Accounting and The Law
We're going to move on to some foundation building mohr stuff you need to know about having a business that I know you're gonna love and the first thing we're going to talk about his numbers everybody loves them on then I tell you, just kidding, just getting a lot of people don't like numbers, but you can learn to like numbers and numbers a really important numbers are your guide to let you know if you need to make changes or if what you're doing is right, or if you need to go in a new direction or, um, just going to do this for a while, you guys, because that we're having a shampoo commercial, but we're not, um, you really need to know your numbers, and you need to be familiar with what your numbers are so that you could make the decisions that you need to make for your business. So this brings us to accounting it's important, and I know you're going to be good at it, and you may be thinking I'm actually not going to be good in accounting, but you are wrong, it's, pretty simple and pr...
etty basic. It is simple money and money out if you like spending money, and if you like making money, you can learn toe like knowing more about money. Oh, yeah, keeping track of money that's all you're basically doing is you're just going to track it like you would any other information about your business, you need to be aware of this because in order to have a successful business, you need to be making some sort of profits. Nobody again wants to work for free and you should not work for free. You should not undersell yourself. You should not undersell yourself, and in order to do that, you need to be aware of what your money situation is. If you are freaked out by money, which a lot of people are number one, you are normal and number two, you need to figure out why you're freaked out about money and how you can get past that staying afraid of something that you need to use every single day to survive is a complete waste of your time and your energy money is important and there's no other way to look t look at it and you need to understand it to the best of your ability in the way that it affects your life and affect your business. If you did not investigate why you are afraid about money or what, why you don't want to learn about money or why you don't want to know how to do the math, you need to really look into that because taking care of business is a big part of being a good boss to yourself and understanding your money is not only your responsibility but it's just it's just a must so you have to figure it out. There's no reason to be afraid of money because it is just paper money represents something else that you might want. This is something I learned from another, um, self help type of teacher mind that it was pretty helpful to me. And I'll just say it pretty quickly. Money just really represents something else that you want in your life. So if you are trying to save up enough money tio by a lake house you need the money to get to the lake house. It's not really the money that you want, it's the lake house that you want. So changing reframing how do you think about money and what it means to you can sometimes help get past the fears, but you are not starting a business so that you can work for free or be miserable. So learning about your money part is essential. Make a date with your books again, scheduling the time to do this where you know you're going to sit down, figure your money out. File your receipts, separate your personal books from your business books if you can and track what you make and spend for your business it's a simple is just saying that you're going to do it on fridays at two pm if that works for you or you're going to do it sunday morning after breakfast, we're going to do it monday after lunch, make a date and stick with it if you know that it's coming up here more likely tio easily do it. I know lots of people filed their receipts and do their receipt work while they are doing something else more pleasurable, like listening to a podcast, you're watching a rebroadcast carried shaping on creative life that would be an excellent thing to dio tips about accounting your bookkeeping khun b a simple or is complicated as you want, this is important because it is important for you to know that learning about your money and how to take care of it, knowing how much you make is only going to be it's hard and is boring and is terrible as you make it. If you choose to make this a miserable tour that you don't look forward to, then that's exactly what you're going to get a miserable sure that you don't look forward to. If you choose to make this a simple part of your planning and your overall strategy, then you're going to go in and you're simply going to get it done you're going to learn what you need to know and you're going to make proper adjustments. You can go with the basic numbers or sell on your computer, you can go to something bigger like quick books or other paid software, depending on the needs that you have for your business. For many years and my own business, I simply had a graph chart that I made in word and I filled in by hand because that's how I roll but it was really easy enough to do and it was very helpful if you haven't separated your personal accounts from your business accounts. I highly suggest that you look into doing that while it's not imperative that you start out that way, it is imperative that you end up that way and that you get there as quickly as possible. It is a huge relief to know what is your money and what is your business is money and it also we'll give you a broader and bigger lesson on how you're going to manage your money and how you're going to make it work sometimes modern banking websites these days if your bank doesn't allow you to get a business bank account what's not all of them d'oh they'll let you categorize your spending now. Has anybody else seen that on their bank's website, where my bank will now say, check this box? Was this an entertainment expense? Was this so when I make a charge with my debit card, there's options for me to figure out where I'm spending my money and it's a free service that my credit union provides and it's really it's really amazing. And so sometimes if I do happen to drop a business, a business expense into my personal account, I can easily pull it out rather quickly, and I can sort through those items and print them out and take that to my accountant if I need tio, if you need help, ask for it. This can't really be stressed enough, and this goes across all areas of our business. If you need help, you need to ask for it. That's your job, it's your job to figure out where you need help for your business and then to go find it. If you start out needing help with your numbers or with your bookkeeping, then you need to get it when you have a cavity and you need help with your teeth, but to d'oh, do you ignore it and wait to your tooth falls out? Maybe you might be super busy, or you call the dentist. You get help for that and you go to a professional just because you own a business doesn't mean that you have to know how to do every single thing to make your business run number one that would be impossible and number two, if you're able to do that, why didn't you start a business years and years ago you could be way ahead of the game. The thing is, is we all need help, and we all need to figure out where to get the help when we need it and by not asking for it, you're doing yourself and your business a disservice were not all just know how to do one thing because we know howto howto make something and how to have a business. I know how to drive my car all over, but I'm not changing the carb aerator I'm getting help when I need that, and and, you know, we all do it in so many other areas of our lives, but for some reason we figure out the d I y business, I should be able to die. Why this whole deng thing I should be able to build my own website, I should be able to do my own accounting, I should be able to make all myself, I should be able to handle this. You don't have to handle it all if you want to do the best job possible in your business, then you must get help when you need it and you must be able to make sure that you're making the time to actually make your product you cannot make your product if you're doing a bunch of things trying to learn how to do a bunch of things that you don't want or need to know how to d'oh there are other people out there who are good at what they do and they are for hire if you're wondering how you're going to pay them, perhaps you should do your books and then you could figure that out but also there's lots of ways to figure out how to get the help and support that you need you can look to your community resource is you can check organizations in the u s like score or the s p a I know that my local community college even the community college that was in the nearest big city when I lived in a teeny tiny village in rural vermont offered classes on basic accounting or bookkeeping skills are offered services that were affordable to small business owners and that's what you are a small business owner and there's a lot of resource is out there for you you do not have to know everything about running a business and orderto have a successful business use your network to find support you know somebody who has an accountant you know somebody who has a lawyer you know somebody who can give you advice on the things that you need to have advice about ask those people for help in fact I want you to think about and I write about this in the workbook I want you to think about all the times that you help other people how do you feel when you help somebody marlowe how did you feel after you helped us all with our photographs? Yeah, I felt really good to help people, right? Yeah cassie when your product helps people haven't event or party or a wedding that they feel really good about how do you feel? Yeah, it makes it feel like it's worth while and helping figure at that solve their problem rosalie when you see that I'm struggling with something and you're able to offer me professional advice or help how does it feel for you to help me? Because great right we all feel good when we help people. So when you ask somebody else to help you, they're going to feel good about it because that's how it works you are not unique or special in the sense of you're the only person in the world that people dislike helping got nothing about you that says, oh my god, I really do not like helping them if you ask somebody for help or assistance or advice and a courteous and respectful way where you're mindful of their time and their knowledge and you think them for it and you treat it like a business conversation that they're going to be glad to help you, I can't think of anybody that wants you to fail and it's possible that you can think of somebody that wants you to fail but that person doesn't matter in the grand scope of what you're trying to do or what your businesses people want to help you and support you people want other people to be happy people want tio give what they have people like feeling good, but when you ask people to help you they feel good so do someone a favor and asked him for some advice it's so refreshing that way you need to do it but people like helping and you're no exception people especially like helping you so there's lots of places where you can go to get help with any of you ever had to ask for help in your business. I mean, I know that we're all here together now so this is one way that you're getting help to figure out what you want but I have had to ask people for recommendations for accountants, bookkeepers, lawyers on copyright issues my whole job is based around finding people to help other people and then collecting that information and then trying tio to make you buy it e so I am always asking for people for help, and I have found that people are so grateful to do it. They're so glad to make me happier to support me and what I'm trying to dio have any of you ever asked for help for from a professional or needed to hire someone to help in some aspect of your business? Rosalie who have you had to hire? Lots of people, lots of people that's. Great, but mainly I'm not a great designer. I do web development stop more the technical side of things. But I I know what I like. I feel like I can look at the design and I like it, but I can't make it myself. So I always hire designers to do that work for me. Yeah, meet you. Hire designers often as possible because there's a lot I can do with it. Well, nothing, really. I have no design skills, so I always hired for help for that. How about anybody else? Have you ever hired for help? Marlowe? One of the best decisions I've made for my business is hiring an actual, real honest to goodness sepa. It was a little more money, but when it came time for him to support me through some things that were going on with my business I have the support right there I didn't have tio in my crisis moment I didn't have to try to find somebody I already have somebody my corner so yeah that was a really great investment yeah and that's exactly what it is it's an investment if you find that you're struggling to get your creative work done and a part of that is because you're spending so much time on the administrative tasks of your business keep track of that time that you're spending working on this stuff that doesn't suit your natural talents and then add up those hours if you were to have if you're spending ten hours a month updating your excel spreadsheet trying to understand what your numbers are like if you could hire that out to a professional what takes you ten hours might take them three hours and if they charge seventy five dollars an hour but you get ten hours of your time and if you could spend those ten hours making are designing a new product or working on something different our marketing your business or doing something to increase your sales you are actually coming out way ahead financially by taking those ten hours back and putting them towards what makes your business successful and paying somebody for those three hours of accounting not only is that person been able to free up a whole lot of mental space which is something I am continually trying to do for myself say how can I get more of my mind back? How could get more of these things to stop spinning in there that's that's something that I have struggled with? I can pass that off to somebody else get that mental space back that means that I'm making more room to do different work, which means that I can make more product I can help more people, I can make more money, I can have more free time and I can build the life that I want to live, but if I'm sitting around struggling for ten hours of the month doing something that doesn't suit me and then I'm still not confident that I've done a good job that's a lot of time and energy and resource is wasted so oftentimes just because it takes you a certain amount of time to do something is not how long it takes a professional to do it because they're really good at it and you are not so what? You are not good at takes you longer so find help if you need it there's no shame in that and you can really grow grow your business in the work buck I have listed several action items for accounting and bookkeeping to sort of give you a general to do list on how to get started if you're not sure where to go on some of the tips in there include developing an accounting calendar. I also have some worksheets in there. I'm not quite sure what page their own, but for how is how you can track your profit, how much money you have coming in and how much money you have going out, how much each item is make he knew because you really want to be sure to pay yourself and you'll be able to figure that out once you know your numbers better. Lots of times, people say, well, say to me, and I always think this is crazy, they'll be in business for, like, three years, and I will say, how much money do you make? And almost every time people have said to me, I don't know, I don't know how much money you make. One time I said to myself, carry, how much money do you make? And I said, I don't know, and then I got some help for that right away, because I thought, that's crazy, how could I not know how much money I make? You know, it's? Not exactly like I'm rolling in the dough, but at the same time, I don't know if there's enough money to cover the things that I need, I don't know if I and making enough money to make these efforts worth it I just like what I do so I keep chugging forward but of course like anybody else I need to earn an income so once I told myself I did not know how much money I made I figured that out with a quickness and you should too so are there any questions and the easy questions about numbers because again it's not my strong suit I pay someone to do it but if they're any quick questions before we we want to our next topic I think that we could probably crowd source some good answers ors are solutions before we move on yes leslie oh it's a weird when you mentioned keeping your money separate from your businesses money how do you determine which is which are you taking out what you a lot and say in your well you're getting paid out of your price for what you sold and then the rest of it goes back to the business or haven't work how do you know somebody in the audience handle it if he could be interesting to know how and make her handles that kathy when you started your business did you put five hundred dollars in your business bank accounts a here I go or right I used I financed my business with my real job before before I quit and then all the money that I make goes back into my business it really does on dh then I pay for a lot I have enough a goal every month to me and that money goes for for my family's business you know for to pay bills to pay bills right and that money that goes to pay bills has to be free and clear of shipping costs mailing costs envelope anything that I need the business still has to come out of that money hidden expenses yeah so expenses have to be paid and then michael to have that money available for months has been that you're worried about that and I don't spend a um us yeah it's pre strict yeah it needs to be so that you can really have a clear picture of what you're doing and you know when you make it's a thirty five dollars for sale and fight that buy dollars that is shipping you know you've really only made you know let less than what you think you're making you need to keep that in mind I think that could be absolutely and there's a turning here to really help you figure that out what are your hard costs? What is the profit because that's really different hole for people to figure out and the prophet is where you're making money that's also why you're pricing formula is really important to know and keeping track of your hidden expenses does anyone else have any accounting tips or yes erin so last year you know, I have my business and everything and then is when it comes to pick came to paying taxes this year, I was a little surprised by owing the government a fairly sizable chunk of money e didn't I have in my pocket right then? So why this year? What I've done is I've set up quarterly all pre pay my taxes based on what I made last year so that next year at tax time, I won't have that you don't be like a nasty surprise. Yeah, the first year he was unemployed, I didn't really understand a lot about keeping my books and I was a little bit of ah, what just happened here, like numbers, whiplash or something and then a lot of crying that this one time that I did cry quite a bit, but I learned a lot of lessons I also used to keep my receipts in a ziploc bag in my freezer, so this is like something that I think a lot of us have a little bit of shame around sometimes it's like I'm just not organized enough to do that, I can't catch up, I haven't been doing it all along, I can't start now when I first took my shoe box filled with frozen ziploc bags of receipts because I put things I don't like in the freezer for some reason, which I'm sure nobody really needs to know, but I took them all out and had them in a shoebox and took them to my accountant. And he was just like, okay, the first thing you need to learn is this. And he taught me and I learned and I paid him eighty five dollars an hour for the privilege of that education. And indeed it wass I have never had to put my receipts in the freezer again since then. So that was that was really good, and I figured out how to do it in a way that worked for me. So even if your business the money part is a mess right now and you have no idea what it is or how to sort it out or if it's even possible, it is definitely possible to fix it. And it is definitely possible to start today off off on the right foot. It is definitely possible to make tax time at the end of this quarter. At the end of this year, however, you're going to pay much easier for yourself. It is always possible to begin, and you can do that right now. Understanding your numbers, helping yourself out and feeling more confident about the money portion of your business. This is the end, unless you have something. I think I mean, this question might lead into the next segment, but I'm not sure if you want to talk about business insurance car latino and said I would love to hear your take on business insurance. I think it depends a lot on what kind of business that you have and whether or not you need to invest in insurance right away if you need to ensure your equipment that's possible, I ensure my equipment because I work from home, so my renters policy I and my homeowner's policy for both situations pays for or covers my equipment, so if I were to go camping again and leave my laptop on the hood of mike car and have the sun burn out my screen, you know, I'm I'm covered as faras liability insurance. I want to start out this next portion of our conversation, so this was a great question because we're going to talk about you and the law, and I would like to state for the record judge that I am not a lawyer, and I'm not really overly interested in knowing the ins and outs of the law, so I don't know a lot of answers to legal questions, and they're different all over. So if you are required to have insurance than you should get it, if you sell something that people eat or could put on their body, then you should get it. If you have a store and somebody could trip and fall and see you, then you should get it. If you have equipment that would be really hard for you to replace if something happened to it, you should get it, knowing what your business needs on the back end and on the legal end is really up for you to determine in there too many scenarios, too many possibilities and too many rules for us to really be able to discuss them all effectively today. Well, you do need to know about the law is that as a responsible business person, that is your duty to comply with it. I would like to state for the official record that I get a lot of email that says, do I really have to to declare my business is a legal entity, I am not going to tell you to break the law. Whatever you want to do is up to you. You are responsible for figuring that out. And if you are asking me if it's ok to do something that you know is wrong, you have already answered your own question, and I am not going to right back with with a yes or a no, I'm going to say, look in the mirror and figure out if you need to register your business, has a legal entity, you might look in the mirror and find out that you do not, that it doesn't is not going to keep you up at night and that you are fine not doing it, and I am here to tell you that I will never know, so I will never judge you, but it's up to you to figure out what you need to do to comply with the law. If you're curious, if you need to get insurance, you can talk to an insurance agent who will probably highly recommend that you get insurance, but if they can explain to you why you need it and what the benefits for your business are, you might find something in that conversation that convinces you that the answer is yes, that I can't possibly know about. I had a client wants you may she still does. She makes gorgeous soaps in the shape of of little fruits like strawberries and orange slices, and they're really, really tiny, and she packages them in these gorgeous, tiny little pottery bowls, and people give them all the time as guests, well, she found after a little island business that she needed to put a disclaimer on them that said, this is soap even though it's called so I need you to know that you should not eat it because it's actually not food it's soap and this is because a lot of people would get the soap and they would think it was march again candy so people are popping you know, little strawberry slices and orange wedges into their mouth and discovering that it was indeed not not actually candy or fruit it was soap and she reached the point where she was advised to put a sticker on her product that said not food this is not food and so you know, that's that's a decision she had to come to her in her business like you know, we just she could have foreseen that are no you know, it just wasn't on her checklist of things to dio but if she had talked teo and insurance provider beforehand or really dug into whether or not she was going to be liable or she could be in trouble a somebody is allergic tio a new ingredient in her soap and they went ahead and made it because they thought it was a piece of fruit like what is her responsibility? I can't answer that question for you you need to do your due diligence because our audience here creative live is international just as I have found out with the books that I write the readers are thanks awfully all over the world. It is really hard for me to give legal advice, but people still like to ask, so I want to tell you that you need to follow the laws that are applicable to you and your business, no matter where you live your laws. I have lived in states where there have been county laws, city laws and state laws, and I lived in states where there have just been county laws and state laws. I've lived in places where there have been different laws based on the zone that I was living in, whether it was commercial or residential, and how that would shake out with the kinds of insurances and licenses and parking permits, et cetera that I needed so the bottom line with you and the law is don't break it and utilize the resources that are available to you to determine what you are required to d'oh a nice google search, taking a local business owner that you like and admire out at lunch and asking them questions visiting your city and county building. Those are all great places to start here's, some questions to ask when you figure out where to go or when you're trying to figure out how to get started. What am I required to do to make my business legal? What kind of documents do I need? What air? The associated fees for getting any kind of licenses, or or permissions that you need to have? How often do I need to reapply or repay that we find that information out and put it in your calendar? Ah, head for next year, so that it doesn't sneak up on you. Sometimes licenses and fees can be expensive, and if you're not anticipating them, it's not so great to be caught unawares about them, and because it could just be a simple as you don't have the time to go down to city hall. I spent over two hours getting a dog license once, which was. I felt very ridiculous to me. But it definitely happened, and it was not convenient. So you're just some questions to get you started, places to jump off and figure out what you need.