Working With a Bookkeeper
September 19, 2023
Welcome back to Business Unfiltered with Mercer and Jeff Sauer today's topic is Working With a Bookkeeper
0:00: What does it mean to work with a bookkeeper? Mercer shares the way he has approached it over the years, the different phases of his business, and how he has learned a little bit about it. A bookkeeper is someone who keeps track of your financials, the accounting of your business. The bookkeeper's job is to organize everything so it's in the right slot. He had been freelancing for a while and making money on the side, but didn't know what he was doing. It wasn't until six months after he had his own business that he finally got around to incorporating hiring an accountant and installing Quickbooks to keep track of things. He was the bookkeeper from 2006 until 2012 or 2013, when his wife took over and was the legal bookkeeping until 2020.
5:59: How much does it cost to run a company? The company service is a company service, assigned to an individual individual in the company, but for us it is running around a few 100 hours a month. The bookkeeper is looking at a certain expense, and they give us a little spreadsheet to put in the right slot and Quickbooks, but at the same time, it's like I could also do that in Quickbooks. Working with a bookkeeper. It would be penny wise and pound foolish to not work with a bookkeeper or to do that yourself. A bookkeeper is a gatekeeper of financial information. They need to zero things out and look at every transaction. They also need to classify new expenses that aren't normal or aren't obvious. In year two, it gets pretty easy to re-engage with them and say what you need to be doing differently.
12:12: Jeff discusses managing different divisions of the company. Each brand is a separate division of the company, with different divisions like Profit Pillars being one of those divisions. The bookkeeper is the Quickbooks person, helping us decide where things go and proactively reaching out for financial advice. They are a value added service. Jeff shares the importance of not having to think about spending money and how it triggers him to a certain extent, and why he trusts a professional to do it. The concept of remembering the early years of the company, and how the goal was to make $3,000.
16:49: How do you know you’re getting the most from your bookkeeper? How to think about who can do this for you when you start thinking about how to do something, and how to reclassify your books into different things, not how. A bookkeeper is your tracking code, your workhorse, the person who is looking at the marketing data and looking at marketing data. The chief financial officer is not just an accountant wondering about tax liability. They are more concerned about the overall liability of a company.
20:51: Treating a bookkeeper like a virtual CFO. One thing that is missing is a virtual CFO. Jeff has a coach who gives him great virtual CFO advice. Jeff believes that the virtual COO is what created profit pillars. Having an analyst in place.
23:47: The importance of working with a bookkeeper. Working with a bookkeeper requires a conversation about what types of actions to take from the numbers and how to see revenue opportunities. The bookkeeper is a super important piece because they are not setting things up properly to see the problem. Most bookkeepers will wait for the entrepreneur or owner to come to them for direction. There is a misconception that the bookkeeper is going to tell them about their business, but they are not the only person who makes decisions.
27:41 : Where to find a bookkeeper? A bookkeeper is a financial analyst. They can't do their job if they don't have good data coming in. They need to have good frontline collection of data and classification of data. Custom dimensions and custom metrics. Most people don't know what they need to do for custom dimensions or metrics. Jeff suggests finding a local person who is doing bookkeeping on the side or using a service like Econbalance or the Mom Project. Jeff encourages listeners to leave a comment, leave a review and tell a friend what they've learned from this episode.
Topics Covered In This Episode
- Understanding Bookkeepers: Mercer highlights the essential role of bookkeepers, who manage and organize a company's financial records. Mercer's journey from freelancing to managing his business's finances until 2013 is shared.
- Cost of Running a Company: Discussion revolves around the monthly service costs of companies, and the value of having a bookkeeper to oversee expenses and financial organization.
- The Importance of Professional Bookkeeping: The risks of self-managing business finances are presented. Bookkeepers play a pivotal role in monitoring and classifying financial transactions, especially for recurring and regular expenses.
- Managing Company Divisions: The differentiation between various company divisions is explained. Bookkeepers act as financial advisors, ensuring proper financial management across different divisions.
- Maximizing Benefits & Virtual CFOs: The episode delves into understanding if one is leveraging their bookkeeper's full potential. The distinction between a bookkeeper and a CFO is explored, emphasizing the broader role of a CFO. Jeff introduces the concept of a virtual CFO and its significance in modern business operations.
- Locating the Right Bookkeeper: Emphasis is placed on the expertise and skills required of a bookkeeper. For those seeking bookkeeping services, Jeff recommends local resources and platforms like Econbalance or the Mom Project