00:00
o’clock last night
00:03
hey welcome back to the essay weekly
00:04
talk show had some technical
00:05
difficulties
00:06
um right back again with carla of
00:09
uh landscaping accounting of cycle cpa
00:12
and uh carla
00:13
want to open it up really quick
00:15
obviously you’re an expert in the
00:16
industry
00:18
in all things accounting for lawn care
00:20
and landscaping if you’re in a different
00:21
industry such as home cleaning pest
00:23
control
00:24
or anything else along those lines this
00:25
is going to be applicable so don’t
00:27
you know hop off this facebook live
00:30
because there’s gonna be a lot of
00:30
content applicable to any service
00:32
business
00:33
um that is watching this so carl if
00:35
people haven’t seen me on facebook um
00:37
you’ve been pumping a lot of really good
00:40
valuable content that’s executable for
00:42
specifically long care and landscape but
00:43
any service business i think would apply
00:45
to this so
00:46
if you wouldn’t mind really quickly i
00:47
know we’re kind of rehashing we just
00:49
went through we got kicked off but
00:50
um give a quick background if people are
00:52
just tuning in of
00:54
how you cut your teeth as a cpa and then
00:56
how you ended up actually transitioning
00:58
into the green industry
00:59
yeah so i um i first started off at a
01:03
small
01:03
generalist firm and we didn’t really
01:06
niche down on any industry and help
01:08
trying to really help
01:10
any industry per se it just so happened
01:13
that we had a lot of clients in the
01:15
green industry
01:16
and so i saw the same recurring um
01:19
issues that they were facing such as
01:21
cash flow
01:23
um profitability um and just not being
01:26
aware of
01:26
the financial statements and how to
01:29
navigate their financial health so
01:32
also worked with a large cpa
01:35
firm and we didn’t niche down there
01:37
either
01:38
but once i started um forming my own
01:41
business
01:42
i really became passionate in that small
01:46
accounting firm on really helping the
01:48
green industry and so
01:50
it was just a no-brainer once i form my
01:52
own business to kind of
01:53
help um this industry and really
01:56
learning everything that i can
01:58
so i can guide them in the right
02:00
direction
02:02
yeah i really appreciate you joining us
02:03
and i know um 20 years plus almost now
02:06
25 with the lawn care business that i
02:07
own snow removal lawn care in upstate
02:09
new york
02:09
uh there was a lot of things through
02:11
those 25 plus years that we’re looking
02:13
at cash flow charts of accounts
02:15
how do we keep our book keeping up to
02:16
date whether it’s quickbooks online or
02:19
quickbooks desktop and when we’re
02:21
talking to that cpa
02:22
um most of the firms that i use pretty
02:24
much all the firms that i used in my
02:25
business were
02:26
the generalists they didn’t understand
02:29
what we went through in a daily basis
02:31
and the cycles of cash flow
02:33
and the different ways that when we
02:34
lived in those trenches how a service
02:36
business should interact with an
02:37
accountant so
02:38
i had to kind of go out and get my own
02:39
education to be able to talk accountant
02:41
talk
02:42
in the service business and say okay you
02:44
know what are we talking about are we
02:45
talking about top line revenue or is
02:46
that gross revenue or what are these
02:48
different things and what are you
02:49
calling it on
02:50
the chart of accounts versus what’s
02:51
actually in my budget so that was really
02:53
uh an interesting thing but i figured
02:55
out once we got the
02:56
accountant the business owner and my
02:59
financial advisor all on the same page
03:00
talking the same language that’s kind of
03:02
when the magic happened um but before we
03:04
really get into that
03:05
um if you’re just starting out or even
03:07
if you have an existing
03:09
business i think one of the most
03:10
important things that you can bring some
03:12
content to
03:12
is entity structure so a lot of people
03:15
are going out and saying well
03:17
should i do be a dba should i be an s
03:19
corp should i be a c corp an llc or if
03:21
i’m just starting out working
03:23
you know out of the back of my garage do
03:25
i even need this or can i just kind of
03:26
fly
03:26
under the radar so would you mind
03:28
spending a few minutes just breaking
03:30
down
03:31
the different types of entities the pros
03:33
the cons
03:34
and maybe based on whether it’s a sole
03:36
proprietor a partnership maybe a husband
03:38
and wife team
03:39
uh is there certain things that play
03:40
into a better uh
03:42
entity structure for taxes and i’m
03:45
assuming you’re probably gonna hit on
03:46
some liability or
03:48
the ability to shield yourself from some
03:49
liability as well
03:51
yeah i mean with these entity structures
03:54
i mean
03:54
a lot of the business owners are always
03:58
okay with where can i pay less taxes
04:01
legally but also we have to consider
04:05
some non-tax issues sometimes
04:07
um depending on your situation so i
04:10
think
04:11
the one that is so popular is the llc
04:15
and that’s because of all of the
04:17
advantages that it has
04:19
and it’s also very confusing to some
04:23
small business owners and i um totally
04:26
understand
04:27
just because the llc does provide that
04:30
limited liability
04:32
which is awesome so if you get sued by
04:35
anybody
04:35
they can’t go after your personal assets
04:38
they cannot go
04:39
they can go after only your business
04:41
assets which is a huge plus
04:43
but the reason why it’s a little
04:45
confusing is because
04:47
an llc can be taxed as anything
04:50
it can be taxed as a sole proprietorship
04:52
as corp
04:53
corp and a partnership so that’s what
04:57
makes it confusing and i’ll break that
04:58
down right now
04:59
so under the irs’s eyes if you
05:02
are applying for an s-corp as a single
05:05
member
05:06
you’re automatic automatically going to
05:08
be taxed as a
05:10
sole proprietorship so you’re going to
05:13
file your taxes in your 1040 your
05:16
personal tax return under your schedule
05:18
c like you normally would
05:20
but you’re still getting that limited
05:22
liability piece
05:23
which is awesome for someone who’s just
05:26
starting out but still wants that
05:28
coverage
05:29
um i think that is an awesome um way to
05:32
go
05:33
but if you’re starting off with a
05:35
partner um like you said maybe
05:37
a husband and wife the wife’s gonna do
05:39
you know the bookkeeping side or
05:41
like the admin side they’ll
05:43
automatically place you as
05:45
being taxed as a partnership so two or
05:48
more
05:49
under net llc under the default rules
05:51
under the irs you’re going to be taxed
05:53
as a partnership
05:54
but you can be taxed as a corporation or
05:57
an escort
05:58
so you can if you’re an llc you can be a
06:01
lack to be taxed as an s corporation or
06:04
now
06:06
a court so i think one of the major
06:09
advantages
06:10
of um applying to be an llc is the
06:13
limited liability piece and also that
06:15
it’s so flexible
06:16
you know if you start adding more
06:19
revenue
06:20
more clients if you start adding more
06:22
employees or want to bring in a partner
06:24
it can go with you as far as taxing um
06:28
structures go so you can elect to be
06:30
taxed as an s corporation along the line
06:32
if that’s what’s going to benefit you um
06:36
next up is a partnership like i had
06:38
mentioned that’s two or more owners
06:40
and a partnership is a flow through
06:42
entity and
06:43
a partnership itself does not get taxed
06:46
on
06:46
as an entity um so all the
06:50
uh net profit or losses at the end of
06:52
the year
06:53
flow through to the shareholders and
06:55
then the shareholders
06:57
um claim that on their personal side
07:00
but um and then in a corporation
07:04
uh the corporation itself does get taxed
07:07
at
07:08
uh 21 so
07:11
i think that once you are a corporation
07:14
you get you’re getting taxed on you’re
07:16
not operating profit at 21
07:18
but also if you’re giving out
07:21
distributions to its shareholders you’re
07:23
going to get taxed again
07:24
so you have that double taxation right
07:26
there
07:28
um in a sole proprietorship you don’t
07:31
have
07:31
any um you don’t have limited liability
07:35
so uh you are the business and the
07:38
business is you
07:39
you’re filing it under a schedule c on
07:42
your personal taxes
07:45
but it is low cost to form so if you’re
07:48
starting
07:49
off and you don’t have a lot of money
07:51
it’s only a couple hundred dollars to
07:52
form
07:53
so that’s a big plus um and the
07:56
simplicity of taxes you just
07:58
file your income and expenses on a
08:00
schedule c and you’re done
08:01
it’s very simple um
08:04
but what i see what benefits the
08:07
landscaping
08:08
industry the most and is the s
08:10
corporation
08:12
and that’s because it does the
08:14
s-corporation gives you a limited
08:15
liability
08:17
and under the s-corporation
08:20
uh the entity itself is not taxable uh
08:23
it is a flow through entity
08:25
uh the profits flow through the
08:27
shareholders and
08:28
then you um take care of that on your
08:31
personal side
08:32
but also um you save money on
08:35
self-employment taxes
08:36
which are 15.3 percent so a large
08:39
percentage
08:40
and you save money on taxes that way by
08:43
being an s corporation so i see that
08:45
as uh the most advantageous for uh
08:48
landscaping business owners
08:52
and carl i’m so glad you mentioned that
08:53
so that was one of the questions i was
08:54
going to have
08:55
half of you is the benefit of that
08:56
escort versus self-employment tax it
08:58
almost pays for itself
09:00
especially with the ability of that
09:02
corporate shield so unless you’re
09:04
absolutely negligent and purposely run
09:05
someone over um i mean that corporate
09:08
shield you know in itself is great but
09:10
then
09:10
the these tax savings from that
09:12
self-employment tax um is a massive
09:14
benefit so that’s what we did in my
09:15
business the early years literally when
09:17
i was in college
09:18
um filed as an s corp and then bought
09:21
the additional insurance for an
09:22
additional umbrella around that but that
09:24
that’s huge but i’m also glad you
09:25
brought up the llc because that’s also a
09:27
very interesting structure
09:29
um and be completely transparent when we
09:31
started simple growth that actually
09:33
started as an
09:34
llc and they i i got upset with my
09:38
accountant because the same guy i’ve had
09:39
15 20 years but once again we weren’t
09:41
speaking
09:42
the same language so i mean it was via
09:44
email finally i called up and
09:45
uh got greg and crystal on the phone i
09:48
said guys what are you doing here
09:49
i’m getting the uh letters from new york
09:51
state because we wanted to
09:53
re-categorize the business as an s corp
09:56
right but it didn’t
09:57
kind of like not in normal terms saying
09:59
you could be an llc but file tax wise as
10:02
an s corp and still catch the
10:04
the benefits of both of those so very
10:06
interesting when you’re going to talk to
10:08
a professional like carla
10:09
um ask the questions there’s no stupid
10:12
questions around this and a lot of times
10:14
it’s just
10:15
miscommunication of like you know
10:18
we’re talking about whatever we talk
10:20
about industry specifics as
10:21
professionals and the cpa is talking
10:22
their language has
10:23
returned so you got to make sure you’re
10:25
on the same page because greg and i were
10:26
not on the same page and i’ll be honest
10:28
carl i was frustrated
10:29
but really the guy had my back he knew
10:31
what he was doing but i’m ripping my
10:32
hair out over here and going
10:33
man this guy doesn’t know what he’s
10:35
doing this is crazy
10:37
you know he’s telling me one thing but
10:39
i’m getting other letters from new york
10:40
state he goes no we’re
10:41
you know we’re filing as an ass car like
10:43
oh all right
10:44
i looked on google and i’m like oh you
10:45
can do that right now this is what he’s
10:47
talking about
10:48
so i think i was like i owe this
10:49
gentleman apology
10:51
but after we set up this corporate
10:53
structure here
10:54
the next thing that most uh small medium
10:57
or even large businesses run into
10:59
especially in the lawn care industry
11:01
um but even home cleaning as well with
11:02
pest control is cash flow
11:04
and a lot of times we see this with
11:06
seasonality especially our businesses so
11:08
uh i know at least in my business uh
11:10
especially in the up uh the upper
11:12
northeast here where we do lawn care and
11:14
snow removal we even see it in the
11:15
companies
11:16
in south south and southwest is it’s
11:19
somewhat seasonal even if you don’t even
11:21
if you go year round you ramp up in the
11:23
spring it’s a cash outlay for marketing
11:25
advertising equipment repairs
11:27
and you really don’t start seeing
11:30
positive
11:30
cash flow where it’s extra cash flow in
11:32
the bank at least in my market to like
11:34
july or august
11:35
um and there’s a there’s definitely a
11:37
seasonality of that cash flow and then
11:38
if you’re
11:39
blessed or not blessed enough depending
11:40
how you look at it to have the crazy
11:42
white stuff flying out of the sky is
11:43
snow to plow
11:45
by the time you’ve got that bank account
11:46
ramped up again and you’re
11:48
you know you’re pushing some bottom line
11:49
profit you’re dumping an extra 150 200
11:52
000 in pre-bought materials of salt and
11:55
ice melt
11:56
and then it’s just this financial roller
11:58
coaster of cash flow
12:00
um and i just it’s interesting to see
12:02
the perspective of simple growth where
12:04
uh it’s more of a subscription-based
12:06
model it’s a year-round spread out and i
12:08
think you’re probably going to hit on
12:09
this how you can do this in the launch
12:10
industry
12:11
but to see the comparatives of the seven
12:13
figure business
12:14
um in a seasonal business versus one
12:16
that’s more
12:17
um i don’t want to say leveled out
12:19
completely there’s a little bit
12:20
seasonality simpler but you
12:22
it’s completely different so if you’re
12:24
not working with this epa that
12:26
understands seasonality and cash flow
12:28
that’s another major advantage of going
12:30
to a vertical
12:32
industry specific cpa so my question for
12:34
you carl is
12:36
how do we go out and look at that cash
12:38
flow from a tax standpoint or just a
12:40
business operations standpoint
12:42
and are there some ways that you
12:43
recommend um to
12:45
to level out those cash flows uh for the
12:47
seasonality of the lawn care and
12:49
landscape business
12:51
i mean i think that the seasonality of
12:55
it really affects cash flow
12:57
and i think that we all have to go in
13:00
with
13:01
a plan so as long as we have a plan
13:04
in place and we never have to be on that
13:06
roller coaster
13:07
you know so um starting off with the
13:10
subscription based model
13:12
um we’re in a subscription-based era so
13:15
we’re subscribing to things
13:16
some boxes i don’t know it’s a wine or
13:19
anything of this story we’re subscribing
13:21
on amazon
13:22
right so that that’s the norm that’s a
13:24
new normal i mean
13:26
we’re really getting out there and just
13:28
um subscribing to
13:30
different services why can’t we
13:32
subscribe to landscaping lawn care
13:35
services
13:36
okay we can bring this model and into
13:38
this especially
13:40
um when you’re providing law maintenance
13:42
services whether that’s maybe
13:44
six months um go ahead and
13:47
get your clients signed up on a
13:50
subscription-based
13:51
uh model that way you have those
13:53
predictable
13:55
cash revenue coming in and you can plan
13:58
for that
13:58
okay i’m going to get uh
14:02
eighty dollars from xyz person
14:05
for the next six months and that is
14:07
really
14:08
what we want to focus on is
14:09
predictability and
14:11
what we’re gonna get in and what’s
14:14
coming out that’s really what um
14:16
cash flow revolves around with and so
14:19
being on a subscription-based model is
14:20
really going to help you with that
14:23
and um so as far as invoicing
14:27
i see a lot of um clients fall behind on
14:30
their invoicing
14:31
as well and that prolongs their
14:33
invoicing cycle
14:34
and um their cash flow cycle so
14:37
when you’re performing a job or a big
14:40
project make sure to invoice them
14:42
the same day or even ahead of time
14:45
right or have it you know where
14:48
you’re saying okay it’s fifty percent
14:51
down before and then
14:53
after we’re we’re going to charge the
14:55
other rest 50
14:56
50 of it so i think just
14:59
staying ahead of that invoicing is
15:01
really going to help cash flow in your
15:03
business
15:05
um as far as crms go
15:09
such as service autopilot or jobber
15:11
that’s really going to help you
15:13
invoice clients clients are going to
15:15
have a place to come where they have
15:16
a client portal and they’re able to pay
15:19
you quickly and easily
15:21
having that within your business and
15:23
staying organized on top of that is
15:25
really going to have help you with cash
15:26
flow
15:27
and building up that
15:30
savings account okay so during those
15:33
busy months where you’re going to have a
15:34
lot of cash coming in
15:36
um having that
15:40
you know like that
15:43
savings account there for the slower
15:45
months
15:46
um during the winter and being ready for
15:49
the spring
15:50
rush that’s going to not only provide
15:54
you with a peace of mind but
15:56
also allow you to invest in materials
15:58
ahead of time or any other equipment
15:59
that you may need
16:00
for the spring rush that’s coming up
16:04
awesome it’s a lot of good points there
16:05
to break down i’m sure cody you’ve got
16:06
some questions here i’ll let you hop in
16:08
in a sec
16:08
but one thing i want to touch base and i
16:10
think that was really a good point that
16:12
i think
16:12
especially if you’re doing landscaping
16:14
design build um you can hear the
16:16
pounding in the background here we’re
16:17
getting a pretty good-sized landscaping
16:18
job done at the house i’m working here
16:19
uh but the contractor was really smart
16:21
about it um
16:22
he dialed in what exactly was included
16:25
in it in each phase and he required a 50
16:27
deposit and then as each part of that
16:30
phase hit a certain threshold of like 25
16:32
50 75 100
16:34
um there was basically a percentage of
16:37
the remaining 50 percent that you knew
16:39
cash flow-wise so that covered his fixed
16:41
and variable costs and materials
16:43
and basically probably part of his
16:44
profit but he knew predictably when that
16:46
cash flow was going to happen so i think
16:47
that
16:48
you know living that on a consumer end
16:50
it was nice to see it laid out in full
16:52
transparency but also being on the
16:54
business end seeing that
16:55
that’s going to keep the wheels greased
16:56
and going um the other question i had
16:58
for not to put you on the spot but it’s
17:00
very interesting that
17:01
um a lot of times so like in the
17:05
northeast like a lot of people are
17:07
nervous of doing a subscription because
17:10
they’re going to try to annualize
17:12
a 12-month contract for work they’re
17:14
doing from april to october
17:16
um so is there anything that you’d
17:18
recommend as a professional at least
17:20
contractual leaders in some way
17:22
what happens when the consumer’s paying
17:25
that installment from april through
17:26
october
17:27
and they’re like yeah we’re done we’re
17:29
firing you but you still haven’t caught
17:31
the last four months of that
17:32
installment for the work that’s already
17:34
been previously due do you front load
17:35
the installment for the season start
17:37
or do you just say it’s your installment
17:39
while we’re working um because i know
17:40
that’s usually a big question in the
17:42
services service we like the idea of
17:43
installments but how do we protect
17:44
ourselves
17:46
yeah so that that is a major question
17:49
because once we come to the
17:50
winter months then the client’s like oh
17:52
well you’re not really
17:54
providing like the services that you
17:56
were providing before so
17:58
it could be broken down um during those
18:02
six months only so just breaking them
18:04
down
18:05
during the months that you’re actually
18:07
performing um
18:09
the work um and then keeping it within
18:12
that realm
18:12
so that the client doesn’t feel like
18:15
okay they’re paying like
18:16
12 months but okay what’s happening
18:19
during the winter months and they don’t
18:20
feel that
18:22
okay what are you guys performing you
18:25
know
18:26
and i love it but at least in that six
18:28
or eight months it’s consistent
18:30
predictable cash flow especially if you
18:31
have a drought
18:32
a lot of times people will be like well
18:34
just skip the lawn mowing for the next
18:35
three weeks
18:36
and then you’ve lost a whole month’s
18:37
worth of revenue once it’s gone it’s
18:39
gone
18:39
right if you subscriptionized i don’t
18:41
know if that’s really a word but we’re
18:42
going to throw that in there’s
18:43
subscription
18:45
you you’ve at least created predictable
18:47
cash flow for those months no matter
18:49
what the inclement
18:50
uh issues going out with the weather and
18:52
it’s you know it’s not as bad as being a
18:53
farmer but let’s face it
18:54
there’s been years where we’ve had
18:56
tremendous drought and
18:58
um in our business um we actually
19:00
somewhat of a scription ideas we
19:02
we charged fifty percent if people
19:03
skipped it so that caused covered our
19:05
fixed and part of our variable cost
19:06
um just keep that spot on the schedule
19:08
so there’s some some interesting ways of
19:10
doing that i’m glad you brought that up
19:11
because very
19:12
very insightful how do you keep that
19:14
cash flow going um
19:16
in that seasonal business cody and i’ve
19:18
been doing a lot of talking here so you
19:19
any questions for carlo if i was
19:21
up to this point so my
19:24
my biggest concern in moving to a
19:26
subscription model is exactly what
19:29
you’re already hitting on which is like
19:31
once i’ve done the work for you
19:33
how do i keep you on are you seeing any
19:36
of your clients
19:37
that are like plugging in interesting
19:40
services
19:40
into the fall and winter to keep
19:42
themselves in front of their clients
19:44
yeah yeah for sure we want to i mean
19:48
we’re gonna have that cushion that we
19:50
talked about that savings account for
19:52
those slow months but that doesn’t mean
19:55
okay forget about revenue
19:57
right so we want to provide some
20:00
leaf cleaning in the in the fall we want
20:02
to provide maybe some holiday lighting
20:05
you know um some snowplowing services
20:10
so we do try to bring some other revenue
20:13
streams
20:14
introduce something else so we can keep
20:16
that revenue
20:17
flowing through those winter slash fall
20:20
months
20:21
for sure yeah so then how does this
20:24
impact
20:25
your initial selling season because it’s
20:28
kind of
20:28
like for some of these companies this is
20:30
turning into like we’re at full service
20:33
outdoor home maintenance sort of company
20:37
are so how is that impacting marketing
20:39
in the spring
20:41
how is that impacting marketing in the
20:43
spring so i would say that
20:46
maybe in the spring we want to focus
20:48
more
20:49
in on like the regular maintenance and
20:52
installation services
20:54
rather than um the ongoing
20:58
uh scheduled services so
21:02
the things that they’re already used to
21:03
you know getting
21:06
if that makes any sense you completely
21:08
obviously want to put you on the spot
21:09
but being the expert i had
21:11
faith faith you definitely would give us
21:12
the right answer and you know
21:14
drop some knowledge and obviously you
21:15
are so really appreciated to be candid
21:16
about that
21:17
um but now we’re kind of looking at it
21:19
at the big picture carl i’ve got this
21:20
entity
21:21
i’ve broken down now i’ve got some
21:22
predictable cash flow through
21:23
subscriptions and trying to offer
21:25
additional
21:25
ancillary services to raise that client
21:27
lifetime value in the lower season
21:29
yeah um but now i’m talking about cash
21:31
flow
21:32
how am i looking at my my revenue my
21:35
chart of accounts and my expense
21:37
so is there um certain naming
21:40
conventions or maybe
21:41
different numbers in the front of each
21:43
account just certain chart accounts we
21:44
should be looking at far as expenses
21:46
income long term liability far as loans
21:49
and things like that for equipment
21:51
investments
21:52
um what does that look like when we’re
21:54
just starting out over really refining
21:56
that in our business so maybe we’re in
21:57
2020 right now but
21:58
as we go into 2021 we may want to kind
22:01
of streamline and optimize some things
22:04
um in those chart of accounts and i
22:06
don’t know if it’s applicable
22:08
uh for this talk but maybe if you want
22:09
to hit on if you’re using quickbooks
22:11
classes based on the ability to separate
22:13
those things out
22:14
yeah and um so a lot of our clients all
22:18
of our clients use quickbooks online and
22:20
i think
22:20
you know what whichever accounting
22:22
software you’re going to have a chart of
22:23
accounts
22:24
and in this industry it’s so important
22:27
to be
22:28
on top of it and organize within your
22:30
chart of accounts
22:31
because i see a lot of clients that i
22:34
receive you know
22:36
they have chart of accounts but you know
22:38
their assets
22:40
aren’t are not in place they’re being
22:42
treated
22:43
as an expense um so
22:46
if they purchase you know trailers or
22:50
sprayers you know for the people that do
22:52
pesticide um
22:54
you know they’re they’re getting treated
22:55
as expenses but they’re really not
22:57
expenses they’re their assets and
23:01
um that’s what value that we bring in
23:04
in being specialized in this industry is
23:06
that we know not to just throw it in
23:08
the expense account we know that this is
23:10
equipment that people are using
23:12
every single day and that’s going to
23:14
benefit the business
23:16
throughout its lifetime and having
23:19
a organized chart of accounts in place
23:22
is really going to help you get that
23:24
correct and accurate financial picture
23:27
geared toward this
23:28
green industry so like i said i talked
23:31
about fixed assets a little bit um
23:34
having those assets on your chart
23:36
accounts
23:37
um recorded correctly such as trucks
23:40
trailers
23:40
sprayers whatever other equipment that
23:43
you may be using
23:45
um cost of services so anything
23:48
you know we hear it in product um
23:51
services all the time cost of goods sold
23:53
right
23:54
we’re selling a service cost of service
23:56
so anything
23:58
that is directly related to um
24:01
giving that client that service
24:04
should be in cost of services so any
24:06
materials
24:09
fuel machine gas or gas that you’re
24:11
using to get to the
24:13
client should be in cost of services
24:16
any contractors or employees that you’re
24:19
using should be in
24:20
cost of services other operating
24:23
expenses such as
24:24
advertising office expenses your admin
24:29
people people those things should be
24:32
separate that should be in operating
24:34
costs
24:35
and having that broken down is really
24:37
going to give you a clear picture
24:39
at the end of the day in your financial
24:41
statements for example
24:43
having your your revenue broken out so
24:46
are you providing weed control services
24:48
how much are you getting from that
24:50
um are you providing lawn maintenance
24:52
service how much are you getting from
24:54
that so having those different line
24:56
items
24:57
in your profit and loss is really going
24:59
to give you a clear picture
25:01
of okay maybe i should focus in on this
25:03
installation services because
25:05
i’m making a lot of money i have a lot
25:06
of clients in this realm so should i
25:08
invest more advertising into doing this
25:11
or
25:11
weak control i’m really good at this
25:13
should i advertise in doing that
25:15
so i think that having your
25:19
chart of accounts set up the correct way
25:21
is going to
25:22
going to give you that picture as far as
25:24
making the important business decisions
25:26
uh moving forward
25:32
i gotta unmute myself here i got the uh
25:34
i hear the saws in the background but
25:35
anyways
25:36
carlos i’m thinking you’re painting this
25:38
beautiful picture of to me almost looks
25:40
like a profit loss i’ve got my gross
25:42
profit i’ve got my net profit i’m
25:43
breaking it down per service
25:45
um and then i’m also figuring out my my
25:48
depreciation on my equipment
25:49
um over that five year or whatever that
25:52
span is or maybe you’re accelerating
25:53
that depreciation
25:54
obviously you want to talk to your
25:56
accountant what the best uh
25:58
you know move is and one thing my
25:59
account earlier has told me like you
26:01
know you can accelerate that but
26:02
eventually at some point you’re going to
26:03
have to pay that back i didn’t quite
26:05
understand it till we actually end up
26:06
selling the business and lo and behold
26:08
there’s some implications of when you
26:09
actually
26:10
accelerate and don’t accelerate that
26:11
depreciation uh so once again he knew
26:14
what he was talking about he just wasn’t
26:15
talking mike language at that in the
26:16
early years so
26:19
you know bring it down just a simple man
26:21
that mows lawns but i need to know what
26:22
that implication is
26:24
um but and a little off the topic but as
26:26
you’re
26:27
painting this beautiful picture of chart
26:28
of accounts here and i’m just loving it
26:30
i can envision this
26:31
now are you recommending or do some of
26:33
your clients i guess you know
26:35
if you recommend or not um do you use a
26:39
budgeting feature in quickbooks online
26:41
uh based on that so you have your actual
26:44
verse your budget
26:45
in there with the forecasting reports or
26:47
is that something you use in a separate
26:48
software
26:49
what are your thoughts about using
26:50
budgeting in quickbooks online or even
26:52
desktop for that matter
26:53
desktop’s a little more robust but at
26:55
the end of the day you kind of
26:57
it paints the same picture and i feel
26:59
like most service businesses that we
27:01
deal with
27:02
their first problem is and this is
27:04
probably something you don’t hit on
27:05
karla but they don’t know
27:06
their cost to operate so what their cost
27:08
is their true break even before they
27:10
make a net profit so are
27:12
our totally loaded cost breakeven per
27:14
man hour
27:15
and then obviously they usually figure
27:17
it out themselves or go to a consultant
27:18
that does financial consulting to figure
27:20
out
27:20
i need to charge x amount of dollars per
27:22
man hour and this is what it’s costing
27:23
us
27:25
so maybe you do that but where does that
27:27
come from that kind of that data
27:29
and then the budget and then your
27:30
account how does that all
27:32
in your opinion come together and it may
27:34
not even something you do but i was just
27:35
curious if you had some insights on how
27:36
does all those three knowledge
27:38
kind of balance out yeah i understand so
27:41
i think that as far as budgeting goes
27:45
i’m not huge on budgeting and i’ll tell
27:48
you why
27:49
um budget is something that you set up
27:52
at the beginning of the year and you say
27:55
you know this is what we’re expecting
27:58
this is the expenses we’re expecting and
28:00
here you go and it’s something
28:02
that you compare like you said this is
28:04
what we have now this is what we were
28:06
expecting
28:07
okay that’s great i don’t really like
28:11
um budgeting because it’s so
28:12
retrospective you’re looking at the past
28:15
all the time and you’re saying oh okay
28:17
that was great we didn’t hit that or we
28:20
did hit that
28:21
um but i focus on
28:25
cash flow forecasting so we’re always
28:28
looking ahead we’re not looking at the
28:31
rear
28:32
mirror all the time as for budgeting
28:35
we’re always looking behind we’re always
28:36
saying oh this is what we expected this
28:38
is what we did
28:39
but what forecasting does is this is
28:42
what we’re going to do
28:44
this is what our number should look like
28:46
and
28:47
this is how we’re going to plan for it
28:48
so do we want to hire
28:50
that extra uh field employee do we want
28:53
to hire that extra sales person
28:56
does that make sense what kind of
28:57
revenue are we looking at how much
28:59
are we going to advertise what can we
29:01
get back from that
29:02
so that’s why i look for forecasting
29:06
more than budgeting as far as
29:09
forecasting and quickbooks online
29:11
i use a different software for uh
29:13
forecasting cash flow forecasting
29:16
um but they integrate with quickbooks
29:18
online and it just makes it easier to
29:20
compare and contrast like use that
29:22
um it makes complete sense i was just
29:25
curious kind of where that
29:26
and i thought they’d probably be outside
29:27
of the scope what you yeah most
29:29
accountants don’t do that but
29:30
i love the fact that you’re forecasting
29:32
ahead i’m assuming that’s going to tie
29:33
into your projected quarterlies
29:35
uh and cody’s probably heard this story
29:37
but i’ll tell you i’ll never forget the
29:38
story of driving down the highway
29:40
uh when the lawn care business was with
29:42
a pretty good-sized business and uh greg
29:44
the accountant
29:45
uh you know god bless him again hey mike
29:47
what are you doing i’m driving down you
29:49
know 390 the highway
29:50
where about sorry goes oh there’s a
29:52
restaurant next exit trada
29:54
you mind pulling off over the parking i
29:55
thought we were maybe having an
29:56
afternoon cocktail at the end of the day
29:58
on friday to review the taxes
29:59
that’s great let’s go some of the
30:01
parking lot you want me to come in and
30:02
meet you goes uh no i’m at the office
30:04
what do you want he goes well are you
30:06
parked in the parking lot
30:07
yeah he goes well you owe about 45 000
30:10
of
30:10
taxes this quarter in two days now we
30:13
obviously did it but
30:15
obviously that that projection of cash
30:17
flow would have been pretty instrumental
30:19
so
30:19
our conversations changed significantly
30:21
at that point and i agree with you 100
30:23
that cash flow projection and
30:25
forecasting is is essential
30:28
yeah because i mean there are
30:31
less surprises like you said you know
30:34
you got that big surprise
30:36
um but i i i think of it as a
30:39
you know you’re you’re planning a trip
30:41
with your family you know you’re
30:43
you’re driving out um and
30:46
you’re you’re you map it out you know
30:49
when
30:50
where you’re going from a to b but
30:52
there’s always things
30:54
uh you know you might have a newborn you
30:56
pull out to the side you have to stop
30:58
now you have to call the hotel i’m gonna
31:00
be late
31:02
oh no the wife always needs to go to the
31:04
bathroom a hundred times so you’re gonna
31:05
make those stops
31:07
okay life is not predictable you might
31:09
have told the hotel
31:10
you know we’ll arrive at five but really
31:12
it’s eight o’clock
31:15
so that’s how i like to describe it life
31:17
is
31:18
not predictable i mean look at what
31:19
happened with uh coronavirus
31:22
so that forecasting is really going to
31:24
help you
31:26
because you can change it it’s dynamic
31:28
it moves with you
31:30
um and that in turn gives you
31:34
less surprises when it comes to
31:35
quarterly taxes
31:37
and what we can expect um in the future
31:40
so
31:41
awesome so i know your time is obvious
31:42
very compressed schedule i appreciate
31:44
you spending time with us but
31:45
one more thing i want to hit on before
31:46
we let you go um you’ve been awesome
31:48
just dropping some really candid
31:50
knowledge and actual knowledge too as
31:52
well um but bookkeeping so now we’ve got
31:55
all this set up we figured out our
31:56
entity we figured out our cash flow
31:57
we’ve got the chart of accounts
31:59
we’re forecasting out where we need to
32:00
be and it’s a fine-tuned machine
32:03
but you know i’m still out in the field
32:05
right now or my team’s out in the field
32:07
i’m too busy managing him
32:08
how do i keep up with my bookkeeping so
32:11
i’m assuming
32:12
this is only good if your books are up
32:15
to date
32:16
um and i know that’s one thing in the
32:17
early years at callahan’s lawn care
32:19
uh we were a little negligent we you
32:22
know we’d wait to the end of the month
32:23
or
32:23
two months to totally reconcile
32:26
everything now it’s simple growth
32:27
i’m literally paying my internal
32:29
bookkeeper to update everything weekly
32:31
so i know within five to seven days
32:34
literally to the penny where we’re at
32:36
and the ability
32:37
to see where we’re at and where we’re
32:40
going um and that’s going to reflect
32:42
that cash flow and the chart of accounts
32:43
and everything else you’ve talked about
32:44
it kind of
32:45
without that it kind of all falls apart
32:48
so
32:49
yeah would you mind just dropping some
32:50
knowledge or just some ideas about
32:52
bookkeeping how to keep it up to date
32:53
how to stay consistent and what’s what’s
32:55
a good frequency so
32:57
obviously it’s simple growth like every
32:59
week may not be applicable for a lawn
33:00
care landscaping company and it probably
33:02
isn’t
33:03
um you know obviously owning one for a
33:04
long time but what would you recommend
33:06
is
33:07
current enough but not too crazy that
33:08
it’s going to cost you too much money or
33:10
drive you crazy yeah i think that
33:14
you know falling behind on your
33:16
bookkeeping is such an easy thing to do
33:18
especially if you’re out on the field
33:20
and you have so much work
33:21
um there and it can it can fall behind
33:24
but
33:25
it’s just so costly when it falls behind
33:27
not only
33:28
on tax purposes but then when you go and
33:31
hire a bookkeeper and then they have to
33:32
do all that cleanup work it just becomes
33:36
one lump sump of just bills
33:40
so i think that exactly when you first
33:43
start out
33:44
and you’re doing your bookkeeping on
33:46
your own i think that
33:48
maybe you don’t need it up to date every
33:50
week or every month but
33:52
you would like to have it up to date
33:54
enough where okay
33:55
um i know exactly where i stand so maybe
33:59
every three months or six months maybe
34:01
that’s applicable to you but it really
34:03
depends on where you are in that process
34:06
so
34:07
um we normally recommend you know every
34:10
week or every month
34:12
you know to have it up to date so
34:15
there are so i have a lot of you know
34:18
clients that come in and their
34:20
bookkeeping
34:20
is um not up to date and
34:24
um just to give you a little bit of
34:26
background i have one client
34:28
uh she came in her bookkeeping was not
34:31
up to date
34:32
um you know more than a year and
34:36
she had lost out on a lot of tax savings
34:40
and it is just so detrimental to the
34:44
business because
34:45
it obscures the big picture so it
34:48
obscures your financial statements you
34:49
don’t know where you stand
34:51
you lose out on important tax deductions
34:53
for example
34:54
payroll and paying out your you know
34:56
10.99 and
34:58
if you don’t do that you’re losing out
35:01
on those expenses
35:02
um so when i took over and i got her on
35:07
track
35:07
okay this is the tax deductions we
35:09
should be
35:10
um you know reaching and we should be
35:13
paying out the 1099s and you should be
35:14
on an ira and
35:16
different things like that then
35:19
yes there’s a cost to obtaining a
35:22
professional to do it
35:24
but the benefit outweighs the cost
35:28
and being behind on it like i said you
35:31
don’t know
35:31
if you can afford x y and z because you
35:34
don’t know what your financial
35:35
statements look like you don’t know
35:36
where you stand
35:37
and that is one of the major concerns
35:39
that my clients come with
35:41
um and so getting them up to date and
35:44
having
35:45
their financial picture in place
35:48
tying in with that cash flow trying in
35:50
with our charter accounts we’re good to
35:51
go we know exactly where we stand
35:53
we can make those important business
35:55
decisions moving forward
36:01
awesome great advice and i guess one of
36:03
the things too is i’ll just bring up is
36:04
a lot of times when we’re working with
36:06
businesses by no means do we do
36:07
financial consulting but
36:09
for some reason it always gets back to
36:10
the financials
36:12
especially if you’re just starting out
36:13
off-road sales tax credit
36:15
is is a big one a lot of people don’t
36:18
have that buttoned up
36:19
so on on-road and off-road fuel tracking
36:22
that i mean and you can go back i think
36:23
you’d correct me right you go back about
36:25
three years and re
36:26
uh redo your taxes and refile for those
36:29
um but
36:30
i mean we’ve we’ve literally found eight
36:32
to ten thousand dollars of literally
36:34
tax credits back um for clients
36:37
literally we’re going into some overhead
36:39
recovery numbers and they’re like well
36:40
you know hey it looks like everything’s
36:43
lumped in this one some like do you guys
36:45
file that credit well no we didn’t know
36:46
it existed and they’re like oh well
36:48
wow we we’ve got a lot of extra money to
36:50
actually pay you to help us do some
36:51
other stuff now because we had no idea
36:53
it was there so
36:54
to carl’s point yes it may look a little
36:56
more expensive but if
36:57
even if you’re a smaller business you
36:59
may be you know stepping over dollars to
37:01
save pennies like it
37:02
is probably beneficial to hire a
37:04
professional like carla
37:05
over at cycle cpa um on facebook she’s
37:08
under the
37:09
landscaping accounting facebook page but
37:12
i mean
37:12
to bring an expert in and just demystify
37:14
some of that stuff is really a benefit
37:16
to your business and it allows you to
37:18
concentrate on what you do good
37:20
maybe it’s sales maybe it’s marketing
37:21
maybe it’s being out in the field doing
37:22
the work
37:23
but a lot of expert in my opinion do
37:25
what they do and
37:26
drive that business success uh
37:29
exponentially and i just can’t thank you
37:31
enough coming on carla just uh
37:33
a lot of knowledge really appreciate it
37:35
um cody any closing thoughts questions
37:37
before we uh
37:38
wrap it up here yeah i want to grab uh
37:41
dave voina’s question from the
37:44
comments here carla earlier you were
37:46
talking about a tool that you use for
37:48
forecasting
37:49
that integrates into qbo
37:52
do you know the name of that offhand
37:55
yeah
37:55
give me one second
38:00
there are a couple you’re as bad as me
38:02
i’ve got them all in there but i have no
38:04
idea what name they are just
38:08
so there’s the uh float app there are a
38:11
couple of them
38:12
um the float app is integrates with qbo
38:16
and i think that that’s a good resource
38:17
as well so cool awesome
38:21
so uh so carl if people are interested
38:24
in your expertise around accounting
38:25
especially in the green industry and
38:26
landscaping
38:27
how do they reach out to cycle cpa or
38:29
how do they find
38:30
um the landscaping accountant on
38:32
facebook i know you’ve got a great group
38:34
there where you answer questions as well
38:35
as they come up throughout the year so
38:37
uh
38:38
if somebody’s interested in finding a
38:39
service how do they actually reach out
38:41
and contact you
38:42
i think the most easiest way to reach
38:45
out is
38:46
through facebook on the group it’s
38:48
called
38:49
landscaping accounting or you can reach
38:52
me through email
38:53
at carla p at cyclecpa.com
38:57
awesome carla can’t thank you enough uh
38:59
essay weekly talk show coming back with
39:01
another heavy hitter
39:02
next week um going to be jeremy atkinson
39:06
and he
39:06
is um basically over at contracting pro
39:10
he was
39:11
a service autopilot user him uh and his
39:14
brother tripp
39:15
uh grew and scale uh probably just under
39:17
just over a seven figure
39:19
lawn care and landscaping business and
39:20
actually sold it
39:22
and then got into general contracting so
39:24
jeremy and potentially trip are gonna be
39:26
joining us
39:27
in dropping some knowledge how they
39:28
utilize service autopilot automations
39:31
and built a business to sell and i have
39:33
a feeling carla he’s going to be talking
39:35
about a chart of accounts
39:36
and a solid foundational financial plan
39:39
where they
39:39
exited the industry and then got into
39:43
uh some larger contracting so always fun
39:46
to see
39:46
uh you know friends of the sa family
39:48
coming back and dropping some knowledge
39:50
and checking in on them so
39:51
gonna be hanging out with jeremy
39:52
atkinson potentially his brother tripp
39:54
um dropping some knowledge on the sa
39:56
weekly talk show next friday 1 p.m
39:58
eastern 12 p.m central
40:00
myself cody owen and uh jeremy and
40:02
potentially tripp atkinson so carla once
40:04
again
40:05
thank you so much make sure you guys
40:07
check out cycle cpa
40:08
landscape count on facebook or hit her
40:11
up on her email
40:12
um if you have some questions around
40:13
accounting uh closing up q4 here
40:15
thanks again guys having me