why You Need a Financial System From Day One
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You need a solid financial tracking system from the get-go when starting a business. Accepting payments without understanding the financial and tax implications is a recipe for disaster. It's like driving blindfolded. I'm offering personalized assistance, even for those of us whose idea of a 'system' is a shoebox full of receipts. No excuses, even if you think your business is the exception.
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Regan Bashara (00:00:00) - Hi y'all. Welcome to money through Ease. This is your host, Regan Bashara. And I'm coming to you flying solo today. I don't have a guest, but I wanted to let you know if you would like to apply to be a guest on money through Ease This podcast, and you want to share your brilliant, valuable resources with this audience. You can find the link to make that application in my Linktree. So my Linktree will be in the show notes. You can also go to my website all E's accounting Comm, click on the podcast page and in the show notes for any podcast episode will be my Linktree. You can make that application. I do have an application process because I don't want just like anybody coming on here. I don't want a platform, just anybody. But I would love for you to be on here if you have something to share with small business owners about money or nothing related to money, just about entrepreneurship in general. If you have your story that you'd like to share, I'd love to have you as a guest so you can fill out that application.
Regan Bashara (00:01:02) - Once your application gets approved, you will receive a link from me to book a call to schedule time to record that interview. So I just wanted to let you know that up top, I'm going to have some more reminders at the end of this episode. It's it should be a quick one. I don't know, we'll see where it goes, but it should be a quick one today. So stick around. At the very end, I'm going to give you some reminders about awesome things that are coming up that you definitely want to be a part of, so be sure to listen until the end. And if you want to be my guest, hit the Linktree, go to the show notes, make that application, and let's chat. So today it's just me and I want to talk about this topic that has been coming up since I started my own business. And even before then, because as you all know, I've been a bookkeeper for a decade now. May will be my bookkeeping ten year anniversary.
Regan Bashara (00:01:58) - It will also be the two year anniversary of my business of founding All Ease Accounting. So I've been getting this question since the dawn of time, probably since I was in a position to be answering questions about business, finances and entrepreneurship. And that question is at what revenue level or what point of money do I get to where I need to start tracking it? And if you've listened for any amount of time, if you've been my client, if you have heard me speak in any capacity, anywhere, you know why I giggle a little bit whenever I get this question? Because the answer is. Or the magic number. Revenue is zero. The magic number is zero. You should have a system, or at least understand how accepting money from other people for your products or services is going to affect your life, your financial life, your personal life, your business, your taxes, all of that. And having a system to track that money is crucial to have set up before you start taking money from people.
Regan Bashara (00:03:15) - Now, do not freak out because I know some of you are sitting there thinking like, well, I'm fucked. Like I'm already taking money from people and I don't have a system at all. And this is why I have anxiety. And this is exactly why I procrastinate on my bookkeeping, is because I don't have a system, and I know that I shouldn't have been doing this a long time ago. Just calm down. Just take a breath. Take a moment. I know that that's what you're thinking because my clients, people who have in any capacity worked with me, learn from me, have had this question. And that has been their response. Like, of course you just started taking money from people, uh, because times are tough. Like even in a period of your life where times maybe weren't tough, it's still exciting to like, accept money from people, to have people pay you for your time, for your services, for your products that you're selling, whatever it is, it's exciting to like, accept money from people.
Regan Bashara (00:04:10) - It is totally a dopamine hit. It is totally a serotonin boosting activity. Whoopsies. Sorry y'all, I received a call in the middle of that. So yeah, taking money from people is totally like a thing that we are. Most of us would not say no if somebody just, like, handed us some money, you know, but especially if we are providing some sort of value, somebody is paying us money for that value and there's an exchange taking place. Most of us are just going to take the money without thinking about it. Right. But here's the thing. Once you get into that momentum and hopefully you do like, I'm excited for you. If your business has the momentum where like you don't get to slow down if that's what you want is. For it to really take off. That doesn't happen to everybody. It's probably a less frequent thing, as we've talked about with some of my guests, is that you don't have like, that momentum where you're just flying by the seat of your pants and you're strapped in and you're hanging on for dear life.
Regan Bashara (00:05:17) - Like some of us when we started out, have plenty of time to sit down and work out those systems in our business. And that is a system for everything, right? That's all of your administrative support. That's all of your financial systems. That is the actual work that you do. Whether you're creating a product, building something, repairing something, providing services in some form or fashion, you have a system for how you do that, whether or not you think you do the way you do something is your system. Whether or not it was intentional for you to sit down and develop that system, or you just kind of started doing something a certain way and you've never gone back and like looked at that. That is a system. So having a system to track your money, I highly recommend that you have that system before you start taking money from people. Which is why I say that the magic number is zero. Before you start taking money from people have a system for how to track that money, not only the money coming in, but the money going out of your business with like your drawers, paying yourself, um, expenses that you have in your business.
Regan Bashara (00:06:22) - All of that. Understand how all of that works before you take that leap, before you jump into things feet first. And if you're one of the people that has already jumped in and you don't have the system, like you're more than welcome to be here. I'm not saying that you've done anything wrong, but what we do need to do is get you on a system I'm suggesting and offering to you that it might have been easier to have a system, or to have some understanding of how that is affecting your finances and what you need to do with that money to stay compliant with your taxes and keep your records. It might have been easier to know how that works. Understand what you need to do, and actually have that system in place. Before you started to take the money from people, before you started to take dollar number one from anybody is have the record keeping system now. If you are somebody that has not started taking money from people, congratulations, you're in Group A, um, you can just go ahead and hire me.
Regan Bashara (00:07:23) - Let's get on a consultation call together. You'll find that link in the show notes. Let's talk about what you want to do with your business. I love working with people from day zero, from ground zero, from number zero. When it comes to revenue, I love working with folks like that that just have no idea. Like, even if you have like an entrepreneur in your family, even if you have friends that own businesses, even if you've worked for somebody who is a small business owner, who is an entrepreneur or a startup or whatever, like just seeing it, seeing somebody else go through that, watching, witnessing their struggle and their experience with it. You know, you get a good idea, you get a good sense of what it's going to take and what it involves. But until you're actually in it yourself, um, you're not you might not appreciate what entrepreneurship is like. And it is different for everybody too, right? If that's you and you haven't started anything yet and you're here because you're like, I really actually want to understand these things and get that system together.
Regan Bashara (00:08:25) - Um, feel free to subscribe to the podcast. You know, make sure that you follow all the episodes. Go back in the podcast episodes. In the very beginning, I did a lot of information just telling you how all the things work, telling you what kind of system you need to have in place, how to put it in place, what kind of decisions you need to make, the questions you need to ask yourself. So a lot of that information exists from me in the podcast feed in earlier episodes, and I encourage you to go back and look at the title names, search the show notes on my website, and find episodes that are going to help you with what you're trying to apply right now. Get on a consultation with me as well, and then you can also come join our community, our virtual community, Mind the Gap community, and enroll in that bookkeeping course. And we'll talk about that a little bit later. And so that is really going to be extremely helpful for you if you have not already started taking money from folks, if you haven't established your business yet for the other folks, for folks who are in Group B that have started taking money from people, now is definitely the time that we want to get you on a system.
Regan Bashara (00:09:33) - And some of you listening have, you know, come and worked with me and you have done a training on QuickBooks online with me, or, you know, you did a fourth quarter fling with me, or you have watched a webinar that I taught where I was teaching you, like the practical step by step tips of how to like approach creating a bookkeeping and record keeping system for your business finances. So you may have already been in my orbit in some way, but I really want to work with you like in that one on one space, you know, ongoing. And so I would love for you if you have already done a training with me, attended a webinar, did a fourth quarter fling, you're already my bookkeeping client. All that, um, the Mind the Gap community online is available for you at no cost for life, so go ahead and get joined in the show notes. Um, if that's you. And for the folks that are maybe new or they've been here a while and they have not participated in any of my offers, um, let's talk about it.
Regan Bashara (00:10:37) - Like you are taking money from people. That affects your taxes. If you're taking money from people the IRS wants to slash, probably will know about it in some capacity whether you want them to or not. So that being the case, we need you to have the data and the information at your fingertips so that you can use it to make better business decisions. And this is what I always talk about, right? The transactions are happening. You're making money. You're spending money. The transactions are happening, which means the data exists. But here's the thing. You're living in the dark. You don't have access to the data because you don't have a record keeping system. You don't have any bookkeeping, you don't have financial reports to read and look at and make choices using that data. The data exists because you're making and spending money. You don't have access to it. You're living in the dark, and when it comes time to do your taxes, you're going to miss things. You're going to misremember things.
Regan Bashara (00:11:35) - You're going to completely leave out deductions that you are eligible to take, which reduces how much tax you owe. Right? So living in the dark, not having a system together, scrambling at tax time, nobody wants to live like this. If you do want to live like this, why are you listening to this podcast? Nobody wants to live like that. And in fact, it's just not a great place to be in as an entrepreneur when you can't tell me or anybody else who might be inquiring how much money you're making, what your profit margins look like. What are your monthly, uh, overhead costs? What are your direct costs for the services or the products that you sell? You know, all of this information is found in your reports. Are you burning cash in your business, or are you retaining a cash surplus every month? The statement of cash flows is going to tell you that information. Not having that information at your fingertips is doing you no good. It is doing you a disservice.
Regan Bashara (00:12:40) - And you probably already know this. Like I'm probably preaching to the choir. But seriously, if you're listening and you don't have a system and you are taking money from people, what exactly are you waiting for? Like, ah, do you need a sign? I have like a flashing neon sign that I could maybe turn on. When you get on a consult with me, it's like behind me on the wall, and I just, like, flash it and I'm like, here's your sign. You need to get a system in place to track your money. If you need that, I will arrange for that to happen. But most of us probably don't need that. Most of us probably know. And understand and appreciate the value of having financial record keeping that they can keep up with. And that also makes sense to them that they can read. So it's equally as important for you to have a system that you actually use and that you actually take part in and are an active participant in as it as important it is to read your financial reports, read the numbers, understand what those numbers mean, be able to relate to those numbers because that is your data based on your spending and your income.
Regan Bashara (00:13:56) - And be able to use that data and say, all right, I keep up with my books. I have a system that works for me. I do this on this day, every couple of weeks. This is when I do that. This is where I put the information. This is how things get categorized. And then this is when I sit down and actually read my reports because I want to set goals in my business, or because I need to know if I'm going to have a huge tax bill. Whenever I go to file my taxes, I need to know whether or not I need to be making estimated payments as a small business owner or sole proprietor. A single member LLC, which most of you probably are. You do get to a point where you might need to make estimated payments. There is a case where you would be making as much money to wear that would be a necessity. You would get penalized for not doing that. There might be the point where you, it would make more sense for you to elect to be taxed as an S corporation, instead of staying a single member LLC.
Regan Bashara (00:14:59) - How will you know when you get to that point? It'll be in your financial reports. We will look at those together and evaluate them. And then you get to make that choice from an informed place. But backing this all the way up, the magic number is zero. Before you start taking money from people, it is extremely valuable to have a system to record your finances. And if you've already taken money from people, we need to be able to look back and see what that money was for. Who was it from? Who did you pay and incur expenses with for your business in order to make that money? Because it costs money to make money all in some form or fashion, you are going to have expenses for your business if you're making money in your business. We need a system to track that, and that's what bookkeeping is. So I've gotten that question so many times, like on webinars, you know, people just coming up to me, people DMing me, finding out that I'm an accountant.
Regan Bashara (00:15:58) - Oh, well, you know, I'm not gonna, like, start doing bookkeeping until I get to, like, $10,000 a year. What? No. If you if you've gotten a $10,000 a year in revenue, you better have some way to track that money. Otherwise, how do you know that you've made $10,000? First of all, it's like putting the cart before the horse. It's like the chicken and egg thing. Like you're telling me that you don't have a system to track your money, but that you know how much money you've made? That doesn't. The math isn't mapping. It's not computing. It doesn't really make sense. I don't know how you know that you've made that much money or when you get to that point, unless you're tracking your money. Like, it just it doesn't really make sense logically. So in that case, let's work together on getting a system that works for you. And by that I mean developing habits and having places to put your information, understanding your financial reports, being able to read those numbers and those words on the page and make sense of them in your head to understand them, to appreciate what's going on in your business.
Regan Bashara (00:17:14) - The magic number is zero. And if you're beyond zero at this point, that's okay. We can still work together. Obviously, I help people all the time who are in that position that they're just like, yep, I'm just I'm making a ton of money. And I, uh, I probably should have done this, you know, from day one. But here we are. And I'm like, great, welcome. I welcome you with open arms. Come into my community, let's be entrepreneurs together. Let's work on this together and get you a system that makes sense for you and your life and your business. Because I can tell you to do something all day long, whether or not you're going to do it and then stick to it. Um, that's another story. So we have to find something that works for you. And that is what I do with my clients. You know, I'm not just going to give you some sort of prescriptive plan that I give to everybody else. It is going to be tailored and customized to your business and your life, and it's going to be something that you can keep up with it.
Regan Bashara (00:18:10) - Otherwise, this is all for me. But here's those reminders that I talked about in the beginning that I wanted you to stick around for. So stick around for the next couple of minutes. Number one applying to be a guest on this podcast. If you would like to come share your expertise with the audience, you can find the link tree in the show notes and the link tree has the application button for money threes. Number two, there will be a free challenge coming up in May. I want you to stay tuned for that because I don't have the details yet. We're waiting on the intuition. She's working on it. It's in the crockpot in my brain. It's simmering away back there. I'll let you know when things are happening, but just know that that will be happening. The way to find out about that happening immediately is to get on my email list. You'll hear about it first over there. So visit my website, Ali's accounting Comm. Get subscribed. When you get subscribed, you get my free receipt organization guide.
Regan Bashara (00:19:05) - So many people recently have been telling me like, okay, like I did that, you know, last year I downloaded it. I got to go through it again perfectly fine. Sometimes I have to like, sit back and like re-evaluate what I'm doing in my systems, in my business. And that's totally cool. So if you download a Chaos to Calm some other time, go back and revisit it, because that is the start of us getting you into a bookkeeping and a financial record keeping system. That's actually where we start. So go download chaos to Com. That'll get you on my email list and you'll find out about. The free challenge that's going to be coming up in May. I have cool things planned? I just don't have details worked out yet. I just know it's going to be cool. Number three is I would love to invite you to come join us inside the virtual Mind the Gap community. Um, once again, links in the show notes. You can subscribe to be in the community.
Regan Bashara (00:19:56) - Or if you're already my paid client, in some capacity, you just get to be in the community for free. So just go over to Facebook and request access to it. Number four, mind to the gap that the community is based around. It's my digital bookkeeping course that will be launching in May, and you can enroll now and get a free bonus. That is a virtual one on one strategy. Call with me. That is a value of $500 that you get for free when you enroll in Mind the Gap. Now link is in the show notes for that. And number five, last reminder. Thank you for sticking around this long. The prices for the training on QuickBooks online is going up March 1st, so if you didn't know already, I do provide trainings on QuickBooks online. I'm an advanced certified QuickBooks Online Pro Advisor. I can teach you how to use their product for your business. Like I said, it's customizable. It is not a cookie cutter thing. No two people get trained the same way by me.
Regan Bashara (00:20:55) - It is all about you and your business and making QuickBooks online work for that. So book your training now because prices are going up March 1st, you can get access to the community immediately. When you book a training, you can schedule the actual training for some date in the future. I don't care when, but you need to go do it before March 1st. Otherwise that price is going up right now. Price for QuickBooks online. The training on QuickBooks online is $259, and that is for two hours of one on one time with me that you get to record for your later reference. So make sure you go do that. Price is going up March 1st. You've got time still, but I wanted to let you know about it here. If you're on my email list, you already heard it. I wanted to let people know here because I want you to have access to that. If that is an accessible price point for you right now. Okay, that's all the reminders. That's all for me.
Regan Bashara (00:21:50) - The magic number is zero, period. Point blank in this essay I will blah blah blah blah blah. Okay, that's the thesis. Thanks for listening. For for this long. I've got more guests coming up for y'all. Um, but I wanted to come on and talk about that just because, once again, I heard it today and I was like, all right, I gotta go record something about this. If I've talked about it here before, I don't know, but I'm trying to drive the message home. Before you start taking money from people, let's make sure that you have a system that works for you and your business so that you don't put the cart before the horse and wind up, you know, backwards, upside down, whatever. Okay? Nobody wants that I love you, I wish you all the best. Thanks so much for listening. Make sure you subscribe, leave a rating and review and I'll talk to you all soon.