Incite-FUL Profit Podcast | Incite Tax

Bookkeeping Red Flag FREE Checklist

What are some bookkeeping red flags to watch out for?

The first bookkeeping red flag is you want to run a profit and loss statement by month. When you're looking at the statement, it'll show January, February, March, April, however many months you're looking at in separate columns. You wanna notice trends, mainly inconsistent trends. If you see this you're likely not categorizing your expenses consistently the same way.

As an example, let's say I purchase supplies on Amazon.com, so it's office supplies. Well, let's then say I buy computer equipment on Amazon. What happens if I book that to office supplies, when it really should be equipment? What my books will show is maybe one month where office supplies are a lot higher.

Maybe there's a month where office supplies don't exist at all. Inconsistent trends is a flag to look out for because it means you can't make informed business decisions based on the numbers, because they're just not in the right spot.

Listen as John Briggs, Tax Genius, shares Red Flag 2-4!

And remember...the #IRSSUCKS

John Briggs | Tax Genius
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Tips to Clean Up Your Books For Tax Filing Purposes
John Briggs, Tax Genius, gives you tips for cleaning up your books this tax season! Avoid the #1 item auditors look for on your taxes. John also offers instructions to send your books to Incite Tax for a FREE review!

Remember, profit is a choice. Have the courage and wisdom to choose it.

John Briggs | Tax Genius
[email protected]
801-999-8295

PDF Link: https://incitetax.com/wp-content/uploads/2019/09/QBO-Invite-Accountant-1.png

bookkeeping problems and solutions, managing transition in the work place, helping employees deal with change in the workplace, managing change example, 5 key principles of change management, how to manage change in an organization, embrace change positively, how to embrace change in life, Navigate and embrace change, leadership, embracing change, personal growth, embracing change in business

John Briggs | Tax Genius
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Comprehensive Cash Flow Management Course - Profit First Walkthrough

I hear small business owners ask all the time, “How do I get to the point where I can work more on my business, and not in the business?” It will be a struggle, but I’ll show you how to stop working in your business. 

No matter where you're at, the goal is to figure out how to free up more of your time so you can work more on the business. But like I said, do it in increments so you can get started right away. Don't wait until you somehow have magically been able to replace yourself from all the day-to-day working in the business stuff. Focus on a little bit at a time, step by step, right? 

Free Up More Time

Now that being said, there's not a wrong or right answer here. It really does depend on your situation. Let me give you two examples.

In the E-Myth Revisited, for example, which I think is a great book, it highlights the importance of systems. The focus is to create a system where someone else can duplicate your process without making mistakes so that you're delivering the same type of product or service, and it's repeatable. 

On the other hand, you have companies like Netflix, who have what they call a freedom and responsibility culture. That's where a company has really talented team members, gives them freedom to do their job and lets them own the responsibility and consequences. Now, if you're not a good team member, you will be let go very quickly in that type of environment. So, while some may feel it's supportive, there's also an element of a cutthroat mentality there. 

Whether it’s systems or giving people autonomy and freedom, ultimately the goal in both those examples, is the result of the owner having freed up more time because somebody else, or some A.I., some software, something else, or somebody else, is doing something they were doing. 

That’s the goal, so now instead of doing that thing, you freed up that time, which you should use to work on your business. Working on important things a business owner should be focused on, like strategizing and improving processes and systems. 

Use Your Time Wisely

When you free up more time, you have to make sure you're using that freed up time to work on your business and not just take a vacation. Look, I'm a big proponent of not stressing ourselves out. The hustle and grind mentality, I don't love it. But there's a time and place for breaks and vacation. And when your business needs more attention, it’s not that time.

Leverage Your Profits

The best way to have more cash available to leverage is through profitability. We love the Profit First methodology. You pay attention to revenue coming in, but also give equal focus to expenses to make sure every expense is necessary. Ask yourself if the expense is productive, is it helping you retain clients or add on new clients? Then get rid of all the other expenses that you don't need. 

In a nutshell, that’s how to stop working in your business. Make small, consistent changes and leverage your cash to free up more of your time to spend working on your business, not in it.

John Briggs | Tax Genius
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Profit First Cash Flow Management System

When cash flow is tight, do you find yourself putting a band-aid on the symptom instead of trying to find the root cause, trying to dig a little bit deeper?

Short Term Fixes

There's a variety of reasons why we could have short cash flow. Regardless of the reasons, oftentimes the two common responses from small businesses are… 

… take out money in a loan, whether that's directly at a bank line of credit on your house, or simply increasing your credit card balance by putting charges on the credit card but not paying it. All of those are forms of borrowing money, which then increases the interest expense that you have to pay, increasing your cash requirement that you have to pay because the bigger the loan, the larger the monthly payment. 

… or you let go of team members and work the extra hours yourself, covering the job that the team member was doing. That’s a quick path to burnout.

The Solution

Look, those are short-term options that might get you by for a little bit, but in reality, they’re just band-aid fixes that don’t actually fix the cause of your cash flow problems. They're not the best options. 

Profit First

That's one of the reasons why we love Profit First. It’s a cash flow management system that allows you to manage your cash in a way so that you have a reserve of cash to call upon when cash flow is tight, so that you can get through the short-term period while you take the time to dig deeper and fix the real issue.

Find the Root Problem

Think through all the possible reasons why your cash flow is tight. Dig a little deeper into your reports and KPIs.

Like, maybe you’ll discover the marketing method you've been using isn't working the same way. Maybe the copy is stale. Could be as simple as the image you’re using. But you want to dig deeper. 

Clean Shop

At the end of the year is a great time to review your expenses and cash flow management system. Anytime is good, really, but specifically if you don't do it throughout the rest of the year, the end of the year is perfect. But take time to look through all your expenses, identifying things that maybe aren't necessary, not helping you get new clients or keep clients, and cut those expenses out. It's a great time to clean shop, if you will. 

One of our team members had spent the last couple days deep cleaning their house physically, and she made a comment saying cleaning is therapy. It's the same thing financially. Clean up your unnecessary expenses. It's a form of therapy. You're going to feel great. You're going to feel lighter.

So don't just look for a short-term fix of borrowing money or letting go of team members because you're willing to work more hours. Look for the deeper issue and solve that. And more importantly, run the Profit First system so that if you do have a short-term cash crunch, you can weather that storm.

John Briggs | Tax Genius
[email protected]
801-999-8295

John Briggs | Tax Genius
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Free Forecast Template

Wealth Building Framework Sneak Peek

Forecasting financials for the next year can be a daunting task. Sometimes it feels like a guessing game or worse, pointless. But after following these steps of the best way to forecast revenue and expenses, you’ll have a roadmap to guide you to success the way you want it.

Best Way to Forecast Revenue

You are going to start with forecasting your revenue by month.

Very first thing is to list out all of the services and products that you currently sell or want to sell in the upcoming year in the template. I'll show you an example in just a second. 

Here are some questions to consider when thinking through what your revenue is going to be like for next year?

·       Are you offering any new services? 

·       If you are, when will those be ready? 

·       Are you going to rearrange any type of existing services? 

·       Are you stopping them all together? 

·       How many units of each service do you think you're going to need to sell? 

·       And what's your price on those?

Best Way to Forecast Expenses

Next, you're going to look at expenses. First, look at expenses directly related to revenue, just those expenses. Now looking at new revenue, think through what expenses are going to be leading up to that new revenue. With a digital course as in the example, there's probably some contractor payments that maybe you’ll have before you actually ramp up.

It's important to forecast these out in the months they will happen before you have the revenue so that you can see where your cash balance is.

After you’ve forecast expenses that are directly related to your revenue, it’s time to go back and look at your historic expenses. What I am not going to do is take an average of my historical expenses and put them in my forecast. That is not forecasting. That's not even budgeting. That's just not good. Don't do it. 

Look at each and every expense and take the time to determine if the expense helps you keep customers or helps you get new customers. That's an idea I got from a book written by Keith Cunningham.

Forecasting Financials is Worth Your Time 

Proper forecasting does take time. And it’s going to be some of the most worthwhile time you put into running your business, because then you’ll have a roadmap of what you want to accomplish. 

And don't stop forecasting and making changes to your forecast until you're happy with the result. Plan each month so you're happy with the net income it's going to offer, you're happy with your take home pay, you're happy with the growth. 

Do all that on paper first, and now you have this roadmap so that each month you can compare how you did to what you wanted to do. 

John Briggs | Tax Genius
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Free Wealth Building Tools & Resources

Let’s talk about small business health insurance options. I’m only covering a small snippet of small business health insurance options here. You really do need to talk to a health insurance agent about the specific options that exist for you, both in your state and based on the unique factors of your company and your team.

Group Insurance for Small Business

You're not required to have a group insurance plan for your business until you have 50 team members or more. But if you’re in an industry like mine where the talent is really competitive, you may need to consider having some sort of a health insurance benefit before you get to 50 employees, mostly to have some sort of attraction level for A players. 

Personal Health Insurance for a Business Owner

When it comes to your personal insurance, if you don't have a group plan, you can go out and get a private plan by talking to any health insurance agent. Based on your income, you may or may not qualify for health subsidies. So again, it's really important that you talk to a qualified health insurance agent so they can walk you through all those details.

How to Write-Off Your Health Insurance Premiums

These instructions are specifically for an S-Corp.

We see this done incorrectly all the time. The two biggest mistakes we see are either not paying for it out of the business, or not picking it up on their W2. Pay for your health insurance out of your business as an S Corporation. Pay the premium out of your business and book it as a health insurance expense. As the owner of the S Corp, assuming you own more than 2%, which in our case almost all of our clients do, you have to pick up your health insurance amount on your W2 as Additional Income. Then when you file your personal tax return, there is a spot on your personal tax return called Adjustments to Income and you put your health insurance amount there so that it is reducing your taxable income.

Consult with Qualified Professionals

There are many small business health insurance options for both your business and you personally as the owner, even if you don’t have group insurance. But again, get a good health insurance agent on your side and a qualified accounting professional to help you write-off your health insurance the right way. It's very easy to do for an accountant. But like I just explained, there are multiple steps to make sure it happens the right way. By using a professional, you get the max benefit without getting in trouble by doing it the wrong way. 

Talk with a Tax Genius here at Incite Tax to make sure you’re compliant with how you’re deducting your health insurance premium from your taxes.

John Briggs | Tax Genius
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Big Sexy Beefy Tax Crushing Packet

These are the top 10 pros and cons of being a business owner. There are many advantages and disadvantages of owning a small business, but the pros seem to outweigh the cons. 

John Briggs | Tax Genius
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Growth Plan Presentation Slides: https://incitetax.com/wp-content/uploads/2019/09/Growth-Plan-Lead-Magnet-1.pdf

Wealth Building Framework: https://incitetax.com/wealth-building-framework-sneak-peek/

What's a simplified business planning process that you can use to make sure all aspects of your business are ready for the new year? There's a lot of stuff out there. You've heard of business plans, and they can get intense.

I like the growth plan more than I like the business plan. There's a lot of similarities, but the focus of the growth plan is how you are going to grow. Not just how you are going to be in business.

I don't really use a growth plan that often anymore. A big reason is it's a five-year plan. If I thought back five years ago, would our business be where it is now? Honestly, I couldn't have envisioned it. That's one of the dangers of taking time to try to perfect something that's so far out, things change.

I like looking at, in a lot more detail, one year out. To help me do this, I created a tool that walks me through all the necessary details. I also fairly recently did a four-part webinar series going over every part of my business planning process with that tool that we called the Wealth Building Framework.

It’s designed to go over your business and forecast financials for the next year. The perfect time start your own business planning process for the coming year is at the end of the calendar year, like November or December. That way you can plan the entire year.

Looking at how I want my financial statements to look like in the upcoming year allows me to ask the questions of every aspect of my business that's going to help me accomplish that goal that I can visualize 12 months out.

John Briggs | Tax Genius
[email protected]
801-999-8295

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John Briggs | Tax Genius
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John explains how you can absolutely apply the Profit First cash flow management system to your personal finances. It's a great system of principles that are easily adaptable to personal financial management. You can use it so you're prepared for taxes, home improvement projects, and even holiday shopping! After you've applied Profit First  to your personal financial plan, you'll begin to notice how much easier it is to grow your wealth.

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John Briggs | Tax Genius
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John shares with you his experiences with trying to make confident decisions for his businesses. The confidence part wasn't always there. Get tips on how to approach decision making and a simple two question analysis that significantly increases confidence when making decisions.

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John Briggs | Tax Genius
[email protected]
Visit our website @ Incite Tax

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