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- [00:00]
A
How should finances be done? Like, what is the ideal setup for an entrepreneur? Listening.
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B
I think it's very important to hire an expert. So obviously you're an expert at what you do in your businesses, and so many businesses try to do everything for themselves. And I understand that when you're first starting off, sometimes you have to do that and learn some things. But finances is an area that you really do need to have someone who knows what they're doing. Michelle Lee is a seasoned financial executive entrepreneur and the CEO of Super Accountants. With 30 years of experience as a CFO, controller, and director of finance, she helps businesses cut through financial chaos and build lasting stability. A lot of people try to avoid doing a budget because they just hope that they can outearn their expenses and have enough at the end in their bank account to cover their taxes. And as a result, their money is telling them what's going on with their business.
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A
Yeah.
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B
Whereas a budget allows you to tell your money what you want to do with it or where you want it to go.
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A
Let's talk practical. That's kind of what you do and a view of how you're different. Let's give some tips to the entrepreneurs listening.
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B
One thing I really see the clients are doing wrong is.
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A
It spans the globe like a super high cold Internet. Elvis Presley. Today, Apple is going to reinvent the phone. It's not over until I win. The Living youg Legacy podcast.
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B
For those who live to leave a legacy that's extraordinary.
- [01:27]
A
The impossible has been. Oh, that is insane. Jordan, open Chicago with the lead. You said Paul is the fastest man on the planet. You can live your dream. Hello, and welcome back to another episode of Legacy Makers. Today we're going to talk about your favorite subject on the planet, your finances. I'm here with Michelle, owner of Super Accountants, and they do exactly that. They take away the. The annoying stress, the mess of your finances and your books that I know they are right now. Fix it all for you so you can focus on making money and changing lives. And they'll do the rest. Guys, welcome to the show.
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B
Thank you so much for having us here. We're so happy to be here.
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A
Of course. So I heard you laugh when I said everyone's favorite subject, which is finances. Right. So I've been an entrepreneur 15 years, and I like to think I'm actually pretty decent with money and books and finances. I was good at maths and I was a sports scientist. I'm good with data. And even me, I've had my fair share of problems with bookkeepers. Accountants, finance. And I know so many entrepreneurs that do. So I'm so excited to do this episode because everyone listening is probably entrepreneurial in some capacity and they all probably are like, oh, God, this is me, this is me. Right? So, so what, what do you guys do and how do you help entrepreneurs kind of like debunk all of that and take the stress away from it?
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B
I think ultimately people think of as accounting and accountants as being really boring people and, you know, not mind numbing. It's like, I don't wanna talk to them today. And we're different in the fact that we bring things down to earth. We're fun. We've named our company Super Accountants because we know we're working with super entrepreneurs and so we're supporting that and we're so happy to be working with companies that are really exceptional at what they do and allowing us to participate in that. So as you can see, I'm wearing my Super Accountants uniform here.
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A
I love it.
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B
I'm Klimaric, this is Liz and she's agent Rose.
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A
Okay, great.
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B
And we did bring a shirt for you.
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A
Good. Okay. I'll put it on later.
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B
Okay. All right, perfect.
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A
So, you know, and I think what I love, you know, from what I've heard about what you guys are doing, it's, it's more day to day, hands on, taking someone through it over the entire year and being proactive about it and learning to, you know, you're obviously doing it, but doing the book so they know their numbers, so they can make the right decisions, so they can budget. Because I know how a lot of entrepreneurs operate is they just like, well, what's the money in my bank account? Yeah, right. And then they get to the end of the year and then they go, okay, I got to get my accountant all my info. Right. And they Hope that the QuickBooks thing they set up one time is going to be ready and then it's not, and then they come and find someone like you to fix it. That's a general, you know how it goes. So how should finances be done? Like, what is the ideal setup for an entrepreneur? Listening.
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B
Okay. I think it's very important to hire an expert. So obviously you're an expert at what you do in your businesses. And so many businesses try to do everything for themselves. And I understand that when you're first starting off, sometimes you have to do that and learn some things. But finances is an area that you really do need to have someone who knows what they're doing, someone who's going to take your information that's coming in or financial information, going to categorize it correctly so that they can tell a story about your business. And that's what accounting is really about. I always tell people that the reason I'm not an ordinary accountant and not as boring is that accounting is really about a puzzle and a mystery. And I love mysteries. I love Agatha Christie and Murder She Wrote. So if you can really start to see the puzzle and see the mystery in it, then you can start to tell the story of the business and you see the art and the beauty in it.
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A
What's funny about story is you can actually start predicting the future almost too when you know everything, right?
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B
So that monthly accounting that we do looks at the past. This is what you did do, this is what your numbers tell us about your business. Then looking forward is managerial accounting. And that's more CFO level services that takes that information and says, okay, let's look at the future. Where do you wanna be? What do you wanna plan on? A lot of people try to avoid doing a budget. Cause they just hope that they can out earn their expenses and have enough at the end in their bank account to cover their taxes. And as a result their money is telling them what's going on with their business. Whereas a budget allows you to tell your money what you want to do with it or where you want it to go.
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A
Yeah, and I think what's, you know, important to point out from the get go. I think most people, when they hear the word accountant, they, you know, the industry, I guess, really believes that's like someone that comes in at the end of the year and does all the tax returns and sends it off. But I really want to be clear for everyone listening because obviously I know you guys, that's not how you operate, Right? You do actually everything else. So it's all ready and clean and polished and perfect for a diff for the accountant to go do the tax return. And what's so important there is the tax return is super easy if everything else has been done right in the year. And I think most people don't understand that. They think the tax return is super complex. No, it's checking a bunch of boxes if everything done during the year is correct. So you're really doing 95% of it. And then the accountant is kind of lucky if they're working with you because they get this perfect package delivered and they just fill in a few boxes and file it. Right.
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B
And it is a lot of savings to the business owner because they're paying someone who costs less money than your CPA firm to do the accounting that supports the taxes.
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A
Yeah, yeah. All the paperwork.
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B
Yeah. So we always explain that actually there's a bit of savings working with us as opposed to waiting and sending it all at once.
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A
Well, with taxes too, I mean, there's a lot of savings if they're also categorizing everything correctly and writing things off correctly. Right. And I imagine you're guiding them as you're looking at all the transactions. Maybe you're guiding them on. Hey, well, if you work from home, you know that office that you have as a room versus your rent can you can 20% you can write off. Or hey, if you take in a flight to a meeting and having a dinner there in a hotel, that can be written off too. So most, I think most people don't understand that. That yeah, most of the time good accountants or you know, financial firms like yourself should save you way more than they charge you because you're generally missing those things.
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B
That's right. Yeah. That's one of the things that we try to emphasize and focus on the fact that there's a quote that basically says, you think that I cost a lot, then just wait till you see how much an amateur costs you.
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A
Yeah, exactly. I always say for accountants, doctors and attorneys, that rule is true for all three of those things. You don't want a cheap doctor or attorney or accountant. So let's talk practical. That's kind of what you do and overview of how you're different. Let's give some tips to the entrepreneurs listening. For financial management, basic tax things. Tax things they should maybe doing. I think a big mistake is understanding an LLC versus Escort versus C Corp.
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B
Right.
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A
And big costly mistake. If you categorize yourself wrong there I think obviously a lot of working from home. So knowing what deductions they can take. Can we start talking about a few few things? You see a lot of day to day with clients that they're doing wrong.
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B
Sure. One thing I really see the clients are doing wrong is how they're categorizing their employees.
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A
Yeah. Okay.
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B
Whether they want to 1099 those employees or have them W2. And there's a lot of trend to I just want to 1099 that employee.
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A
Well, everyone stars.
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B
Yeah, right, Right. And you know, the penalties can be very hefty if you do that wrong, especially for the employer. If they're really a W2 employee, then you get to pay both sides of the taxes. What you should have paid and what they should have paid well. Just to be clear, that's critical.
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A
That's fines from the government, not it's a misclassification. And you can get. Yeah. Lots of trouble and lawsuits if you don't classify correctly.
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B
Yeah. So I have clients that will, that will ask, how should I classify this person? Can't I do a 1099? Well, you can do whatever you want as the business owner. Those are your choices. Ultimately, I give you advice and recommendations and make you aware of what the risks are if you make a choice that I don't necessarily recommend. But yeah, that's a risky area that I see a lot of businesses volunteer.
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A
And I went through all this when I first moved to America, started my business here, and eventually, you know, after a year or two, my attorney said, hey, now you're starting to grow a team. You really need to learn this. And actually it's not that scary. And I recommend most people listening. There's, there's actually the IRS has a list and you just read that list and it's very like third grade level. Like, are you treating your staff like this? Well, they should be W2 if you tick a lot of these boxes. So I recommend everyone out there checks that list. You just Google it. It's called a classification list. There's a bunch of variations too. That's an easy way to start. And, and I think just to address that, if they do have a few stuff that should be W2 right now, it's not that hard or scary to shift them. I think most entrepreneurs don't want to do that because I think it's this like whole thing. Obviously you might need to HR person for a few hours and working with you on, on the other side of it for a few hours, payroll and whatever. But it's not that big a deal to, to shift them.
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B
It's really not. Especially if you have all of your employees in the same state. Yeah, it's when you have employees in multiple states, that becomes a little more tricky, especially if they're states that would, that would trigger a nexus. And what that means is that whatever products you're selling, you may have sales tax implications.
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A
We have a lot of employees in different states, but one of my businesses, but luckily it's nothing physical, so it's a little easier. But yeah, I think that's a great one. What about write offs? Right. Every entrepreneur wants to try and write everything off. What are they maybe missing or what are they maybe writing off that they shouldn't be writing off?
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B
Okay. I see a lot of people Writing off a lot of personal expenses.
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A
Yeah.
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Where they put everything towards the, you know, on their business.
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A
Credit cards, clothing. I see people don't understand clothing.
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B
Yeah. So there's a lot that you want to write off. If it's legitimate for your business, then yeah, you should write it off. But at the same time, you don't want to be getting into a situation where you're writing off a bunch of stuff that. That catches you in the end.
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A
So, yeah, a good.
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Really just kind of think to yourself, is this something for my business? Is this going to advance my business? And if it's not, then, you know, Fabletics is probably not.
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A
So the rule on clothing is a good example just for everyone. It can only be, you know, technically classified if it's only ever worn for the business purpose. Right. So it's like people buy Fabletics or Lululemon. They, you know, might wear it one day, but they also wear it every other day and you're not wearing it for the business uniform. Yes, exactly. So. So knowing these nuances are important because, you know, if they do get this wrong and ever get audited, they pay about 30% more as a fine. Right. And it can be very costly if they've been doing it wrong for years.
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B
Yes.
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A
Yeah. What about things that they maybe could be writing off that they don't know about there any that you see a lot that you help save money for the clients?
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B
Well, you talked a bit about the home office.
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A
Yep.
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B
So that is a good one. Especially if the business owner has an office, but then also does a significant amount of their work from their home.
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A
Yep.
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B
So that is a big one. Like you said, travel is a big one. Yeah. I think that many times sometimes people get too worried about what they should and should not categorize and aren't taking. Maybe meals that they should be for, you know, for their business or other related business expenses are the biggest things.
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A
I think another good one, just to expand on the home office, there's one called the Augustus rule, where if you do work from home mostly and you host events there, or you fly your staff in for retreats and trainings at your house, then you can up to 14 days a year you can rent your house to your business.
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B
Right.
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And you just, you know, you get a comp spec for like if you rented a hotel conference room nearby, for example, and you know, say that hotel conference room is over 14 days, it's two grand a day. That's a $28,000 deduction you can make if you're following that, so that's another more advanced version of the home office that I think a lot of people miss. But I see a lot because a lot of entrepreneurs fly their staffing for four days and they'll host a training event or even some of their clients, their home. And they're not taking advantage of that. So that can be a good one too. All right, let's talk about projecting into the future. How should client, how should your, you know, how are you helping your clients and how should everyone listening be looking into the future with their planning?
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B
It starts off with a 90 day cash flow. Looking at what, what does your cash flow look like, what are you going to be spending and what money do you expect to be bringing in in 90 days? That's the first step. Then goes to a 12 month budget. We like to do a rolling budget so that you're not just at the end of the year doing a new budget every year, but every month you're doing the next month. You're always 12 months out on your budget like that.
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A
Yeah.
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So a 12 month rolling budget and then going into a five year forecast, which is less specific. You can't be as concrete five years.
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A
From now, especially as an entrepreneur.
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B
Right, right. It's more generalized categories of where you want to be. But I think also just taking the time to think about what am I wanting to do over the next 12 months, what do I see opportunities that I could take advantage of and what is that, how's that going to impact my business? Whether that's investing more in some marketing. Do I have a goal to grow so much in my revenue or my, my sales? And what does that mean? Certain expenses are going to be fixed expenses to a certain point. No matter, you know, how much you do that probably expense might be the same. Whereas other expenses are going to be variable. The more you sell, the more that expense is, especially cost of goods sold. If you're selling a specific product and you sell 20 of them and the next year you sell 40, well then your cost is going to go up for those products, even though you might get a volume discount. So it may be a lesser percentage is still going to fluctuate with the amount of your sales.
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A
Good. And one last question before we talk more about your personal story. In the legacy side that we did skim over, I think it's important classification of business. LLC Escort vs. C Corp. Very costly. If you have maybe a C Corp when you should be an S Corp, for example. Any quick tips there on how to understand that or even who to hire, to understand that, like you an attorney, how do they go about structuring? Right.
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B
So we usually partner with a CPA firm to answer those questions.
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A
Yeah.
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B
Just so that you've got more than one opinion on that. I like S Corps the most.
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A
I think most people, it should be. Unless they're massive with a bunch of employees and stuff.
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B
Yeah, yeah. I think that's the best classification. Unless you're like a, you know, just one owner. And sometimes that doesn't make sense. But that, that would be, I think, where a majority of small entrepreneurial businesses end up landing. Yeah.
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A
I generally see it like llc. Right. When you start, then when you get a few staff and you're growing. S Corp.
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B
Right.
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A
And then if you're. You start getting to hundreds of staff and raising capital and having multiple entities. C Corp. Eventually. Yeah.
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B
Okay, I would agree.
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A
Good. Last question on the finance side. Someone's listening. They're like, oh God, my finances are a mess. What should they do? Right. Can they, can they hire you to go back? Can you come in mid year? Do they wait until tax season? Where do they go from here?
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B
So usually we have someone book some time with us and we have an intake form that they. They tell us a little bit of details. Who's currently doing your books or is anybody.
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A
Yeah.
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B
What is your current accounting system? What is your current payroll system? So that when we meet we can more definitively talk about business. But just knowing in advance, so many people don't know, well, I don't know who's doing our payroll and I don't know what my accounting system is. So knowing some of those things is really, really helpful. And if you're really starting from the beginning where you don't have anything, then organizing your information as best you can, it's going to be probably less costly for you to organize it than us trying to find on your OneDrive or whatever where you've got all these details that that's one of the biggest things to help move the process along.
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A
Actually, one more question. Most people are probably doing it themselves on QuickBooks or similar. What's the risk of that? Like if they're just doing it on QuickBooks and trying to file it themselves.
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B
Right. So QuickBooks has done a really good job of making software that brings accounting down to the common person. It does get a little confusing at times. And they have multiple levels of services that you, you know, as far as the level of accounting software you use with them. And I think that they do a really good job of helping small Small businesses solo. Yeah. Get by with what they need and not have to have that extra knowledge. But once you grow, I think that the time you spend trying to do your books takes away from what you primarily need to be focusing on. So hire someone else to do that. Hire somebody who knows what they're doing, who knows your specific software, whether it's QuickBooks or NetSuite or Sage intact that is helpful as well. But if you are using QuickBooks, it's a great software. 90% of my clients use it. I use it for my own business as well. It's just a matter of being able to then give us access for a short period of time so we can review your books and see what the condition is so we can tell you in advance. Well, this is what we think it's going to take to get you from point A to point B.
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A
And I. Yeah, and I agree and I don't think QuickBooks is bad actually I think it's good. But I think what you know, I have an in house controller and finance manager but what you know, finance managers or firms like yourself can do in QuickBooks that most people don't realize is a lot of automations and stuff too inside there. So most entrepreneurs I meet, they're all trying to do it manually.
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B
Yeah.
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A
And then they're sometimes miscategorizing stuff too which can have an impact if they ever get audited, you know.
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B
Yeah.
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A
Whereas they can you I imagine come in and build it out for the long term. Scalability.
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B
Yeah. There is a lot you can do in the background to tell it, to tell the system. If this is the situation with the transaction, do this. You do have to be very cautious about it. You can tell it to set up certain ways and then it starts, you have to check it, it starts categories, you know, it is a little AI controlled so it can go a little crazy on its own if you don't, if you don't watch it.
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A
Yeah. Good. Last couple of questions then. I'll save most of it for your main episode. But, but tell us the bit of the story and what to expect from your main episode about you and everything.
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B
Okay. So I've owned several businesses, whether purchased them or started myself over the years. I started this accounting firm about three years ago. I was working for a separate accounting firm and I just felt like the communication with the clients and what they were promising wasn't always honest and true and the ways that they treated their employees with respect to that was just not in line with what I wanted. So I had People asking me to do their accounting for them. And I thought, rather than taking it to this other company and me getting paid a lesser portion on their behalf, why not just do it myself? So I started my own firm. So our firm is 100% women owned and operated. So currently all of our staff are women. Not that we have anything against men we would hire, but we haven't found a qualified man that really is to our standards. Okay. So, you know, sorry to say, but we are women operated. And one of the things that we really value is the importance of education and the importance of leaving a legacy and teaching something to other people. So we are bringing in people that aren't necessarily have all the skills in accounting, but are bright, intelligent, and you can see that they have the ability. And so we're teaching them the skills in accounting so they have an extra skill in their life and don't find themselves in situations where they are financially. What's called the financial abuse, where they are in a situation where they can't move on because they're financially tied to another individual. So we want to just add additional skills so that people can feel more comfortable with their situation. And we can't save the world all at once. But we're trying to do it one person at a time.
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A
No, no. I love the grander vision. It's like accounting can feel so in the spreadsheets and P. Ls, but I love the grander vision attached to it. I think it's. Yeah. So needed too. So that's awesome. So, last question. If people want to, you know, tune into your episode, follow you on socials, learn more about you, or even look at hiring you, where can they find you?
- [21:54]
B
Sure. So our website is super accountants.com. we're also on Facebook and Instagram and LinkedIn as well. As far as a legacy is concerned. This is my daughter, Elizabeth, or Liz. Hi. And she's one of the super accountants as well. She's one of those individuals that we're teaching the skills to, but if she chooses, then this will be something that is passed on to her in the future. So she's already making plans of when I own the business. So we do have a legacy mentality in the organization as well.
- [22:25]
A
Good. Well, I'm so excited to see the main episode come to life and you tell your whole story and keep educating, you know, the financial side of business and personal to the financial freedom side. It's. It's so important. It's often neglected. I think so many entrepreneurs have great products, but then they mismanage that and it kind of catches up with them. So great stuff. Great stuff. What you're doing, guys, that's a wrap. Another episode done and dusted. As always, keep working hard. Impact lives and build a legacy. I'll see you guys soon. Sam.