Bookkeeping Systems & Routines with Sara Verheyen | 119
I talk a lot about Facebook Ads and marketing, but I decided to step out of the box a little! Sara Verheyen from Mareish Books chatted with me on the podcast about bookkeeping for businesses and how to overcome that fear of taxes. Sara offers bookkeeping and CFO services for creative entrepreneurs who want to grow into a more sustainable business.
While Sara and I both share a love of numbers, taxes are not my specialty (and I’m Canadian, so I have no idea about all the everything my American listeners have to deal with).
Luckily, she came with several helpful tips and advice for DIYing your taxes and knowing when to hire an expert. But before you can dive into your taxes and bookkeeping, we need to talk about money mindset.
P.S. Sara is a CPA but she is not your CPA! For specific questions and advice about your financial situation, talk to a tax professional.
Understanding Your Money Mindset
If you’ve ever felt shame, embarrassment, or pure frustration over your business finances - you are definitely not alone. Sara said it’s really common that business owners want to stick their head in the sand and pretend it doesn’t exist.
Of course, that’s not the best strategy when it comes to bookkeeping for businesses. Instead, Sara suggests learning a bit more about your money mindset. Where do your ideas about money come from? What emotions do you associate with money and why?
If you’ve listened to the podcast before, you know I am all about mindset. I even did a deep dive navigating number overwhelm and adjusting your marketing mindset on episode 110. So naturally, I was a big fan of Sara’s journaling tip.
The best thing you can do is accept the situation your money and bookkeeping are in and make a plan to move forward!
How Often Should You be Reconciling Your Accounts?
In order to tackle bookkeeping for businesses and avoid that sense of overwhelm later, Sara recommends reconciling your account once a month at the very minimum. However, she said that checking in with your finances once a week is a great habit to build.
You should also check your monthly profit and loss statements and calculate your profit margins. Sara has a great quote that I think sums this up nicely, “It’s not about how much money you make, but the money you have leftover.”
How to DIY Your Taxes and Bookkeeping (and Should You?)
For the most part, anyone can DIY their taxes and booking if they are committed enough. But not everyone wants to. Hiring someone who handles bookkeeping for businesses is a great choice if you find no enjoyment, or you can’t stay committed to upkeep your books.
However, if you want to continue DIYing your taxes and bookkeeping, Sara had a few helpful tips:
#1 Use a spreadsheet to calculate your expenses and profit. Make sure you update this regularly and include all of your transactions.
#2 Look forward in your business. Use your money trends to make forecasts about your income and expenses. Then, create a budget and set goals for the upcoming month or quarter.
#3 Maintain a cash buffer. Always keep at least three months' worth of operating expenses in a savings account. This is just in case something were to happen.
Grab Sara’s Write-Off Worksheet with a list of twenty deductions you should know about. These will help you prepare for tax season, whether you are DIYing it or working with a tax preparer!
Don't forget to follow me on Instagram @heyitsjenzaia and tune in next Saturday for more business tips and strategies!
xo, Jenzaia
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Episode Transcript:
Hey there - I'm Jenzaia and this is Market Scale Grow - a podcast created for ambitious teacherpreneurs looking to have a bigger impact on the world, achieve freedom, flexibility, and ultimately make more money. With weekly strategy sessions and inspiring stories from fellow teachers just like you, my goal here is to help you create a customized marketing strategy so you can grow your teacher business beyond your wildest dreams.
Today I have an exciting interview for you. I'm talking to Sara Verheyen from Mareish Books. She is a bookkeeper and does CFO services for creative entrepreneurs who are looking to grow their businesses into more sustainable processes of businesses that serve the quality of life that their entrepreneurs have for them.
She helps them to focus on the parts of business that they love rather than the accounting. And Sarah helps her clients get organized and embrace the numbers side of their business, combining the data and intuition for ultimate aligned decision making. Sarah is the host of Profits Affogato podcast, where she gives inspiration and actionable tips to make the numbers make sense in your business.
So I'm super excited! As you probably know, I love numbers too, so we have that in common.
Welcome, Sarah, how are you?
Sara: I am great. Thank you so much for having me.
Jenzaia: Yes. Do you wanna just jump in, tell people a little bit more about who you are, where you are from, and a little bit about your story? Then we can start chatting more about numbers and money and bookkeeping.
Sara: Yeah, of course. So I'm Sarah. I'm from Texas, born and raised. I have been a C P A for about 10 years now.
I was doing tax for most of my career and then had two babies back to back. And that combined with the lockdown, just kind of turned into a reexamination of my life, my routines, and the overall picture I wanted life to really look like. And at a similar time in which I was finding a gap in how clients were served in public accounting firms, just like the lack of attention that there's just not the resources to provide. The hands-on attention that small business owners can really use. So I kind of started the small bookkeeping business and it's grown from there to bookkeeping and CFO services, which is more of the advisory side of things.
And I love working with creative entrepreneurs because I myself have both the analytical and the creative side. I was also just missing a ton of creativity when I was just working full-time and that's all I was doing. And so building my business has brought that back in as well as I always am a big advocate of having hobbies outside of work.
Jenzaia: Thanks for sharing. Can you just share a little bit of the story of the name of your business?
Sara: So, as a Texas girl, I grew up riding horses and a mare is a female horse and when a mare would be acting kind of moody, like pinning her ears or swishing her tail, somebody would be like, oh, she's being marish.
I was like, well, that's ridiculous. It's basically just saying she's having hormones or emotions or whatever. And so I was like, it really paralleled corporate America where women especially are not allowed to show emotion. How, you know, emotions are not only like, not bad, but they're allowed and normal, and part of being a human, and to just bring that all back into business and say like, you're allowed here and accepted whoever you are.
Jenzaia: It’s putting a positive spin on something that seems to have a really negative connotation.
Sara: Yes, yes, that too.
Jenzaia: I love that.
So let's jump in and chat about how overwhelming the numbers can be in your business in some ways. To shift that perspective to bring the power back, because knowing your numbers is really, really important.
Sara: Yeah. So I find a lot of times when clients come to me, they've sort of put their head in the sand for a little bit and just kind of avoided their numbers and put it off.
And I totally understand why. Your money mindset has a lot of history. And so there could be a lot of baggage attached. Especially for a small business owner when your finances feel like an extension of your personal finances. When it's a solo-run business, you're making all the decisions, so you have that kind of fear and judgment.
So when people are kind of overcoming that hurdle of logging in and just looking at their finances and doing their bookkeeping, I have a few things to just kind of think through.
The first one is to just identify what is preventing you. So like what emotion, like we talked about emotions earlier. I'm big on that. And so like, is it actually fear of what you're gonna see? Is it shame or embarrassment? Is it just for procrastination, because you don't wanna do the tedious work? Which I get, trust me, it's not the most fun thing to do in the world.
So just like first identifying what it is, and then I'm a big advocate for journaling it out and just kind of writing it down. Getting it all outta your brain and outta your mental space. And then also remembering that whenever you do log in and look at your numbers, whatever that looks like for you, remember that all you're seeing is digits on a screen.
The numbers are not good or bad. It's the meaning that you attached to them that creates the feelings. You could have a hundred business owners in a room and say, “your bank account has $6,000 in it. How do you feel about that?
Every single business owner would have a different reaction and a different feeling to that. So just remember that the numbers are just numbers and it's what you attach to them.
Jenzaia: I was listening to a podcast this morning. The whole thing was about getting better at what you do, and she said something along the lines of, we're here right now. There's no problem with where you are right now, but if you wanna get better at what you're doing, how are you moving forward? It feels like a really good parallel of your bank balance.
The money you've spent is the money you've spent. The money you've saved is the money you've saved. Whatever those numbers might be. If you think that there's a problem with that or that you misspent or you miss saved or whatever it might be, you still have to just accept where you are and like make that plan to move forward.
It feels more powerful. Just accepting and not necessarily attaching that shame or embarrassment or guilt to something that's already happened and you can't really do much about it.
Sara: Yeah, exactly. And also not doing it, it might feel easier, but you have that like swirling stress of you're looming to-do list and like, oh gosh, I wonder how bad it is kind of feeling. Verses when you actually sit down and do it. Llike, yes, it's hard, but then you know what the numbers are. You know what those black and white facts are, and you can create a plan for the future.
Jenzaia: So how often should I be going in and…just for a little bit of context, I'm a solopreneur. I have a VA that I work with and some contractors. It's basically just me and I'm around that six figure mark. So like how often should I be going in and reconciling my accounts and putting all those numbers into my spreadsheet?
Sara: So to do your bookkeeping, I would say at a minimum monthly.
I think that's a really good rhythm for a lot of people. If you find yourself getting overwhelmed with the amount of transactions and the amount of time it takes, you definitely could go in weekly. I do also like to recommend a weekly, just kind of quick check-in and just see where the bank accounts are, see where you are in your budget.
But definitely doing your bookkeeping at least monthly will make it so much easier to avoid that tax season rush of, oh my gosh, it's April 1st and I have nothing. Or just like even doing all of it at the end of the year.
Doing it monthly, you also have that data there to see what your profit or loss is. Profit margin is a great calculation to run every month, which is just your net profit divided by your total revenue, and that tells you how many cents of every dollar of revenue that you're keeping as profit.
So if you had $10,000 of revenue, $5,000 of expenses, that's a 50% profit margin. So for every dollar revenue that's coming in, you're keeping 50 cents. So that's a really cool metric to track over time and just kind of watch it go up and down. You can set little goals like, I wanna round up and get to the next 10% or whatever, you know, like up to 70% or up to 80% and watch that over time.
Jenzaia: We are recording this at the beginning of March and it's probably gonna go out at the end of April, which is like the end of tax season, right?
Oh, and here's the other piece of important information! I'm in Canada, so I know things are slightly different here, but most of my listeners are American. So the end of tax season is the end of April?
Sara: Right. Yeah, it's April 15th.
Jenzaia: So what are some things that like now as we're starting to ramp up for it, that people who will be listening to this just after tax season should be doing so that next year, besides doing their books every month, what else can you be doing just to make sure that you're on track for taxes?
Sara: Yeah. So definitely make sure you're getting systems implemented and definitely look back to how this tax season went and if it was stressful for any reason, kind of dig into why that was and what could make that easier in the future. Definitely create if you don't already have one, like at a receipt management system.
So whether it's saving all of your receipts to like a Dropbox folder or you know, just labeling them in your email inbox, just making sure they're somewhere that if you needed to pull them for an audit, you can.
Also just something good to kind of keep in mind is what is actually deductible on your tax return, because that can impact decisions throughout the year as you're running your business.
So kind of getting some education around that and what is and what isn't deductible so that you know what expenses to put on your business credit cards, what expenses are personal and, you know, shouldn't cross that threshold at all.
Jenzaia: Is that something that's determined state by state or how does that happen?
Sara: So for the US it's federal, so it's based on the entire country. Every state, of course, does have their own tax system too. And so some things that are deductible for federal may or may not be for your specific state, and it varies by state.
Jenzaia: And just if there are Canadian people listening, which I'm sure there are, I'm fairly confident that it's the same in Canada, that it is a federal system, though I don't think it varies province by province. But again, do not hold me to that. I am absolutely not a tax professional in any way, shape, or form.
Should we really be as afraid of taxes and the IRS or CRA as we are?
Sara: Probably not. Everybody is like, oh my gosh, I'm afraid I'm gonna go to jail. Like the chances of that are super, super, super small. What will happen is if you get audited, they'll look at everything and they might adjust your tax return, so they might say, you know, you deducted these things that shouldn't have been deducted, so we're going to adjust the amount of tax that was due.
Which, you know, will result in interest in penalties because you're paying that tax after it was due. But really, there's no need to panic.
Jenzaia: So instead of it being like, you owed an extra thousand dollars in taxes because of interest and penalties, now it's like an extra $2500.
Sara: Yeah.That's probably way more than it would even increase to.
Jenzaia: Okay. So we don't need to be afraid of the government.
Let's talk a little bit more about the whole DIY piece. What does that really look like and when do you know it's time to hire someone? Or is it completely variable on your business?
Sara: There are a lot of factors. So I'll go into kind of like when I think is the right time to switch and I'll talk a little bit about tips for diy. So I think it depends a lot on you as a person and on your schedule. How much time you have or how much you enjoy doing your bookkeeping, you know, how much you enjoy spreadsheets or whatever your system is.
Some people don't want to touch it. But how much do you want to invest time-wise into researching that versus somebody else who could do it better, faster, and more accurately.
If you're getting it done, great. If you just say you're gonna do it, but you know, month by month rolls around and then it's been six months, it's probably maybe the time for you to think about getting that off your plate.
The tips for actually doing it yourself.
I actually don't usually recommend accounting softwares like QuickBooks for people who are doing it themselves. Just because QuickBooks makes a lot of assumptions and does things behind the scenes that you might not realize. Some things as simple as duplicating transactions or involving the owner's equity accounts and just stuff that gets a little bit dicey.
So for solo owned businesses, a spreadsheet is often the best way to go. And it's just, it's simple. You can track your income, your expenses, you can calculate your profit or loss.
And I have a template on my website that does this for you. You type in like 25% and it shows you how much you should be setting aside every month for estimated taxes. And that also just reminds you to do that month over month. And so again, you don't get that tax season crunch of I forgot to set aside money.
Jenzaia: Now this is all gonna be different, but I am to the point now where I'm 99% sure I'll be owing quarterly taxes. Which I'm really excited about not having to hold onto the money in my account for 12 months. I don't know if everyone's excited about paying the government money early, but I am because it's a lot of money to accrue in the account and sit there and do nothing.
Is there a point where you are required to pay quarterly taxes in the states as well? Or is it by choice? Like how does it work?
Sara: I believe it's when you owe a thousand dollars in taxes, they're required to go through quarterly, but it also depends very much on your holistic tax situation. So if you're married and you have a partner who has withholding out of their paycheck, that kind of factors into it too.
Jenzaia: Right. Because in the states when you're married, you can file as a couple, right? You can't do that in Canada. Our taxes are completely separate. We can file at the same time but they're completely separate.
Sara: Yeah. And here there's very rare circumstances when it makes sense to do married filing separately. Like almost all of the credits and deductions are always favorable for married filing jointly.
And then I guess the other distinction I would wanna make is that bookkeeping is always looking backwards. It's always recording what's already happened for the month or the year or whatever. So another important piece of managing your finances is looking at cashflow forecasting. So just looking at the future and making a plan for the money that's gonna come in and setting those budgets and just kind of tracking where that's going.
So that's another important piece of kind of managing the finances holistically, is not only looking back at what happened, but using that as a springboard for the forecasting. But making sure that, you know, the, the money is there when it's ready to go, whether it's to, you know, for payroll or contractors or credit cards or you know, whatever.
And then another piece too is to kind of build up that cash buffer too. Having, uh, recommended like at least three months of operating expenses in your bank account to just kind of have it there to, to cushion everything so you're not having to watch cash by the penny necessarily. And also, you know, it, it's a good indicator to where [00:20:00] if for whatever reason sales were to stop today, you would still have three months to kind of, you know, build that back up and what, whatever that would look like for
Jenzaia: your business.
And now that I have a va, now, she is technically a contractor. But now that I have a VA that I'm working with, I have this, this feeling of needing to make sure, especially for her, like that, her mm-hmm. Money is available that I'm not, like, it's one thing if I have to cut my own paycheck or you know, something else, but I feel that I'm contributing to somebody else.
And so that like really hit home because that's something that I've been really not struggling with, but just like thinking about a lot recently of like mm-hmm. Other people are dependent on me and I don't want to like let them down, if you will.
Sara: Yeah, absolutely. And that's too where it becomes so important to do your bookkeeping and to look at your profit because it's not what you bring in that matters, it's what you have left over.
And you know, like to, to put it bluntly, if you're operating at a loss, you're paying money to be in business and you know, which is just not sustainable. [00:21:00] Yeah.
Jenzaia: Yeah. It's a little bit like a hits home at the beginning too. Like I know there are businesses and I feel like more so brick and mortar businesses mm-hmm.
That, you know, you pay the rent and furnish the place and all of that other thing. That operating at a loss initially mm-hmm. Is a normal part of business. But I don't feel like that operating at a loss initially for an online business is the same necessarily. I feel. Because we don't have the same overhead costs, it can be easier to have those higher profit margins right from the
Sara: beginning.
Yeah. We're very fortunate in the online business industry with how, how lean we're able to run businesses. Mm-hmm. Which is hard sometimes because there's a lot of shiny objects out there when masterminds and you know, retreats and things. You're like, oh. So yeah, it can be tricky, but it is very nice to not have all that rent and even as much like labor.
We can deal with so much by contractors too versus employees, which is another important [00:22:00] distinction to make sure that when you hire somebody, um, the IRS has rules about who can be considered a contractor and who has to be considered a part-time employee. So something to keep in mind too, and just to bring questions to your tax advisor as you're going through these decisions of running your business.
Jenzaia: Yes, absolutely. Thank you so much for being here. If people wanna find you, you do have a freebie for us. Can you talk a little bit about what it is and when we download it, what we'll get?
Sara: Yeah, so it's called the write off worksheet, and like I was mentioning earlier, this is just a really good checklist of 20 tax seductions that you should know about as you're going through your business day to.
And so that you know what's deductible and what isn't. And you can use that kind of to factor in your decision making. So yeah, I'll give you that link and when you downloaded it, you'll get your checklist of 20 deductions. And it's also a great thing to, if you have a tax repair, to bring to them and say, oh, like what about this home office deduction, for example?
You know, what do I need to be tracking for that? And great [00:23:00] springboard for looking into. And
Jenzaia: if you're Canadian and you're listening to this, it is slightly different. So feel free to send me a dm. I have a couple of like Canadian resources that I can send you the links to, but like again, if you're American, then this is probably the best one for you.
So thank you so much. Where can people find
Sara: you? Yeah, so I'm mostly on Instagram at Marish Bookkeeping, and I have my podcast Prophets a Fugato, which is on pause right now, but there are about 30. If anybody wants to dive into episodes, like, um, you know, what business owners need to know about sales tax, and just little things like that where I kind of dive into what you need to know about the accounting side of your business.
Jenzaia: Perfect. Thank you so much for joining me, Sarah. It was a pleasure chatting with you.
Sara: Yeah, thank you so much for having me.
Jenzaia: Thank you for listening to this episode of Market Scale Grow. I'm so thankful that you've taken some time out of your busy schedule to make me part of your journey. If you love this podcast, don't forget to share it with your [00:24:00] friends and then head to your favorite podcast app to subscribe so that you won't miss next week's episode or any of the upcoming ones.
And if you loved it, be sure to leave a review on Apple Podcast. So that other people can find this podcast and we can impact teachers and teacher business owners around the world. Thank you so much for listening, and I'll be back in your ears next week with another Saturday strategy session