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Are you trying to learn how to deliver massive tax value to your clients? Then look no further. Retirement Tax Services Podcast, Financial Professional’s Edition is a show hosted by Steven Jarvis, CPA. Steven aims to bridge the gap between tax professionals, financial advisors and their mutual clients in their quest for reducing tax expenses in retirement.
In this special episode Steven is joined by Brook Cecil, Directory of Accounting Services at Belay Solutions to tackle a topic most advisors probably need help on themselves (and potentially could benefit some of your clients. Brook and Steven discuss the value of good bookkeeping, how bookkeeping needs evolve overtime and provide a framework for the key functions your bookkeeper needs to cover for you (and if you are your own bookkeeper, is that really your highest and best use?). Brook also shares how you can use a delegation matrix to judge ROI on adding a bookkeeper to your team and was kind enough to share an example that is linked in the show notes.
Steven and his guests share more tax-planning insights in today’s Retirement Tax Services Podcast. Feedback, unusual tax-planning stories, and suggestions for future guests can be sent to firstname.lastname@example.org.
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Hello everyone, and welcome to the next episode of the Retirement Tax podcast. My name is Steven Jarvis. As always, I am here to share how advisors can do more with tax planning, and I’m especially excited about today’s conversation because while we typically talk about things you can do for your clients, my guest today is going to be talking about things you might need to do for your business as well. Joining me is Brook Cecil, the director of Accounting Services at Belay. Brook, welcome to the show.
Thanks so much for having me.
Yeah, I’m really excited to have this conversation. Like I said, so often I talk to advisors about here’s things you should go do for your clients, and specifically we’re going to be talking about bookkeeping because BELAY has a great bookkeeping service. We also love working with BELAY for the virtual assistants that you provide, but especially when it comes to bookkeeping, I know I’ve got a lot of advisors who work with business owners and it might be easy, this is probably one of those situations where it’s kind of physician heal thyself. There might be people listening who are constantly telling their clients, Hey, you need a better bookkeeper. But I also run into advisors. Literally before we started recording this today, I was talking to an advisor who I had to say, Hey, it is time for you to go get a new bookkeeper, someone who does this professionally full time. So Brook, talk a little bit about the origin of bookkeeping being a part of Belay that I always really thought of as a virtual assistant company.
So our virtual bookkeeping services are a service that has been around really from the beginning, right around 11 years we have been providing bookkeeping services, and so we originally started out in the nonprofit sector and then expanded in 2017 to serve for-profit businesses as well. And so that has been a fun journey to be a part of, but really our goal is to come alongside small business owners and help take off that burden of bookkeeping. And I’m sure for your community, that is something that we have the expertise, experience, the education in, and so we know enough that we can kind of get it done and check those boxes, but at the end of the day, we want to eliminate that burden so we can have our clients focus on what they need to do to order to serve their clients and to grow their businesses.
And Brook, I’d love to hear your perspective from the clients that you work with, but as I talk to advisors, as I talk to business owners, bookkeeping to me feels like one of these things that no one will disagree that it needs to be done, but it always feels like such a low priority that when someone starts a business, whether they’re an advisor or some other and some other business, it’s like, oh, well I have Excel. It’s not that complicated. I can just do it myself. And maybe when you first start, that’s sort of true, or at least maybe we won’t argue too hard on that point, but over time this just becomes more and more complicated. And the things that I start to see that, especially as I prepare tax returns, these just kind of drive me nuts. We start seeing really large miscellaneous buckets that rather than take the time to actually classify things, everything just goes into miscellaneous.
We just won’t worry about it, which causes all sorts of problems just in getting things done right on the tax return the first time, let alone if the IRS ever comes and asks you questions, they’re not fans of giant miscellaneous buckets. So I see advisors, I see business owners over time not recognize that their complexity has changed and they keep just kind of stumbling through bookkeeping, and I think they just tell themselves, well, my tax return gets filed every year, so it must be just fine. So I mean from your side, what do you encourage business owners to be on the lookout for to help them identify, okay, maybe it’s time for it to get some better help?
Yeah, I think as we start off in small businesses, you were correct, there are those automated payments and things seem to be pretty smooth. You have an idea of your revenue, so you’re making your quarterly payments on time. You see all those things and then business takes off and for some reason this level of detail just falls to the wayside. And candidly, you’ve got money in your bank, you’re growing, you see your revenue ticking up. But one thing that we see, especially when we do notice that it is time, is that you are in a crunch. You are operating in this almost panic mode because you do have to get your stuff over to your CPA to file so you can file on time or Oh my gosh, I filed that extension and October is here, September is here already and I have to file. And so when it tends to be an afterthought, I really think that that’s when it’s time that you kind of step back and need to evaluate, alright, I need to look at a different option. And the beauty of it is that there’s so many resources out there that now it doesn’t even have to be a full-time or even a 20 hour a week role really, there’s many opportunities that it can be done within a very small window of time, which is very financially responsible.
Yeah, we always love that. That’s a really great point, Brook, because it can kind of feel like, well l, once I need a full-time person, I can hire my team. That’s when I’ll outsource bookkeeping to someone else. And to your point you made earlier, for a lot of financial professionals in particular, they probably, in fairness, they probably do have the intelligence and expertise to figure bookkeeping out on their own if they were actually going to dedicate the time to it. In my experience, financial advisors just don’t they have a separate corporate card or whatever they have that it’s like, okay, that’s how I track things and then all that stuff on that side is business expenses and that only works for so long and it’s really questionable whether it works at all. That only gets you by for so long before you start creating headaches and if nothing else, even if you’re doing a perfect job right now, I would challenge anyone listening to this podcast to try to make an argument that bookkeeping is your highest and best use and even if you have someone on your team that’s helping you with it, if that’s not what they’re experienced in, if they’re just kind of meddling their way through it, is that really their highest and best use?
And so these are things you want to be on the lookout for to say, Hey, just like any other area of my business, is it time I go and get better help in this area?
Yes, absolutely. And I know one resource that we will be linking to this podcast is we have a sort of Delegation matrix, if you will, to really evaluate what are the things that you are spending time on from a bookkeeping perspective and just trying to put the time to that so you can really evaluate the RLI of your time versus when it is time to really have somebody come in and support you in that way. I was even thinking when you were talking about just dumping everything into miscellaneous expense in doing that, you’re not getting a real clear understanding of where your spending is, and so you’re potentially even missing out on an opportunity to become more profitable because maybe you’re paying your internet just skyrocketed and you have no idea because it’s just getting dumped into this account that you just never have time to look at. But if you had somebody’s outside perspective, they would be able to say, Hey, this is going up. If you considered looking at a different vendor or whatever it might be, that’s also extremely helpful and it takes that work off of you as well.
Yeah, that’s a great point. This isn’t just kind of taking some of your time or giving you some of your time back. It is potentially costing you money to not have good bookkeeping done. Again, situation I was looking at recently working on a tax return for a client that again, we’re encouraging them to go and find a better bookkeeper because there’s some distinctions that weren’t being made that if our team wasn’t asking really detailed questions, and a lot of times the tax preparer is not going to, they’re going to take what you have and they’re trying to get through a thousand returns, and so they’re just going to go rapid fire. We went back and asked some really detailed questions to really drive that weight should some of these things be classified differently because it does matter from a tax perspective. It’s not just revenue expenses, income.
There’s some important distinctions in there, and you could be paying unnecessary taxes, tipping the IRS if you aren’t doing your bookkeeping right. One of the other suggestions that actually came from a financial advisor, but that I love making to business owners in general, that ties into bookkeeping for me at least because you mentioned, Hey, is this expense going up? Is this time to look for a new vendor? Another one that, especially in the internet age, we all get really guilty of having way too many subscriptions. Not even just talking about Netflix, but I mean just about anything anymore is a subscription service of some kind, and it’s a great model. I love the subscription model, but an interesting exercise to go through is every couple of months just pick some subscriptions. You’re not entirely sure what you’re using ’em for, turn ’em off, see what happens, see if you really actually need them. But again, if somebody’s not paying attention to that level of detail to say, well, wait, how many monthly subscriptions do I have? It’s going to be impossible to identify those things.
And we always say too, it’s just great to have an additional resource, kind of that outsider perspective because this is the way that you’ve done it, this is the way that you’ve built the business, but is that the best path forward? Is there an efficiency to create within your process of whatever it is, whether it’s your payables or how you go about doing your payroll, there might be some efficiencies that, again, you’re so busy that you haven’t had time to step back and just look and evaluate, and that’s one great benefit that we see and hiring that additional support.
If a client walked through your door right now and ask to see their 10 year tax plan, what would you do? How would you answer that question? What would you show them? What actions have you taken as a financial advisor and ensure you’re delivering massive tax value to every single one of your financial planning clients without being a CPA? If you are like the hundreds of financial advisors that reach out to us from across the country, you know, you need to do a better job for your clients when it comes to tax planning, and that is why leading financial advisors across the country, we’ll be going to Las Vegas, Nevada, September 27th through the 29th to learn directly from Retirement Tax Services how they can improve their tax planning for financial planning. Clients go to retirementtaxservices.com and register to attend this incredible tax planning session September 27th through the 29th in Las Vegas, Nevada.
So whether it’s for advisors listening or for business owners that they have as clients, one of the things that I’ve noticed is that it can be challenging for the business owner to whether they’re getting good help from a vendor with a service that they aren’t themselves intimately familiar with. What should business owners expect from their bookkeepers? Is this just, Hey, reconcile my bank statement once a month? I mean, from your perspective, what should you be asking a bookkeeper for?
Yeah, so for our bookkeepers, we kind of look at it in three different buckets. We look at reporting reconcile and recording, and so we want all those transactions that are flowing in and out of our bank accounts to be recorded and to be recorded accurately, not just in that miscellaneous bucket. And then we want it to reconcile because we want everything to be able to line up and be shored up. We always tell our clients that we want them on a monthly basis to be audit and tax ready, so again, we’re getting away from that scrambling and we can just quickly hand over those reports in a beautiful manner and then that reporting so you can see on a weekly, monthly basis where things are and so you can make the decisions that you need to make to push your business forward.
I think another key thing that I see, I’ve been here for 10 years working alongside our bookkeepers and our clients, and the thing that I also see that is a big gap is just the communication piece. Often clients think, oh, I’ve handed over the books. I’m done. I’ll just get it come March when I’ve got to send everything over. And that’s not the case there is that conversation because they aren’t mind readers for those miscellaneous expenses, but also it’s an additional layer of a team member, and so talking about maybe some adjustments that we need to make within the budget in order to get you to where you need to be over here or forecasting for the future. That is one piece that I think that clients at times think that out of sight, out of mind when it’s really just coming alongside you to take that support, but for you to be that partner.
I really like that framework that recording, reconciling and reporting, and this makes me think of how I talk to both advisors and taxpayers a lot about tax planning is that to me, these things should be non-negotiable for every business owner. And if you want to be the one responsible for them, that’s fine, but someone on your team needs to be responsible for each of these areas. And so if you’re not willing to make it you or you don’t have a team member who can dedicate and has the experience to do that, it’s time to look for professional help just like someone would with financial planning or tax planning, someone on your team has to pay attention to this stuff. It’s either got to be you or you need to hire someone to do it. Brook, what do you see as that experience of switching bookkeepers, of having a bookkeeper for the first time? I know a lot of advisors who, again, we talked about this at the beginning, that you start your business, you think I’ll get that said eventually. And so for a lot of people, they’ve probably never switched bookkeepers before and that might feel like really daunting that I’ve got to open my personal life to someone else. I’ve got to share all this sensitive information. What should somebody expect going into a transition like that?
Yeah, well, we try here at Belay, we try to make it as seamless as possible, but to your point, it is a big step to take that with whomever you’re moving forward with bookkeeping. The beauty of where we sit today is that there are so many integrations within technology that it really can be a seamless process. Many of the accounts payable systems as well as payroll integrate directly with QuickBooks, and there are a lot of great functionalities. For instance, within our payable system, it has approval process and security measures to ensure that your information is correct. Our bookkeepers don’t even have access to client’s banking information because it’s all integrated within the system, which is fantastic, but there is that process of you do have to train your new team member, and so that’s what I was saying. It’s not like a set it and forget it.
There will be that upfront implementation for your team, but I think again, keeping that clear communication and just setting the expectations of what the workflow looks like, what reporting need just to look like, it can quickly, we tend to say it’s probably about 30 to 60 days to where you were fully implemented. We kind of provide here at Belay a journey so clients can kind of just see at this marker, here’s our expectation of where you should be within your processes and set up. But it is, it’s a big responsibility, and so you want to ensure that your bookkeeper is highly vetted and that they have the experience in order to serve you. And it might even be industry specific. That’s one thing we see a lot for our for-profit clients where we see it work really well is those that have experience within whatever field that they’re serving in.
Yeah, that makes a lot of sense because the industry is going to really dictate the types of transactions, the frequency of the transactions, what different vendors you might come across, and how those interactions all work. Brook, are there ever situations you come across where, because I always try to take the opposite perspective where you say, you know what, you need to be a little bit bigger before you consider a bookkeeper, or if you’ve got to wave a magic wand, would you just say on day one, every business everywhere has a bookkeeper?
Well, being a wife of a small business owner, I would say it really varies. I think as we kind of look at different clients, we have some clients that come in and all we really do is we reconcile and we provide them reports on a monthly basis. There’s not a lot of things going in and out, very minimal transactions. And so again, I think it’s kind of you evaluating the RLI for your personal needs and desires to see and determine, is this worth whatever that price tag is to get you out of that, or is it time? In my husband’s case, he has a wife that has the experience and so she can handle it for him. So I think it’s just kind of evaluating for you what that cost is. But we see the gamut. We see people that are just starting out that already have very minimal transactions to multimillion dollar businesses.
As I talk to advisors and business owners, it seems like from the tax perspective, it’s usually we’ve identified something went wrong when we say, Hey, listen, you really need to go look at this because as the tax professional, I’m not really in the business of evaluating everyone’s team for them, and so until something goes wrong, I might not always know that there is an issue. But I mean, so ones we commonly see, it seems like especially with smaller businesses, payroll complexities start to add up really quickly as you start, as maybe you go from just having one employee or only having yourself on payroll to having multiple employees, or in the virtual world we’re in now having employees in multiple states. So payroll is definitely one that I see trip people up and then say, oh, wait, I probably do need more help. Are there other specific areas that come to mind that you commonly see, oh, hey, this was the problem that pushed me to, I need to go get a different bookkeeper?
Yes. Payroll is definitely one that we see quite frequently. We also just see lapse in bill payment. Just all of a sudden they get a notice and something is way past due and the lights are going to get turned off or whatever it might be, but that they are so overwhelmed by whatever’s going on within their business or if they just have somebody that is coming in maybe one day a week and doesn’t see a bill and can miss it. Those are similar things we see. Also, like you mentioned around tax time when they are sitting down with their CPA and they’re kind of getting a recap on the year to evaluate, okay, I’ve got to make some changes because what I’m doing is not working. That’s another big thing that we see. Or like I said in my instance where the wife is tired of completing the financials and she says that she is hanging it up, and so we’re looking for another opportunity.
Yeah, those are great examples. Definitely things that people should be paying attention to just again, like any other area of your business, you need to have periodic times where you check in and say, is my current system still working? And if it’s not, maybe it’s time to find a new resource.
Brook, we’d like to make sure that the conversations that we have are always valuable for our audience, which for us means that they can take action. You mentioned the Delegation matrix that you’re going to provide. We’ll make sure there’s a link to that in the show notes, which, so that’s right out of the gate. Anyone who has a business, this is the type of thing you should be looking at this, this isn’t like, Hey, I think everything’s perfect, or I think everything’s just about to fall apart. I mean, these are important to do on a regular basis. You might go through something like this and say, you know what? We’re all set. Which, hey, great, that’s fantastic. Now you’ve reaffirmed that. Now you feel we have that level of confidence, but we got to make sure that we’re going through that process to make sure we know what we should be doing. So Brooke, if people listening are interested in learning more about specifically working with Belay, where can they go to learn more?
They can go to belaysolutions.com and you can just click get started and it will take you directly to schedule a call immediately with one of our team members that can talk to you a little bit more, just understand their needs and see if we might be the right resource for them.
And as we record this, it is in September, it’ll get released in September as well. We are quickly coming up at the end of the year. I always where we can, I like to make sure that people understand timelines. And so are there windows where you don’t take on new clients or is there a time by which it’s like, you know what, as the business owner, you’ll have a better experience if you come to us before a certain date so we can actually get you set up for the end of the year? What’s that look like?
Yeah, well, we will never say no. We’ll happily take anyone on. However, if someone’s looking to make a change with their payroll or as we step into the new year, obviously towards the end of the year, November is kind of a great time to get in and get started, just to make sure that we are ready to roll come January one for a clean slate. That’s normally our best practice is we try to get all of those payroll clients in before Thanksgiving, but we can make it happen otherwise. But yeah, at any time, we would love the opportunity to start with that.
That’s fantastic. The last thing I’ll throw out is just a reminder of that framework that Brooke gave us of the recording, reconciling and reporting. You need to take a look at your business and there needs to be someone’s name next to each of those things. And if you’re not sure whose name goes next to them, maybe it’s time to think about a bookkeeper. If your own name is next to them and you’re not happy about, that might be time to look for a bookkeeper. Whether that’s exploring, working with Belay or someone local, someone else virtual, like everything on this podcast. We care so much more about you taking action that you do good for your business, you get it for your clients, and that if a specific solution like Belay is the right fit for you, that obviously you pursue that as well. So Brook, thank you so much for being here. I really appreciate your time and your perspective.
Thank you. Appreciate being here too.
Yeah, and to everyone listening, good luck out there. And until next time, remember to tip your server, not the IRS!
The information on this site is for education only and should not be considered tax advice. Retirement Tax Services is not affiliated with Shilanski & Associates, Jarvis Financial Services or any other financial services firms.
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