Stop Losing Money: Fix These Bookkeeping Errors Now

Hey, this is Loral, and welcome back to Loral's Real Money Talks podcast about money, how to make it, how to keep it, how to invest it, how to use a team, and how do you find a really good team? Most of my books, at the end of my books, I have interview questions on how to find appropriate teams. Having done that for like, 510, years, most people can't find good team. They don't know the questions to ask. So you I mean, I'm bringing you the best, because I want to bring you folks that absolutely could help you in areas where you're either completely not doing anything, which is the area of that we're going to talk about today, which is bookkeeping. Most people think bookkeeping is throwing their, you know, bank statements, or keeping their bank statements online, not even looking at them, keeping your credit card statements, no reconciliation, no tying out, and then at the end of the year, wondering why you overpay taxes. Bookkeeping, I call it forecasting, is a huge piece of it. So today, I have Niki with me. She's actually a fellow Nebraska girl. I love that highly skilled CPA over 10 years of experience in public accounting and financial auditing as an owner of legacy accounting and consulting, which specializes in bookkeeping services, helping business owners stay organized, stress free as much as possible, as much as you can be stress free, she will help you get organized. And I'm happy to say now kind of millionaire maker style, because she's not only in our big table, but working very closely with us. So those of you who need it? You're going to go to the show notes, click on her link and grab her report on 10 mistakes typically made in bookkeeping that is costing you 1000s in taxes. So Niki, welcome to the show.

Thanks for having me. Laurel,

absolutely. So let's talk about Well, first of all, give a little history. What got you into bookkeeping? Where was your past? Did you go up in Nebraska? Tell our audience a little bit about you, and then we'll go into some of the questions.

Okay, um, kind of a fun little story. My parents used to own a bar and cafe in a small town, and one of our customers was an accountant, and as part of this high school project, I had to interview them. And I always thought, you know, somebody that can have such a fancy car like him, that should be a job that I want to have. And he ended my interview, I asked why he got into it, and he said, accounting came easy to him, and he just really enjoyed it. And in my classes that I took, I'm like, hey, this kind of comes a little easy to me, and I really enjoy just organizing money, I guess. So I felt it was a fit

perfect. So I mean, all I do is talk about the importance of good accounting, good bookkeeping, good tax strategy. So do you where's the kind of mistakes? And I know there's a bunch in your report, but you know from your words, what? Why do you see it important? Because you're the ones that are really down in their in their receipts and their details of how they spend.

Yeah, I would say the importance of bookkeeping is so you can make decisions for your business. I know Laurel, you talk a lot about the tax planning and the forecasting. If you don't have your numbers together, you really don't have anything to base that those decisions on. You can't, can't plan taxes if you don't have numbers in place. And same with the forecasting, you know you can't tell where you're spending your money to better place it potentially in your business as an expense if you don't know where you're spending your money, I kind of look at it, you know, in comparison to like, health and fitness, you gotta track how you're doing, whether that's getting on the scale or taking progress pictures. Accounting is tracking where your business is doing. You know, one thing I I know a lot of people say it in different ways, but I know Tony Robbins had always said, if you you can't improve what you don't measure. So with a lot of what you do improving and living this corporate life, they can't do it if they're not measuring their their business, but through their accounting. The other thing I think is really important, and. Know, speaking to living that corporate life and spending intentionally is having those costs. One other person I had listened to, they alluded to, don't ask if something is deductible, but ask how it can be deductible, and tracking those expenses accordingly, of course, is giving you good bookkeeping and accounting for your business to get the most out of your deductions and benefits and decision making for growing your business.

So a lot of you listening, if you haven't watched my YouTube channel, it's Laura Lacher, The Millionaire maker, and we talk about corporate life. So also in the show notes, we're going to be giving you two tickets to our millionaire intensive, where we go through the first two hours explaining what is corporate life. And corporate life, in our words, is living through a company. So you make your money in a company. So then what Niki does is help you understand. And as a client, I help you understand, but she can get you well off to the races of how much and how aggressive you can be in deductions. Most people are super, don't you? Fine tunic super. They're super conservative. They might have pecked around in this lovely thing called the internet, the bathroom, while I call it, and found a few common deductions. But if you're out there, you're doing your own Turbo Tax. You're an h and r block. You're living as a sole proprietor, you can't take off anything more than 13 to 30 deductions. So when we say, live corporate life, you have an LLC, an S corp, a C Corp, a limited partnership trust, some variety of those entities that allow you these deductions. And then how you spend like, which company should write this off? And that's what bookkeepers, I think should do. And Niki, when we met, I first started talking to you about this, because most bookkeepers Wouldn't you agree. Bookkeepers an account. They record history. They don't lean in and say, Yeah, but this year, you're going to make an extra 100. These are the deductions you now need to do. This is how you need to spend. Use this card for this. Use this card for this? So talk a little bit about the behavior of that, because that's where I think just tons and tons of mistakes are made.

Yeah, I think it goes to living intentionally. You know, going back to that, is the deductive is this deductible? Or how can it be deductible? Is living, spending with intention. If you're living a corporate life, and you know, you may go out to a meal with your friends, right? Well, instead of just a meal with your friends, how about you go and talk about your business and try to, you know, incorporate them in your business somehow other. That's maybe they know some strategic partners to get you new clients, or they could be new leads for you. Just doing it intentionally gives you the opportunity to have more of those deductions that are typically personal and now become business expenses.

What are the ones just top of mind, Niki, that you know people miss all the time, and I think I'd say going out to eat, a big one, even getting groceries. And then, like, I know, tons of people don't write off any groceries yet. They have clients over, they do dinner parties, they have people over happy hour, and they're not writing any of that off. What are some I'd say more obvious, but not so obvious.

I know you always pull up your cell phone, or maybe you have, like a computer at home. I'm guessing you use that for business a lot. One thing I if you work from your home, one thing at Smith slot is your home office. So deducting a part of your house for your your office that you have. I think that's missed often.

What about vehicles, kids, paying kids? What are you seeing and again, until you joined our community, I know you were much more local in the Midwest. Now you're going to start getting clients all over the country, don't you? I what I don't think a lot of people know they can employ their kids, or if they know of it, it's like an idea, but they don't know how, maybe speak to them a little bit.

Yeah, I think employing your kids is definitely missed, and a lot of times your kids are probably helping you, but to get that deduction really making sure you're documenting, you know, treating them kind of like an employee, because that's what they would be so making sure that if they're doing things for you age appropriate, of course, you know, if you have it a 10 year old or 15 year old, maybe they're great at posting things on your social media for you or shredding paper. Or if they're older, you know, maybe they can go be making those business connections with you or for you, but just tracking that, making sure that the documentation is there to support that they're they're an employee with you. And

one thing, and I know we all say, is, you know, it's not if it's deductible, it's how can it be deductible? What's the context and category you need to. And we're not saying do anything illegal, and I think a lot of you just don't know, which brings me to my next question is, I'm going to say when and should business owner or even an investor hire a bookkeeper or hire a professional? I mean, I know my answer. What's yours?

I mean, I'm a little biased. Hire me now, right? Yesterday, I but I'm, I think, ask yourself, do you enjoy doing the bookkeeping? If you're one of those people, when you think about it and you're like, that's terrible, we'll hire it out. The other thing is, do you have time for it? Your Your time is really valuable. If you can go out and make sales and create revenue for your business and really grow it. That's time better spent than sitting at a computer doing the accounting. The other piece is, if you're doing it, are you doing it correctly? You know, of course, you can get a link to my 10 common mistakes. But if you, if you aren't sure, you know you're you're kind of making decisions on potentially false information when when it comes to those tech strategies, or, you know, growing your business, buying new equipment, any sort of financial forward looking forecasting, if your numbers are wrong, then you might be making bad decisions based on that too.

So Niki, I know we you have a report of the top, you know, 10 mistakes. Tell us the the the few in there, the maybe one or two, just kind of peak everyone's interest to go get the report. It's in the show notes. And while you're there, grab two tickets to the millionaire intensive. But talk about the few, and kind of go into a little deeper dive of those mistakes and how people consistently continue to make them.

Yeah, one thing I see a lot is CO mingling. You know, you have somebody, they have one bank account, and they do all of their spending through that personal and business makes it really hard to track your information. You know, it opens up the opportunity to count something as income that really isn't truly business income, or miss an expense when you're doing your accounting. So I highly, highly, highly, and if you were my client, I would say I wouldn't do your books unless you have a separate business bank account and or credit card account and run all your business stuff through that.

So dig deeper into that, because I think, I mean, that is kind of an easier solution that people don't realize the bank account, your credit card statements. I mean, there's pretty much if they just ran that way and put their debit card away. Doesn't that make it easier for you? Absolutely

it's it puts everything on those statements. So it's a great, great way to make sure that you are accounting for all of your transactions and that you don't have to guess on anything if it's personal or not, so a credit card statement is going to have the history of your spending, your bank statement, it's going to have your history of your payments and your income.

And talk about cash you you mentioned it, but cash is extremely hard to track. And I know a lot of people, they like to live on cash and use cash. My my question always is, well, whose cash is it? Is it yours? Is it the businesses? Is it a different businesses? The the cash gets really, really layered. So speaks to just the treatment of cash, because I think it's messed up

a lot. Yeah, cash is very, very hard to track. I know back in the day, they would have petty cash boxes. And honestly, if you're doing it correctly, you are taking your receipt, you're putting it in there. You're writing down how much you spent, like a handwritten ledger of what you put in there and what you take out. To me, that's pretty tedious, and if you forget, you may have lost that expense where, if you have a bank statement or a credit card statement, it's documented there, so you don't miss out on those. And you don't have to be so tedious of nickels and dimes and tracking that money, because last time I checked, if I looked at my purse, I couldn't tell you exactly how much cash I had in there, let alone is it my cash or my business is cash, so I very, very much recommend, would almost require not using cash, if at all possible.

So give us more tips on how to document, track receipts, invoices. I mean, I know some people are fans of QuickBooks. Quicken is more for personal. I mean, you can use that for some investment accounts, but give some just overall, how do you even start getting I would even back it up to say how to get organized, even get the documents where they need to be right

anymore. There's a lot of technology out there, so you have a bunch of options for tracking. Your receipts and invoices. I utilize QuickBooks. I know they, along with many other softwares, have apps where you can just take a picture on your phone and you have it digitally. And the IRS does accept digital documentation now, so if you wanted to take a picture and throw away your paper records, you definitely could. I would just recommend thinking about, if you lost one or the other, what's your backup? So however you feel the most safe about that. But I mean, I know there's like, scan apps. There's scanners you can put literally on your desk, and just dump your receipts through and they organize them for you. But I would say, find a way that works best for you, that you've created a habit that every time you have that receipt or invoice or whatever you this is what I do with it. I see it, I push it to, you know, to QuickBooks, to get added to a transactions or push it to a file to save it, however works best for you, but I would keep that documentation intact

and talk about the duration of documentation.

It's usually recommended at least seven years to keep your documentation typically, sometimes they can go back further than that. If, if they find issues, like if an IRS audit, they find issues in your books, they can go back further to wherever you know, wherever they think they is necessary. So I would say at least seven years on most things.

Yeah, you said these T shirts that said, do paperwork or be poor, because this is such a critical part that sets up your tax basis. So many of you, you think your taxes is putting everything in a box and setting it down to a CPA once a year. And then, historically, they document it bookkeeper or no or no bookkeeper. But typically, even if you send it to your CPA, they're going to bring in someone, or they're going to bring in a bookkeeper, somebody help organize and actually, what they call tax prep, get it ready. But if you haven't, I say behaved all year long, using the right cards, the right bank accounts. I mean, think about it. If it's you and say three companies, that means you have one social security number and you've got three lines of credit. So you should have three, at least four credit cards. I'd say each of them, honestly, should have three or four, but minimum, you'd walk around with one for you, one for each of the companies. And wherever you are, you're like you said, Nick, you're intentionally spending knowing this is a deduction, and whatever you're spending personally, most likely is not going to be and a huge part of your tax strategy starts with this level of spending and the detail of when you go to Home Depot, are you buying a repair for your house, or are you buying, you know, just some plants and seeds for, you know, your own personal house that still could be under landscaping if you Have owner, Officer and director benefits. So there's so many strategies that a lot of you you don't know. And I mean, Niki, you are like a full fledged CPA, correct, correct. You went through the grueling for exams and all of that fun stuff my son's going through now. Why did you lean towards the audit, bookkeeping side versus go to the like, just to front the clients as the tax strategist, because, like, I have two people that are on my team. They're CPAs too, but they're doing the same thing you're doing. So I'm just curious, like, you're going to find a variety of people with different skills and where they like to lean. So just talk about that.

It's funny, I always say I started public accounting at the wrong time of year for taxes. I started in October. They weren't really doing taxes. They needed people to fill the audit position. But I did learn that I actually did really enjoy it again. It goes back to organizing and just making sure that the numbers are right. A big part of auditing is, well, that's why we come in, is to make sure that what you say, your numbers are in your financial statements are are correct. So I really just learned to love digging into it and making sure that the numbers are correct and fixing them so that they are when they are. And I've stuck with it ever, ever since.

So how often should a business update its books? And then I have a whole series of questions after that. So let's go one by one.

Okay, um, this is another one. I would say it depends. Um, how big is your business? How many transactions Do you have? Obviously, the more you have, the more frequently you should be updating your books. If you maybe, let's say you have a rental, just a single family home rental. You know, you receive the rent once a month. You pay that monthly utilities. It's not a whole lot. You could probably do it an update each month. And. Uh, but say you're selling products, and you're selling hundreds and 1000s of them every day. I would probably check that every day.

And as far as you know, there's this one once in a while, like catastrophes. I have a some doctors that just came into our big table, and the manipulation of the bookkeeping from prior teams to have it look like a big valuation, and it looked horrible. So it's pretty rare. I could probably count on one hand the amount of times I've told someone just to scrap their books and start from scratch and just start from a January and start a cleanup of what's real. How often, I mean, how bad does it get before you just call it because it was so commingled, so tangled. Company to company was even commingled. It wasn't just personal in one company was personal. In like five companies was such a tangled mess. You know, at some point it's a cost analysis is, at least that's the way I looked at it. With this client. You can have somebody untangle all this or just put a nice little bow around it. Say it's a mess. We'll park it over here for a little minute. Tidy it up later, but start fresh from like January 2024. Is when they started, and they cleaned it, cleaned their inventory. They had negative 10 million in inventory. You knew that wasn't right, and there was just such a mess in their books. So it's probably more like I said, one of five times in my whole career, what have you kind of seen and when do people make that determination? I actually don't think the person should I think somebody like you should make that determination, but talk a little bit about how bad it can get. This is a serious topic. Those of you that go, Oh my gosh, this podcast is boring. No, actually think this is the most creative stuff, because this is the front line of how you spend and how you pay bills and how you get your tax strategy right. I think it's the most creative, fun part of it. Most of you're like, Oh, my God, I hate this. So just give them a little fear tactic here. And I'm doing it intentionally because I want people to wake up. This is really serious, and a lot of you treat this part of your business casually, which is maybe why you're not winning.

Yeah, I have done some cleanup work, and I would say hands down, if, if somebody else made your mess, that's when it is extremely difficult to try to follow. And if it, you know, I kind of go back to tying out your numbers right if I can't go in and there and your bank account doesn't tie to your bank statements. Like, that's a problem. That's a huge problem. If, like Laurel said, if your inventory is negative millions of dollars, that's a huge problem. How can you tell what your business is doing if those numbers are that wrong, and at that point, it takes so much time to dig in there and try to figure out what somebody else did, but it's not worth trying to fix that versus just redoing it and that. Again, if you've ever read a year's worth of books, I know some of those people that right now, getting ready for last year's taxes, are doing 2024 books right now. How grueling that can be. It's just a lot of work. So if you can hire somebody right now that can keep you up to date throughout the year and do it correctly. I mean just the amount of time and stress that will save you and money to not have to pay for a cleanup, because that's a lot more expensive than doing it right the first time,

absolutely. So those of you who don't know much about us. Again, I'm going to send you back to the millionaire maker YouTube channel. Look up debits and credits, whether you should use a debit card or credit card. I say put your debit card away. Go over there and check out why Niki has wrote a report. So talk about your 10 common mistakes and what's going to be in the report. How do they go get you? Go to the show notes to go get it, when they get it, then what do you want them to do?

Alright? So if you click on the link in the show notes, you'll get access to my free ebook, which is the 10 common book make bookkeeping mistakes you are making. This list out and the top 10 that I typically see it'll kind of give you guidance to let you know, if you're doing that, you'll also be guided to set up an discovery call with me if you'd like to discuss with me an opportunity to help you with your accounting, and we can see for a right fit. And then from there we can, we can go and I can help you out as needed.

And kind of, I have many questions, but the lot, one of the last ones is, you know, there's also this myth that they need to be in your state. So talk a little bit about, you're in Nebraska, they're in Maryland, they're in Alaska, they're somewhere else. How? That's fine, especially at the bookkeeping level. If they're if they're not licensed as a CPA to file tax in your state, then that's different. But bookkeepers can work anywhere,

right? I actually have clients all over the United States with, again, with the technology that's out there, it makes it super easy. I can use QuickBooks, and that allows my clients to see their books, as well as me to work in them in real time. And then I with technology, there's plenty of share file options to provide me with the documentations that I need, and getting access to their invoices and receipts to make sure that their other transactions are accounted for properly too. So it's it's really easy to take care of. Zoom meetings is another great opportunity for us to even see face to face. So I'm not this, you know, non existent person you're working with,

awesome. And again, we got zoom all sorts of ways for her to log in. And wouldn't you say at least once a month meeting, if not twice a month? For bookkeeping,

at least they may be not as formal each time, but at least touching base to ask questions about you know what you're doing when I'm getting in your books, to make sure I'm doing accurately,

absolutely. So all of you make sure you grab her ebook in the show notes. Check out our YouTube channel. Grab those two tickets to the millionaire intensive. If you don't know what we're talking about, we say, live corporate life, and we'll have you back again, Niki and she will be also with us at our big table. April, 28 and 29th it's our 25th anniversary here in Reno, Nevada. So those of you who've been walking around joining the table, it's time to jump, because it's time to go. And by the way, yesterday, which we are recording this on March 18, yesterday was your tax filing extension day. So if you didn't file extension, so you've missed you missed it, I would still get extensions filed. Do what you need to the wealthy calendar is you file taxes September, October, not at April 15. And if you don't know about that, you must go to millionaire intensive and learn Niki. Thanks for being on any last words of wisdom to our listening audience from all over the world, because this isn't all over the world. I know it's very American centric topic with Niki, but there are people like her all over the world, in your country, same behavior has to happen.

I would just say, if you don't hire somebody, or if you're doing it yourself, it's really important to keep track of your accounting on a regular basis. That will save you so much time and stress, and I am happy to help you, if you would like to offer that to somebody

Perfect, perfect, perfect. Thank you for being here. Thanks all of you for listening again to another episode of laurels Real Money Talks. Pass this on to other folks that need it, and you parents out there, make sure your kids start it at 18 years old, when they become an adult, even if they're resisting adulting. This is important at a basic level. So great to have you. We'll be back next Friday with another topic. We'll be doing a lot of very what I call big table centric topics. We have we just interviewed an estate lawyer, Bonnie. So if you have not listened to that podcast about a legacy software and how to manage that. I have another table person coming on. It's called patient, patiently lazy or something like that. Kelly wrote a real estate book. It's all a drive. Ai driven on how to go find real estate deals. So that'll be coming soon, in the next few weeks, and we'll be featuring more and more of our superstars. So Niki, thanks and talk to you on next Friday. Thank you.