Becoming an entrepreneur should come with some kind of warning…

? Woot, woot for making money doing what you love.

? Womp, womp for also wearing hats you were never really into – like finance, marketing, and operations.

Since Tax Season just passed and usually invokes frustration somewhere on the scale of…1. I’d rather be doing anything else to 10. How hard will the IRS look for me if I just leave the country…

I thought this would be a great time to introduce a special guest to your inbox – Deanna Brooks, CPA for small business owners.

You’re going to want to keep this interview in your back pocket to prep for next year and hopefully land closer to the *I’d rather be doing anything else* side of the scale.

If something is in (parentheses), it’s added in by me!

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? Rachel: Okay, so you’ve worked with a lot of different types of entrepreneurs. What is one thing you wish every entrepreneur would do from the get-go in their business?

? Deanna: Get a business bank account ASAP. For one, it’s going to make bookkeeping and taxes way easier. It’s also going to allow you to get business credit easier.

You need a business bank account if you have an LLC, because otherwise you’re commingling funds, and you can lose the shield of liability that your LLC gives you.

(I have Novo because I don’t pay fees and love the auto-reserve function that automatically puts money into buckets of Taxes, Expenses/Charity, Retirement, and Profit. This code gives us both $40).

? Rachel: Taxes and bookkeeping are some of the most frustrating parts of being a business owner. How can entrepreneurs make this easier on themselves before Tax Season arrives?

? Deanna: First of all, get tax planning. You do not want to go into tax season not knowing what you owe and be caught way off guard. You don’t want to go into tax season not dictating how much you’re gonna pay the IRS.

Yes, you as an entrepreneur can dictate what you’re going to pay the IRS if you plan before the end of the year. So I recommend every entrepreneur gets tax planning before the end of the year. 

Also make sure you have your bookkeeping done. There are different ways that you can do bookkeeping at different price points – you can do some of it yourself or pay a bookkeeper for cleanup.

Deanna Brooks, CPA and Founder of The Soft Life Financial

? Rachel: Can you help us understand the difference between a bookkeeper vs. an accountant vs. someone who does strategy/CFO work?

? Deanna:

• A bookkeeper is the one doing the producing, aka the work putting all the stuff together and producing the financials.
• An accountant is going to be the person who can interpret the financials in a way that can make it make sense to you.
• CPAs (Certified Public Accountants) are just people who went an extra mile to get a master’s or 150 credit hours in accounting. And we sat for a four part exam – which took me two years to pass, and then had to do a full year at an accounting practice before getting certified by the state to be a certified public accountant.
• EAs are enrolled agents. They’re specialized in taxes. They don’t necessarily have to have an accounting background or have gone to school for accounting. But they are someone who specializes in all things taxes. They are approved by the IRS to do that.
• CFO (Chief Financial Officer) services – that is when you are looking more into advisory services and asking…”How do I make decisions based on these financials given to me by my accountant?”

So I think about it like this. Accounting and bookkeeping look at what already happened in the past.

CFOs look at what’s happening in the future to help you make decisions about what would be the next best step financially for your business based on what has already occurred.

? Rachel: Do you have favorite software or systems that you love and would recommend to anyone who needs to upgrade from what they’ve got going on?

? Deanna: QuickBooks is the best route to go because it is the most widely and popularly used software, meaning that they already have all the integrations that you will need. QuickBooks also has a lot of controls in place for the person who doesn’t understand certain accounting things.

(If you currently run payroll, Deanna introduced me to Gusto, and it’s the best & makes the entire process so simple. Here’s a referral code with a $100+ gift card).

? Rachel: We’re usually talking about ~fun~ marketing stuff in this newsletter…can you share how having a good grasp on your numbers/certain reports can actually influence your marketing and strategy?

? Deanna: It is super important to know your marketing numbers. An example that I use is for return on ad spend. What may be a good ROAS (return on ad spend) for one person may be a bad ROAS for a different person based on the price of your product, your client or customer LTV (lifetime value), or what your business model is.

So essentially, these are numbers that could cause cash flow issues if you don’t understand them. 

Your contribution margin, your gross margin, your LTV (lifetime value), your CAC (cost to acquire a customer), all these numbers are important to know because it can make or break the cash flow in your business.

If you are a little tight on cash, these may explain the reason.

? Rachel: Now for the fun Q’s. Next place you have on your travel list?

? Deanna: I want to just be in nature. Like I want to just be in the Amazon or something.

? Rachel: What’s your favorite local spot to eat and why?

? Deanna: I like this Chinese food near me that is really good. Oh my goodness. It’s called Café Ginger and the food is just so fresh and flavored perfectly. Just makes me happy.

? Rachel: Thing you’re most excited about in your own business right now?

? Deanna: The most exciting thing happening right now in my business is pivoting and growth. My whole purpose of my business is that I want to help CEOs achieve the soft life that they went into business for.

So there’s this big movement for soft life right now. Running a business is hard already without all the bells and whistles. It’s hard. But it doesn’t have to be complicated.

If we just take out all the noise and take out all the chaos, when we pare it down, we can make running a business really simple. So right now I’m working to help CEOs better live that soft life that they desire.

If you want to feel confident going into next year’s Tax Season, you can find Deanna here and get her support.