General Cash Flow advice

How to budget as an entrepreneur: My Chat with Suze Orman on Huffington Post Live

OMG. To say that I was excited to get an email from Huffington Post Live asking me if I wanted to go on-air with Suze Orman is a HUGE understatement.

So excited to go on air. I opted for a clean makeup look for the show. Yay!   Foundation:  Hello Flawless in Nutmeg by Benefit and Golden Deep by BareMinerals. I highlighted my brows with Benefit's High Brow Glow. For an extra pop, I lined my eyes with Benefit's Push-Up Liner and false lashes. For extra good luck,  I wore "Risk It All" lipstick by Bare Minerals  under Too-Faced's light gloss, Sweet Maple. *Muah*

So excited to go on air. I opted for a clean makeup look for the show. Yay!

Foundation: Hello Flawless in Nutmeg by Benefit and Golden Deep by BareMinerals. I highlighted my brows with Benefit's High Brow Glow. For an extra pop, I lined my eyes with Benefit's Push-Up Liner and false lashes. For extra good luck, I wore "Risk It All" lipstick by Bare Minerals under Too-Faced's light gloss, Sweet Maple. *Muah*

I literally started crying with joy when I read the email. And shared it with my wonderful Facebook friends. Suze has been an inspiration to me for as long as I can remember. Not only when it comes to my personal finances (I own every single one of her books and have read them each several times), but also her philosophy of love when it comes to money and being true to your authentic self.

A couple of years ago, I moved to a town called Emeryville in California. The same town that Suze Orman got her start working as a waitress at the Buttercup Grill. I launched my bookkeeping business, catering to the fashion and beauty industry, and named it "EmeryCloud" because of Suze Orman's immense impact on my life.

Today, I had the opportunity to go on air with her and ask a question for entrepreneurs. We all know that starting a business is tough. Especially in beginning, when you don't know much money you'll bring in each month.

I asked her for her advice to entrepreneurs on how to pay yourself a salary and create a savings/investment plan when you have fluctuating income.

Suze gave me fabulous advice that I wanted to share with you. Below are three key things that every entrepreneur needs to do to manage cash flow and expenses. (Click to tweet and share with your friends!)

Suze Orman's Tips to Entrepreneurs

  1. Figure out how much you need to earn each month to cover your expenses. Know that total!
  2. Every dollar that you earn above and beyond that total needs to be put in a savings account. If you need to make $5K each month and you earn $7,000, put that $2,000 in a savings account. Be disciplined about not spending the extra money. 
  3. Look into opening a Roth-IRA. Unlike a traditional IRA, you can pull out this money at any age with no penalties or tax implications. Start putting your emergency funds into a Roth-IRA and watch your money grow!

If you want to watch the full episode where Suze covers more awesome advice on how to deal with student loans, mortgages and being your authentic self in the financial industry, click the image below!

Danetha Doe is the author of a Simple Guide to Accounting and Financial Strategy for New Entrepreneurs. She is the founder of Danetha Doe Consulting, a business development agency based in San Francisco. Connect with her on Twitter, @danethadoe.

 

How to create a financial plan for your business

One of the hardest things for us to do as entrepreneurs is to make financial plans and commitments when we have no idea how much we'll actually earn.

Doing your books, also known as bookkeeping, is not a boring task that we have to do for taxes. It's also a way for us to plan for the future and design our dream life.

Money and Mimosas™, a daily podcast, covering everything you need to know about accounting is launching this month.  Click here to be the first to know about it!  *Muah*

Money and Mimosas™, a daily podcast, covering everything you need to know about accounting is launching this month. Click here to be the first to know about it! *Muah*

Want to buy a new tablet or invest in a new marketing campaign?

Or what about that photoshoot that you've been dying to have to showcase your new line of products?

Or that brand new wardrobe you want to buy for your upcoming conferences?

When the money comes in, there are so many things we could spend it on. A bookkeeper, a new website, makeup, a conference ticket, a marketing consultant, a website designer, clothes, an attorney...

Goodness. How do we know which expenses make sense for our business now versus ones that we can table for later?

This is where doing your books comes into play. Whether you have a bookkeeper, or you're doing it yourself, doing your books allows you to create a plan for your revenue.

While there isn't a one size fits all for businesses, I like to use the 60/20/20 rule when determining how much of my clients' revenues should be dedicated to which expenses.

  • 60% of your revenue is dedicated to fixed costs, taxes, consultants and other related expenses.
  • 20% of your revenue is dedicated to growing your business and related marketing efforts.
  • 20% of your revenue is dedicated to your salary and "play" account. This account allows you to try new things and experiment with different offerings.

When you want to have a successful business, you have to know how you will spend or save the money that comes in before it does. We all know the saying, failing to plan is planning to fail.

Doing your bookkeeping doesn't have to be boring!  Join the party  and learn why creating a financial plan for your business is FUN. #moneyandmimosas

Doing your bookkeeping doesn't have to be boring! Join the party and learn why creating a financial plan for your business is FUN. #moneyandmimosas

Today's tweetable:  If you want to design your life, you have to create a financial plan for your business.- Click to tweet.

Of course, you're the boss and if you need to tweak these percentages because you're doing a major hiring push or marketing campaign, then you make the call.

How often should you create a spending plan for your business?

I believe a plan should be created at the beginning of every year and reviewed at the beginning of each month. 

If you need a little guidance in this area, here's a free worksheet to help you plan out your happy hour business dates and how much you should spend working with a financial strategist. (I'm half-kidding about the happy hour dates).

You can click here to download it. 

I want to hear from you! What is one upcoming expense that you need to plan for in your business? Leave a comment below.

Want more weekly tips that I only share with my newsletter community? Sign up for Money and Mimosas below.

Danetha Doe is a business strategist and product launch expert. Her consulting helps businesses launch new apps, services and products and has worked with companies like Google and Audi. You can view her services, here.

Why you're doing your accounting wrong

Money and Mimosas™, my weekly bookkeeping date, is now a daily podcast covering everything you need to know about accounting! Sign up for my newsletter (in the Tiffany blue box above) to be the first to hear about its official launch on iTunes and Stitcher.

Money and Mimosas™, my weekly bookkeeping date, is now a daily podcast covering everything you need to know about accounting! Sign up for my newsletter (in the Tiffany blue box above) to be the first to hear about its official launch on iTunes and Stitcher.

Oh, the wonderful world of accounting. Numbers and reports for days on end. While this sounds like a chocolate covered dream to me, if you're like most small business owners accounting doesn't exactly light you up inside.

Sure, we all know that it's important but why? What exactly is accounting? And are you doing it wrong? There are a lot of applications out there that do a good job of adding up different financial numbers within a business, but are they really doing the accounting work for you?

Many small business owners fall into the trap of thinking that accounting is only good for filing taxes. But, there are bajillion other reasons why you need accounting to make sure you stay in business and continue to grow your profits. 

For more reasons why accounting is good for business, other than just filing taxes ,be sure to read my post, " What your CPA isn't telling you."

So what exactly is accounting and what should you look for in the software you use? Rob Maurin, VP of Brand Engagement at Wave did a fabulous write-up explaining what double entry accounting means and why you need it for your business. Wave is an absolutely fabulous cloud accounting tool (I use them for my business and adore them!). Their support staff is top-notch and always willing to help with any tech and/or accounting related issues. Read below about their take on the importance of accounting for all businesses.

Danetha Doe is a business strategist and cloud accounting expert. Her consulting firm helps businesses launch new apps, services and products with ease and has worked with companies like Google and Audi. Contact her directly at danetha(at)danethadoe(dot)com.

Original Post is by Rob Maurin, VP of Brand Engagement at Wave-click the link to read

If you look at online reviews lately, the term "accounting software" gets applied to anything capable of adding two numbers together. So expense trackers, invoicing applications and other lightweight software in the cloud get lumped in with real, double entry accounting applications like Wave. It drives me nuts.

But is that bad?

Actually, yes, it is. And not just because I like promoting Wave. When small business owners use a "lite" software tool to do their accounting, it can cost them money and hurt their business.

If you're running a business, you need to use a double entry accounting system. (What's double entry and how do you recognize it? See the end of this post.) The good news is that you don't even need to know what double entry is! The double entry work happens behind the scenes, and sets you up for better success, with more money in your pocket, without requiring any special work from you.

But don't take my word for it. I asked some independent small business accountants for their perspective on whether double entry accounting matters. Here are some of the reasons they gave:

Reason 1: Double entry accounting will minimize your income tax.

Deductions and proper reporting can make a huge difference to any business. “It matters for every small business, even little ones that sell things on Etsy,” says William Lopez, Partner at TropezCPA and Founder of AdvisorFi in West Palm Beach, Florida. “I tell them, ‘You use a computer to log onto Etsy? OK, that’s a fixed asset we need to depreciate to save you money'."

"For bigger businesses, I tell them about a client whose tax bill I chopped from $150,000 to $30,000 just by flipping the accounting method and utilizing the double entry side of things. Without double entry, I can’t do that.”

Reason 2: You have a business loan. Or you might want one some day.

"Without real double entry accounting, you might not be able to get a loan in the first place,” says Anna Abbruzzese, president of Actium Consulting Inc. in Toronto, Ontario. “Lenders want to see a balance sheet,” and you can only get a balance sheet with double entry.

Think of the stuff you need in order to get a personal loan or mortgage: The bank wants to know your assets like cars, property, investments and so on. Same goes for your business loan. A balance sheet will provide the right info. An expense tracker or income/invoice tool will not.

Once you have the loan, you need to track it properly, too, and you can't do that without double entry. “Invoicing applications might track your income and expenses. However, a loan isn't income,” says Maggie Geiser, an accounting and bookkeeping advisor in Vancouver, British Columbia. “The interest that you pay on that loan is an expense, but the principal you pay is not. How do you track that without proper double entry?”

Reason 3: You want to be awesome.

“Research shows those who use full double entry accounting are more confident and have a better understanding of what they need and what they can do to make their business more of a success,” says Abbruzzese.

Reason 4: You want your business to grow.

“If you think your business is going to grow at all, and you want to develop good business habits,” Geiser says, “double entry is absolutely the way to go because it will discipline you and get you looking at the reports you ought to be looking at.”

Reason 5: Business decisions matter to you.

“You can’t make accurate decisions without having a complete financial picture,” says Andrew Wall, CPA, CMA, a partner at Wall & Associates in Toronto. “And without double entry accounting and without a balance sheet, you don’t know the financial position of the company.”

Lopez adds, “Within the balance sheet I derive a lot of intelligence, like: How efficient is your company? Are you even aware that it takes you 40 days to get paid from an invoice?” 

“Especially with small businesses where things are changing — and changing rapidly — people need to be able to make informed decisions quickly and accurately,” Wall concludes.

 

There's more, of course. Anna Abbruzzese told me, "We would never work with a single entry accounting system. Ever.” But ask your own accountant and form your own opinions. 

 

When is it OK to not use double entry?

There used to be 3 good reasons to avoid old-school double entry accounting software:

  1. It was too hard to use.
  2. It was too expensive.
  3. It took too much time.

That's no longer the case, especially with Wave. So today, in the same time and with the same effort it would take you to do it wrong with "lite" software, you can do it right with a double entry accounting system in the cloud.

"Lite" software may have its purpose — some of it is pretty great at its intended purpose, like invoicing or expense tracking. But don't confuse it with accounting, or you could wind up paying for it, now and down the road.  

 

How do I know if my software is real accounting or "lite" accounting?

Here's what you need to look for, or ask for:

  • Simply asking if something is double entry is usually enough. A real double entry application will tell you that's how they crunch your numbers. 
  • If the software doesn't give you a Balance Sheet, or only has a work-around solution to get you close to a Balance Sheet, then it's not real double entry. A Balance Sheet is a critical report that any accountant will need to save you money. And as you get more experienced, you'll be able to learn from it, too.
  • A proper accounting application allows you to create Journal Entries or Journal Transactions. This is the old-school way of entering info into an accounting application, and it illustrates what double entry means. In each Journal Transaction there are two offsetting entries. It allows you to track where money came from and where it went, and a whole lot more. If your software doesn't allow you to use Journal Entries/Transactions, it's not real accounting.

If the software you're considering covers these 3 bases, you're probably looking at a real, double entry accounting application. Of course, Wave offers all these features and then some.

As I mention above, the great news is that you don't actually need to know what's happening under the hood of a double entry system. What's important is that it is a double entry system, and that those powerful tools and reports are available for you and/or your accountant when you need them.

So next time you see someone say "accounting software" when what they mean is "expense tracking" or "invoicing tool," please join me in sending them the graphic at the top of this post! You can get it any time from http://bit.ly/REALaccounting .

Danetha Doe is a business strategist and cloud accounting expert. Her consulting firm helps businesses launch new apps, services and products with ease and has worked with companies like Google and Audi. Contact her directly at danetha(at)danethadoe(dot)com.

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What your CPA isn't telling you

This past Thursday, I hosted a mixer for my professional community called the Future of Accounting. We have close to 250 members and are sponsored by some of the biggest companies within the Accounting industry.

Our group is full of accountants and fun tech people who are passionate about helping small/medium sized business owners grow.

Since my passion is to help deepen the relationship between you and your CPA, I always like to ask the CPAs who attend, how business is going and how often they hang out with their clients.

Maybe not "hang out" at happy hour, though that would be really cool. But at least get together more than once a year. And it always shocks me when I chat with a CPA, or someone from the firm, that says that they only talk to their clients once a year.

What? You wait until tax time to touch base with your client? What about the rest of the year when they are thinking about hiring a Virtual Assistant, or rolling out a new product or are nervous about the dwindling cash in their bank account? Or want to buy a home? Or or or...

Crickets.

The beauty about working with a CPA is that they see the financials for lots and lots of businesses and can help you grow your business faster than you can do on your own.

Let me phrase this.

If you only talk to your accountant during tax time, you are doing your business a HUGE disservice. And potentially losing out on lots and lots of money.

So often should you meet with your accountant? And what should you go over?

  • I suggest meeting at least once a quarter. Preferably, once a month.
  • You should create and review your monthly and quarterly goals.
  • You should share any changes within your life or business that you're anticipating may affect your company. For example, are you thinking about hiring someone? Or you planning on having a baby which will decrease the amount of time you can spend working on the business for a period of time? Do you want to expand locations? Do you want to purchase a home?

Letting your CPA know about your plans for the future and your income goals, will help them figure out the best course of action for you to take in order to grow your business and save on taxes. Your CPA is also probably well connected within the financial industry and can probably recommend someone who can help with things like budgeting for a baby or purchasing a home.

How often do you meet with your CPA? Let me know in the comments below!

Want to read more about how working with a CPA will improve your business? Sign up for my weekly newsletter below.

Danetha Doe is a cloud accounting expert. A business coach and former NFL Cheerleader, she is on a mission to bring sexy back to the world of accounting.

For weekly accounting tips, sign up for my weekly Money and Mimosas newsletter.


3 easy ways to immediately improve your cash flow

Whether you're a budding marketing guru or a full-fledged agency, most businesses have had difficulty maintaining a consistent cash flow. While we typically put the pressure on our sales team to turn more leads, often times we can look to our finance department or how we manage our books to help our business run more smoothly.

Below are 3 easy ways to immediately improve your agency's cash flow.

  1. Upgrade Your Bookkeeping Program.
    • Does your agency use Excel or a desktop software for your bookkeeping? Unfortunately, these tools need to be updated manually and don't allow you to see a true financial picture in real time. I highly recommend switching to a cloud based program. Three of my favorite tools are Xero, Wave, and Freshbooks. These programs are intuitive, give you real-time holistic financial information and are beautifully designed. If you want to learn more about these programs, click to read my post.
  2.   Automate your invoicing.
    • Does your agency create invoices in Word or within a design program? Creating your invoices within your bookkeeping program will save you time and headaches when you need to gather financial information quickly. This is the easiest way to improve your cash flow immediately.
  3. Make a list of your client's Accounts Payable contact.
    • Do you know who handles the bill payments for your client? Find out and make them your BFF. Getting to know the person who will actually pay your invoice is probably not a bad idea. And they probably have a ton of work on their plate, so your invoice may be forgotten if you don't give them a friendly nudge. I recommend sending them flowers and chocolate. Just kidding. Sorta.

Danetha Doe is a cloud accounting expert. A business coach and former NFL Cheerleader, she is on a mission to bring sexy back to the world of accounting.

For weekly accounting tips, sign up for my weekly Money and Mimosas newsletter.