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This episode of the Kate show is brought to you by HoneyBook. I love using HoneyBook for my business because it helps create a streamlined workflow when people decide they want to work with me. Because, you know, there's one thing to do the right marketing to get the client, there's quite another to impress them all the way through the end of the project. And with HoneyBook, my clients are able to review and sign their proposal, make their payment, and then be told what to do next, all in one fell swoop. I've set up automations that remind them when they need to send me certain assets so that their website project can go off without a hitch. And if you've ever worked with us, you know that honeybook kept you on track. It kept us on track and it was really easy to use. If you're Interested in using HoneyBook for your business, go to HoneyBook.com and use the code Socialite at checkout for 50% off your first year. Hello, everyone, and welcome back to the K Show. I have Morgan with me today. Morgan, thank you for being here.
B
Thanks so much for having me. I'm looking forward to chatting with you.
A
Yeah, I'm glad we could make it work because I've been working with business by the book for quite a few years now. That's the first booking firm I ever hired. And, well, I'm still here. You guys just can't get rid of me. So it is an honor to speak with you. I know that, you know, when your mom started the company, however many years ago it was, it's really grown a lot, especially, I would say, over the last decade. And with you now in the position of vice president, I thought, well, you're the perfect person to have on the show. So I would like to know. We're just going to get right into it. All the listeners are going to want to know the answers to these questions. Which bookkeeping software is best for designers? There's QuickBooks, there's House Pro, I'm sure there's other options, but what's your take on that?
B
Yeah, so first of all, I think that these softwares kind of fall into two different buckets. QuickBooks, we would really consider that a financial management software. And then Houzz Pro Design Files, Mydoma Materio, those are all project management softwares and they work together. So most of our clients are in. Houzz Pro Design Files is coming up and we have more and more people using that. Materio is another up and coming one that we really are excited about and it really depends on what size business you have and what your needs are. So House Pro and Materio are really great for bigger firms that focus a lot on new construction and big renovation because they have a lot of project management planning tools. Design Files is great for like a small to medium sized businesses. The one thing that we would say is that we sit on the Houzz Pro advisory board, Business by the Book does. And so that is a great connection for our clients because we're able to take any issues with the software directly to the software development team where this isn't a paid position, we get no kickbacks. It really is just a relationship that we have with Houzz Pro to make improvements that our clients like directly. We're able to send them screenshots when people are having trouble and we find that that really helps get answers. So but, but we don't just work exclusively with House Pro. We also love the people over at Design Files and then we're building a relationship with material which is newer.
A
Yeah, I had not heard of them before. I'll have to look them up. But I like that you make a difference between like, one is financial management, one is project management. Because as much as a lot of us business owners don't want to have an account here, an account there, sometimes we have to because each tool does have its own zone of genius. And let's just get into like the, the financial management side of it because that's a side that a lot of people are scared of. That's a side that I was scared of for a long time. And I would like to know what are some of the most common bookkeeping mistakes that you guys find yourselves helping people specifically interior designers correct in their businesses.
B
So I would say the very first thing is sales tax. It is so complicated and can be really scary and intimidating because the Department of Revenue is on the mail and on the websites and it feels really scary. And so there are lots of nuances to the laws. There is nexus requirements. And so we, that that's really like people just are afraid of it and so oftentimes they just don't do it. And so that is when you can get into, you can just create real big messes there. And so that is a number one mistake or like avoidance that we see people that come to us with. And so we, we have lots and lots of experience with sales tax in all different states. And so we can. We. We really also focus on education and teaching our clients like how to move forward with this on their own and Teaching them, like, what would trigger Nexus. So if you have a project in a state that's not your home state, there are thresholds to be aware of and those sorts of things. So we focus a lot on education. With sales tax, the second real big issue that we are, a common mistake we see is people purchasing retail versus wholesale. You lose tons of revenue with purchasing retail, and it complicates your sales tax. So there's huge sales tax implications with retail purchasing.
A
And.
B
And so we really sort of do some education and coaching on retail versus wholesale purchasing. And then the second, or like, I guess the last big mistake that we see is with confidence. And so the people come to us with a complete lack of confidence because they don't have any financial documents. They have no idea what their. What the financial position of their business is. And so with putting together the financial reports and showing them what their numbers are, you know, it's a very Shark tank thing to, like, know your numbers, but it really is important. And by having that data, you can make really educated financial decisions, which then backs up what you're, you know, validate the price that you're charging, and you can, you know, really know your worth there. So, you know, yeah, those. Those three things are. Are real big, you know, mistakes that we see and how we. We really help our client.
A
And those are heavy right there. And the idea of purchasing retail versus wholesale, it's crazy how many designers are still buying retail. And I only say that just from, like, the marketing perspective of they're. They're selling things that these people could go buy themselves versus wholesale, where now it's exclusive through you, the designer. Plus, you also should be making a markup on everything that you're selling. And you can't do that if it's retail, because everyone knows what it costs because they can go shop at Pottery Barn, too. So it is a challenge. And I will say for everyone who's watching on YouTube or watching on Spotify right now, my screen froze in the most unflattering way. So you can probably still hear me. I don't know why it is frozen right now. But, Morgan, you still look beautiful, so we'll. We'll go with that.
B
Okay. Okay.
A
Yes. I have no idea why I did that. So anyway, with this whole idea of, let's just say interior designers have been selling retail instead of wholesale, they've been making sales tax mistakes. They might then feel like it is going to be such a colossal project to get all their bookkeeping fixed retroactively. And this is something I was going to ask you about a little later, but I want to bring it up now because I have a feeling that a lot of my listeners are going to be like, oh no, I did that. I'm making these mistakes. How bad is it going to be to get this fixed? So what would you say to that?
B
Okay, so first of all, there's no shame in this. We have seen it all. It really, you know, we build relationships with our clients, but at the end of the day that just numbers and it sort of, it's like going to the doctor. You get of separated from what's going on and who you are. So it's fine. We will, there's no reason to be embarrassed. That's sort of kind of the first thing that I would say then. So to kind of walk through the processes. So we put it all together. We can take your bank and credit card statements, your invoices receipt bills, basically any sort of documentation that you have in QuickBooks. The bank and credit card statements sort of become the backbone and then we fill everything else in. And so we refer to this process as retroactive bookkeeping. You may also have heard it be referred to as catch up or cleanup bookkeeping. And so we just sort of go back and fill in the gaps, recreate the financial report. If you have not paid sales tax or if your sales tax was filed wrong, we can go back and file sales tax amendment. It's. It really, at the end of the day is not that big of a deal. We, it'll be fine. We just, it, you know, we'll need to know if you've already filed your income tax return and even that can be amended so this can be fixed. And so with this process, depending on how far back we need to go, we say that it could take anywhere from six weeks to six months, depending on how far back we need to go. But we're also able to work in like moving forward at the same time so we can, we can fix things and not make the mess even work even worse by getting things corrected and working forward in the right way and at the same time cleaning things up. And eventually we'll get on track together and we'll just be moving forward.
A
I like that it's not a doomsday scenario because like when I first realized I need a bookkeeper, I had messy spreadsheets and that's really, that was my bookkeeping. Like I just had random spreadsheets that only I understood and I wasn't following any of the proper procedures or practices when it Came to keeping track of, like, what goes where. Like, did I understand QuickBooks? No. I knew how to send invoices and even that made me feel sick. So I'm glad to know that, like, you help people dig their way out of this hole. They don't have to be stuck there. And the whole point of not being ashamed, that's huge too, because shame doesn't lead anywhere good. Now, what are the annual, quarterly, monthly, weekly tasks that every home industry CEO should be doing to ensure the financial success of their business?
B
Yeah, so let's flip it over and that let's start from the most frequent to the less frequent. So weekly, it's just going to be important that you're updating your project management system. This is posting payments on invoices. Like, if a client gave you a physical check, going in and marking that you received that check, that's really important that you're doing that weekly. If you're using purchase orders, which really people are not using them to make the order, it's just the tracking mechanism for what you've spent on your projects. But so updating the purchase orders and your project management system, making sure that those same updates are happening in QuickBooks. If you're not working with the bookkeeper, that would be like categorizing the transactions, those sorts of things. So that should be happening weekly on a monthly basis. You're going to be, you're going to want to review your bank and credit card statements, make sure that you're using all of the subscriptions that you've signed up for, that there are no fraudulent or duplicate charges. This is also helpful if you have a team. This helps with some purchasing controls. So, you know, whatever your junior account manager went out and bought or filled up their tank with gas or bought Starbucks for the team. Like, you want to be checking to make sure that everything is, you know, approved. Reconciling your bank and credit card accounts, if you have an accountant, they should be doing that. But if you're doing it on your own, you should be doing that monthly, reviewing your financial report. So we send ours out monthly, making sure that you're looking at those things look good, that you understand what they say. Sending invoices and following up on overdue invoices, that should be happening monthly. Then there's, you might have monthly sales tax that you need to file. So doing that. And then we also like to prompt our clients to follow up on missing W9 from their vendors on a monthly basis. So going back through checking on who you paid who is still owed you a missing W9 and keep following up and collecting that monthly so that at the end of the year you don't have a mess on your hands with in regards to 1099. And then quarterly, we like for our clients to do a more in depth review of their financial reports quarterly to make sure that they're looking for trends and making any adjustments to spending or tweaking your marketing plan or you know, just looking at it a little bit more in depth and looking at multiple months and not just the last month in a silo. Quarterly sales tax. And then this is a great time to follow up with your CPA about estimated quarterly tax payments and any sort of tax planning meetings that they should be doing with you quarterly. And then annually you're going to send any W2s that you owe your employees or send any 1099s out to your vendor, review your financial reports, you know, at the year, update your business plan and set goals for the next year.
A
Yeah, that's like, that's a ton right there. And yeah, really, that's so much. But that's why people have CPAs and bookkeepers and even business coaches or mentors or even a board of advisors, a cfo. Because we are in business to make money. Even those of us who are money averse, like we don't understand how it works to manage it, we want to figure out how to make it. That's like the thing we're most focused on. And that's why I tell people, in my opinion as a marketer, I think marketing is less important than financial management. Because if you can't manage your marketing, if you don't know how much money you have coming in, if you don't understand how to best allocate it, like you said, it's going to impact how you can market your business. So when you mentioned like the money that's coming in and what the budget looks like on a month to month basis, well then go back to, well, is your marketing working and how much can you afford to like invest in marketing? A lot of people are marketing without that information. And that again, in my opinion is why they feel so paranoid about their businesses and about marketing. Because, because they are operating with too little information.
B
Right. The financial reports really give you so much power. You know, it's important to understand what you're, what's in your budget and how much you can spend. And, and without the, the data, you don't have that. Yeah.
A
Now let's talk about that data and the financial reports, which financial reports are going to be the most helpful for say an interior designer who's like, I need to hire, I need a junior designer or I just need to hire a va. Like how do these people know they can afford to make the hire?
B
So a pretty general rule of thumb is that payroll costs should be between 15 and 30% of your revenue. So total revenue, total income, that's the same thing. On your profit and loss statement. That's going to be the first bolded line that you see. All profit and loss statements look the same. So you're going to have all your sub accounts. And then that last number is a total revenue. Payroll costs should be between 15 and 30%. 15% is for the good, like the indicator of like the restaurant industry where the cost of goods sold or cogs is super high compared to the service cost. And then like for full transparency, Business by the book is a completely service based business. We have a negligible cost of goods sold. And so our payroll costs are actually closer to like 40%. And so I would say the interior design industry is somewhere between like 25 and 35 maybe percent depending on the size of your team. So that is a really good barometer. And so the question is, can I hire a junior designer? Well, what are your current payroll costs and is it within that range of your total revenue? And then you would need to know like based off of your area, what you plan to hire this person at and will that tip you beyond the range. And it's also important to think about hiring somebody does not just include their salary or their hourly rate. If they're going on payroll. You're going to need a payroll service provider, whether that's QuickBooks, online payroll, Dusto, ADP cost associated with that, that is included in that payroll cost. There are payroll taxes there. You might want to offer benefits or reimbursement with like mileage and mules and office supplies or whatever it is. And so it's just, it's more than you have to look at that payroll number, but then it's more than that. And so we offer some advisory services that has to do with forecasting because when you're looking at your financial reports, that's all in arrears. And so it's important that you're also projecting. And it's like, well, maybe you wouldn't be able to hire that person based off of the projects that you have completed, but maybe you have some really big projects in the pipeline. And so do you know how to project out and know how you're going to recognize that revenue and what that looks like and how that is going to impact your ability to hire somebody that you may need in order to have that project.
A
Those advisory services are so valuable because. Well, you brought up a good point. Everything you look at in a report has already happened. It is in the past, it is history. And as one of my favorite business coaches likes to say, the past is not a fortune teller, it's just a teacher.
B
Right, Exactly.
A
Yeah. So being able to learn from it, but you have to have the actual financial reports in front of you in order to be able to learn from it. And that kind of puts us back in the situation of someone who's running an interior design business and they don't have proper record keeping. They can't make decisions for the future because they don't even know what happened in the past.
B
And yeah.
A
Oh, the angst that I used to feel over this. I'm not even an interior designer. I mean by comparison my business is pretty simple, much like you. It's like completely service based.
B
Right.
A
But when you're dealing with sales tax and, and like physical products and oh my goodness, complicated. So that's why I say, you know, huge hats off to anyone who wants to run a design business for more than like two days because just the thought of that is enough to deter a lot of people. That's probably why most businesses fail within the first two years, which is really sad. But if it was easy, everybody would do it.
B
Yeah, absolutely.
A
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B
Everybody would do it. Yeah, absolutely.
A
Now, what are some of the best ways for a designer to pay herself? Because that can be a problem. I have met plenty of designers who haven't paid themselves in months or years. Or when she does pay herself, it's like it equates to six or seven dollars an hour because she didn't charge enough. And like it's such a mess. So what are some of the best ways for these people to pay themselves and how should they calculate that owner's draw or the payroll amount if they are on payroll?
B
Yeah, so this is a, like a big can of worms. I kind of, I feel like. But we'll. Let's just kind of work through it in a couple of stages. So we refer to this. And so this is an end term I came up with. But entrepreneurial poverty is a big issue where the business owner or the founder, you're right, doesn't take a salary or does. And it, and it is negligible at the end of the day. And so we obviously don't want any of our clients to be having to do that. And so there are two ways that you can pay yourself. Owner's draw or payroll. Like you mentioned, most clients to start out at owner's draw and maybe even just stay there forever. And so an owner straw is a transfer from the business checking account to your personal checking account. You can do that with a wire. You can do that with a fiscal check, which nobody really does that anymore. But you know, that's the, that's the gist. That's how you should think of it. And so it is really important that you are doing this. It's about the same amount every time and on our recurring schedule. And what this does is it shows proof of income so that when you go and you need a loan for a car or a mortgage you can show that you have income coming out. And it's significant. If you are just doing your Netflix is on the business, your kids daycare is on the business, your Nordstrom charges. That is not proof of income. That is a terrible habit. That's something that we see all the time and is one of the first things that we say get that out of your business account, pay yourself and buy all that same stuff through your personal account. Like it should treat your business like a business. When you it's called piercing the corporate veil. And so when you run your personal expenses for your business, if you were to ever be audited, they would think that there might be business expenses in your personal and it could open your personal accounts up to an IRS audit. And so it really is really serious. It seems silly but it really really is serious. So owner's draw is taking a recurring bank transfer and out of your business into your personal. You could also go on payroll but but you want to consult with your CPA before you do this because there are different laws regarding like an and an S Corp and all of those sorts of tax entity types about whether or not it's advantageous for you to go on payroll. So before you do that you want to check with your CPA and make sure that everything is in alignment as far as what the amount should be. There's a term called minimum viable lifestyle. And so you need to be honest with yourself about how much you need to take out in order to live the life that you can maybe not that you should you know and be really honest with yourself because if you take out more you you may start to run into some cash flow issues especially at the beginning. So we you want to start out small. You can always take an additional owner's draw, sort of like a bonus and slowly work it in to your cash flow. It is important to real to remember that owner's draw does not show up on the profit and loss statement which is the report that most people like to look at. And so worst case scenario your net income is a negative. So which means you lost money during that period. If you've also taken owner's draw out you've lost even more money. It's more negative from there. So the balance sheet and the profit and loss statement are two reports that you have to look at together they they tell the complete stories at P&L if you're taking an owner's draw, it's not going to tell you the complete story.
A
Yeah, it does get kind of complicated. And, and yeah, the like LLC versus Escort, payroll versus owner's draw. I mean, this is why working with a small business CPA is important. And I have to say this for people who maybe don't know, working with a CPA at H R Block is not going to cut it. No offense to H and R Block, but you need to work with a small business CPA who knows which tax deductions you can take and which expenses you can run through your business. Because there will be some that you can that you maybe didn't realize you could, but the opposite will also be true. So yes, it is super important. And I've noticed especially like my office is in my home. So technically part of my home is a tax deduction and that has to be categorized a certain way in QuickBooks. And thankfully your team knows all about that. And you know, I can pass along info to them from my CPA as things change. Because the crazy thing is as well, tax laws can change every year.
B
Right.
A
Like sometimes meals and entertainment are totally deductible. Sometimes they're only 50% deductible. Wow. It's so much to keep up with.
B
Yeah. And we're sort of living in this post Covid area era where they made a lot of adjustments to the tax code to give businesses and people a break during the pandemic. And so we're kind of after we're reverting back to how it was before. And so it's important that you're working with the CPA and a bookkeeping team that works together because the roles are different. And so we love working with great CPAs. We have no problem emailing them directly or hopping on a call with the cpa, the client and us, and working through some things to make updates or changes. And so we're all a team, really.
A
I love that you guys have a collaborative mindset and it's always been that way, like even within your own team, because I know I've worked with several different bookkeepers in your team and the experience has been so consistent from person to person that I just have to applaud you guys for that. It's not easy building a team that's so consistent that the client continues to have a wonderful experience no matter who they're transferred to. And with that being said, what services do you offer? Creative entrepreneurs, interior designers? I know you had mentioned the advisory services. I mean, Obviously the bookkeeping services, but can you dive into that a little bit more?
B
Yeah. So our bookkeeping services really focus on compliance and so that is preparing your financial reports so that your CPA can file your taxes and get you the most deductions possible. That's like the top line basic goal and not get in trouble with the irs. So following the rules and the laws is of the utmost importance. That then that kind of like rolled over into all of the sales tax stuff that we talked about before. So we can't. We will file and set up the payment remittance to the individual state sales tax. And so we. That could be monthly, quarterly, annually. Kind of depends on what state, state you're in and what their thresholds are. So that kind of encompasses the bookkeeping. We manage the QuickBooks account, we manage the integration between your project management system and file the sales tax. That's all in our base bookkeeping package. We also offer white gloves payroll services and including assistance with 401k and other benefit management. Like something that can work. Becoming more and more popular is qsera, which STARTS stands for Qualified Small Employer Health Reimbursement Arrangement. It's a way for small businesses to offer health reimbursement versus like health insurance. So with our team, with our clients that have small teams, we see a lot of them doing that. So we can help with the implementation and the setup of that. We like I mentioned, we offer the advisory services, which we have some basic advisory services like helping you save for your taxes and your rainy day funds and setting aside your sales tax escrow and those sorts of things all the way up to KPI, tracking, cash flow forecasting, budgeting, helping you make these decisions about can I hire somebody, can I give myself a raise, can I open up a brick and mortar store, can I go on a trip to France or sourcing those sorts of things. So we can do all of that with our analysis packages. And then we also offer ar, the invoicing or ap, which paying billed services where we can create time billing invoices, send those to the clients, send reminder and then pay your vendors. We can do that. And that is all sort of tied up in cash flow management and making sure that you have money coming in and that the money going out is happening at a time that isn't going to like zero out your checking account.
A
And all of this just makes the business owner feel more and more confident because like everything's being done correctly. The bank account's never going to get to zero, they're going to get paid consistently, they're going to know if they can hire. I mean, it would just be foolish not to work with a bookkeeper, even if you're good with money already. And I have some clients who like. But one is a former cpa, but she still has to work with a bookkeeper because she's a designer now. You know, it's just, it's good to have a fresh set of eyes and, and with you guys doing this every single day, well, five days a week, and, and being able to see what is working and what isn't working. And especially I would imagine after you've worked with a client for several years, getting to know them and their financial priorities is not a one size fits all solution. And that's what I love most about you guys, because even recently I got a loom video, which I get every month now from my account manager, and she had some questions and I gave her the scoop and, and she was like, you know what? I figured there was another plan at play here. I mean, there's like zero judgment, but there's always like, I noticed this and I noticed this. And I just want to follow up on that. Like having that set of eyes that like, you guys care about all the details of our businesses. Yeah, yeah, it makes such a difference. Now you are also going to be offering procurement services for designers later this year in 2024. So I need the scoop on that because I have not heard much about it. So I want to know what, when, why and who. So tell me all the things.
B
Yeah, so this is new, actually. Our team member that's going to be heading up this new program, she starts in June. So this is. We're still really, really in the very early stages, but our clients have been asking us about this for like literal years now. We are already in the weeds so much with the purchase order management. We offer that right now as sort of like, you know, they'll update your orders at or info at inbox and make, make the updates in the project management system. Like this order was shift. This order has been delivered to the warehouse. There's an issue with this order. We already do. Or we can do some of the tracking. So it sort of was just this natural progression for us to do the actual order placement. It. This is the. I think the biggest pain point with the designers, aside from maybe just the sales tax nuances, is actually placing and tracking the orders. Things ship multiple times. Some vendors charge you all at once. Some charge you when things ship. And the rate and delivery is never what they estimated. And so we really just feel like we're going to be able to take a huge weight off of our clients shoulders by offering this procurement services. So right now we are in sort of a project or service development stage. We're working with a couple of our clients right now to help that have offered to sort of tell us what we what they want so that we can really make sure that we're meeting the needs of the clients in the industry. Our new team member, she has years of experience as a sales rep for a really well known home furnishings brand. So she comes at it from a different perspective. So we're excited this continues to become more and more ingrained in the interior design industry as a bunch of non interior designers. And so we're excited for her expertise. And this will be offered as an add on to people to clients that have existing like bookkeeping services with us.
A
Got it. Yeah. That makes so much sense and it's exciting to see you guys branching out in that way. I mean, yeah, it's very different from what you have been doing. So I would imagine that mapping it out is a little bit overwhelming. I'm glad you've got someone coming in who will be dedicated to it because you guys already have enough to do. But I know the feeling of like when clients ask for years and years, can you please do this? Can you please do this? And it's like, okay, yes, we'll find a way.
B
Well, we have tried. We've taken, we've done surveys before getting information. It just never really was the right time. We didn't have a team member who wanted to make the switch over. And it feels important that this is somebody like when our clients are telling us that they spend 60 hours a month doing this, I cannot add that to my account manager. That's not going to happen. And so we, that we have just been looking for the right person to help us with this. And so we're hoping to be able to really alleviate a lot of the time and energy so that our clients can focus on what they love, which is the actual designing and not the computer work.
A
Right. Yeah. Most designers did not start their design firm to be stuck in front of their laptop, so.
B
Right, exactly.
A
And I hear the same thing about marketing too. Like this is not what I signed up for, but yet it's all I'm doing. So I'm sure, yeah, yeah, it's frustrating. But for the designers and other creative entrepreneurs who are listening, we're like, okay, I need business by the book. What do I do. First, whether they're a hot mess or they just need to transition from one bookkeeper to another, how do they go about working with you guys?
B
Yes. So you can go on our website and book a discovery call with our director of client services. Her name is Ashley Mobley. She's fantastic. And on that initial call, she's going to learn about you, your business, your accounting, sort of what you have done in the past, how it's worked, what it's not worked. We have sort of a desk that walks you through how we work, how the process works. It's very standardized with the different phases. So we'll explain how the phases and you move through everything. And then if you have an existing QuickBooks Online account, we do an assessment of your QuickBooks Online account that helps us determine your scope of work. We move into the assessment phase and then once we have kind of looked under the hood, figured out what you need, what is really going on, then we'll present our scope of work and a service agreement, and then we'll go from there.
A
Awesome. Yeah. I mean, you guys really do make it as painless as possible, and I've always appreciated that. So, guys, if you are interested in working with business by the book, go to business by the book. Money, not.com. money. And book a discovery call. It really is as simple as Morgan is laying out. Morgan, thank you so much for coming on the show today. This has been so helpful.
B
Thank you so much, Kate. It's always so great to chat with you. So I really appreciate you having me on.
A
Oh, it is my pleasure. All right, everyone, keep your marketing simple, your message clear, and I will talk to you soon. This episode is brought to you by the Window Coverings association of America. Are you an interior designer, a decorator, a student, a workroom, an installer, or a window treatment vendor? The WCAA was meant for you. If you're looking for community rather than competition, business guidance, real growth strategies instead of just good ideas and introductions to all the right people, you need the wcaa. Their mission is to provide education, networking, a code of ethics, and increased exposure for this unique industry. Learn everything from the latest window treatment production techniques to business profit tips, marketing, and so much more, all from the comfort of your laptop. Learn and grow your business right where you are by connecting with your local WCAA chapter. Monthly meetings, educational opportunities, and fun activities abound within the organization. Lastly, you can also save money with vendor discounts. You can save on items and services your business is already buying through their industry partner relationships. Everything from coaching and marketing to well known window treatment brands and more are available. But hey, here's the real question. Do you need more leads? As a WCAA member, your business will be listed in their Homeowner Facing Directory of Home Industry Professionals, helping you connect with more of the right clients. Do you need to hire or be hired as a member of the wcaa? You'll have access to a job board that is exclusive to the design and window treatment industry, perfect for finding or filling your next role. Don't wait. Go to WCAA.org and apply to join with them. You're never in business alone.
Podcast Summary: The Kate Show
Episode: "How to Pay Yourself as a Business Owner and Avoid Entrepreneurial Poverty"
Host: Kate (Socialite Agency)
Guest: Morgan (Vice President, Business by the Book)
Date: June 10, 2024
This episode dives deep into the financial realities of creative business ownership—specifically for interior designers, home stagers, organizers, and window treatment specialists. Host Kate is joined by Morgan from Business by the Book, a bookkeeping and advisory firm specializing in the home industry. Together, they demystify best practices in bookkeeping, address common financial mistakes, explain how to pay yourself as a business owner, and introduce new service offerings aimed at making creative businesses more profitable and sustainable.
[01:13–03:38]
Quote:
"We would really consider [QuickBooks] a financial management software. Houzz Pro, Design Files, Mydoma, Materio—those are all project management softwares and they work together.” – Morgan [01:59]
[03:38–06:56]
Quote:
“People come to us with a complete lack of confidence because they don’t have any financial documents...It’s a very Shark Tank thing to know your numbers, but it really is important.” – Morgan [05:24]
[07:44–10:33]
Quote:
“At the end of the day, it’s just numbers...There’s no reason to be embarrassed.” – Morgan [08:24]
[11:23–14:35]
Quote:
"It’s just going to be important that you’re updating your project management system [weekly]…” – Morgan [11:23]
[14:35–15:56]
[16:16–19:02]
Quote:
"Payroll costs should be between 15 and 30% of your revenue...For interior design, it’s somewhere between 25 and 35%." – Morgan [16:16]
[22:17–26:55]
Quote:
“There are two ways that you can pay yourself: owner's draw or payroll...It's about the same amount every time and on a recurring schedule. What this does is it shows proof of income.” – Morgan [22:48]
[26:55–28:49]
Quote:
“It’s important that you’re working with the CPA and a bookkeeping team that works together because the roles are different.” – Morgan [28:09]
[29:27–33:56]
Quote:
"Our bookkeeping services really focus on compliance...preparing your financial reports so your CPA can file your taxes and get you the most deductions possible." – Morgan [29:27]
[33:56–37:29]
Quote:
“We really just feel like we’re going to be able to take a huge weight off of our clients’ shoulders by offering procurement services.” – Morgan [33:56]
[38:00–39:20]
Quote:
“You can go on our website and book a discovery call...It’s very standardized with the different phases.” – Morgan [38:00]
On past mistakes:
“At the end of the day, it’s just numbers...There’s no reason to be embarrassed.” – Morgan [08:24]
On clarity:
“The past is not a fortune teller, it’s just a teacher.” – Kate [19:02]
On proof of income:
“That is not proof of income. That is a terrible habit... Get that out of your business account, pay yourself and buy all that same stuff through your personal account.” – Morgan [23:43]
For creative entrepreneurs:
If you want to avoid entrepreneurial poverty, pay yourself properly, and run a business you can sustain, this episode is essential listening.