EP #41 | Simplify Your Bookkeeping with Morgan Boudreaux
Welcome to the Designers Oasis podcast. I'm your host, Kate Bendewald, interior designer, mama and CEO of a thriving interior design business, built on authentic word of mouth referrals. It wasn't that long ago that I stepped away from my corporate architecture job to build my own dream, one that would allow me more time with the people that I love, the ability to serve my clients at the highest level, and to make a great living. It wasn't always easy, and I've made my share of mistakes along the way. Fast forward to today, and I've learned a thing or two. This podcast is for you - the inspired, creative, ambitious, and let's admit it, occasionally overwhelmed interior designer who shares this dream of transforming lives by transforming homes. Join me and my guests each week as we walk through practical ways to build an interior design business you love, and helps you transform your clients' lives. You can do this.
Kate Bendewald
Today, my guest is Morgan Boudreau from business by the book a bookkeeping service provider who specializes in working with interior designers across the US. I have personally been using business buy the book for many years, and I cannot overstate how much easier business is having them by my side. I have always had a bookkeeper in my business, but I can tell you firsthand that working with someone who gets this industry is vital. Morgan's team is always on top of things and helps keep me accountable as a business owner. They really understand that as designers, bookkeeping can be like a foreign language, their team is always patient, they explain things clearly. And you can tell that it really matters to them, that you feel confident when it comes to understanding your business books. So today, as part of our celebration of financial literacy month, I have invited Morgan here today to answer some common questions related to accounting in the interior design industry. Please welcome Morgan. Hello, Morgan. How are you?
Morgan Boudreaux
Hi, Kate, thanks so much for having me. I'm so excited to be here.
Kate Bendewald
Oh my gosh, it's been a minute since you and I have seen each other face to face. So it's really nice to chat with you. I've been working with your your team. They're
Morgan Boudreaux
great. Yeah, I know. I haven't talked to you in a while. But it's so nice to chat. And I'm excited to answer some questions for your members.
Kate Bendewald
Yes, no, I'm thrilled. I'm thrilled to have you. I just in preparing for today's interview, I was making a couple of notes. And I have a funny story to tell you and the listeners today before we dive in, because what happened is I was reminiscing over some of my past experiences with bookkeepers prior to landing with you guys. And it just in a way I was like cringing, but I was also kind of laughing. And I was like okay, I'm going to tell like this iteration because you know, guys, a bookkeeper is not somebody you want to go through like boyfriends, this is a relationship, you want to establish it, you want to feel trust. And the more longevity you have with a bookkeeper, the more they understand the nuances of your business. And so I really do think it's important to find somebody that you can be in business with for the long haul. So this definitely was not my experience in the early, early stages of my business. So I have I had three that I worked with, I'm gonna tell you what I experienced with each of them. And I'm not going to do any name dropping. So the names that I hadn't sharing today are made up names. So the first one, I'm calling her unethical Ursula. She was always making suggestions that, well, maybe it could have saved me a few dollars on taxes. The bottom line was it wasn't the right thing to do. And it always gave me this kind of sick feeling in the pit of my stomach. And one of the things I know about you guys is that you have a zero tolerance policy when it comes to compliance. And if somebody comes to you and says, you know, can you arrange things differently? It's just not something that you guys are willing to do is that yeah, Yeah,
Morgan Boudreaux
absolutely. I mean, this the right off the bat, the thing I think about is with 1090 nines, we just finished filing all of our clients 10 nines and, and, you know, all of our clients are totally on board with the way that, you know, it's you paid them we have to get, we have to file the 1099. But when we're interviewing new clients, that is often something that comes up and it just is so important to do things right the first time and just be a upstanding, compliant business owner and your reputation will precede you know if you're following the rules.
Kate Bendewald
Yeah, no, so funny. She'll just do the right thing. How hard can this be? I think to your just sleep better knowing that you've done the right thing, you know? Well, yeah. So that, you know, that was my first experience with my business, my first business bookkeeper, she lovely, lovely person. Other than that, and I was just like, this isn't working for me. So the next experience that I have, I like to call her hot mess, Hannah. It was like she intentionally talks circles around me, using industry jargon and verbalizing numbers with explicit purpose of keeping me confused. I felt like her strategy for retention was to keep me confused, like, Well, if she's confused, she'll feel the need to need me. And that could not be further from the truth of it. Like, I remember one time and it's okay, so I'm a crier. It's not super hard to make me cry. But when it comes to like business, like, I'll cry in a movie, I'll cry on like a moving, you know, video that I see on Instagram. But when it comes to business, I just don't get that emotional. But I remember what time she brought me to tears. I just got off the phone. And I was like, I don't like what, why is it so hard, I don't understand. Like, she just made me feel so small. And anyway, needless to say, that relationship also did not work out, which is why I made this point and introducing you. One of the things I love about you guys, is that there's this like, Serenity around money, and this confidence and this calmness that I get from you and your teammates, when you're talking about what we're whatever it is we're working on. And it's just, there's this dedication to making sure that you feel clarity, I feel like,
Morgan Boudreaux
it's so important to us that our clients feel competent in their numbers and explaining it and because this is it's not the I mean, it is a pillar of being a business owner is understanding your financial statements. And so in that confidence rolls over into pricing your clients correctly, and I'm sure all these things that you're teaching your to your members, and that I think the foundation is feeling confident in what you're looking at. And so I'm so glad that that that has been your experience. I mean, it's something that we really focus and teach our team, how to explain sometimes over and over again, until you're until the client understands because it does some it's it's can be really foreign to some of our clients, and some of them come in with more understanding of it, but we want you to feel competent, and what you're looking at, but also confident in doing it. You know, it's nice to have us do it. But it's important that our clients understand that basics, for
Kate Bendewald
sure. Yeah, well, and you do. And you're gonna clear some of that up for us today in terms of like, rolls from from the two partners. But yeah, whatever you're doing is working. And so you can take that back to your team that the patience and the serenity that comes with understanding the books and you guys all just mentioned to have not only helped me with my design business, but you know, bringing in designers Oasis into this because you obviously are going to do the books for that too. And so how do you like make sense of keeping the finances clear and separate? You know, the expenses and the revenue for both different businesses so that I could kind of look at them individually and to me, I'm like, that's magical. Yeah, so definitely. Hot, Miss Hannah. You don't want somebody who's going to cause you to stay feeling confused. You want to find somebody that can help bring that clarity. And then the third one, I think this also happened where I was just like, I'm not at an age where I'm willing to do this kind of stuff anymore. I call her Manisha Mary and she is what I called. She's She would just create like, from the way I saw it. Unnecessary homework for me to do every day, every week every month. And she did it in the name of audit proof. During my business, and what she wanted me to do was just upload every single receipt. So that it tied back to every transaction. And I get how that is nice in theory. But you know, we're not only transacting on behalf of the business with our operations, expenses, but the hundreds, if not 1000s, of transactions that we have for each client. And, of course, we PDF and save those into the receipts folder, and we've got that organized there. I'm not going to duplicate my work and redo it, you know, by uploading it into this software that didn't work on my phone and like,
Morgan Boudreaux
right, and that
Kate Bendewald
wasn't the that wasn't the worst part. The worst part was, she would outright disparage me by saying, Listen to my only client that is a dude. That's like, buying. So anyway, if it turned out unethical, Ursula hot, Miss Hannah, and minutia, Mary, these are some of my experiences with past bookkeepers. And so I think my point in leading this conversation with this is because I want people to know that, you know, I think it's really important. Number one, if you're already working with a bookkeeper, do you feel really confident with him? Are they setting you up for success? Are they helping you really understand things in a logical way that makes sense with your brain and how your brain works? I just sat down with your team. And we did a recap from last year. And it just gave me so much clarity on you know, we had a great year last year, what can we expect this year, and it really was such an invaluable time. So I feel like there's you got out of your way to make sure that that I'm clear. And so if you've already got a bookkeeper, I want you to ask yourself, are they doing these things? By the way, this is not a paid promotion, by the book. But I just feel passionately that you know, they do a great job. If they're a fit for you, we'll we'll make sure to share their information. But you know, our is your existing bookkeeper doing the job that they should be doing. And if you don't have a bookkeeper, it's time you want to do that right away. I think these are some things that you can be asking yourself to make sure that you're working with somebody that is the right fit. So who well I feel like we've already talked about so much, but we've got some questions. So we're gonna dive right in. Are you ready?
Morgan Boudreaux
Great. I'm ready. Yes.
Kate Bendewald
Okay. All right. So speaking of some of these characters that I just mentioned a minute ago, can you talk about red flags? For example, when a designer is hiring an accountant, or they're interviewing an accountant, what questions should they be asking in that introductory call? Or meeting? And are there any red flags that a designer might want to look for? When they're having that conversation? With a potential accountant?
Morgan Boudreaux
Yeah, definitely, I think the first thing is to ask them, What are the deliverables going to be? Meaning how frequently am I going to be getting? You know, emails from you financial reports? Like, is this a monthly situation? Is it quarterly? Are you going to just hold on to everything until the end of the year? So understanding what that looks like and what the deadline is? So is it the 15th? Is it the 20th? Is it the 30 at the last day of the month, because somebody that can commit to you that they're going to provide these deliverables to you by x date, is just really important, because or else it just will go on and on and on forever, and you may not ever get anything in return. So I think that that is definitely the first the first thing I would ask. And then secondly,
Kate Bendewald
I want to I want to pause you there. Not to I don't want to lose your train of thought, but you guys give me a monthly report. And I would say that, would you agree if somebody's only willing to do it quarterly or that's their process? Do you see that as something that you would shy away from? I mean, to me, I would I would be like, yeah, no, I need more information than that. I can't wait every quarter to be looking at this. Do you agree? Or is there a time and a place where like, if budget is an issue and all you can afford is like quarterly reporting? What would you say to that?
Morgan Boudreaux
Yeah, so I we do offer quarterly options. It is a great kind of first step. For somebody who's businesses smaller, maybe they don't have a lot of transaction volume, their sales tax tax is only quarterly or annually then it makes sense. If you are a monthly sales tax filer, you do not qualify for our quarterly options because we're having to look at it so so closely each month. But anybody who is bringing in any sort of volume or has quite a lot of turnover then I do think monthly looking at your reports monthly is Really important, the flip side of that coin is that we send them to our clients. And the the right thing to do is to look at them, you know, and and review and answer your question or answer our questions and, and all of that, because it can be hard to look at some times if you feel overwhelmed by the reporting or whatever, but it definitely is good to stay on top of it monthly. That's why we That's why your instinct is like, oh, you should be sending these monthly because it requires that much maintenance.
Kate Bendewald
Yeah, absolutely. But Intuit, I don't want to get in the weeds here. But two, I think there's that. And I think there's also this idea of, but don't analyze your whole business based on one month's Yes. Writing. Can you explain that a little bit more? Yeah.
Morgan Boudreaux
Yeah. So if we're talking, we're talking about looking especially looking at the income statement, or the profit and loss statement. And we always said a month, it by the month and a total. And so if you're only looking at if you're looking at what you did last month, and if you had, you didn't invoice a lot, but you bought a lot of things and your numbers look off at the you know, at the bottom then looking at it so granularly can make you panic or or feel overconfident if you had a big invoicing month, but that's not really the trend, you know. So it is important to, you know, step out of the weeds a little bit and not make decisions based off of just one short period. 30 days, it's not that long at all. So yeah,
Kate Bendewald
yeah. Yeah. I think I think I was a test too late to figure that out. I was definitely wanting to, you know, when I first realized like, okay, you know, we've, and this is true, especially for anybody that's doing full service or purchasing products, you know, let, it's not gonna say it's not a factor for people who are doing virtual design or consultation type only services. Because it is, but especially when you're doing that full service, because the money can just kind of float in these different states at different times, which we're gonna get into a little bit. Okay. Anything else related to red flags? I definitely interrupted you. I don't know if you remember,
Morgan Boudreaux
I just, yeah, so I was just the other thing is that if you are working with a person, that's a one person show that maybe that's the right fit for you, but it's important to understand or ask them, what's going to happen if you go on vacation, or if you're if you get sick, or your child gets sick or something. Because at our firm, we have a team of people and so people deserve and they need to go on vacation and get refreshed, but the payroll still has to be processed, or the sales tax will have to be filed. And so we can kind of cover for each other. It's not a bad thing to work with a one person show, but it's just important to understand what that means for the client. Yeah,
Kate Bendewald
oh my gosh, I never never considered that. But that makes so much sense. Or just like not to be like worst case scenario, Debbie downer, but like, but what if they do and like, are you gonna be able to access your QuickBooks account? If you're not the owner of that account? And right, so anyway, okay, well, we're not gonna worry about that today, because we're gonna die. Okay. All right. I would like for you next to set the record straight. What do you find most surprising or misunderstood about your role in the interior design field? What do interior designers get wrong about accountants and what it is that you do?
Morgan Boudreaux
So I think that maybe the misconception or the stereotype is that bookkeepers and accountants are just number crunching, they're just sitting behind a computer and entering data. And at our firm, we really feel like we're part of the our clients teams. We are their in house person just in Georgia. And so we want to help them make informed decisions about whether it's the right time to hire somebody. If they're on payroll, is it time for them to get a raise? Do they need a raise? helping them improve their processes around the retainer proposal invoice purchase order cycle that can that we see the opposite side, the the backside of everything. And so I think that understanding that we're just trying we want to be part of your team. Our goal is to help you improve your business and meet your goals, whatever those may be. And just really join the team and we care so much about your six your your success in your business and growing it if that's your goal.
Kate Bendewald
Yeah, I've always felt that way from day one that you were an extension of my team. I felt like there was never a question. too silly, too weird to, you know, like, elementary to send your way. And I always got a respectful, clear and concise and prompt answer. So, you know, that, that extension of the team feeling really as a client resonates. So, if somebody is listening to this, and they're feeling maybe some anxiety because they fallen behind in their bookkeeping, maybe they're feeling like, I don't know where to start, I'm embarrassed to let somebody see my behind the scenes, bookkeeping. I feel like I don't have enough money in my account to like, hire this person. Like, whatever. The reason is that they might be feeling anxiety around hiring somebody, but the big reason is like, they feel like they're behind. And it feels just overwhelming. Like crushingly overwhelming, you know, or even just slightly overwhelming, right? Like, how do you how would you make somebody feel good about taking that first step? Like, come here? Let's sit down, let's get this, let's get this straightened out so that you can feel good, and there's nothing to be embarrassed about? And we've got a plan, what would you what would you say to that person?
Morgan Boudreaux
Yeah. So first, I would say, there is no reason to be embarrassed people come to us, and are asking us to help them with their 2019 and 2020. Finances, okay, so we it is totally normal, but we don't want you to stay there forever. So the first thing would be to update if you're using a project management system, you need to update that that's the, you know, mark the invoices, or
Kate Bendewald
something like house or design files, or studio designer, my, my 100 is all about all of them. So if you're using something like that, okay,
Morgan Boudreaux
update that if you know that the invoice has been paid, do your best to mark it as paid and put the date that the payment came in, if it was a check or and not like an E payment via house or whatever, right? Mark, and if you have bought the items, and you're using purchase order marked the purchase orders as paid, let's just clean up the project management system, because we do not know if your client has paid or if you if you decided not to invoice those things. Then when all those documents synced over to QuickBooks, we're gonna do some forensic bookkeeping to match up the bank deposits with those invoices that you said were paid. And so we'll we can kind of match everything together. But if you if it's not marked paid, I'm going to assume that it should still be open. Right? So some data transfer for us. Then I would say the biggest thing is to not fall too far behind on filing your sales tax. Even if you do not know that's it's accurate, because we can always file an amended return. But they're the states are, are way more forgiving. If you at least tried. And the penalty is in the interest is less. Even even if you're like I don't know that this is accurate, we can then come in and help you through it up and file an amended return and they're less likely to be so I don't know, mean about about you're less likely to get a letter in the mail.
Kate Bendewald
Yeah, yeah. So making sure that you're checking out on how to do that. I will say that when I first started my business, so I'm in Denver, and this must have been put on by the county like this by excuse me by the State Department of Revenue. But they did a free workshop every month for people who were starting new businesses to go through sales tax and how it works and explaining that so I'm, I'm assuming that any state that's living in this decade has something like that, whether it's live in person, or recorded. Also, I know that you guys can help tremendously with that, but there are so many resources, it's, you know, just know how to like create an SOP guys on how to log in and how to what buttons to click what to put in where and if you're not sure you guys can definitely that's something that you do and can help with but for sure. Getting your sales tax paid. What else?
Morgan Boudreaux
Yeah, yeah. And then the last thing I would say is that if you know that you're going to hire a bookkeeper or or in six months you want to hire a bookkeeper, you should start talking to the person that you want to hire because the wait the wait time is that long to get on. And so the the a lot of people want to make changes in January. Well Well, at least with us, if you want to start in January, we need to get you on the list like in July, because we don't take on new clients around tax time so that we can focus on our current clients. And so it's just important to think for to be a forward thinker about about hiring that person when you get close to being ready.
Kate Bendewald
Well, I didn't realize that there was such a long wait time, but I'm assuming that that would be an industry truth because nobody wants to try to take on new clients that time of year. Right, that makes a lot of sense. And I, it makes me feel good as a client, knowing that my, that you guys are in my corner, our corner, putting us first making sure that our information gets buttoned up, and not spreading ourselves too thin. And it's, you know, I tell this to design clients, it's like, sometimes, clients have to wait to work with us. But what, what I assure them of is, this allows me to give you my undivided attention, when you're up next, allows and allows me to continue to serve my existing clients to the highest level possible. So I really, I really appreciate that too.
Kate Bendewald
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Kate Bendewald
I get a lot of questions as in my role in designers Oasis working with designers. And I would just say generally speaking, there is this kind of feeling that tax compliance feels really muddy to a lot of a lot of designers. new and seasoned right? People designers move they take on clients in other cities, states, counties. And that can be a factor. Sometimes it's that compliance changes. Can you share any overarching advice for designers to help them understand some principles about how taxes how tax compliance works when it comes to sales tax?
Morgan Boudreaux
Yeah, yeah. I mean, this is like the biggest pain point for our clients for sure. Hands down. I would say number one is that your state has a like address lookup GIS program, every time you get a new client, you should put their address in and double check what the rate is. Because if they let's say they live just outside the city limit, but they have an Atlanta address, their rate is different than if they were two miles inside the city. And so it's a good practice, even if you think you know, let's verify because things change all the time. So that would be the one thing I think the second thing is, you mentioned it earlier about kind of taking some responsibility and learning about the particular nuances in your estate and doing some training. We can help our clients as much as we can. But ultimately, that is the responsibility of the business owner to To understand what, what the rules are, and there are tons of resources out there, and we're here to help. But it's much easier to do it right the first time than it is to have to go back to a client and say, I put the wrong sales tax on all of your invoices. And now I now you owe me $10,000 In sales tax, nobody wants to say that, right?
Kate Bendewald
Yeah. And we've had, we've had that happen. It was fortunately a very, very, very small was like one little decimal. They didn't have much of an impact. And it actually, you know, cost our business model, okay. The reality was the client owed a little bit more in taxes. But it was such a small amount that we weren't even willing to, like, ask for that. We were just like, this was on us, we're going to cover the cost. But it was one of those situations where like, they were just over the line. And if you looked at, you know, their address one way, they fell into one district, and another way and another, I don't even and it was actually somebody from your team that caught this and brought it to our attention, told us what we needed to do, gave us the estimated difference, and we were like, just pay it, we're gonna fix it moving forward. We're not even going to go, yeah, obviously, if we owed they overpaid, then we would have had to pay the client back. But yeah, so yeah, this is a good point, you got to put that into your put this into your client onboarding, probably even before you. I mean, if they're really far, like in another state, you might want to decide if you want to go through the work to do that additional. Yeah. But if they're, yeah, if they're close, I just think everybody should put this into your onboarding process. As a step.
Morgan Boudreaux
Yeah, it's just important in the in this day, you know, during COVID, during the pandemic, there were a lot of sales tax. Some of the states like passed quickly passed rate changes to help make up some of the difference in the restaurant industry. And so it's important to, like, just, I think it's just a good practice to look it up every single time, but especially if you are considering getting a client and a new state. It's called economic Nexus. And it used to be more about physical locality. And so it only mattered where you had a physical location, which does interior designers typically are not like targets all over the place, right. So it doesn't matter. But then there was a court case and a decision that came down that sparked this economic Nexus, which moving into the digital age. And so now, it doesn't matter whether you have a physical location there or not. There's a buffer where you do not have to collect or remit sales tax until you reach this threshold. And so it's important to understand what the threshold is in that state, is this client going to surpass that $100,000 or $500,000 threshold or is it under, and so it just, it can be very nuanced. And it's important to look it up and to discuss it with your bookkeeper to make sure everybody's on the same page before you agree to take on the project.
Kate Bendewald
Just to read, just to reiterate this so that the, the threshold is set at the state level? So it's not it's not, you know, okay, got that that makes sense. I think this another way that this might impact you is if you've got a sister, or an aunt or a parent in another state, and they're like, Hey, can I buy this? Through your business? Right, and they're in another state, and then all of a sudden, you're, like, liable for the taxes for that one thing? And you have to, I mean, who knows what the threshold is. But if it's a low threshold, you know, I could see that. I guess, in most cases, if the threshold is high enough, it might not be an issue, but Okay, so you got to check on it for every single project to because even locally, it can change the can,
Morgan Boudreaux
yeah, it's just a good practice to just check on it and make sure that you are staying up to date on any changes. And that's the only way that I think it's the best way to stay on top of it.
Kate Bendewald
Okay, that makes sense. Okay, so making sure you're paying your taxes quarterly, do your due diligence to know what's required of you locally and seeing what resources are available for you start with your Department of Revenue. Your Small Business Association is probably a great resource as well. Yeah, for sure. And then and then doing a check of your tax obligations based on the client's location because that is ultimately what dictates your sales tax compliance is at the product and location, level. Okay. This is fun. Texas are fun.
Morgan Boudreaux
Scary ages? You just have to, you know, take it bit by bit.
Kate Bendewald
Yeah, yeah, no, it really is I think the clarity, hopefully is making things a little easier for people, especially new new designers, or those who are just starting to move into full service and do purchasing for clients. For a lot of designers, they don't start there. They want to get their head around the game first, before they start moving into purchasing. And I get that and that feels like the next step for them. And so this can be where these questions come up. Okay, so I know that because of what you guys, do, you kind of see everything right. You see it all? So do you have any memorable anecdotes about that aspect of what you'll do?
Morgan Boudreaux
Yeah, I think that the something that you probably don't realize, if you haven't ever worked with a bookkeeper before, but we're going to see it all, where if you are running a lot of personal transactions through your business, we're gonna see that. And so we have had, I mean, the full spectrum of learning about people based off of their spending habits, you know, just tuition and pure bar and weightwatchers. And whatever it is like it's, it's fine. Well, it's not, you should not be running personal transactions through your business. And, but we are going to see it and that's always the, you get a little chuckle sometimes. So,
Kate Bendewald
I would assure my own personal story about this, it was mild that I was doing a project in Texas, and we flew back to do an install. And I needed an extra hand on site for the install to help with a couple of things. So I hired a friend to come out and hang some art and just general kind of handyman type work. And I don't remember if it was, it must have been a check because it was in the memo line. That's right, but I wrote him a check. And in the memo line, I put Spanx as a joke as PA and x. And of course, I got an email, they're like, We have this check to this person. We don't see him in your system. All we can tell from the middle light space. Yeah, so I had to explain what I was paying. John for my Sphinx is like not the pay. It's the
Morgan Boudreaux
Yeah, exactly. Yes. So so that, you know, that's just the biggest little stories we have about what people are running through their business. And, you know, yeah, it's never anything bad or anything, but we just, ya know, like
Kate Bendewald
you said, the last time we talked get your you know, in the UK, and you're a guest expert for us inside the membership, you get your Netflix and your Nordstrom off your business account. So if you are running a business, this is just business 101. For anybody who's just getting started, you got to open your own business checking account, which means you know, file an LLC or whatever with your whatever business structure you decide is right for you set that up, and get your EIN numbers, those are like three of the most basic things. They're not super expensive, or difficult. They're so easy, easy to do. But that is the very first step to separating your business and your personal expenses. And I have a whole I have finally, the thing that made the biggest difference for me is even once I had my own business account, I went for a long time with just one business checking account. And then I finally, after reading the book profit first realized how important it is to have a couple of different accounts in order to keep that that money set different types of money separate and organized. And different credit cards that we pay off every month that if it's if it's a client expense, it goes on one credit card, meaning if we're purchasing products on cost of goods sold on behalf of a client, it goes on one credit card, and then I use a separate credit card for all of my operating expenses. So and then that comes out of that checking account and keeping those two accounts siloed for me, my brain it just makes so much more sense and I can very quickly look and see what but we're both accounts and credit card stands. And prior to doing that I I feel I felt really untethered financially because it was never really clear. What was mine, what was theirs.
Morgan Boudreaux
Right. I think especially if you buy if you are full service and buying furniture for your on behalf of your clients, it's so important to do that because you It can just get so messy with using somebody else's money to pay for this and you don't know what's, what's your what the profit is and everything. So Kate, your star client, you're feeling so good.
Kate Bendewald
Well, just a few years of trial and error got me there? Yeah, I think just a feeling of groundedness in that was really important. You know what if this is if this is incentive enough for you, if you're listening to this, let this be your incentive, there's a good chance you're not paying yourself well enough, if you're clinging on to money, because you're not sure how much of it belongs to you versus right is is a liability. So getting clear on that can often have the added benefit of being able to pay yourself. So we actually reached out to our members and we had a couple of questions, we let them know that you were coming. And I said What questions do you have that you want to ask Morgan? Can I share a couple of these questions with you?
Morgan Boudreaux
Sure. Yes, for sure. Okay.
Kate Bendewald
The first question says, When should a designer consider hiring an accountant? And why do I need to be in a certain income bracket? And if so, what is it?
Morgan Boudreaux
Yeah, so I think that it's important that we define a couple of titles because people will use the word accountant to mean a CPA and bookkeeper books. And so you need a CPA from day one. They're the person that is going to file your taxes, you know, every year, but they don't all most of them do not have like this nitty gritty interaction with you like your bookkeeper will. And so the CPA you need right off the bat, the bookkeeper. You know, it may it will be okay, if you have to do your bookkeeping for your first year, you can definitely do it. You we have a couple of programs where we do some bookkeeping bootcamp and teach you like what the foundation is. And then I would say that as soon as you have recurrent, you know, your clients, you're on a waitlist or you have clients every month, then it would be the right time to pull somebody in to help you stay in compliance, learn what to pay yourself, you know, and kind of help take you through the steps of growing your business.
Kate Bendewald
I love that. So what I like is you're giving people options, you've got that sort of grace period of we're speaking specifically about a bookkeeper not a CPA? Yes. You know, the first, the first year might be simple and straightforward enough that you could easily manage it yourself. If they need help getting started, you can help them with sort of a one off coaching experience to show them how to get started. And then once they do start to get rolling with clients and, you know, increasing their transactions would be a really good time to bring to bring you in. That makes a lot of sense to me. Okay, great. Okay, so our next question comes from sorry, I do not have a name for this one. In general, how much does it cost to hire a bookkeeper? And how? How is that cost determined? Okay, I'm gonna put myself on the spot real quick and just ask. bookkeeper and accountant, same thing.
Morgan Boudreaux
I think in this situation, yes.
Kate Bendewald
Okay. Well, if you feel like elaborating on nuances, by all means, go for it. I think we're all clear on the difference between a CPA and a bookkeeper. But okay, what does it cost?
Morgan Boudreaux
Yes. So I think it's pretty industry standard, that all of the packages are so dependent on the individual client, no two businesses are set up the same or operate the same. And so we don't have like a cookie cutter, this is what it costs. It depends on how many bank accounts, savings accounts, credit cards you have. Are you good at updating your project management system or not good at that, are we having to constantly chase the answers from for you and how many states do file sales tax in and as So Colorado as a Home Rule, sales tax state, so you also have to pay file like Denver and whatever the other?
Kate Bendewald
Oh, my gosh, yes. And then there's the there's, I don't know if all states have occupational tax, but there's and then the, which I love to contribute to this, but because we're participants, but it's the I forget what it's called, like the cultural tax that helps pay for our museums and our parks, our zoos, and all of those things. So happy to contribute, but it does, like when you look at our tax, like lineup, it's like, oh, yeah, right. We have a great Senate because of it.
Morgan Boudreaux
Right, exactly. But But there's more to it than just like in Texas, it's one filing, you know, that's it. And so it's a depends on where you're located. It obviously depends on transaction volume you do you have 20 or 50, on projects in the pipe like going on right now or just one. So it really, really varies. We are constantly updating our scope of work and service agreements to kind of meet the needs of our clients as they grow and change. Like, honestly, month over month. I don't know how standard that is. But I think that that that's kind of like that, should you should your bookkeeper should meet you there and help you with that. So
Kate Bendewald
yeah, it will, right. And when we I remember when we got started, which has been years now I don't remember how long we've been working together. But you know, you the questions to in order for us to get started were how many accounts do you have, how many credit cards, how many transactions, and just like the way that we customize proposals for our clients, it makes sense that this is no different, you gotta gather some information first, in order to be able to put together something which is great, because then you have something that's customized, you're not paying for services that you don't necessarily need. And you're getting the service that you deserve. So that makes a lot of sense. Okay, so the short answer to that is they need to, you know, research and find a bookkeeper or bookkeepers to interview, I highly recommend starting with business by the book, I will be sure to link to you guys below. But they can set up a discovery call, I'm assuming that kind of thing where they can learn some more information, provide you guys with information and then kind of figure out next steps, that would be the best way to start? Yeah, absolutely. Okay. And there's no cost to do that. I'm assuming. So if they're just wanting to figure out how to budget for this, that would be the first step. Yeah, yep. Okay. And if you're, you know, decide you're not ready, and you want to just start with, you have the bookkeeping bootcamp, which can help them kind of get started. Is that right? What do you include with with the bookkeeping bootcamp, and you don't have to say pricing if if you don't want to, but what do you do in that service? Yeah, so
Morgan Boudreaux
So you share your quickbooks online with us and your project management. Login. And we kind of look under the hood look and see what the transaction volume that's not something that people generally know right off the bat, look and see what that looks like. Look to see how I mean, the integration is so delicate between let's house Pro and QuickBooks Online, it just is delicate, same thing designed out there all like somebody can set it up. You can set it up really wrong. And so it just that is something that we take a look at how are your documents coming over? How are the payments being applied? We look to see when
Kate Bendewald
sorry, when you say that integration is so delicate, does that mean like, from a tech side things can become disconnected or meaning that things can be mapping to the wrong thing, which makes it messy? Or? Okay. Okay. So you're on that to just make sure that everything's kind of set up the way that it should be.
Morgan Boudreaux
Yep. And then and teaching people what to look for, like how to when this happens in your QuickBooks, or when you see the red circle, I should be alarmed by that I need to keep I need to dig further because this is going to impact my financial statements. And so we kind of teach people what that looks like we offer some advice about the last time your banks were reconciled was three years ago by you need to be doing that every month. And we show you how to reconcile the accounts where some of it is just like using QuickBooks, like click this button and then click this button. And then this ledger. And then, you know, we do some tips about getting your personal out of your business, stop using Venmo. You know, those? Those things that we just, you know, say? Yeah, and then we offer so that also, we can do the one off bookkeeping boot camp. And we've also added like a quarterly support call with that. So we're not doing any of the maintenance and your account, but basically that is just reserving your spot. You're going to touch base with us every quarter. And we're going to basically do it again. How's it you're trying to do this on your own? How are you doing? Is it Are you ready to pull somebody in? Is this too much? Are you can you afford it now?
Kate Bendewald
That makes a lot of sense. A quarterly check in. I will just say that I keep no my bookkeeping now is a lot more straightforward. But when I was doing, you know, purchasing for multiple clients and multiple states plus running payroll, I always had questions So I had this running Google Doc. And anytime I had a question, I just put it in there. And rather than pinging your team every day, or every, whatever, Friday when I would do, you know, financial stuff, I could send them, I could do a couple things. One, I could either say, hey, let's hop on the phone, I've got a couple of questions, I but what was better is I could send them that Google Doc, and then they could comment and would comment with their response. And it just helps me to stay focused. So I didn't forget my questions, whenever we would meet. We could link to, you know, house or whatever, so that I could reference what they were talking about. And for somebody who's such a visual person, that was a really important way to communicate, and they were so helpful with that. I want to ask you about Venmo. First, like, you mentioned that and this is a question that comes up. There is now Venmo, for business, do you recommend not using that? Or if you're going to use it use Venmo? For business?
Morgan Boudreaux
Yeah, so. So if you're going to use Venmo, it should at least be Venmo. Business, okay, we still recommend that you don't, it's very complicated, that makes your bookkeeping a little complicated, because a client will pay you it, unless you're going to treat it like a true bank account, then, then you should just have them wire you the funds, or use it as a system, but then you're going to deposit that money into your bank account, and you're not going to pay out of it. But when you have when you use your personal Venmo account with your business, it creates a mountain of headache. And I actually haven't looked at it recently, but then No, in the past has not been FDIC insured. And so if Venmo goes under, you're that money that you have sitting in your Venmo account is gone. And so we just what's so timely to kind of talk about that right now. But it was just important to Yeah, you know, know where your, your money is. So yeah,
Kate Bendewald
this use good old fashioned bank, you know, just
Morgan Boudreaux
Yeah, well, and I think a lot of people are trying to, like, circumvent the credit card fees and the transaction fees, and we just really encourage our clients that that is a part of business, you're going through such a headache, to not pay this nominal fee, increase your prices, cover the fee. And just let's move on and, you know, your your time is more valuable than that. So,
Kate Bendewald
I am so glad that you said this, because I talk about this all the time, but it can't be it's better coming from you. And I can't emphasize this enough that the small price that you pay in a transaction fee or credit card fee. If you equate that to your time and how much you're gonna have to revisit it again at some other point. And that's just another way that it steals your time. And that is time away from doing your craft, being creative. Working on a project doing business development, said creativity zapper so if you can just like you said, like build it into your business model so that it's covered, raise your fees, whatever you need to do, but stop stressing over fees and just take it. Okay, and like
Morgan Boudreaux
we have had, let me just say get one sample. Without it like $2,999.99. Okay, we had somebody pay like a $50,000 retainer in to, you know, $2,900 increments. So and it's like, that is just what a waste of time to have them write you a check or get a wire transfer or pay it off it just,
Kate Bendewald
yeah, there's so many other ways to do this. How many? Yeah, okay. And you can help them figure that out? Yes, for sure. Yeah. Well, we do have a couple of other questions. But I want to go back to something else. You said, just because I know that there's somebody listening right now who's maybe you're thinking this or asking this? When I said, you know, how much does it cost to hire an accountant, one of the first things that came into your mouth was we want to get access to your product management system and your bookkeeping. What if there's somebody listening who really wants to hire an accountant, they're ready, but they're like, Hmm, I've got spreadsheets. I don't know what house Pro is, I don't know what does anybody else's are. I've been doing everything kind of manually. And they haven't yet invested in those those systems, right, that are going to help them run their business and sounds like they're probably there if they're coming to you too. Like they need to integrate your systems. But do they need to have that first or can they come to you with these kind of manual information and have your help getting them
Morgan Boudreaux
started? Yeah, so we would we can you can definitely we can help You move from the spreadsheets to the project management system. But you can, we are happy to help you get cleaned up, do any retroactive work that we need to do with the spreadsheets. But moving forward at, if you're ready to hire a bookkeeper, you're ready to have a project management system. And there are lots of different options that fall within your budget. And we have opinions and thoughts about which one is right for different clients. And so we're happy to like consult or offer any advice there to pick the right one.
Kate Bendewald
So I love that. I love it. Yeah, I just, I wanted to paint that picture. Because I know that there are designers out there who are doing business like they're doing projects, they're transacting, right, and they've got money flowing through their business, but they're still working in kind of that analog, that analog manual world, it's time to move to the next level. But if you're not there yet, you don't necessarily have to have that in place yet. They can help right there. Okay,
Morgan Boudreaux
so I can I let me clarify, because you don't have to have house Pro or design files. But we will if you don't have anything, we will set up a QuickBooks account for you. So that is like the Yeah, the minimum. So we need a financial management program, at least
Kate Bendewald
at the very least. Right, but the project management system itself, you know, could be something that they get to later, although I recommend it. Okay. All right. Our next question is from one of our members, our name is Karina and she asks, Morgan, how do we use retainers in our business accounting? How are they different from invoices? I love this question. And when you're done, I have a story.
Morgan Boudreaux
Okay, great. All right. All right. So a retainer or deposit that those words can be used interchangeably, is a liability. So on the balance sheet, it goes in a different place than an invoice does. So it is completely different than an invoice. So when a client pays you a retainer or deposit, they're giving your you money for you to hold on to, in lieu of services or product. So that is really not your money, it does not show up on your income statement, it is treated completely different. And so then what you do is you create an invoice and then we're going to apply that payment, we're going to move that from a liability to the invoice which is, you know, basically income that you've earned. And now it's an asset. And so it's important that if you're taking if you're using a project management system, that you create those in the right place, so that if it truly is a retainer or deposit, you're using the retainers like module and not just creating an invoice and then QuickBooks we make sure that it's recorded correctly so that it shows up on your balance sheet at first and versus on your income statement. And so that's especially important to think about at the end of the year. Is this where you are going to go?
Kate Bendewald
Yes. Can I interject? Because I have a story about Yes. I know what you're gonna say, Well, I learned this the hard way back when I was working with one of the said previous accountants. I was not employing retainers in my business at that point, I should have been, but my accountant hadn't educated me. And I was too early in my business to know it. And I felt like that was a missed opportunity for them. I'm not throwing them under the bus. But I'm just saying they were so embedded in my business that I was a little frustrated to learn this after the fact. But I wasn't using retainers in my business. I didn't understand how it worked. And so what happened was we had presented a big project to a client at the end of the year, in December, and they approved everything and they handed us a check for ballpark 50 grand. And we said wonderful, thank you, we deposit it and we let them know you know as soon as we come back from our holiday break, we're gonna get started on the next phase, which is purchasing project management cetera. Fast forward January, we start purchasing and because we hadn't used retainers, what happened was we closed out that year with an extra 50 grand in income on my books, which was taxable income taxable. And so when it came time to do our taxes, it's like, okay, got this awesome 50 grand bonus at the end of the year, whoo hoo. Along with it came the tax bill. And then in January I show of the next year I show this huge loss because of all the cost of goods sold because those cost of goods sold were not tied to a revenue or a retainer. Had I been using a retainer. The money and I know you know this, I'm explaining this for the people who are listening that might not had I been using a retainer to request that money for Were there project purchasing, it would have shown up on my books as a liability, meaning it's not income for me yet. And starting in January, so it wasn't income that wasn't income taxable. And so in January, when I started doing the purchasing, those cost of goods sold would have been tied to the retainer money. And then, you know, obviously, we would have had revenue from whatever was left over from our sales, etc, right. And that part is taxable. So, ultimately, it came out in the wash, because the following year, we looked like we had all these cost of goods sold, but it didn't have the income tied to it. So there wasn't really any way for us to, you know, undo that. But, you know, from a income tax standpoint, it was kind of a wash, we think we hope, whatever, it's yours behind us. But I think that was a big aha moment for me, when it came to using retainers, not only for products, but also for services.
Morgan Boudreaux
Yeah, for sure. And it's also good. I don't know, some sometimes I think that when you're a large interior designer, maybe you've had life or years long clients, but sometimes you don't know everything about the relationship that you're getting involved in. And so it's always I maybe you can speak to that more than I can. But we always hate to see our clients, like get stiffed with an invoice at the end. And so it's always nice when they have a retainer that they can that they're planning to apply to the last invoice if something goes wrong. It's like a little insurance policy.
Kate Bendewald
Yeah, so and that's so your suggestion, and I know that a lot of designers do this. I think it's smart. We haven't. We've been lucky enough. But you know, as you know, we've I've sort of retired from the direct client work so that I can be here full time for designers Oasis, but you're saying that you keep that retainer money on hand and save it until the very end of the project, you know, ply it to the the last invoices for services and product? Well, it makes sense for products but for services, too.
Morgan Boudreaux
So we have some clients that do or or this was maybe more when I feel like a lot of our clients have shifted from hourly to flat fee. But when it was hourly invoices, it was we I really like to see them take an input retainer for that final hourly invoice, like the installation day or whatever. Because once they have all of that, yeah, yeah, you know, what's the? I don't know? Yeah,
Kate Bendewald
I don't know that that makes sense. And I and we have designers who have set their businesses up in a number of different ways. And I think there's merit to a lot of them. But yes, we're, I'm a big proponent of hybrid billing, where your billing upfront flat fee for all of the design portion may be broken up into two payments, and then moving into hourly, once you get into the implementation phase of working with your clients, but I could see doing a monthly retainer of, you know, 20 hours a month for the next six months, or you know, whatever, it just gets automatically paid. So there's different ways to set it up. But the idea of retainers is critical to understanding and keeping that money organized inside your business. Okay. Thank you, Karina, for your question. We've got one last one, and it comes from jewel. And we've kind of already talked about this. But if there's any, you know, if there's anything that you can think of that would put a finer point on it, that her question is, what advice do you have for helping me to keep track of client income and expenses for different projects, and I know jewel personally, and she is juggling a whole lot of different projects income and expenses from from numerous projects. She's also in New York. And I know that within New York, there's like borough taxes and there's like, even like, that gets a little bit wild, too, depending on where you're working. So what at the project level, keeping that organized, what do you recommend?
Morgan Boudreaux
Yeah, so I think that this is where it's imperative to use purchase orders, if you're buying furniture for your clients, you can also we like to, I like to tell our clients that it's we're not sending purchase orders anymore, like through the mail, you know, you're gonna buy the furniture online, this is a record of what you have spent. And so that's that is the the only way really to keep up with the expense or cogs side of what's going out so that you can take the income minus the cogs and maybe some expenses is like if she's in New York and she's taking taxis or Ubers or whatever, all of that, you know, then that's where we see the net at the end. And so if you're using a Umm, QuickBooks, you can run an income statement by client or five project. And so we that's how you can see what the true project profitability is on a on a specific client or group of clients. But, but using utilizing purchase orders is the first place to start. And then then you could talk about uploading receipts and tagging. Like, if you have a lot of expenses that you are wanting to see, like for a specific client and not just general overhead, then then maybe it is time to think about like, expense tagging and that sort of thing.
Kate Bendewald
Yeah, so expenses, and a lot of them are reimbursable, sometimes just depends, but like parking, transportation, buying lunch, for a client's project, all of those things are expensive. And it can be really easy to just say like, this is just a business expense. But tying those expenses, if it's appropriate to a specific client can help you get the true cost of running a business. And I have an episode on auditing your projects to look at their profitability. And so you would need to track those expenses in order to do it. I also like Harvest, I use harvest for timekeeping, regardless of how we charge flat fee, hourly or hybrid. But they also make it super easy to track your expenses and their app, you just, you know, upload or scan your receipt, you know, or whatever the case may be if you've got a paper receipt, or you can just manually enter like $30 For lunch, during install day or whatever the case may be. Right? And you'd be surprised. And then you think about photography, too, for a project,
Morgan Boudreaux
all of that and all that. and QuickBooks also has an app that you can track. So your bank is integrated to QuickBooks, and then you can go in and and tag the client or the project on the transaction or that is something that some of our clients, we help them with that piece. And so, but if you want that level of granularity, you have to there it's more work to get to get that for sure. But but you can we can we can figure it out for sure.
Kate Bendewald
Yeah, well, and I just when you're just starting. First, I think it's important that designers recognize the importance of auditing every project, especially when you're first getting started to see for you what kind of projects are going to be the most profitable and balancing that with, you know, what are the projects that also light you up and make you feel fulfilled at the end of the day, I think, you know, I remember there was a season where I just was feeling a lot of burnout. And so I just stopped doing full service work for a little while in order to get. And I take a take a break. And, and it's just what I needed. But then that also allowed me the chance to start to audit my projects and realize that you know what, I know that these full service projects are more work, but the revenue from them is worth it. And so let's just, let's just make it easier. So we, you know, we've tested out a number of ways to just keep up with it. I'm probably not the best model when it comes to this. But I just want to say as a starting point, you know, those little expenses, you know, lunch, parking, or whatever, if it's not a reimbursable, it's still keep track of it. And so that at the end of the project, you know, even if it just goes on your books as a business operating expense, for now, that's fine, but you'll at least be able to see at the end of a project, how profitable it was if you can not only look at your revenue, but you can look at the time that you spent on the project, compared to what you estimated on the project, right? Where did you hit your target? Where you beyond or under? And then what additional expenses? Did you have that were not reimbursable? Photography, client gifts, that kind of thing, you know, paying for a mistake, right? If you screw something up like okay, that tax, you know, was a couple of your dollars for this tax hold you got at the beginning of that at the hour. You're saying you could even create that as a would you create that as a purchase order or would you not specific example you might put separately as a
Morgan Boudreaux
Yeah, that's a balance sheet. Yeah.
Kate Bendewald
All right. Now we're getting nitty gritty. Yeah,
Morgan Boudreaux
it's okay. It's okay. But yes, we can. It's important like the gifts or installation day when you are running out and you're like, oh, this would look really great if I stocked the pantry or bought some stuff or they're open shelves. It's like you maybe you when you go buy lemons or apples or whatever like you're gonna forget to put that on an invoice but it's important because those little things do add up or you want to know what to budget for installation day. A we have to have data in order to start to say like my average is $500 a day or whatever it is. Yeah. And then we can also like, tag multiple projects with the same tag that are similar so that then you could see like a comparison from while I was, I was testing out flat fee with this, I was testing out hybrid with this, I was doing hourly with this, we couldn't really see the difference between the types of projects or there could be any examples. But and that's that's that kind of goes back to what we were talking about at the beginning is that it is our goal, to prepare your reports in a way that helps you run your business better. And so we can not be creative with the numbers or hide anything, but we can be creative with setting them up so that it makes sense to you and that you're using them to make informed decisions about your business. Because ultimately, that's the goal. Yeah,
Kate Bendewald
yeah. Oh my gosh, so much comes to mind when I'm thinking about organizing your money and keeping it straightforward. But that's I mean, if you take nothing else away from today's episode, I want to just re emphasize how much clarity and how much peace, you can feel when you have your money organized. You know, if you don't, even if you don't have the biggest fattest bank account from the designer next to you, if your money is organized, you know exactly what's there. And your cohort over there has all this money, but he or she doesn't know what to make of it, or what is hers or whatever. Like, I'd much rather be in the scenario of at least I know where I stand. For sure. Yeah. Oh, my gosh, we're gonna thank you so much. I feel like we're gonna need to have you back for regular check ins on these conversations. There's, I just feel like there's endless things that we could talk about, we've really just scratched the surface. But yeah, I tell folks who are listening, if they want to learn more about working with you guys business, buy the book, where can they find you?
Morgan Boudreaux
So our website is business, buy the book, dot money, and love that. You can think you can schedule a new client consultation with our Client Services Director. Her name is Ashley, she's absolutely amazing. And we are taking on new clients and happy to chat with you. And or if you have you know, if you have some quick general questions, we'd be happy to answer those to my email is Morgan B, as in boy, at this is by the book dot money. If you want to email me, you can email me directly if you want to.
Kate Bendewald
Awesome. Well, thank you so much, Morgan. It's been a pleasure. I feel like there's a lot of designers who are really even seasoned to answer. We're gonna have some aha moments from today, because we covered so much. All right. Well, we'll see you back real soon. Thank you. Thanks, Kate. I thank you so much for letting me spend part of this day with you. If you're loving this podcast, please share it with a friend who you think might also love it. Or perhaps you can take just 30 seconds to open your podcast app and leave us a five star rating. And if you have just an extra minute, go ahead and leave a review. This helps me so much and it helps other designers like you to find the podcast. It also adds fuel to my motivation to keep making great episodes just for you. However you choose to help. Please know I appreciate you so very much. Thank you, my friend. Have a wonderful rest of your day and I'll see you next time.
