00;00;05;19 - 00;00;25;29

Unknown

You're listening to the Profit First for Real Estate Investors podcast. This show is all about helping real estate investors and entrepreneurs bring clarity and structure to the financial side of their business. In these sole episodes, we focus on practical financial strategies that real estate investors and business owners can actually implement, whether it's profit, cash flow forecasting or mindset.

00;00;26;00 - 00;00;47;09

Unknown

The goal is simple to help you run your business with more confidence and less financial stress. Enjoy the episode. Dirty books cost you way more than clean books ever will. What do I even mean by that? The quick books are like whatever financial software you're using. If you say, well, I'm going to have to pay this person to be able to get my books up to date and clean them.

00;00;47;09 - 00;01;05;23

Unknown

And you're like, I don't know about the number and the price. But if you have dirty books, it is going to cost you ten x more than you invest in to get your books cleaned up. You know why? Because there's so many disadvantages of having dirty books, of not knowing the numbers, of not being able to pull out an accurate profit and loss of accurate balance sheet.

00;01;05;23 - 00;01;24;14

Unknown

Inaccurate cash flow statement. As a business owner, your business numbers tell the story of your business. So if that those numbers are dirty and you don't know, like what am I really making? What's really going out the door? What do I get to keep? What do I get to put in my pocket? And it's all a financial mess.

00;01;24;20 - 00;01;43;04

Unknown

Then that's not helping you. If anything that's hurting you and hindering you. You've literally made something that could be a springboard to the next step of your business evolution, and you've made it a stumbling block on your path, because a lot of people just go for the cheapest option when it goes to bookkeeping and goes to accounting. They're just like, can is this person breathing?

00;01;43;09 - 00;02;05;18

Unknown

And did they say they can do bookkeeping? Great. Help me out. And it's like then they get that person in the door and they get that person in the door, and then they're like, I have no idea if this is good or not. And hopefully you can take care of it and you can handle it. And then they have no idea if that person is actually cleaning stuff up or getting it to in the right position or into the right categories, into the right transaction fields.

00;02;05;21 - 00;02;26;08

Unknown

And then you go a year later and it's like you go to your tax accountant and they say, this is a mess. I can't file your taxes. So that way your tax time is pushed back. You didn't get any clear numbers. If you were running your numbers throughout the year, then you didn't have accurate numbers. It's like okay then it's cost you a whole lot more than getting the right person in from the very beginning.

00;02;26;15 - 00;02;42;09

Unknown

So this is where dirty books are going to cost you more, at least then getting those clean books. And how do you actually get clean books? How do you actually do that and how do you get them cleaned up? Number one, make sure you're using a bookkeeper who understands your industry. Make sure you're using someone who understands that.

00;02;42;09 - 00;03;03;05

Unknown

And if it's you, then you need to either get training on how to input that data and input those numbers. Or if you have a family member or someone that you're hiring like a virtual assistant, they need to understand your industry and where every transaction goes. This is not something you want to mess around with. Dirty books could also mean hey, at the most extreme case could be jail time.

00;03;03;05 - 00;03;18;09

Unknown

And you're like, what? What are you talking about? Like, what if you file taxes incorrectly? The IRS comes after you like you're wearing an orange jumpsuit if it goes too far, like, and I don't want it to go that far ever. This is why the dirty. Because it could be maybe someone stealing from you and you don't even know it.

00;03;18;10 - 00;03;41;07

Unknown

Like, there's so many things where if you don't have clean books, it could be working against you. So how do you get that cleaned up? Number one, like I said, working with a good bookkeeper who understands your industry. Number two, it's having open lines of communication with the person who's doing the books. Do you have a clear cut system to be able to say, here's the transactions, here's what it was for.

00;03;41;12 - 00;03;59;16

Unknown

So that way also, you're not taking more of your time out of your day to be able to input that or months at a time. And you have to go back in like an eight hour day, or like I've met some people where they're like, I have a mess. And like every time where it comes tax time, I have to take two weekends and it's like two 16 hour days to get this cleaned up.

00;03;59;22 - 00;04;15;09

Unknown

And they're like wanting to shoot themselves in the foot. I've had many people that like that where they wait till the very last minute and then they're like, what? Why did I do this when I could have had a system the whole time? Third thing of making sure you get clean books is not just number one having the right person.

00;04;15;11 - 00;04;36;00

Unknown

Number two, having a good system. But then number three, making sure that they understand where every single transaction goes. Like, do you know, do you know if they're doing it correctly? Do you know that if they're putting it in the right place. Do you have some way to manage them? The third one is good management of that bookkeeping system, process or person.

00;04;36;06 - 00;04;57;20

Unknown

Because if you're not doing it, then and someone else is doing it for you. You need to make sure that they're actually doing it correctly. If you're like, well, I don't know how this is where getting some good advice or good help. Maybe you need a fractional CFO, maybe you need some training. There's some good training and courses out there of how to look for what you need to inside of the financial analysis for a profit and loss, or for a boundary.

00;04;57;22 - 00;05;22;24

Unknown

Bookkeeping should not be so difficult that you're like, I have no idea what to look for unless you. There are some industries that are more difficult like owner finance in real estate, or some of the other ones like out there. This is where no matter what industry you're in, knowing what to look for will be a big benefit for you as the business owner to at least have a cursory overview of do I know what they're putting in or are they just BSing me?

00;05;23;00 - 00;05;39;00

Unknown

So just because you found the right person who's in your industry, and just because you have a good communication system, you need to make sure, number three, that you're managing them and that you have expectations with them. Are they putting it? Are they getting it up to date on a regular basis? Are they did they get the clean up done and was it correct?

00;05;39;06 - 00;05;55;07

Unknown

You might have to ask your accountant. You might have to ask a CFO or someone to come in and say, is this accurate? What should I be looking for? If you want to turbocharge that. But bookkeeping is literally the foundation of finding the real problems in the business, because you can always follow the money, right? They always say that's a clichéd statement.

00;05;55;07 - 00;06;10;28

Unknown

And all those those cop movies and the like, the TV shows, it's like, follow the money. And this is where for you to be able to follow the money to see what are the real issues in my business. Am I spending too much and, you know, on payroll? Am I spending too much just on general subscription and then the general admin in the business?

00;06;10;28 - 00;06;31;28

Unknown

Am I spending too much and I'm not getting enough return in marketing. Like am I spending enough to get a return in marketing? So this is where the foundation of good books is not just about getting it cleaned up. So you can present to the tax accountant. It's about a couple of other things that I mentioned. You getting the problem solved in your business, so you can make real decisions and keep more of what you're making.

00;06;32;01 - 00;06;47;23

Unknown

So you're not wearing that orange jumpsuit because either someone's stealing skimming or you've got someone where it's like, hey, I turn this into, you know, the IRS. And they said, it's all out of whack, and if we don't pay the right amount, then we could be coming after you. It's like real good bookkeeping will keep you from all of that mess.

00;06;47;26 - 00;07;05;15

Unknown

And the benefits of good bookkeeping are making sure you actually have a return from the numbers and from the money that you're spending, and you get that cleaned up, like I said. To recap, number one, having a bookkeeper who understands your industry. Number two, having those open lines of communication with them. And number three, managing them to make sure.

00;07;05;19 - 00;07;22;06

Unknown

Is this actually accurate? Are you savvy enough as an owner to understand that, or do you need to bring some help in to make sure, okay, they are doing it correctly? These are your numbers. What decisions do we need to make from here? That's the difference between good books, dirty books and how you can get them cleaned up relatively quickly.

00;07;22;08 - 00;07;40;21

Unknown

Thanks for spending time with me today. If this episode gave you clarity or a new perspective, be sure to like, subscribe, and comment below if you're ready to apply what we talked about today with real guidance and accountability, visit profit Recom to schedule a free discovery, call with us to create your path to financial clarity and freedom.