Lessons

Lesson Info

Accounting

we need to make sure that we have people operating our business at the level that we can find successful, successful growth. So one of the things we have to do right out of the gate is find a C p. A. When you find somebody to manage your money, you want to look for somebody who has a track record of working with similar businesses or businesses your size. That's to me. More important is businesses your size. They don't have to work for photographers. In fact, some cases you don't want them to, but somebody if they're working for slight, most photography studios. Air, small business, you kind of want somebody who works with small businesses who understands what a small business needs are the tax ramifications, the write offs. Everything is different, depending on how much money and income you bring in and who you are and what you do. So you wanna deal with a person who works with like businesses because more than likely, they're going to stay current education wise with the type of work...

they do. So if you've got an uncle, that's a corporate, you know, c P. A. And he said he'd do your taxes for free. You may want to consider paying somebody else because somebody that works with similar businesses probably gonna understand what your business needs are a little bit better. Definitely want to have a license. C p a. Somebody who comes with recommendations. And one of the most important things is, don't be afraid to interview and find the right person. I got very lucky. My c p. A. Actually was a client of mine, and he has now become a dear, dear friend, but he happened to be the right person at the right time. But hindsight. 2020. I got very lucky. I would always recommend that you interviewed three or four people, just like hiring an employee. Put some time into its effort into it. Really Try to figure out who's going to be best for your company is that this is a person that's going to control your financial future to appoint. They're going to make decisions on what's best for your business. They are going to make decisions on what taxes you pay, and if they make mistakes, you ultimately will pay for it, not them. And so you want to make sure that it trickles down to somebody that actually cares about you. In addition, does C p A. Which everybody should have a good CP And CPK does not have to be a full time employee. This could be somebody you see a couple times a year. Bookkeeping is the next issue. Now, anybody in here love bookkeeping? Yeah. No, I I didn't think so. Now, in my case, when I started, I was my own bookkeeper. My first book keeper was a friend who just help me out once or twice a month, I have this little shoe box that I put receipt in, and all she did was take that little green ledger and those receipts and kind of, you know, manhandle what she had to. Eventually, we got to the point where I needed a serious bookkeeper. Then I hired one for one day a week. Then it was two days a week. Now we have a full time five day week financial officer, somebody who manages our money to the penny every minute. That's not necessary for everybody. But those of you wanna make a $1,000,000 wink wink over there. You're probably going to be looking at some sort of financial officer because you can't do everything and you cannot micromanage your money. Somebody has to do this for you. So you want somebody that can work with your C p A. They do not have to be full time. But you want somebody that can help you see the big picture on your company. We're so caught in the day today that when we set our goals that we set our financial plans sometimes hard to see how to get there without that number person taking you step by step. It's really it's actually really a benefit toe. Have that person. I'm not opposed to trade either. My first book keeper, I traded Portrait's because I couldn't afford a bookkeeper and she was awesome, so it wasn't a long term solution. But start thinking about who do you know that's a bookkeeper, a friend of a friend or something like that? Is there a way that you could work with them and do some mutual trading? Now I'm gonna have my disclaimer here. When I first started my business, I didn't know about government in taxes and all that stuff. I was like a little punk rocker from the eighties that didn't believe in government, your taxes or anything. So that was like It's 16. By the time I was 17 I realized that that was probably not the best choice, so I didn't understand it. So things like trade it made sense to me. It was, Hey, you do this for me and I'll do this for you. Turns out you have to pay taxes on those two. So I mean, my opinion is not in this case. It's not. Ask forgiveness, not permission. I didn't know better, but there is something to be accountable for what you know. Once I realized that there were taxes that needed to be paid, I did everything legitimate. You still can trade with people. In fact, I have a couple trade accounts, but we pay taxes on services, so when they buy stuff for me, we collect that it. We trade for the taxes. We don't even collect them. We just trade for them. They exist and we pay them and vice versa. These people pay taxes when I use the services, so I don't have to come up with a chunk of change like say for my kids Orthodontist Bill, we traded out. I just have to pay the taxes on what they spend with me. Does that make sense? So So that's knowledge. And once you have that knowledge, you have to do the right thing. So I'm sorry I'm ruining it for all the virtual audience out there, that's like I didn't know that. Why did she tell me? Say things like employees. When I first started out, my first employees besides air and she was the nanny, basically. But the first few people I hired they were clients that loved what I did, and they wanted to work part time for trade. I didn't know you had to pay tax. I mean, honestly, I was really not even if I was 20 something. And so once I realized that there was a process there, then you have to work within the process. You could still trade. Just make sure you're doing the right thing and paying your taxes and being a good person. Now, once you have your financial person in line, the two people, if possible, the bookkeeper in the CPI. If you have those here to start building your company have to open up bank accounts and one of the things that we're really gonna work out because I know we have a huge virtual audience. And I bet some of you are guilty of this as well. That gray area of using your personal checkbook in your personal expenses. I see it in your faces for your business and that confusion of of you know what? I paid for it with my own money because there wasn't any here. And I'll pay myself back and all that stuff. And I'm seeing a couple of you sinking in your seats on the whole virtual audiences going, I know, but it's really, really important. This is like step to Once you get your license, you feel like you're a business owner when you get a separate checkbook and you start to treat it like a business. If there's no money in your business checking account, don't spend any. You don't have any. You have to earn it to spend it. I know that sounds mean, but if you keep spending your own money, then you've created that toilet bowl effect. You know that whole swirling sound that we all hate so bad. That's what happens when you pull from. If you truly want to be a business, there has to be separation there so that you could say, Look, I want to buy a new camera but I have $ in my business checking account. Yes, I could take a personal credit card and run it up. Why would I? That's my family's time and money. I don't have the right to take that money. I have always taught that you should pay for everything as you go. Why I teach. That is because I didn't. In the beginning, I was awesome. I paid for everything my first camera on it paid for. Then I got into that pie in this guy. My first studio. I told you I borrowed $50,000 to make it look pretty. Took me like 10 years to pay off that $50,000. If you look at the interest I paid, I probably felt like I paid twice that much to just dio to buy a few couches and chairs and things that I don't even own anymore. And yet it took me long after those things were gone and sold and given away, I was still paying for them. So there's something wrong there, and we all know I mean, I could I could preach, you know, forever on why you shouldn't do that. But really, And truly separating those accounts is the first step to feeling like you really are getting. Wait till we get to the part where you pay yourself. That's even That's that third awesome level. So a couple things checking accounts for the day to day business track transactions. Does your payroll need to come from a separate account? Yes, it does. We have a separate payroll account. You don't have employees. Don't worry about it. Do you need to access credit cards or credit line? You need to consider that. Do you want to set aside money for future purchases in a savings account? My company does have a savings account. We have to. Actually one is for the business future business. And then we have a separate one for tour because I teach. I can't. It would be very easy to take that touring money that comes in and just spend it on camera equipment. But then I have to realize, Well, I gotta pay for hotels, etcetera, so that money has to be kept separately. User C P. A. Is a resource to help establish what accounts are needed and what money goes where. The average business will have to 4 checking accounts or checking slash savings account. So just know that walk into it going. Okay, I'm comfortable with that because there's something really appealing about having a little savings account. Even if it has a $50 cushion, you just know that money is saved. A supposed to pulling from your own personal funds. I said it before, but when it comes to borrowing money, it's always better to save and paydays. You go, you don't need it. There's probably a 98% chance you can live without it, so don't buy it honestly. I started my company with one camera, and my first reflector was a piece of cardboard that I take the little bit of oil onto it and folded it. That's all I could afford, and that was my first for five years. I had a single camera and a piece of aluminum foil to work with. I read a entire business and made money that way. In fact, it wasn't till about my second camera. Within about five days of buying my second, I was so proud of myself. I bought my second backup cameras. So now, at a wedding, if I lost my camera within five days of buying my backup camera, I kicked over my first camera and trashed it. So within five days of finally having two cameras, I had two cameras for five whole days. And then I was back toe one again while the other one was repaired. So there are times where you can't even factor what's gonna happen to you. But But it was pieces. Those cameras I paid for out of my own pocket didn't borrow the money. Technically, I've read a little bit for my dad on the 1st 1 but paid him back first thing right away and started building from there. If you do have to get a loan, if you are going to lock into to a financial commitment, somebody like myself with my building arbor, even birds home. You heard that. He said that he saved money when he first did it because he combined as commercial space with a home and he saved money. But now I never even thought about that till he said that. He said the tax, the property taxes have gone up so much that he's not saving anymore. I've never heard anybody say that before, and I just when he said that I was like, That's good to know because I'm in my life, considering my future and what I want to do. So keep that in mind. If you get to the point where you're gonna go to a bank, you have to be prepared in advance to provide the information that the lender will ask. You need to personal business tax returns for the previous three years and one year of business and personal text bank statements, and you will need that business outline. You will need that business structure. So that question that was asked earlier about what if I don't have that information start today because in a year or two from now, when your duty that money, you're gonna have that business plan in place, and it's gonna be a lot easier to get this information and grow from there. So with the loan options, you'll need a complete business plan you needed a record of your accounts payable on receivers are receivables. And then your license and registration, your articles of incorporation, your contracts and commercial licenses they're gonna take you apart. Money getting money these days so hard, so many people have gone out of business and banks have been hurt by all of the losses, whether it's home or business, they're very, very finicky these days on who they trust. So keep that in mind. Most lenders will run a background report on you and consider your personal credit history as well. So they're gonna look at the big picture, not just what your business is doing or could potentially do. If you're already in business, your business credit will be taken into consideration as well. So keep that in mind. Those are all important parts of building a business. Okay, what is your feeling? You were saying to only spend the money as you go along that you have it. But what do you do if you want to do displays or marketing? I mean, what is your feeling on that? Well, and that's really where it's It's that investment like, how do you get the money I'm sorry. You know, I say this all the time, but what about a garage? So what about a car wash? I know that sounds dumb, but if you're gonna I mean, if you're going to commit to something, you want a good display? If you walked around your home for a couple hours, I bet you could pull. Especially that you just moved. You probably didn't do that whole purging of stuff. If you make a commitment, we've had garage sales that my studios just to get something we wanted. So I think we all think linear like we're a photographer, So we gotta shoot to get the money. Why do you have to do that? I mean, why can't you have a car wash? Why can't you have a big sell? Why can you commit to something else? I mean, heaven forbid. I know it sounds crazy, but get a paper route if you have to, To get that extra money. That's kind of my attitude is, if you can find a way, make it happen and and then, of course, if you have to borrow that money, then you have to go to that second level so What's your feeling on? If you do want to sell some, like studio props or something, do you Craigslist? You have you sell? We perhaps have you done? We have a little bit of everything. Crisis is a little iffy. And so we have an Amazon account. We have a big garage still going right now trying to get rid of the universe. I'm moving again. And let me tell you have hundreds of backgrounds and things and we changed it every day. So I'm coming down way. Have an entire room this big full of props. So please come and take it all because it's stuff that, you know, I found in this transition in my life. This last year, I found out that I'm a border, that I would I honestly And I didn't know that I was gonna be one of those cat ladies that was buried with my backdrops and 50 cats, and that's where I can end up some day. And it was really an interesting process to go through and look at my life and say that all of these things were what I thought made me. And the truth is, I don't need any of them. So So for me, you know, downsizing. I'm moving and I cannot take You can take 6000 square feet of stuff, are 10,000 square feet and stick it in a 6050 bucks. So I have to let things go. So Craigslist, Amazon There are a lot of a local associations that you can Sometimes I let you put ads out or they do monthly e blast that you put it out there. Camera clubs, there are camera cos people like that not only to sell your stuff, but to buy them as well. So I know that I'm sure there's people on the Internet that no of resource is like that so they can throw some links up and stuff like that. But my thing is, is make a plan. I mean, there's so many ways to get things that you want, and you don't have to take pictures to do it. You just have to commit. So is there another question? Yeah, I, um I am still a little bit confused about I think the difference between a c p a and a bookkeeper and what it is, what the difference is that the two c p. A. Is licensed to do your taxes. Most bookkeepers do not do taxes like mine does not do taxes. They can manage QuickBooks. They could manage your finances, but they legally are not licensed to do your taxes. So a C P. A. Is somebody who has that license. And again, that's why I want you to choose the one that works with similar companies because there are different types of light. It's not even licenses. They're different types of education that they have a corporate c p a very different than a small business. C p A. So my suggestion is, if you could only have one or another, you would want the good C p A. Because I ran my business for almost years with Justice C p. A. And it was about every quarter providing them information for quarterly taxes. They would also go through and do an analysis of my finances. Bookkeepers tend to be there's gonna come a time, and we'll talk about it later. When you hit a financial point where you're so busy you can't keep track of the receipts that you spend in the money that you do. That's the person that's gonna come in. You're going to say, You know what? I can pay this person this much to do this stuff I hate so that I could be behind the camera more and that's how you gonna make money. Does that make sense? So C p. A. Is your to me personally, your biggest priority. Bookkeeper. It's not a luxury because there will come a time. You probably need one, but that's the person that's gonna do the day to day management. C P. A. Is overall financial, financial management. And we didn't even talk about a financial manager, mostly because most of us aren't in situations where we have so much money. We need it managed. But it's something to consider. You could put it in your notes. It's in the book. But if you you know, if you want somebody to actually long term, when we talk to retirement and things like that, you will be looking at a financial manager and it's that you don't have to be rich to have one of those. I mean, you have to be smart to have one of those people who are smart. You have babies right now. Talk to a financial planner and do it $50 a month payment plan for their college. Because I'm telling you, I did that with my oldest to, and I didn't put the maximum that I could, and I had half of their college fund. I don't ever remember it hurting me along the way. It wasn't like, Oh my gosh, I have to pay this I treated it like a bill and I paid it. Think happens, I did, because I paid for half their college. But now I look back and think, if I would put $25 more a month per child, paid for the whole thing. So it's like those little things that you just wish you knew. Yeah, we'll ask a question from the Internet. This is from Q T Mousey. Who said, Sandy, How do you pay yourself from your business account? Walk us through how how that works. Yeah, that's important. In fact, that's my big I think one of the big may come up a little bit later, but that's one of my soapbox speeches. Not that I haven't had enough of those today, but paying yourself is the most important thing you can dio mentally. When you own a business that is, you have a separate account for your business and you write yourself a check. I don't care if you write your check for a dollar $5 or $50. You have to understand you're working in percentages, and if you understand, hopefully tomorrow will come up. If we have time, we'll show you the percentages of where your marketing goes accelerates in the book. You guys can review this, but, um, your salary is only a percentage of what you make, so you want to be able to write your check for that amount. Once you determine what your salary again, I don't care if it's $5. You need to pay yourself and you need to do it consistently. You need to determine that if I'm gonna work this hard, my self, my family deserves some money out of our problem. When we start our business just like me, every penny goes back into the business. We need one more prop, one more background. One more thing, and we never pay ourselves. And that's where you start to you. Never. That's where your family can't connect because you're not providing for them. That's where you emotionally can't connect because you're not making any money. It's mostly because you're spending everything you make. It's not that you're not making it, you're just spending it also. So the way you pay yourself is just like anything else. You do have to pay taxes, etcetera. So you're gonna wanna have a bookkeeper a C p A. To help you. Once you determine what your salary is or what percentage do it two ways you want to salary. You're gonna say I make $10, a year. Doesn't sound like much, but I'd rather make 10 and zero, So you determine that you're gonna make $10,000 a month. Let's say you pay your bills every two weeks, you're gonna put yourself on a payment schedule in every two weeks. You're going to write yourself a check when you pay the electric bill and the phone bill and all that other stuff, you're gonna write a check to yourself and you're gonna pay it. Now you have to have a bookkeeper, a C p. A. That's managing the tax side of it. You definitely want to be paying the appropriate taxes, but you're gonna write yourself a check and you're gonna cash your check first, because mentally, when you cash your check first it's a check mark in your head. It's I'm doing it, I'm making it. And when you realize that the phone bills gotta wait because you needed to pay yourself first, you're gonna work harder to get that phone bill paid. Cause you're gonna say, OK, I can't live on the edge like this. I don't want to do this anymore. If you don't pay yourself first, you're gonna struggle to pay everybody else and you feel like you're failing because you never had a paycheck. You never get any money out of the company. So you understand what I'm saying, right? If you pay yourself first, you still it doesn't mean you have more money. You might even be slightly have slightly less money. But you're gonna tell yourself this is mine. This is my company, my money. And if I can't pay for these things better either a commit to finding a way to pay for them or be get out of the business, right? Go work at Wal Mart, and I'm not being rude, but there's a guaranteed paycheck there. If you can't guarantee your own paycheck, then you shouldn't be doing it honestly. And I know that sounds so harsh, but the happiest photographers I know, if you were to go on our forum right now, the very happiest photographers I know are the ones who are now paying themselves. Once you picked yourself a little bit, you're gonna wanna pay yourself more. Honestly, you get really selfish with that money and you're like, Well, I gave us a 150 bucks. I want 200. Next, What does it take to make $200? So that was a very long answer. But it's definitely one of those things that I think is a benchmark for feeling successful.