I need help at Woolichooks. I’m looking to hire someone better and smarter than me to oversee the client accounting services we provide at Woolichooks. I’m currently doing it all. I’m the owner, but I’m also stuck in the weeds of the client services. So, I actively feel like I’m the bottleneck for Woolichooks’s growth.

I don’t want that. I have plans. I have ideas for new types of services. None of it can happen if I’m stuck creating journal entries, approving journal entries, syncing Ramp transactions, coding transactions, creating audit schedules, fixing tech syncing issues, reviewing the work of the team, processing bills in Ramp, etc. You, who is infinitely smarter than me on all things accounting, will be taking over this outsourced “accounting manager/controller” role for the clients.

Who are you?

• You LOVE accounting: You think this is your life’s calling. (Founder’s note: I’m good at accounting, but I don’t think it’s my life’s calling!)

• You enjoy working on multiple clients: You’re able to understand what the clients want and how to communicate with them. (Founder’s note: I care a lot about the type of clients we work with.)

• You understand technical accounting: You can explain complex concepts to folks in plain English.

• You have leadership experience: You’ve managed team members before.

• You have a heart for nonprofits: You want to work with nonprofits, which currently make up 75% of our client base.

• You know audits: You’ve done audits or gone through audits before. So, you understand what’s needed to prep the documentation for the audit requests.

• You are tech-savvy and curious: You understand technology, learn it quickly, and are open to trying new things. (Founder’s note: Nothing is done here just because “that’s the way it’s been done.” I want us to work efficiently.)

• Bonus points: It would be amazing if you have your CPA, but it’s not a strict requirement.

Details

• Role Type: Senior Accounting Consultant (1099 Contractor).

• Location: 100% Remote. Woolichooks is a remote-first company. (Our team is currently spread across Austin, Houston, and Oklahoma, with clients in NY, Austin, and London).

• Time Commitment: Flexible, whatever you need to do to get the job done.

• Compensation: Retainer, $6,000/mo

Sample list of what you’ll be doing

• Stepping into an outsourced “controller” role for our clients

• Creating and approving journal entries

• Coding transactions and syncing data from Ramp

• Creating audit schedules

• Creating client bills and managing Accounts Payable

• Reconciling accounts in QBO/Sage Intacct

• Overseeing & reviewing the work of the two Accounting Consultants (contractors)

• Troubleshooting tech syncing issues

• Managing client inboxes and communications

• Writing the Standard Operating Procedures for each client

• Troubleshooting technical accounting questions/issues before they reach me

• Anything else that may need your expertise!

Why you shouldn’t work here

• We’re a startup. If you’re used to just doing your job and nothing else, then we may not be the right team for you.

• Do not enjoy context switching. Some days, a client may have an urgent request, and you will need to drop whatever plan you had for that day and solve that request.

• If you need a lot of hand-holding, I won’t be able to provide that for you.

• If you’re not intellectually curious or willing to learn.

• If you need to always be right, then skip this post. Woolichooks is a low-ego environment.

• If you’re not willing to speak up and communicate your concerns & questions.

How do you apply?

Send me an email at senioracnt@woolichooks.com telling me who you are, why you love accounting, and what about this post made you want to apply. You can attach your LinkedIn and/or your resume. Feel free to link to any projects/things you’ve done. I just want to know you. (Tip: Don’t use AI to write your full email.) We’re a small team of 3 (Me, 1 contractor who treats this as her FT, and 1 contractor who is truly PT), so we need to make sure the vibe is right.

Lastly, you have to be willing to come along for the journey. Woolichooks can grow, and I want to give it the chance it deserves.

If you know someone who would be a good fit for this, please forward this post to them! You will have my eternal gratitude. ☺︎

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Upcoming post: My adventure on vibe coding a grant tracking app!

Woolichooks in 2025 grew in revenue, clients, and team members. I made the budget on a prayer, and we beat it by 120%. Which is so crazy to me and I’m grateful. But I wasn’t living. I, personally, was on a downward slope.

The goal of Woolichooks was to work with clients doing good work, team members I care about, and not have to work 50+ hour weeks. I wanted to work on interesting projects with clients that solve different types of business problems. But I felt stuck.

Earlier in the year, in February, my car was totaled. I thought my life would flash before my eyes as I careened toward death. Instead, my mind was blank. I’m alive. 3 hours after that crash, I was already in a meeting with a client. Why?!

Yes, I own the business, and if I don’t work, I don’t earn. But I should have given myself time to digest what just happened to me. But I never stopped. Client work also grew, and there wasn’t a stopping point for me until November. I felt like I couldn’t stop because the business was growing and doing well beyond my initial dreams.

In November, I forced myself to stop for a whole week. In hindsight, I was burnt out or on the edge of burnout. I lost myself. Who was I? I say I didn’t know I was burnt out, but I know I’m lying. I saw it earlier in the year, but I ignored it. It never really went away. I can’t do good work for clients and be there for my team if I just work on autopilot.

Hustle culture sucks. Why was I rushing? Another goal of Woolichooks is to create a firm culture where people feel like they can have a life. Why did I feel like I couldn’t have this? I, as the founder, definitely wasn’t showcasing that. So, I took a week off. I ignored Slack. I ignored my laptop. I ignored Gmail. I ignored people outside of my family. I just laid about doing nothing.

It was one of the best decisions I ever made in 2025. It took me off the ledge of wanting to quit everything. The other best decision I made was joining the host team at church. I get to just greet, welcome, and smile at folks. I don’t have to be thinking that hard about whatever fire that needs to be put out. I can just come as I am and rediscover myself.

So, in 2026, what do I want/hope for Woolichooks?

I want to work with business clients doing good and have interesting problems to solve. I want Woolichooks to be a place where team members can grow in themselves and in their skills. I never want this company to be a place where people stagnate. I want to help clients achieve their dreams. Profit is good, but is there a bigger purpose? So, I will be reaching out to potential clients and writing unignorable emails to businesses that I think would be cool to work with.

Community matters. Making sure I work with businesses that do something good for their staff, customers, and the broader community matters to me. Yes, profit matters for the sustainability of a business, but what else can you do? How do you serve your community, your people, and your customers? The generally accepted business model of generating profit for shareholder value and nothing else is boring to me. There must be something else.

You have employees, and you want to provide benefits. Sure, money is an excellent benefit for employees. But what if you don’t have enough cash to give out spot bonuses frequently as your business grows? The extra benefits you provide help define your business culture and the values you care about.

1. Healthcare benefits

2. 401k Plan

3. Stipends (Gym, Phone, Internet, Office Setup)

4. Professional Development & Tuition Reimbursement

5. PTO (Extra days, Family Leave, Sick Days, Sabbaticals)

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Healthcare Benefits

One of the best benefits you can provide to employees outside of wage bonuses is healthcare. As an employer, providing medical, dental, and vision benefits is essential, especially as a U.S.-based company, as it’s one way for an employee to have affordable healthcare insurance.

401k Plan

Employees can start planning for their future by automatically saving a percentage of payroll to a retirement savings account. It’s even better if the business can match at least 4% of an employee’s contribution. For nonprofit organizations, the equivalent is a 403b plan, essentially the same as a 401k.

Stipends (Gym, Phone, Internet, Office Setup)

Another way a business can provide an employee benefit is by offering monthly or annual stipends for gym memberships, phone service, internet, or office space. You can either give a recurring virtual benefit card or require your employees to submit receipts monthly to be reimbursed for the specified amount.

Professional Development & Tuition Reimbursement

If you care about employee professional development, you can offer an annual total amount that an employee can be reimbursed. If an employee wants to take a course, attend a conference, or apply to a degree program to progress their career, the business can sponsor a portion or all of the fees.

PTO (Extra days, Family Leave, Sick Days, Sabbaticals)

Having different types of PTO (paid time off) days can be a way to show your employees that you care about them having a life outside of work. You can provide more than ten days of regular PTO, extra sick days, or an extensive family leave policy. Sabbaticals can also be provided depending on how long an employee has worked for you.

Your combination of employee benefits shows potential employees what matters to the business. Do you have an extensive healthcare benefit and 401K match? That shows you care about your employees’ wellness and want to help them save for retirement. You don’t have to provide all these different types of benefits from day 1 of your business. That wouldn’t be fiscally responsible. All these benefits cost the company, so budgeting responsibly is required as you still need to pay your employee’s regular salaries.

🔜 The next post will discuss things to consider when hiring your first team members.

📥 Reader Survey —Let me know your thoughts on this post and newsletter.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable mission-driven companies to grow.

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Woolichooks recently got three types of insurance, and I feel like I’ve entered my teenage years as a business owner. 😆 Insurance is something you need to have as another layer of protection. Yes, it may feel like you’re throwing money away into the void. Still, you’ll be glad you have it when those costly, unexpected events happen in your business — an employee gets injured, a client thinks you made an error, or a customer sues you because of your product. Below are the most common types of insurance for a business:

1. General Liabilities

2. Workers’ Compensation Insurance

3. Directors & Officers

4. Property Insurance

5. Health Insurance

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General Liabilities

General liability insurance covers claims of bodily injury, property damage, and personal injury (like copyright infringement and slander). All businesses should have this insurance as their first policy. If you only have enough money to get one type of insurance, get general liabilities. As you grow, you will continue to add to general liabilities the other types of insurance that make sense for your business.

Workers’ Compensation Insurance

The business will also need workers’ compensation insurance if you have employees. This helps benefit employees who suffer from work-related injuries or illnesses, covering medical expenses and lost wages.

Directors & Officers

Directors & Officers insurance covers the personal assets of company/nonprofit directors and officers if they’re sued for alleged wrongful acts during their board service. All my nonprofit clients have this insurance as a standard yearly cost.

Property Insurance

Property insurance protects your business’s physical assets, such as buildings, equipment, and inventory, from fire, theft, or natural disasters. So, this protects everything in your balance sheet's current and fixed assets section.

Health Insurance

Health Insurance allows the business to provide the employees with medical, dental, and vision insurance as a benefit of working at the company. It’s always great to provide this benefit as the business grows. I’ll write a deeper post about health insurance in the future as this is an actual benefit that employees can enroll in instead of the other types of insurance listed in this post.

Insurance is a way to hedge against potential risks to the business. Some grants, such as government grants, will require specific insurance so the funders can be assured that the business can cover any potential claims. Application for each insurance type will require you to provide information on your financials, employees, and general business info. Insurance can be one of your bigger expense line items, but it’s the fixed cost of doing business.

🔜 The next post will be about the different types of employee benefits.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable mission-driven companies to grow.

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You just opened up your first business. All the money your business makes is yours, right?! I mean, why not? You can use the money for whatever you want. No one can tell you what to do with the money. Right?

Wrong. If this is your thinking, you’re on the fast track to a potential audit and massive headaches when tax season comes around. You must despise your accountant if you decide to run your life this way. 🥲

A business is a separate entity from you as the owner. Colluding funds by using business funds for personal expenses not only screws up your financial reports but can also be a flag for a potential IRS audit. You have no idea of the profitability of your business and no control over your personal funds. You can’t plan for retirement because you have no idea the difference between your business and personal money. Below are ways you can use to separate your business and personal expenses.

1. Mindset shift

2. Separate bank accounts

3. Separate business and personal budgets

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Mindset Shift

As a business owner, I know you feel that the business is yours to do whatever with. But, you must consider the business as a separate entity with its own life cycle. You can’t see the business and you as one. The business has obligations to your vendors, customers, IRS, employees, and other partners. As an individual, you have obligations to yourself, your family, your hobbies, and the rest of your life. Yes, a tiny part of you works in the business, but it’s not the whole of you. This mindset shift is the most difficult thing I see my clients struggle with. Many small business owners start businesses to fulfill personal goals like buying a house, but now that business entity has more oversight (as a legal business). If you decide to apply for government grants or contracts, this separation is even more necessary because your financials will be under scrutiny.

Separate Bank Accounts

Separate personal and business bank accounts are the fastest way to separate your expenses. If your personal and business accounts are with the same bank, make sure you distinguish between the cards. I’ve had clients mistake a business debit/credit card for a personal one because they look the same. You can put a sticker or customize the background to do something noticeable. It’s fine if personal expenses happen infrequently; you can easily pay the business back if it is a mistake. If multiple personal expenses occur every month in the business account, then a conversation will need to be had to help reduce the occurrence. As the owner, if you aren’t on payroll and want to buy something personal, transfer the money from the business account to your personal. Then, that transfer will be classified as an owner’s draw on the balance sheet.

Separate Budgets

Having separate personal and business budgets will help solidify the differences in expenses in your mind. Having a personal budget will let you know how much you need in owner’s draw or payroll from the business each month to live your life. You need a business budget to understand how your business revenue is spent. At the beginning of your business, you’ll want to make enough net profit to pay yourself your breakeven monthly personal expenses.

It’s imperative that you quickly separate your personal expenses from the business. Any future business growth planning will be useless if your financials are inundated with your personal expenses. It will be hard initially, but this discipline is required from you as the business owner.

🔜 The next post will talk about the different types of business insurance.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable mission-driven companies to grow.

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You’re still sending out PDF invoices created in Word or Google Docs to your customers expecting payment, but how do you make sure they pay you on time? It’s not like you have a tracking system to know how many days your customers have left before payment is due. What about a collection policy for when customers are 30/60/90+ days past due? Who’s responsible for reaching out to your customers for payment? Have you ever done work and forgotten to send your invoice for payment after 1 month of service? Determining how often you receive payment is imperative to managing your cash flow and not feeling like you’re living paycheck to paycheck.

So, what can you do to transform your revenue management? Some of what I talk about today will seem like the same process as last week’s post on spend management. You’re correct; it is. Every process starts with documenting your current process, looking for where software can help automate some of the mundane tasks, and training relevant staff members on the new process and software. The one thing different this week is the monthly review of your Accounts Receivable (AR) Aging Report because you need to reduce how many days it takes for your company to receive its revenue.

1. Current Process

2. Update Process with Automation

3. Embed the new process into the company culture

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Current Process

The first process of taking control of your revenue management is to document what you’re currently doing. Are you sporadically sending out invoices via email? Who’s keeping track of your customers, and who owes you? List everything you’re currently doing, and make sure to tag the employee responsible for each task. This lets you see where the company is falling short and how to improve your current process. Doing this before introducing any software will ensure the team knows exactly what the process is before adding software to an abysmal process. The software will amplify the problems you had before or add more stress to the team if the problems aren’t addressed.

Update Process with Automation

You can use software to send out your invoices, send payment reminders, receive payments online via ACH and credit cards, track who owes you on your AR Aging Report, and keep track of your customers. There’s no need to spend minutes or hours creating PDF invoices manually. That time could be spent on solving a more pertinent issue in your business. Business owners inevitably talk about the processing fees when I talk about using software to help collect customer payments. Your total processing fees will be less than the total you’ll spend trying to do everything manually. If processing fees are that big of an issue to you, then build it into your pricing.

Payment reminders can be automatically sent to each customer so they can be aware when they’re past due, and you, as the business owner, can see when a customer has viewed, opened, or paid the invoice immediately. Your accounting system, such as Quickbooks Online or dedicated revenue management software, can be used in conjunction with your current systems to provide an overall view of your revenue.

Embed the New Process into Company Culture

After implementing the new software, make sure the primary teams are experts on the new software. As a business, you must ensure that a dedicated person/team keeps track of your invoices and that all invoices are sent out promptly. The faster you send the invoices, the faster you get paid — hopefully. By embedding the new process into the company culture, you create one source of truth for all things revenue.

Revenue management is one of the most important things you can do for your business. If you can reduce the days sales are outstanding, you can replenish your cash just as fast. Managing your spend is one of the ways you can extend your cash runway, but if your revenue management is in chaos, you won’t have any cash to have a functioning business.

🔜 The next post will discuss ways to separate business and personal expenses.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable companies to grow.

Subscribe now

The team knows that their current process of managing their bills is wrong, but they’re so overwhelmed that they don’t know where to start. It’s better for such a team to continue with the wrong process than to try to change. Something or someone has to come in and be that element of change. The current team can’t see the light at the end of the tunnel. They know that things need to get done regardless of how convoluted the process is.

So, what can you do to transform your bill and spend management? Below are steps you can take to start to take control of your spend management. A complete overhaul will take months but at least you can start to have quick wins to help keep the team morale up and start to break the cycle of torment.

1. Current Process

   1. Carve out the time

   2. Document the current process with the team member responsible for each task

   3. Remove redundant and unnecessary steps in the current process

   4. Implement updated process

2. Update Process with Automation

   1. Implement software to automate the majority of the tasks

   2. Software training

   3. Update process document

3. Embed the new process into the company culture

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Current Process

You can’t fix anything if you don’t know what you’re currently doing. So, the first step to take when transforming your process is to document it. Make sure to tag which team member does what in each step. This is a painstaking process; you must carve out the time to do this as a team. Blindly choosing any software and implementing something new can be a deterrent to giving your team the needed breathing room. The inertia of doing the current process will make it hard to find the time to document it, but you can’t skip this step.

By documenting your current process task by task, you can clearly see what redundant and unnecessary steps can be removed. The team will be able to see and question why they’ve been doing something one way instead of a more optimized way. Once all unnecessary steps have been removed, have the team try it out and see if it works. This is taking the tiny steps needed to find the right software in the future. Implementing a software on a crappy process will produce crappy and unsatisfactory results.

Update Process with Automation

Once you have figured out your new updated manual process, you can start looking at which tasks can be automated via technology such as Ramp or an industry-specific one. You won’t know what to use unless you’ve done the previous step and looked at your company's technological needs as a whole. You can use software to help you remove the need to give employees direct access to the bank account or debit card to pay bills. Along with this new software, it’s imperative to have adequate software training to make sure the team is comfortable with the technology. If the team isn’t using the software, then what’s the point?

You can use software to schedule out payments, process the bills, pay vendors via ACH or check, collect all necessary vendor information, and automate the necessary approval workflows. If one of the changes you’re making to your process is to have standard payment days, make sure to alert your vendors and contractors of what days you process payments. This way, if they don’t get their bills to you in time, they’ll have to wait until the next round of payment processing. You control the bill processing, not the other way around. It also puts the onus on the vendors to make sure they’re on time and gives them the confidence to know the days they’ll always get paid.

Embed the New Process into Company Culture

Embedding this new process and software into the company culture will take the concerted effort of the team leading it. You’ll need to gradually remove avenues to the old process and forward all requests and needs toward the new process and software. Everything related to spend and bill management should be in one control center. Everyone in the company should automatically think of this software when they need to spend money. You’ll know you’ve succeeded when random team members come up to you and are excited about doing something in the software — “I finally used the reimbursement feature, and it was so cool!” or “Omg, I can’t believe how easy it was for me to increase my spend limit.”

I believe any new process should be easy and comfortable for the team. It shouldn’t be as cumbersome as your old one. If your team has more stress on top of their old stress, then you know you messed up. Implementing this new process can take up to 6 months to 1 year. Try not to rush your team; take time for each new step. Remember, people don’t like change. But, if you can show how much time they can save and any other benefits, they’ll slowly use the new process. Unless your team is so fed up and grasping for something to save them, you may have an easier time.

🔜 The next post will be about the steps to take to take control of your revenue.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable companies to grow.

Subscribe now

At some point in your business, you’ll need to open up a spreadsheet to do some calculations, build your financial model, answer questions about your sales, analyze your expenses, determine how much to pay your employees and determine how to price your product.

Before you can use any functions, all formulas start with the equals (=) symbol at the beginning. Once you have this, you’re letting Excel or Google Sheets know you want it to calculate something. You can use many different functions in Excel and Google Sheets, but you only really need to know how to use the following functions to do everything.

1. Basic Math Functions: Plus (+), Minus (-), Multiplication (*), Division (/)

2. SUM

3. COUNT

4. AVERAGE

5. IF

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Basic Math Functions

Like any calculator, you can use basic math functions such as Plus (+), Minus (-), Multiplication (*), and Division (/) within any cell in your spreadsheet. Once you start with an equals sign, you can reference any cell by clicking on it and then going forward with the basic math functions. If you don’t have a cell you want to reference, you can always type in the numbers you want in the cell and then press enter. The result will show in whatever cell you choose to put the formula in.

SUM

Instead of manually using the plus sign for every cell you want to add up, you can use the SUM function to add up a row or column of cells quickly. The SUM function can add your total annual sales and expenses.

COUNT

If you have an inventory list in a spreadsheet and want to count how many of a particular product you have left, you can use the COUNT function to show the result automatically. This way, you won’t have to count it yourself manually!

AVERAGE

You can use the AVERAGE functions to see, on average, how much you spent on expenses this year or how much you sell monthly. Once you know your average, you can use this number to forecast for the future months what you can expect to make.

IF

The IF function is the more advanced function on this list. It’s unnecessary for you to know as a beginner, but it is necessary if you want to use logical formulas. If your business gives out commissions to employees based on sales, you can use the IF function to tell your spreadsheet to calculate the commission amount if sales reach a certain amount. You can also use the IF function to calculate referral fees based on the number of new customers you closed that month.

As your business demands grow, you may need to use even more advanced functions, but the goal is not to show how much advanced Excel knowledge you know; it’s to analyze what story your financials are saying about your business. As long as you can get to the answer, it doesn’t matter if you only use basic functions. All that matters is what answers you can get to determine your next steps in business.

🔜 The next post will be about the steps you need to take to transform your bill and spend management.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, including setting up finance software systems and processes to enable companies to grow.

Subscribe now

Taxes. They’re a necessary part of doing business, and you need to make sure you’re aware and are planning for when you’ll eventually have to cough up the money you owe the government. Tax planning is an essential part of running your business, and you need to ensure you save a portion of your net income every month when the payments are due. This post wouldn’t apply to most non-profits — except for your annual 990 filing to let the government know you’re still alive as an organization and you won’t owe the government money for income tax. Nonprofits do still need to pay payroll tax if they have employees.

Here are the five most common paid taxes by small business owners:

1. Income Tax

2. Sales Tax

3. Payroll Tax (includes Unemployment Tax)

4. Franchise Tax

5. Property Tax

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Income Tax

• Frequency: Annual

• Mandatory: Yes

This annual tax is due in March (for corporations) or April for everybody else. Work with a CPA to ensure you’re paying the right amount and you’ve taken advantage of any deductions. If you’re an LLC, your business income tax is filed with your personal income tax. Yes, just because you have a business doesn’t mean you get out of filing your own personal taxes. I’m not a tax accountant, so I always refer clients to a CPA.

Sales Tax

• Frequency: Annual/Quarterly/Monthly

• Mandatory: Depends on the business industry

For sales tax, I suggest you call your local sales tax office for answers. If you have no idea if you’re supposed to pay sales tax, call the local office to get a quick answer. It will save you hours scrolling through Google. This can be a cumbersome thing to figure out, depending on where you make sales. The last time I called the local office, they were very helpful and answered all my questions — no matter how stupid I thought they were. If you’re a bigger corporation, you can also work with sales tax firms or use software that tracks sales tax payments to make sure things are aligned and filed correctly.

Payroll Tax

• Frequency: Quarterly/Monthly

• Mandatory: Yes

If you have full-time W2 employees, you must file and pay payroll and unemployment taxes. A payroll system such as Gusto will remove the stress from these filings. Make sure you’re registered with your state’s Workforce Commission so you can connect your tax account number with your payroll system so all payments can be correctly allocated.

Franchise Tax

• Frequency: Annual

• Mandatory: Yes

Everyone is required to file the Franchise Tax report. The threshold for Texas is $2,470,000 in revenue, and even if you don’t have that revenue, you’re still required to file the Public Information Report or Ownership Information Report. If your company issues shares, your franchise tax report can use your share counts and amounts—this is easier, especially if you use a cap table software such as Carta.

Property Tax

• Frequency: Annual

• Mandatory: Depends on if you own property

If you owe any property, you’re required to pay property tax. Properties include land, buildings, and any improvements you’ve made. It also includes tangible personal property used in the “production of income,” such as furniture, inventory, machinery, supplies, etc. Due dates vary based on county, so call your local office to confirm the date.

So, if you don’t want to be hit with a tax bill that the government thinks you owe them, be proactive with your filings. There’s nothing more shock-inducing than getting a bill for $100K when you know that number couldn’t be right. Also, form a relationship with a CPA (Tax Accountant) at the beginning of your business so they can make sure you pay the right amount of taxes and show you how to achieve that as a business.

🔜 The next post will be about the most common functions you need to know for spreadsheets.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

Subscribe now

It’s the end of the month, and you have no idea if your financial reports are correct or showing the right numbers. If you’re asking yourself, is this right?! 🧐 Then, you need to create a process to make sure all accounts and transactions are categorized and reconciled on a monthly basis. So, how do you build confidence in the numbers your accounting system is showing you?

When I’ve shown clients how to do their bookkeeping, I try to keep the process simple and something that doesn’t take over their time or brain space. It’s not a good look for me if the client walks out overwhelmed.

Steps to take control of your bookkeeping:

1. One day each week to categorize for 1 hour

2. First week of the month to finalize reconciliation

3. Second week of the month to review financial reports

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One Day Each Week

One hour each week to be on top of your transactions. If you keep this time sacred and focus for 45 minutes to 1 hour to ensure the weekly transactions are categorized, then it won’t feel so overwhelming by the end of the month. I’ve worked for companies that had 100s of transactions each month, and when I didn’t stick to this rule, I spent days at the end of each month catching up. It didn’t feel good, and I don’t wish the experience on anyone. So, do yourself a favor and keep this hour each week. Your future self will thank you.

First Week of the Month

Once you’ve finished categorizing your transactions, you’ll use the first week of the month to reconcile your accounts for the previous month. Reconciliation is where you make sure your accounting system matches your statements. Ending balances for the account in your accounting system should match ending balances from your account statements. Sometimes, there may be differences due to the timing of the ending date, but it shouldn’t be massive. Reconciliation ensures every account on your balance sheet statement is correct, and you can defend the numbers shown.

Second Week of the Month

The second week of the month is when you can review your financial reports with yourself or your team. Your numbers finally look right to you, and you know it’s right, so the next steps are to analyze your numbers to see if you spent too much on expenses, made enough sales, or have enough cash flow. This is where the fun begins, and you can use your numbers to plan for the next month or quarter.

Depending on how many transactions you have in a month, you can definitely truncate the steps and combine your reconciliation and financial review weeks into one. Having a repeatable process will make sure you’re confident in the numbers your reports show. If you start as a one-person team, this process makes sure that you can transition the work to another employee week by week until they can do it.

🔜 The next post will be about the most common taxes and filings necessary for a business.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

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Imagine a customer wanting to pay you, but your process requires them to pull out a checkbook, write the check, put it in an envelope, mail it, or drop it off; you wait at least seven days to receive your check; you wait another two days to deposit it, then it takes another 2 days for the money to be available in your bank account. Finally, you can use that money to pay for expenses. How tedious and annoying is that process?!

As a business owner, you want to make it easy for your customers to pay you. If you’re a professional services business, ensure your invoicing system allows your customers to pay you online via card or ACH. If you run a restaurant, make sure your point of sale is easy to use. If you run a software or digital goods company, make sure your online payment processor connects easily to your customer’s favorite way to pay online. It’s all about how fast you can receive your customer’s payments to increase cash flow. If you’re waiting 30, 45, 90 days to receive payment but you have expenses you have to pay during that wait time, you’ll always feel like you living check to check.

Yes, these methods to receive payments online will require you as a company to pay processing fees, but that’s a small price to pay for easy payment collection. If you’re really annoyed by the 3 - 4% fees, then just bake it into your customer price. I don’t believe going the full manual route in order to avoid processing fees actually saves you that much money. It definitely takes up your time.

Tools to use to get your customer’s money:

1. Invoicing System

2. Point of Sale (POS) System

3. Payment Processors

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Invoicing System

Quickbooks Online or any accounting system will allow you to send invoices online and allow online payments via credit cards or ACH. You just have to make sure you turn on the payments function in your accounting system. The pros of invoicing from your accounting system are that your revenue is automatically recorded in your income statement and you can easily track. You can also run an Accounts Receivable Aging report — this lets you see who owes you money and for how long. This way, you can come up with a collections strategy.

Point of Sale System

You’ve most likely used a point-of-sale system as a customer before. They’re everywhere, and some are industry-specific, like Toast. You see Toast used by restaurants. Their backend reporting is useful for restaurants, and they have integrations. I recently saw a coffee shop using Dripos as their POS system which seemed to be created for the cafe industry. Some banks also offer merchant services that include POS systems. Just make sure their system has integrations, and it’s easy for you to pull reports online. Square is another popular system that’s easy to use and implement, so many independent shops use it.

Payment Processors

Payment processors such as Stripe, Paypal, or Square allow anyone to pay you online easily with a link. All three also let you send invoices if you don’t have an accounting system yet. Ensure all accounts created are connected to your business, not a personal account. They’re easy to use, and you’ve probably interfaced with each system as a customer. I don’t believe in using peer to peer payments like Venmo or CashApp for business because it’s too easy to switch between your personal and business account. If a business owner wants the QR code functionality, it’s easier to create one that links to your Stripe, PayPal, or square account.

Having an easy way to receive customer payments is fundamental to your business. It makes sure your cash flow doesn’t dwindle as fast, and you have enough balance to pay for your expenses. Most businesses have payment terms such as 30 days, 15 days, or due on receipt. You have to choose which payment terms make sense for your business. For businesses such as restaurants, payments are expected on the day of service, so they have quick cash turnover, but a consulting business has a longer time period for payment.

🔜 The next post will be about creating a process for monthly close and reconciliation of accounts.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

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When you hear the word, budget, what emotion comes to mind for you? Some dread it and actively avoid using it. Some think it’s restrictive and not flexible enough to match their ideas. But, a budget helps give you a north star to follow. If your business doesn’t have focus, it’ll feel like nothing is moving or things are moving in all directions and yet feel stagnant. A budget can help you focus your energy on one thing for that year. If you realize halfway through the year that the budget you built is over or below your actual results by a huge margin, then at least you have a starting point on what to change for the remaining year.

If you don’t have a baseline budget, then how can you know what needs to change and how to change it? If you feel like your business is off course, you can always go back to your budget to see what your plans were and refocus. It’s not meant to be a restrictive handcuff. You can have fun with it and get into the habit of recording and seeing the changes in your budget and business as it evolves.

Three ways you can start creating and using a budget:

1. Simple

2. Growth Rate

3. Detailed & Bottom-Up

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Simple

The simple method of creating a budget is multiplying your monthly revenue and expenses by twelve (annualizing your monthly number). This automatically gives you your annual goal for revenue and expenses. This only works if you’re just starting out and are a one or two-person team. At least you’ll have a goal that you’re trying to reach. You will sacrifice some accuracy with this method, but it’s a starting point. Then, as your business grows, you’ll get a sense of what revenue and expenses look like to help inform next year’s budget. What ends up happening, as you grow, you’ll want a more detailed method to plan for revenue and expenses.

Growth Rate

Another way is to pick a percentage that you think your total revenue or expense will increase or decrease for the year. For this you’ll need your previous year’s total revenue and expense to multiply your rate to it. Some common sense will have to be applied when using this method. You can’t say you’ll 10x your revenue over the next year when you’ve barely been able to double your revenue. Don’t set yourself up for failure, and keep your numbers reasonable. I usually like to underestimate revenue and overestimate my expenses. You’re always going to spend more than you think so you might as well build that in your budget.

Detailed & Bottom-Up

I like using this detailed and bottom-up approach when building client budgets. It forces my clients to think through the levers that run their business. What quantities and at what price do you think you’ll be able to sell every month? If you’re a nonprofit, which donors or grants can you get your funds from? If your business is seasonal, we can build the seasonality into your budget. How many employees do you think you’ll need? Is the number of employees needed associated with your sales? If you have department heads, this approach forces you to talk to them and have them bring their input as to what the budget should look like. Since, they’re living the day-to-day and can accurately estimate what resources they’ll need for the next year. This approach takes the longest to build, but it’s comprehensive and will have every part of the business talking to each other to build a functional budget.

Not having a budget is not an option. A budget gives you a goalpost to look towards and helps keep you honest as a business owner. If your actuals don’t match your budget, at least you have a starting point to investigate the differences. Do you have to change your sales and marketing tactics? Is it an operation issue? Have you hired too many people? Do you need to hire more people? Is your fundamental product that you’re selling not what your customers want? It opens a world of ways to start analyzing and seeing your business. A budget is a plan that you can use to run your business, but don’t feel you have to stay stuck to it. It’s just a plan that can change, but whatever change you plan must make business sense. You can’t change just because you feel like it. Your employees will feel the whiplash and lack of stability.

🔜 The next post will be about the tools you can use to receive payments as a business.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

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Your employees need to travel for work but don’t know what can be a company or personal expense. Can they ask for mileage reimbursement, or can they request reimbursement for the total cost of the trip? You can choose to do everything on a case-by-case basis, but inconsistencies will start to arise. You can say no to one person or say yes to another person, or you can pay someone their partial cost. An established travel policy on what’s allowable for transportation, hotels, and meals will remove any confusion. Having this documented will help the employee plan their trip accordingly and know that some things they want to do on the trip may not be reimbursable. So, if they want to do it, they’ll have to be ok with paying for it personally. Or else stick to the company policy. This policy also helps the approvers be rational and logical.

Three sections that are important in your travel policy:

1. Transportation

2. Hotels & Lodging

3. Meals

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Transportation

Transportation is one of the most important things to consider as a business. Do your employees know what’s acceptable to book on an airline or what circumstances they’re allowed to use public transportation, rental cars, or rideshares for work? Will the company reimburse mileage or gas fees? You can’t get angry at an employee for booking a first-class ticket when they didn’t know there was a policy against that. You can also limit the ticket price for any business trip. Would you allow your employees to book it themselves and request a reimbursement? Or is the company in charge of booking all transportation needs? Booking travel for multiple employees at once can be cumbersome, so using tools such as TravelPerk can be a lifesaver.

If an employee wants to shell out their personal money for the difference between the allowable ticket and their preferred choice, would that be ok? Thinking through these situations will make sure your travel policy is as robust as needed so there’s no confusion as to what classifies as a business expense. For rideshares, you can create corporate accounts for Uber & Lyft that allow you to send user invites to your employees. The corporate account allows you to set the general company limits so the employees know how much they have left to spend within the app itself.

Hotels & Lodging

What types of hotels are allowable for your employees? Is it only 3-star hotels, or can they book a 5-star hotel? What is the limit on the price per night? Can your employees use Airbnbs, or is that against company policy? Are you okay with your employees booking their own hotels with their corporate card, or do you want the company to book it for them? Do you want your employees to stay only at a particular hotel chain? If so, you’ll have to make sure you’ve signed a corporate contract with those specific hotels. At my old job, we got a corporate discount for one specific hotel in Houston. So, we booked every guest, employee, and participant at that specific hotel. If anyone didn’t want to stay at our designated hotel, we could only reimburse them the cost of their preferred choice based on our discounted price. It was better for us financially, and the hotel's location wasn’t too bad.

Meals

A great way to track per diem or allowable cost of meals per day is through corporate cards such as Ramp. You can also set this up in your Uber Eats or delivery apps corporate accounts. Each employee will have their own user account, which will help them see how much money they have left to spend that day on food. Will your company only pay for food, or will you pay for alcohol? If so, is one drink the acceptable amount, or do you pay for all drinks up to a limit? What types of meals are acceptable? Meals with coworkers every day or meals with business partners? If someone wants to go to an expensive restaurant that’s past their daily limit, then it’s up to them to pay for it personally.

A documented travel policy ensures your finance and accounting team aren’t bogged down with questions from employees. They can quickly approve the trip expense or flag it for the employee to pay back. I saw a message on LinkedIn complaining about an employee taking a $154 Lyft ride in New York for a business trip and the comments were asking if it was for an allowable reason per the company travel policy. If an employee wants to expense a trip to go see the eclipse, what’s the business case for it? Are they meeting a business partner or customer? Your travel policy shows, as detailed as possible, what types of trips the business can pay for and what it can’t.

🔜 The next post will be about creating a budget for your business and its importance.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

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You finally have enough money to pay people. Your business is growing, and you want to streamline your vendor and payroll operations. There are two types of people expenses: 1099 contractors and W2 employees. 1099 contractors are people or vendors you hire to help with a business problem. You can’t control how and when they do their job. You sign a contract with the contractor with an expected deliverable and hope to get the agreed-upon deliverable. A W2 employee is someone that you can control how and when they do their job. You pay their payroll taxes via your payroll system. They would also receive company benefits such as health care insurance and paid time off.

4 tools you can use to pay your contractors/vendors and employees:1

1. W2 Employees & Contractors

   1. Gusto

   2. Justworks

2. Contractors/Vendors Only

   1. Ramp

   2. Melio

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Gusto

Gusto is a payroll and HR platform for small to medium-sized businesses. It’s not free. Most payroll platforms are not free and have a monthly base cost plus a per-employee fee. I do not like dealing with the headaches that come with payroll, as there are many different rules and regulations based on where your employees live. Instead, I would outsource this to a system that will ensure all correct forms and taxes are paid and filed. Yes, you can do this yourself, but it’s best to focus your energy on what will grow the company rather than being bogged down by payroll and HR paperwork.

You can also get healthcare benefits through Gusto for your company. Gusto takes a week to implement if you’ve never had an employee before. It’ll take longer if you have historical payroll and employee information that needs to be entered to make sure everything looks right and the proper payroll taxes are being paid. It can also pay contractors, but I suggest using Ramp or Melio for better details and controls.

Justworks

Justworks Payroll is another payroll platform for small to medium-sized businesses. It’s not free, but it provides the same capabilities as Gusto and allows you to be set up within a week. The only downside is that it operates in fewer states than Gusto. Again, the system will ensure all correct forms and taxes are filed and paid. The difference between Justworks and Gusto is that Justworks has a more extensive payroll product, Justworks PEO, that will allow you access to better healthcare benefits for your team. So, if you want to transition to this product, you can start with Justworks. If you’re looking at costs, go with Gusto, as it’s less expensive on a monthly basis.

Ramp

I’ve discussed Ramp several times as my top option for paying your vendors and contractors. It’s a free system that allows you to pay your vendors via ACH, check, or card and create virtual/physical credit cards for your team. It also allows you to implement controls such as not allowing any bills to be paid unless a second person in the team approves the expense. It’s very easy to set up and can be used within three days. It takes three days because your account has to be approved to be on the system. As a business, you need at least $75K in your bank, as that’s how they calculate your card limit without requiring your personal credit score. If you don’t have this amount yet, you can use Melio to pay your vendors until you need business credit cards for your team.

Melio

Melio is a free system that allows you to pay your bills and contractors via ACH, card, or check. It also allows you to pay your international contractors with a transaction fee as well. It’s straightforward to set up and use from the first day. It syncs with Quickbooks Online, so all bills paid via Melio are already recorded in your financials. Before Quickbooks Online rolled out its native bill pay option, it partnered with Melio. It also allows you to implement approval workflows — making sure the right bills are getting paid and no bills are paid without the approval of a designated manager.

Choosing one tool from each category will solve all your operation needs when paying people. The great thing about these tools is that they integrate with your accounting system, such as Quickbooks Online. So, there will be no double work to ensure all payment transactions are recorded. They will also guarantee you collect the right forms from your vendors/contractors and employees. Nothing is more annoying than finding out you need a form from a vendor you stopped paying eight months ago. Now you must send the awkward email, hoping they respond with the requested form. 🙃

🔜 The next post will be about creating the right travel policy for your business.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

Subscribe now

For the past two weeks, I have written about reading and understanding your financial statements—Income Statement, Balance Sheet, and Cash Flow Statement. Today’s post is on the Cash Flow Statement. What is it? How do you read it? What does it tell you about your business?

The Cash Flow Statement shows how much cash you have left after accounting for your cash inflows and outflows. Cash is different from your net income. It’s possible to have a positive net income and be low on cash. This is due to cash payments that are not tracked on the income statement but are on the balance sheet, like loan principal payments, credit card payments, owner’s pay, buying a building, or inventory purchases. All of these things take cash! Therefore, you can’t just take your income statement at face value and automatically think you’re doing great. You could be heading to bankruptcy.

There are three main sections to a cash flow statement:

1. Operating Cash Flow

2. Investing Cash Flow

3. Financing Cash Flow

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Operating Cash Flow

Operating cash flow includes your net income plus any net increase or decrease in your accounts receivables, inventory, and accounts payables. This is truly the cash needed to operate the business daily. If you have more customers this month, you’ll have a net increase in accounts receivable than last month, or if you owe fewer vendors this month, you’ll have a net decrease in accounts payable. If you buy more inventory, you’ll have a net increase in inventory amount balance than last month. This section shows you the effects of your daily business operations on your cash flow.

Investing Cash Flow

Investing cash flow includes purchases of equipment, plants, buildings, vehicles, or other long-term assets. This section shows the effects of reinvesting in the business to help it grow and expand. So, any cash used for this investing activity will be added here, or if you sold an asset, the asset amount will decrease as there was a net decrease from the previous month.

Financing Cash Flow

Financing cash flow includes loans, investor funding, or owner investments. Any external funding activities will be recorded here. If you decide to give out stock or dividends, these amounts will be shown in this section. Any net increase or decrease within the equity section of your balance sheet shows up here on your cash flow statement.

The cash flow statement makes sure you have enough cash in the bank to pay your operating expenses for the next month or year. Adding up the three sections shows your ending cash balance for that period. Accounting software such as Quickbooks Online and Wave already have these financial statements ready. You just have to run the reports and review them. Keeping track of your cash will ensure you’re proactive in avoiding bankruptcy as much as possible. It’s perfectly possible to have a ton of revenue but still not have the cash to keep the business going.

🔜 The next post will discuss the tools you can use to pay your vendors and employees.

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

Subscribe now

For the next few weeks, I’ll discuss reading and understanding your financial statements—Income Statement, Balance Sheet, and Cash Flow. Today’s post is on the Balance Sheet. What is it? How do you read it? What does it tell you about your business?

The Balance Sheet is also known as the Statement of Financial Position (nonprofits), and this shows you the balance between how much you own (assets), how much you owe other people/companies (liabilities), and the book value of your company (equity). Like the income statement, you read it from the top and then move down the report. It tells you the ending balance of your accounts at a singular moment in time. Most business owners ignore this report and focus on the income statement, which causes you to be short-sighted with your business. If you can’t tell how much debt you have, how often you can turn your assets into cash, and any other future payments you may have, then you will always feel behind. Your balance sheet should always balance—Assets always equal liabilities plus equity.

When you’re reading your balance sheet report, you’re looking for months that break the trend you see. What’s weird? Why’s one month significantly lower or higher than the rest? Why are your total assets lower? Why are your total liabilities higher? Why is your total equity higher? You should be able to determine the answers to these questions as you review your balance sheet. All three financial statements are connected, and you shouldn’t favor one report over the other. Your net income from your profit and loss statement is connected to your balance sheet in the equity section. A monthly review of all three financial statements helps give you a complete picture of your business.

There are three main sections to a balance sheet:

1. Assets

   1. Current Assets

   2. Long-Term Assets

2. Liabilities

   1. Current Liabilities

   2. Long-Term Liabilities

3. Equity

   1. Owner’s pay & investments

   2. Investments from others

   3. Retained Earnings

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Assets

Your assets are divided into current and long-term assets. Your current assets include your bank balances, accounts receivables, and inventory. Your current assets mean that you can quickly access your cash immediately, or if you need cash within 12 months, it’s possible for you to sell more inventory and call on your customers who owe you money (accounts receivables). Long-term assets include purchases such as equipment, vehicles, and properties. These assets will take longer than 12 months to turn into cash. It’ll be harder for you to access cash for immediate needs quickly.

Liabilities

Current liabilities include your credit card balance, lines of credit, and accounts payable (vendors/contractors that you owe) — bills/debt you must pay within 12 months. Long-term liabilities include your larger loans and other long-term debt you may have. These loans usually don’t need you to pay the full balance within 12 months. Some debt is good to help you grow your business, but being over leveraged (having more liabilities than assets) will cause you to constantly be scrambling for cash to keep up with your interest and principal payments and may eventually go bankrupt. So, be careful when taking on debt, and always have a plan of how you’re going to pay your debt back while growing your business.

Equity

Equity has three main sub-sections: owner’s pay or investments, investments from others, and retained earnings. As the business owner, any dividends or transfers from the business account to your personal account will be recorded here. Unless you legally turn yourself into an employee, all the money you pay yourself as the owner is recorded on the balance sheet, which doesn’t show up as an operating expense on the income statement! Also, if you invest in the company with your personal money, it’s recorded in the equity section, as well as any other investments you receive from others. Retained earnings are the cumulative net income from starting your business. So, if you’ve lost money from the beginning, your retained earnings will be negative, and if you’ve been net positive, your retained earnings will be positive.

The balance sheet reports help you see your business as a whole, while the income statement only shows you one portion of your business. Having a positive net income means your retained earnings increase, which in turn means you have more cash in your bank. But you may have to use some of that cash to pay your liabilities. Next week, we’ll talk about how reviewing your cash flow statement will help you confidently see if you have enough cash to pay your expenses for next month.

🔜 The next post will be looking at the Cash Flow Statement. What is it? How do you read it? What does it tell you about your business?

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance consulting services, which include setting up finance software systems and processes to enable companies to scale for growth.

Subscribe now

For the next few weeks, I’ll discuss reading and understanding your financial statements — Income Statement, Balance Sheet, and Cash Flow. Today’s post is on the Income Statement. What is it? How do you read it? What does it tell you about your business?

The Income Statement is also known as the Profit & Loss Statement and Statement of Activities (nonprofits). This report shows how much money (net income) you’ve made monthly as an operating business. You start reading the income statement from the top and move down. If you have the report in months or years, you read the top line first and scan to the right to see the trend, then you move down to the next line and repeat. You’re looking for something that breaks the trend you see, so you can start asking questions about what could cause this break.

If you want to be nosy 😆 to see how public companies and nonprofits operate their business, check out their statements to review. For nonprofits, search for their 990 tax form filings. Check out the SEC, Google Finance, or Yahoo Finance for public companies’ reports. The SEC database provides a more detailed report, while Google and Yahoo Finance provide a summary overview. There’s nowhere to see the reports of private companies unless you become an investor or buy the company.

There are six main sections to an income statement:

1. Revenue

2. Costs of Goods or Services

3. Gross Profit

4. Operating Expenses

5. Other Income or Expenses

6. Net Income

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Revenue

This is your top-line revenue or income. Here is where all of your direct business sales will be recorded. Depending on how you want to analyze your company, this section could be grouped by product lines or locations, or all sales are grouped into one line item. This section is not the same as your net income. Revenue is usually the bigger number that business owners like to brag about. It’s important to grow it, but if you’re inefficient and careless with your expenses, you’ll always feel like you’re not making any money.

Costs of Goods or Services (COGS)

Every direct expense related to making a single sale should be recorded here. For instance, the raw materials to make the food you sell will be recorded here if you're a restaurant. You can also add the particular staff members necessary to make a sale. Consider COGS as direct expenses you need to have, or a sale won’t happen. The difference between Cost of Goods and Cost of Services is whether you’re selling a physical product or a service like a consulting business.

Usually, your inventory (things you buy to sell in the future, such as retail businesses) is usually recorded on your balance sheet as an asset. Once that particular inventory item is sold, the cost of that item is turned into COGS. This then decreases your inventory since you just sold that item! We’ll talk more about balance sheets next week.

Gross Profit

This section shows how much money you have left to pay for your operating expenses after paying for your direct or variable expenses (COGS). A high gross profit margin means you have enough money to invest in growing the company, such as hiring more staff, exploring new product ideas, or increasing marketing spend. This number is important to track and benchmark with the industry standard. Google is your best friend when determining your industry's average gross profit margin. You can ask the AI tools or talk with other business owners in the same industry.

Operating Expenses

Operating expenses are every other indirect expenses related to running your business. This is where you’ll record your selling and marketing, general and administrative, research and development, and payroll expenses. These expenses are not directly revenue-generating but are crucial to running your business.

Other Income or Expenses

Other income or expenses include income received not from the primary business operations, such as grants and interest income or expenses. You can also record your income tax expenses in this section as well. Depreciation and amortization expenses also fall under this category. Depreciation expenses are the cost of a long-term asset such as a company car or computer. Instead of expensing the total cost of the car in the first year you bought it, you can record it as an asset on your balance sheet first, then record the expense on your income statement over 5 years or the useful life of the asset.

Net Income

This is where you see if your business is making money or not. Is your income growing monthly, or are you making a loss? The amount in your net income is what you’ll use to pay for things on your balance sheet, such as your liabilities (loans), buy more assets (inventory or equipment), or take owner’s distributions or dividends.

The income statement allows you to see how profitable your business is and the efficiency of your business operations. But you can’t just look at the income statement in silo without looking at the other statements. The next report, Balance Sheet, shows you how much the company owns (assets), how much the company owes others (liabilities), and how much is left in the business (equity).

🔜 The next post will be looking at the Balance Sheet. What is it? How do you read it? What does it tell you about your business?

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours.

Woolichooks provides finance digital transformation services, which include setting up finance software systems and processes to enable companies to scale for growth.

Subscribe now

Last week, I wrote about the tools you’ll need if you’ve been in business past the entry level and your transaction level has increased. This is the last post for this series!

Your company is in its later stage and ready to move past Quickbooks Online and implement advanced tools. You’re expanding internationally, creating subsidiaries, and inventory management has become unwieldy; what tools will help you keep track of your finances and accounting?

1. Enterprise Resource Planning (ERP) Systems

2. Data, Planning, & Business Intelligence Tools

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Enterprise Resource Planning (ERP) Systems

Moving past Quickbooks Online’s accounting system means spending up to five or six figures on implementing an ERP system. So, you need to determine whether there’s a need for it as a business. Does it make sense? Would it help consolidate even more disparate processes and help centralize your finance/accounting/operations data? Quickbooks Online is not good at handling a heavy inventory-based business or multiple subsidiaries under a holding company or a nonprofit that has multiple government grants and complicated grant tracking requirements. In this case, I would say it’s worth considering an ERP system.

Popular examples of ERP systems are Netsuite, Sage Intacct, and Microsoft Dynamics 365. If you’re a nonprofit, I know that Netsuite has a social impact program to help you get the basic Netsuite package at a minimum cost. But, if you decide to get these ERPs via a reseller or a firm, expect to pay the full price. Once it’s been decided that an ERP system is needed, plan for implementation to take at least a year and have ample resources for staff training. Think about how the rollout process will be explained to each department and how you’ll want each department to interact with the ERP. Habits are hard to change, so expect resistance from your team, but as long you can explain the end goal of data centralization and have everyone’s eyes on the North Star goal, this should help ease the pain of implementation.

Data, Planning, & Business Intelligence Tools

As a company, you’re now generating tons of data from customers and vendors. How can you analyze the data in a way that’s useful to business operations? How can you make sure you’re purchasing the right things and pricing your products correctly? As it’s the running theme of this post, these tools will cost money but will help to further simplify processes and produce even better business reports. Examples of tools you can implement include Sudozi, Cube, Mosaic, and Anaplan. For business intelligence dashboards, you can use Tableau, Power BI, and Looker. Every year, new tools in this category are being created so you might have to shop around for the best tools for your business situation. There’s no one-size-fits-all type tool out there, and customizations will be needed.

With all tools you choose to implement, always think about how that tool integrates into your current or new tech stack in your business. You don’t want to implement a stand-alone tool that doesn’t connect to one central business system. You’ll just create more spreadsheets and data wrangling. You don’t have to go with the tools I’ve talked about so far because there are many industry-specific tools for nonprofits, restaurants, schools, retail, etc that are built with the key metrics most commonly tracked in mind. At the end of the day, it’s your business; build your operations to work for you and your team.

🔜 In the next series, we’ll be exploring financial statements! The next post will be looking at the Income Statement. What is it? How do you read it? What does it tell you about your business? What expenses should you keep an eye on?

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions you may have.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours to make.

Woolichooks provides finance digital transformation services, which include setting up finance software systems and processes to enable companies to scale for growth.

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Last week, I wrote about the tools you’ll need if you’re in the early stage and have not made that much money yet.

So now you’ve been in business for a while, and your transaction level has increased from 2 per month to over 100 monthly transactions. Business has become more complicated, and it’s become harder to continue using free/low-cost tools to track your finances. You have a better idea of what metrics you want to track, so what tools will take you to that next level without breaking the bank?1

1. QuickBooks Online

2. Ramp

3. Jirav

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QuickBooks Online

Once you need to track transactions by locations, departments, and different fields, QuickBooks Online (QBO) is the natural next step. As long as everything is set up correctly at the beginning, you won’t need to ever move on from QBO unless you need something industry-specific, such as school finance, or you’re planning to have multiple subsidiaries and international locations, or you need to track inventory. It can spit out the basic financial reports you need — income statement, balance sheet, and cash flow statement.

Along with the basic reports, you can see those reports split out by the fields you’ve set, allowing you to see your financials deeper. If you want to connect your Google AdSense data to QBO, you can’t. You’ll still need a spreadsheet to triage all the data to get an overall view of your business related to your financials. Your financials will show you the total cost of online Ads for that month, but it won’t show you whether paid ads or referrals were your biggest factor for revenue growth that month. You can also get a discount via TechSoup if you're a non-profit.

Ramp

You have contractors and vendors you have to pay. So far, you’ve been paying them as they land in your inbox. Ramp allows you to keep track of all vendor bills and schedule any payment via ACH or check. It will also help you collect all the vendor data you need to send out the 1099 forms the next year. Along with bill pay, you can also create virtual and physical cards for your employees or contractors with limits. It forces the assigned owner of the card to forward or text the receipt for the transaction. You can even create software-specific virtual cards to help you manage your subscriptions. It’s a great system that gives you control over your expenses with audit trails.

Jirav

You have QBO, and you’re using Ramp, which syncs with Quickbooks Online. What do you need Jirav for? Jirav is for the planning, budgeting, and forecasting side of your finance operations. Jirav brings all data from Quickbooks, the payroll system, and other data, such as Google AdSense, together for you to create dashboards and forecasts for the next month or year. Yes, you can continue to use spreadsheets for this, but if you’re spending too much time wrangling data together to create your management reports, this might be the solution you’re looking for. Spreadsheets are great for building your first budgets and forecasts, but over the years, you can automate some processes using software like Jirav.

Quickbooks Online becomes your base accounting software system, and other tools are synced. Ramp and Jirav can sync to or grab data from Quickbooks Online. The goal is not to have disparate systems that don’t talk to each other. Spreadsheets will never go away. There will be some times when you want to do a quick calculation or export the data into Excel to play with. That’s okay as long as you make sure you go back to your base systems. The software you implement should be nimble and advanced enough to give you the data you need without any stress. But not so advanced that you’re spending months on implementation training at this stage of the business.

🔜 Next post will be about advanced software tools you’ll need past Quickbooks Online. You’re expanding internationally and creating subsidiaries; what tools will help you keep track of your finances and accounting?

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions you may have.

😁 Disclaimer: I'm not your employee or finance consultant, so all business decisions are yours to make.

Woolichooks provides finance digital transformation services, which include setting up finance software systems and processes to enable companies to scale for growth.

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It’s one month after you started your business. You’ve been selling and receiving payments. You’ve had to pay your vendors and contractors. It’s just you running the show for now, so there are no employees yet. Maybe your friends decided to help out a bit throughout the month. You feel like you’re making money because the customers are lining up out the door. But, are you really, though?

How do you know how much and when to start paying yourself as the owner? You feel like you have enough cash, but do you??

Today, I want to show you 3 free or low-cost tools you can use to quickly know how your business is doing outside of a paper napkin or your brain.

1. Google Sheets/Excel/Spreadsheets

2. Mercury

3. Wave

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Google Sheets/Excel/Spreadsheets

Yes, spreadsheets can be intimidating, but they can also be a place for you to have your questions answered. I always say that you can build your whole dream in a spreadsheet and test out different scenarios and possibilities for your business before implementing it in the real world. Honestly, there’s a whole lot you can do with just plus, minus, and division functions. Here is where you can start detailing every sale and expense you’ve had during the month. Then, you simply subtract total expenses from total sales to get your net income (how much money you’ve made).

Your net income is how you can determine if you have enough money to pay yourself. You can then start seeing the trends from month to month to determine whether you’re truly bringing in enough sales to pay your expenses and yourself as the owner. A business owner can’t say they don’t know their numbers. Your numbers are there to help you confidently talk about the story behind your business. Whatever feelings you have around numbers and spreadsheets are valid, but it’s up to you to know your key business metrics and data.

Mercury

If you’re a startup, Mercury could be great for your banking needs. It’s easy to sign up and it connects to any other financial software that you might think to implement in the future. It allows you to categorize your transactions and also gives you access to virtual and physical business credit cards. They have a great early-stage founder community and technology perks. If you still don’t want to jump into an accounting system and don’t want to deal with a spreadsheet to track finances, this could be a good median. It’s a great way to get used to categorizing your transactions at the beginning stages with a great user experience. But, spreadsheets will never truly go away 😂.

Wave

Wave is a free accounting software that’s a step up from spreadsheets. I would recommend Wave if you’re tech-savvy and aren’t afraid to jump into the software. It’s an easy-to-use software that connects to your bank account. It automatically syncs your bank transactions and allows you to categorize the transactions with their ready-made chart of accounts (how you categorize your transactions into different buckets). Using Wave will allow you to have your financial reports already populated: Profit & Loss Statement, Balance Sheet, and Cash Flow Statement.

Profit and Loss statement is where you’ll see your total revenues and total expenses. Balance Sheet shows you how much money money you have in assets, how much money you owe other people or vendors in liabilities, and how much your business is worth in equity on paper. The cash flow statement shows you how much cash you truly have to spend after factoring in all potential income, liabilities, assets, and expenses. The cash you see in your bank account doesn’t always factor in expenses that are upcoming or pending during the month, as well as how much cash you have just sitting in inventory.

At the end of the day, these tools are there to further help you manage your business and make sure you’re growing in the right direction. Knowing your numbers is one of the powerful ways to tell your business story. Imagine being able to talk about your revenue growth, why you were able to hire more people, and how much your profit is growing month-to-month. My whole goal is to empower the business owners and leadership teams I work with to feel comfortable with the numbers and be able to make any changes they want. Because it’s your dream we’re working on, so let’s make it as successful as you want it to be.

🔜 Next post will be about leveling up your finance operations tech stack after 1 year in business. Business has become more complicated, and it’s become harder to continue using free/low-cost tools to track your finances. You have a better idea of what metrics you want to track, so what tools will take you to that next level without breaking the bank?

📥 Office Hours is on! Use this anonymous form to send in any finance and accounting business questions you may have.

😁 Now, I'm not your employee or finance consultant, so all business decisions are yours to make.

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Woolichooks provides finance digital transformation services, which include setting up finance software systems and processes to enable companies to scale for growth.

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