♪ California's top casino and entertainment destination is now your California to Vegas connection. Play at Yamaha Resort and Casino at San Manuel to earn points, rewards, and complimentary experiences for the iconic Palms Casino Resort in Las Vegas. ♪ Two destinations, one loyalty card. Visit yamaha.com/palms to discover more. You've heard me say lots of times that financial questions should be easy.

After all, just look at the data and see what the data says, right? Well, what do you do if you don't have the data? That's a problem that many of us face. So today I'm bringing in Ryan Marquez. He is an accountant, he has a CPA license, a master's in tax, and is an instructor in a master's of tax program at Boise State University.

And he's gonna give us some advice for how to set up a bookkeeping program and a bookkeeping system for our businesses. ♪ Welcome to the Radical Personal Finance Podcast. My name is Joshua Sheets and today is Tuesday, February 3rd, 2015. Today is an instructional class to give you some ideas for how you can set up some systems that will help you track your money and, most importantly, figure out whether you're making any money or not, and then figure out how much.

♪ My guest Ryan is a listener of the show. He reached out to me and he's helped several times, made some comments and shows and things like that, and it's been so helpful to keep me on track. I like having guys like him in the audience. It helps me to feel confident to know that I'm being fact-checked as I talk.

And he reached out to me and said, hey, if you'd like, I'd be happy to help. And I immediately said, yes, please help with some information. One of the blind spots that I have is having never worked as an accountant, having never acquired a CPA license, having never consulted with clients on their bookkeeping aspects of their business.

I don't have the ability to, I mean, I have some theory, but I don't have some practical experience. I brought in Ryan. He's got a wealth of practical experience. He's an expert in this area, both a teacher and as a practitioner, which is a useful combination. And so he's gonna set you straight.

I hope this is use, set you straight in a good way, not tell you everything you're doing wrong, but give you some ideas for how to do things better. But I hope this is useful information for you. I hope it can help you here at the beginning of the year to get your bookkeeping system wrapped up so that you can track your numbers and we can do some good planning.

Ryan, welcome to the Radical Personal Finance Podcast. I appreciate you being with me this morning. - It's my pleasure. Thanks for having me on. I'm a listener and I really enjoy the show. - Yeah, you're a dedicated listener and I appreciate having listeners like you with an accounting background to help keep me on track.

It's really tough. As a practitioner and a former, and a financial planner, I think anybody who has a little bit of experience in any technical aspect of planning, you have to get very comfortable quickly with the idea of being wrong because sometimes you just get stuff wrong. And so I love having knowledgeable accountants like you and other, there are financial planners that listen that email me from time to time.

And I love having you guys to check me out and fact check me and keep me honest. So I've been looking forward to this content, especially with you as a listener. I wanted to bring some information on accounting and bookkeeping to the audience, but I knew that that's not necessarily my area of expertise.

And so I'm thrilled to have you here. What I'd love to start with is, share with us a little bit about your story and a little bit about your background in the accounting field. So people, listeners can have some confidence in our course of discussion today. - Okay, yeah.

So I'm originally from Southern California. I was born and raised there in Orange County. After I graduated with my undergraduate degree from a small school down there, I relocated to Idaho. And I've heard you talk in probably quite a few shows about relocating for a lower cost of living or lower taxes.

And those are some of the exact reasons that I decided to move to Boise, Idaho. I've noticed my quality of life is a lot higher here and I'm able to do some things here that I wouldn't be able to do in California. So we were just talking before the show, I ride my bike to work.

You can do that in bigger metropolitan areas but it's a little harder. The area that you need to live in is limited and a lot of times more expensive if you're working downtown. And so that's about my relocation to Idaho. When I came to Boise, I decided to go to Boise State to get my master's in tax.

And then that was just a one-year program, really intense program with just a bunch of tax classes. And then after I graduated, I went into public accounting at a large firm. I work with small to medium-sized, closely held businesses and their owners. And so I got a good idea of, okay, what's happening at the entity level for these people and then how I see that move to their individual tax returns.

I also see kind of what mid to high wealthy individuals are doing with their money, with what they're interested in with respect to tax planning. Are they really interested in $5,500 for their IRA each year? Some are, some aren't. And so it's an interesting perspective to kind of work with a lot of different people around town but at the same time, be able to still relate to them as opposed to working either with or at a large corporation in their accounting department.

It's a different skill set and it's a different mind frame you really have to have. We have some clients that if something's off, I don't know, five, six, $7 million, they could care less. But the people I work with, really, a lot of them care about every single cent.

So it's interesting from that perspective. - I've often thought that would be much more interesting working as an accountant to have that type of varied practice. I've had a few friends that I've known that work in some large firms here where I live in Florida. And it just seems like, I mean, if you're an auditor and all you do all day is audit large corporations, that just seems, I don't know, maybe it's a personality type that doesn't appeal to me but the opportunity to work with different people at different levels to me would seem like a really appealing I guess job profile.

- Yeah, it is. And I enjoy, a lot of my job is, depending on how much one would know about the accounting field, a lot of my job is actually talking and meeting and discussing kind of face-to-face either over the phone with these individuals as opposed to just going through numbers all day.

And so I get a kick out of that. I think it's funny you mentioned the auditors. I was laughing the other day on the 529 show. You got the two emails from the auditors that wanna switch fields. And I just kinda chuckled 'cause I was like, yep, I would too if I was an auditor.

And I'm a tax guy so I can kinda, I can jab at the auditors just a little bit. - I wanna ask you a question about the master's in tax curriculum 'cause I know that you have a master's in taxation and you teach in the master's of tax program.

I've thought about setting that out as a course of study for myself. I've pretty much decided I don't really have any use for the academic credential at this point. Although if I could find a cheap enough program that I could do self-study, who knows, I might do it just to, 'cause the credential can be useful in the academic, I mean, in the community that I work in.

But I've mainly just been interested in the knowledge and I've realized that I have a hole in my personal understanding of finance with regard to some of the theoretical side of taxation. I've looked at syllabus, syllabi for international tax policy, just different aspects of that. I've wondered, generally our master's of tax programs, are they focused on the practitioner, the ins and outs of the knowledge that a financial planner or an accountant might need to accurately apply this credit, this program, or are they primarily focused on the theory side?

Here's the history of taxation, here's the theoretical framework that is applied as governmental policy. What is your opinion on that? - So it's interesting you ask the question 'cause that's the program at BSU I'm actively trying to work with to make better. After I graduated and I came into public accounting, I felt a lot of the stuff I was actually doing, I never really learned in the program.

To directly answer your question, a lot of it hinges on the history piece and then it gets into really academic accounting and tax knowledge. And so depending on the type of teacher you have, they'll either put it in context for you or not. But a lot of it is very standard, I think, lifecycle transactions of either a partnership or an S-corp or a corporation.

But you really miss out on the, okay, here's this form, how do you fill it out? Or the tax planning aspects of, okay, here's this situation and what would you do with this client and what would you recommend? And part of the problem is there's not enough time in the semester to really, okay, get through all the basics of here's what you need to know and then dive into the tax planning and other things like that.

And so one of the reasons Boise State actually welcomed me and picked me up as a professor there is the classes I do teach are really practical and they don't have it in their program or even mention it in any of their classes. And I know with talking to other students and looking at other schools, they have bits and variations of them.

And a lot of the larger schools will have these classes, but at least here from Boise State, they didn't. And so my classes are really practical knowledge that you're gonna use every day, at least on the tech side of public accounting. And I'm hoping my one goal for any class I teach is, okay, I hope to give all of my students just a little bit of a leg up with all of their peers when going into public accounting.

'Cause a lot of it is you spend your first year learning, maybe even your second year just learning, learning, learning. But if I can cut that down for my students with practical knowledge that they're gonna use every day, I think that's a win for my classes. - Awesome. So let's dig into the meat of our content as far as the subject that we're gonna be working on today.

And that's an introduction to bookkeeping as for business owners especially and some best practices. This is probably one of the areas that is, it's overwhelming to many people who are new in business. I remember it was to me as a new financial advisor, I was, it's a business. And here I was responsible for tracking everything and figuring out what can I do, what can I not do.

And my systems were terrible for the first couple of years. And looking back, I never did go through and file amended returns. But now when I look back at what an idiot I was, and I thought about it, I went through and I looked at it, but it was okay.

But when I go back through and look at all of the stuff that I missed due to poor bookkeeping that would have been in my favor and not in the IRS's favor for my first few years, it really made me hurt. And I tell you, even this is something that financial planners struggle with.

Most business people, unless they're established, this is a major question of how do I set this up. And from what I do, talking about, from what I do as far as teaching, here's how to integrate all of this knowledge. You need records and that starts with bookkeeping. And as individuals, as businesses, we really struggle with this.

So let's kick it off with how would you approach me as a new business owner, giving me some practical instruction and ideas on how to establish the bookkeeping side of my business? - Yeah, so I kind of put together an outline here of my tips and I have them in five overall categories.

I tried to make it a little easier to follow and categorize these tips. And I should say up front, this isn't an exhaustive list of everything you need to do or step-by-step detail instructions, but they're just some basic tips I've seen help a lot of people and basically like the question you asked, how I would approach proposing to someone how they set things up from the get-go so that all their records and documentation are in place so that when you get to tax return time, you're not missing deductions like you maybe did in your first few years.

And so the first category I have here is I just wanted to talk briefly about overall theme. And the first point here is to change your mindset on bookkeeping and accounting. I see a lot of entrepreneurs that don't necessarily think about it up front and they don't want to because they are, or they want to be working on their business.

Like I started a consulting practice to consult people on marketing or I started a podcast to be a podcaster and record these shows. I didn't do that to all of a sudden have a bunch of accounting and bookkeeping and tracking numbers. But you really do need to change your mindset on it 'cause it is important.

It's important to understand where your business is currently where it came from, from a financial standpoint, and where it could possibly be going or what resources you currently have in your bank account or what assets you have. And so if anyone's taken a intro to accounting class or accounting 101, something like that, you'll hear every professor talk about accounting as the language of business and they make this big deal about it and how lavish it is.

But to be honest, it really is true. And if people don't necessarily understand what I mean by accounting as the language of business, what that means is essentially you need records. It's a process of records that essentially organizes the financial information into an easily accessible format so that someone can understand what's going on with your business, whether they're in marketing or whether they're in research or whether they're at the bank or even investors.

But if you don't necessarily understand the language, it's hard to talk with different entrepreneurs or even talk with yourself really about your business. - I think you could expand on that and even just simply say, I don't know if this is true or not, but what comes to mind as I think about that saying from accounting is, economics is the language of life.

And the accounting, the specific numerical accounting is indeed the language of business. But our lives are governed by economic decisions at every stage of life. And what happens is in general, many people view finance as something that's boring, that's dry, that's difficult, that's overwhelming. But it affects every single life and every single lifestyle.

No matter how creative and right-brained the venture, it's still an economic transaction. And once you understand the fundamental economics and economic decisions, especially the numbers and the accounting system behind it, you can immediately know what the outcome of a course of action is going to be. And so I think it's, frankly, it's criminal that we don't equip people with at least a basic knowledge of understanding to not feel intimidated by the books and the numbers.

So, and with a basic knowledge, it can free somebody up to really focus on what they really wanna do. The creative aspect, the specific business enterprise, or whatever it is that they wanna do. If you've got the foundation behind you, you're actually more free than if you just shut yourself down to it and say, "Well, I just don't wanna deal with that." - Yeah, I think that's exactly right.

And a lot of the, I'll get to it a little later, but one of the overarching themes of what I do with bookkeeping and what I recommend to people is simple and easy to do so that the process actually gets done and you have more time that's free to go do whatever you need to do on your business.

And it's interesting, I guess, two comments I had on what you just said is I have a lot of people, or I was talking with a guy earlier in the year where he was losing money, but he thought he was making money. And so once I actually went through his bank statements and kinda got all the information from him, I asked him, I was like, "Do you have an idea of when your business "is gonna maybe turn the corner "and you might start to be making money?" And he had no idea he was losing money.

- Right. - And then I had the guy who, I ended up calculating his taxable income and say, "Hey, you probably need to make this payment to the IRS." And I told him what his AGI was, and he was like, "No, that's impossible. "There's no way I made that much money." But he actually did.

But he had no idea because he wasn't looking at the financials or even taking anything into account. All he did was look at his bank account. Cash was still there, so life was good. - I've had this comment so many times on the show with listeners email me privately, just simply with the tip that I've given of make sure that when you create your cash flow statement, you include your tax liability on there.

And nobody ever does that, to actually look and say, "Where is my money going?" But sometimes just including that calculation in dramatically changes the perspective of how profitable is my job. And when you actually go through and you look and you figure out, "Okay, what's my tax liability? "What is it costing me to work at this job "that's way across town for which I have to do "all of this fancy work?" If you actually sit down and look and understand the numbers and say, "Am I making money?

"How much money am I making? "What's my hourly rate? "What are my goals?" It affects your decisions. And I've had several listeners email me, and it's been from both husbands and wives, and say, "We sat down and we looked at it "and we decided why are we wasting, "one of us is going to work, and there's no point in it.

"And so now I, as the husband, "I'm gonna stay home from work and my wife is working, "and we've calculated that we're gonna be able "to live a better lifestyle with less work." Or the wife, "I'm gonna be able to stay at home "and we're gonna live a better lifestyle with less work." But you need the numbers to feel confident in that decision.

- Yeah, and I think that's exactly right. And part of it too is doing it as you go. I see a lot of people that wanna calculate it or figure something out at the end of the year. And it makes it really tough to put together, I mean, you can put together some pretty detailed spreadsheets on, okay, here was my income for each payroll period, and here's what came out, and here's where it went.

But it's a lot harder, it's more laborsome, and you don't get a lot out of it because it's all way back in the past. But you can also use it to help make decisions going forward but I've also noticed if you don't do it as often, it gets less detailed, at least from a personal perspective.

And then some of these things you're gonna miss out on that maybe have been there if you were doing the detail each week. - So I delivered pizzas for a week and this was not too long ago, it was about eight months ago and I was curious to see, I was trying to create a part-time income at a dead-end job without any connection and I just was trying to make about 2,500 or 3,000 bucks a month.

And so I was curious if I could do it delivering pizzas. And it was also part of an interesting experiment. But what I noticed is the first thing I wanted to know was I wanted to know how much money can you actually make with delivering pizzas. And so I asked a bunch of people and I found some information online that it seemed like it would be in excess of 20 bucks an hour and I thought this would be fun.

It was always on my list of things that this would be. And I said, man, 20 bucks an hour, it's not great but it's enough for a dead-end job, it would be ideal. But I went and started asking some of the people who were delivering pizzas and I said, how much money are you actually making?

Nobody knew the answer to it. And the very first thing I did was I had a notebook. I recorded every minute of my time, of the amount of time that I needed to drive from my house to the location. I recorded every single call. I recorded the number of miles driven every single night.

I calculated the cost of wear and tear and gasoline. I calculated the hourly rate, the tip rate. I averaged it out per per delivery. I averaged and I started tracking to see, is there anything that I can do that's gonna increase the number of deliveries in a night? Is there anything I can do that's gonna increase the amount of the tips?

I tried things like calling to let them know I'm on my way, shooting a text, just different ideas that I had to deliver customer service. And in five days, I knew that this was a complete waste of time. It was a total dead-end and there was nothing that I could do and my hourly rate was atrocious.

But as I'm talking with some of the other drivers, I recognized that nobody was approaching their occupation from a business perspective. And it was a fascinating experience to me because some of them really enjoyed what they were doing and they'd been doing it for a long time. And others had a very poor attitude and it was just like, I can't believe I have this horrible job.

And I'm looking at it saying, have you sat down and calculated what it's worth? And just the simple ability to, there was no math involved, but just simply writing things down and calculating the cost and averaging it out. Again, I could make a career decision and I knew it practically the second day, but I would've said, well, I'll work it through a weekend and then I'll just see if there's something wrong.

I did it for a week and I knew, this is an absolute waste of my time. There's no point in my pursuing this. But that business, if I could teach some of the other people that approach, it would change their mindset about the opportunities they pursue. - Yeah, I think that's exactly right.

And it's kind of funny, I guess people working on salary and public accounting, no one ever wants to, no one ever wants to calculate their hourly wage 'cause everyone assumes it's really low based on the hours put in during your business season and tax, but I've kind of calculated mine.

I think it's a little higher than what people actually think it is, but again, you never know if you never run the calculation, right? - Right, right. So keep going, I derailed you, but I just thought it's important to have a motivation for this. And if you can get a motivation and you can recognize, I don't have to pursue this course of action, I can pursue this other, or at least if you have a reason.

I have a friend of mine that was, he was commuting an hour and a half in the morning and two hours in rush hour traffic home to go to a mid-level corporate job. And I sat down and I said, let's run the calculation. Unless you're convinced that this mid-level corporate job is actually going to lead to another step and that's part of your career plan and you're paying your dues to make this next step, my goodness, man, quit and go to the grocery store next door and you'll have a better quality of life even though you're making $9 an hour instead of $50,000 a year when you actually look at the cost.

So these economic transactions are extremely important, but I derailed you from your outline, so keep going. - Yeah, and so to get back on track, you were right there basically, is if you change your mindset on bookkeeping, actually do it and get a system in place, you're gonna be able to get some valuable information out of your business.

To list just some basic things, things like where do I make the most money, you know, I have product X and product Y, you know, product X has a 40% profit margin, the other one has a 5% profit margin, well, what can I do to sell more of the higher margin product and less of the lower one, and you never know that unless you really kind of run the numbers on it.

And you can also get a high level picture of which expenses, which expenses a business has and what you can cut out. So if you're looking, if you look at your business, you're like, man, half of my gross profit goes to rent. Well, what can you maybe do about that?

Do you need a storefront or do you need an office? Can you work from home? But again, if you don't run the numbers and don't actually have it in the system, you're never gonna know exactly how much your rent is coming out to be, and it could be for any expense.

I've only had one person that I've ever worked with that really, he didn't really keep any records, but he knew exactly how much he was making and what was going where. I think he's just a really smart guy and really in tuned to how his business worked, but besides him, I've never seen anyone that just knew off the top of their head exactly how much they made or how much of their percentage was going to this expense and things like that.

And so when I say to change your mind, mindset on bookkeeping, and you kind of need to understand all this stuff, I'm not saying that everyone needs an accounting degree or to go out and pass the CPA exam. It's not needed for the average entrepreneur out there, but it is important to start to understand the basics of how your bookkeeping works and the drivers of your business, like income or expenses.

- And it can lead to a competitive advantage where I've worked with some entrepreneurs that I found I learned a lot from, and I also have taken some classes from some marketers. And one thing I remember, I think it was Dan Kennedy made a big point of this in one of the courses of his that I went through.

He talked about the importance of understanding the lifetime value of a customer so that you can understand how much you can afford to pay for a client and pay to acquire a customer. And people, we know this, you see this, for example, at something like the grocery store, and we're familiar with, you go into the grocery store and sometimes they have these products that are on sale at such a low price.

And you say, they're losing money on that. The example that comes to mind is here, the grocery store we use is a Southern regional chain called Publix. And at Thanksgiving, you can buy turkeys for 60 cents a pound at Publix. And you say, that is, they're losing money on that.

Well, they're establishing a loss leader so that they can make it up on all of the other ingredients that you buy to create your Thanksgiving dinner. And I have a friend that works in the warehouse and he says, they overbuy the number of turkeys they need by a massive number because they will not run the risk of running out of turkeys but they lose money on every turkey.

So why? Well, because once you keep that customer, you make up your profit margin in another area. And so in something like a business, a direct mail business was the example that Dan Kennedy was teaching from, he will often pay money to acquire a client if you know the lifetime value of that client 'cause that gives you a competitive advantage where maybe your competitor is saying, well, this customer is only a $10 customer, only a $100 customer.

Well, if I can pay 150 bucks to acquire a $100 customer this year, but that customer is gonna go on to buy a thousand dollars worth of product from me, then you can buy up the entire marketplace with your business, but that only happens if you have an accounting system that will accurately show how much money you're making.

It blows my mind in things like services, for example, cell phone contracts or cable contracts. Right now I have Comcast Cable. It is the worst company I have ever dealt with in my life other than AT&T. Those are my only two options for internet. And they are horrendous. And I can't bad mouth them enough because the service is awful.

And I sit down and I look at the lifetime value, where it was the worst. I finally was able to get away from AT&T for cell phone service. But I looked at it and I said, you give all of these cell phone companies, and thankfully the market's changing, but they give so much preference to new customers.

It was always about getting new customers, new customers, new customers. And I calculated how much I had paid to AT&T at one point. And I said, could you not actually be a little bit gracious with an existing customer and make me feel like a valued customer instead of making me feel like all you wanna do is go out and get new customers and not take care of me.

Do you guys not know how to calculate the lifetime value of a customer that's a loyal customer? And it just blows my mind when you look at some of these big businesses. And anyway, I'm ranting, but it all comes back to the accounting of recognizing the lifetime value of a customer.

And don't, as the scripture says, don't despise, it's not scripture, don't despise the day of small beginnings, right? Don't despise the small client if you recognize that this small client could grow and the lifetime value of this customer can be massive. But that comes back to your accounting system to know those details.

- Yeah, yeah, that's exactly right. And the next thing on here, or the second point for the overall theme section is, and we touched on it briefly earlier, that your accounting needs to be simple. If there's one thing that listeners get out of this podcast or one rule to follow is your accounting system needs to be simple.

And there's two main reasons for this. The first one is that if you have a big, complicated system, a lot of the times it's gonna provide little value to you with reference to how much time it actually took you to put that together. And so if you're the average entrepreneur where you don't have a full accounting background, you don't have a CPA license, you're just not trained with that, if you have this big old complicated spreadsheet or this big old complicated report to look at, it's not gonna do you any good because you're not gonna know how to interpret it.

I've seen a lot of CEOs, the reports and the numbers that they look at, there's like 10 numbers on them. But the accounting department's putting together this entire financial statement and this entire system of numbers to track how the business is doing. But when you look really at the top level, they're looking at a few metrics and they want just this simple report 'cause their time is valuable.

- Right. - And I don't mean to compare entrepreneurs to huge company CEOs, but I think it carries over with the fact that your time is valuable as an entrepreneur. You wanna be out there generating business, you wanna be out there providing content or making sure your customers are taken care of, less time worrying about the numbers, putting them in place and things like that.

And so the second reason is, oh, did you have something? - No, just keep going. - Okay, the second reason is that if you have a process that's complicated, it's less likely that you're gonna actually do it, either weekly or monthly or quarterly, whenever you do your bookkeeping. So you might keep it up for a few months or for a year and a half or something like that, but the more complicated it is, the more time it's gonna take to keep the system up to date.

And so at the end of the day, when you're tired and you just wanna go home and be with your family or do whatever you do, if you're staring at three, four, five, six, seven hours of bookkeeping work 'cause you got this big elaborate system, you're not gonna wanna do it.

And then all of a sudden you put it off and then you have 16 hours to do, then you have 20 and you have 25. But if you have a simple process, it's easy to sit down for a half hour or an hour, just do it real quick and then you have all the data you need.

And so simple-- - Yeah, that one is my problem is I tend to overcomplicate everything. And including with bookkeeping, with everything, I always, my character weakness is, and I have to be very careful of it, that doesn't hurt me, is to go for the most elaborate system I can come up with, just 'cause it's fun and I feel cool.

And I have to constantly remind myself, keep it simple. - Yeah, with working at a public account, there's a lot of people that are really good with Excel and they build these elaborate spreadsheets to do this and do that. And then I sit down and look at it and I'm like, well, what's the main point of this thing and what do we actually need to get to the end system?

And a lot of times it's 20% of the work that they're actually doing. And I did the same thing with my own personal finances. I tried to come up with something that was big and elaborate and got all the data I needed, but I ended up just paring it down to just a simple thing that I can do for 10 minutes, 10, 15 minutes each weekend, and boom, I have all the data I need.

I have by month, I have by year. And so simple, I think, really is the best rule. It gives you a lot of value for the amount of time you're putting in and it'll give you a higher likelihood of actually doing it week in and week out, as opposed to doing it for a while and then stopping and all of a sudden you're back at square one.

- So where do you start as an entrepreneur? I wanna set up a simple system. Where do I start? - So the easiest way is probably, well, depending on the type of business, you probably just wanna get it in Excel and just track everything that you spend and everything that's coming in.

And so the system, I guess, of recording a transaction, I have down a little later in my outline here, but it does kinda lead into the next topic I have here, which is the first thing you wanna do is open a business checking account and get a credit card.

And so when you have your checking account and your credit card, you only wanna put your business expenses in that account and on that card. And you wanna put all of your business expenses in the account on the card. And the main reason is segregation. So you want your personal stuff in one area, you want your business stuff in another area so that it's easy to track, easy to follow.

You do not wanna mix the two. When you start mixing the two, paying for business expenses out of your personal account or you're a little low on money in your personal account this month, so you're gonna take out of your business account, starts to complicate things. And in the grand scheme of things, it's not that hard to account for it, but at the same time, for a system as an entrepreneur, you want something that's easy, almost repetitive, where you don't necessarily have to think about it too much, at least with recording the data.

And then when you actually get it nice and organized, you can start to think about it more and analyze it. And so-- - I'll add one-- - The reason-- - Let me add one tip to that. Yes, set up a separate account, set up a separate business checking account, but it doesn't actually have to be a business checking account.

Many banks, the personal checking account is free, and the business checking account, they'll charge a fee or you have to maintain some kind of higher minimum balance. The primary purpose, especially just for a simple enterprise, the primary purpose is to have the account segregated for easier bookkeeping, and so that you can simply go back through and just have everything organized.

And so even at the end of the year, if you had no other system, let's say you were mowing lawns on Saturday, or, and that was just your little thing, and all you did was just add a little free personal checking account, but you use your, you're not establishing a separate business entity, you're not, you don't need a formal business checking account in the name of Joshua's Lawn Service, it's just Joshua Sheets, by having everything in a separate account, you go back at the end of the year, you look at your 12 monthly statements, you can go through, and in about an hour, you can recreate all of your tax records that you need to file your Schedule C.

So don't let the business checking account part of it stand in your way. Just set up a separate personal checking account. And if you have something where, for example, you have a small part-time business, whether it's a hobby that you've decided to turn into a business, so now you're pursuing it in a business-like manner, run everything out of a separate account, so that you can look back at the end of the year and decide, what do I do with the income from this business, what do I do with the expenses?

It's just the easiest, simplest way to run things. - Yes, that's exactly right, and that's actually the main reason I had listed here for why you wanna open a separate account. It makes everything electronic, it makes everything in one place. And so, when everything's in one place, like you said, it's easy to account for, easy to recreate statements, you're also less likely to lose tax deductions.

And so, I have clients that they, I don't know, go to the post office and mail something for their business, or they go get gas for their business vehicle that they make deliveries in, and they pay it out of their personal account. And so, when you hand over your stuff to either your bookkeeper or your tax person, or maybe even you do it yourself, you're gonna go pull the account that's dedicated to business, and those payments to the post office and the gas station aren't gonna be there.

And so, depending on how long it's been since you've incurred those transactions, you may forget that you actually paid those amounts for your business, and so you're gonna lose those deductions. And one thing about losing deductions that always kind of gets people to perk up and actually listen about it is, if you're in a 35% tax bracket, if you don't account for $100 expense that you had for your business, it's almost as if you're just taking $35 and just lighting it on fire.

Because that's additional tax you're gonna have to pay to the government because you didn't record that expense. And then, also, with the accounts, everything is gonna be on statements. And so, like you said, you can go back through, categorize all your expenses, and put it on your tax return.

And with the statements, the electronics, you can email them around easier, or put them on some sort of SharePoint site for your tax person or bookkeeper, whoever, and they can grab them real quick, as opposed to, I know some people get the paper statements and you can scan them in, but at least from my perspective, electronics is a lot easier to work with.

- Right. And my reason for mentioning that, and it's not to say that we don't need business accounts, you do, if you're gonna be paying, I mean, there is a functionality to a business account, and we need to set that up properly and set up your tax ID numbers, you do need to do it properly.

But I see so many people that run little, you know, sideline enterprises, little part-time enterprises. Example that I think of, when I was a kid, I used to raise and sell rabbits. And something like that, let's say somebody has a hobby of raising rabbits. Well, all I needed to do, if I'd had a little bit better instruction, is have a checking account for my rabbits, and that's the business that runs through that.

And now, all of the things associated with that become deductions. So the books that I bought on rabbits, instead of them, you know, because they were specifically related to my focus of building that business up, and I was actively pursuing it in a business-like manner, now all of a sudden, every activity that's associated with my rabbits becomes a business, and it becomes a business deduction.

And there are many little businesses that people can set up, and little businesses that people can run, and you don't have to pursue a business 60 hours a week to have a legitimate business. And it's not that difficult to do, it's just that most of us, we're taught by employees, most of our teachers that we have throughout our life are employees, and so, and very few of us, unless we have a mentor that comes along and says, here, let me show you how to set this up, we don't know how to go through the simple mechanics of keeping a separate account.

But I think everybody, you know, is gonna have some, should probably have some kind of side business, and it's so simple. Separate account, file a schedule C on your tax return, and you're basically done. So correct me if I'm wrong in any of that, but to keep it simple is very important to lower the barrier to entry.

I get questions from friends, well, I need to go and do this, I need to go and do that. Listen, even if, yeah, get your taxpayer ID number if you wanna set that up, that takes you about five minutes, it's not that tough. You don't need a bunch of expensive stuff, it's basically free, it's not that tough.

- Yeah, I think that's exactly right. If you're running a small-time thing, especially if you're a minor, you definitely don't need a separate business checking account. A separate personal one would be fine. One thing that I like about the business checking accounts and, is that you don't have to use your social.

- Right, right. - So each entity needs some sort of identifier. So for us as individuals, we have our social security number to identify ourselves to the government. Businesses have what you mentioned in EIN, an employer identification number. And so when people, when you're in business, a lot of people will ask for this sort of stuff, they'll give you a W-9 or a 1099 or something, and you need to give them some sort of number.

And so if you don't have that EIN or that bank account that kind of shows, like hey, this is my EIN, this is my documentation, sometimes you have to give it that social. And I know identity theft has been a big thing coming up recently, especially with people filing fraudulent tax returns.

So I don't necessarily mean to or intend to scare people, but at the same time, it's important to some people and it's definitely something to be cautious about. And there are business checking accounts out there that are free, especially if you have a smaller enterprise. And so I, at the local credit union here in Boise, I can have up to 1,000 transactions a month and not be charged a fee.

And so if your business is having less than $1,000 a month, you could have a free business checking account and all the benefits that come with it. But with the business checking account, they like to add fees to everything, so it's harder to transfer money electronically without having some sort of system that's a fee from the bank, things like that.

And so that's, I guess, my spiel on the business bank accounts. If people want to open one up, all you gotta do is go down to your bank and say, hey, I wanna open up a business checking account. You can open, from what I've seen, there's no online business checking accounts.

I know some people like the online banking. I've only seen online savings accounts. But to open a checking account, all you need is your EIN from the IRS, which you mentioned before. You can do it online, takes less than five minutes. You can ask for either electronic or paper letter from the IRS and you'll get your EIN.

And then you probably need some sort of documentation from the secretary of state. So each state has a secretary of state. In Idaho, if you wanna fill out a DBA or an LLC, you just need to send a one-page form to the secretary of state. They'll stamp it, mail it back, bring those two things into the bank.

And at least in my experience, that's all you really need to open up your business checking account and get going with that. - Right, I agree. And I will reaffirm your mention of local credit union. When I shopped for business checking accounts, I went to the big banks and all just the fees were, in my opinion, egregious.

But local credit union, completely free, no fees. Had to maintain a very small balance. I even forget what it is, but a very small balance in an attached savings account at that specific local credit union and a free business checking account. Super easy, completely free, and they will offer you better service over time.

And I like to support local credit union regardless. - Yep, yep, definitely. I've had bad experience with larger banks. Local credit union, I've never had anything happen. I had an issue once, but they fixed it really quick. Unlike some other experiences at larger banks. - Put it this way, I will bad mouth SunTrust 'til the day I die.

They destroyed me. That was where my first business checking account was. I will never again do business with that company in any way, shape, or form. It was just a terrible experience. And there are enough, anyway, so there, I bad mouthed them publicly. That's the first time I've bad mouthed them on the show.

I pretty much keep my mouth shut about most companies, but I'll never do business again with them in my life. - I have one bank in mind as well, but I won't mention it on the show. - All right, keep going. - All right, so the next tip here is to avoid using cash for your business.

And I know a lot of people like to use cash. If people are on the Dave Ramsey budget, you have your cash envelopes, and it helps people with budgeting. Say, okay, I have $80 or $100 or whatever that I can spend at the grocery store. I can't buy more than $100 'cause that's all I have.

But for business purposes, especially when you're trying to do bookkeeping and get everything ready for taxes, cash makes it really hard. And it goes against the simple concept that I was mentioning before. The main reason is that cash is really, really, really easy to lose track of. And so you could pay for something with cash and say, oh, that's a business receipt, but then you lose the receipt.

Or you're not used to keeping your receipts and you get it for your business and you just throw it away. We talked about the segregation concept earlier. You could pay for something with the wrong kind of source of funds. I'm putting that in air quotes here, with the wrong source of funds to kind of keep everything balanced at your business.

And there's lots of other reasons, but the main reason is the most transactions I see not recorded on a tax return come from the owners using cash and not remembering to tell someone about it or keep the receipt. 'Cause it's easy to remember that day, but especially if you're busy, even the next day it's hard to remember, oh, I need to make a note about this cash purchase or the next week or the next month.

You're never gonna figure it out. So cash is really, really easy to lose track of. And then some people have multiple businesses going on. They have multiple Schedule Cs or if you're into rental properties, you have your Schedule E. Just multiply kind of all the things I mentioned by two or three in terms of complication and that'll get you how important it is for the multiple business side.

Because now all of a sudden you got a business expense that you have to remember, you have to keep the receipt for. And then you gotta remember which business it should go on. And so the people I've seen with multiple business, it gets tough to remember which business it's for.

It's a lot easier, okay, as I'm doing that transaction, I pull out the credit card for this business or I pull out the credit card for the other business, run the transaction through and then it'll just show up on that statement and then it's easy to categorize. And so, go ahead.

- I was gonna say, cash is definitely the ultimate discipline factor. So for somebody who needs discipline and someone's deeply in credit card debt, trying to get control of spending for the first time, building in that discipline factor of not actually physically being able to overspend, I think that's a huge advantage.

But once that basic discipline factor is established, you're exactly right, you've gotta be able to track it. I've never met someone who is, including me, who has the personal discipline to actually record every transaction and have a proper journal or ledger of their cash so that they can know where every dollar goes.

Most people, it just seems to slip through their fingers quicker than anything else. - Yeah, that's exactly right. And you can, I mean, you can use cash for your business. - Right, absolutely. - You just have to up your game on documentation and remembering what came from where and recording everything.

And I'll tell you, even for me, sometimes if I use cash for my personal stuff, sometimes I forget to record it. And it's like, I do this for a living. - Right, me too. - So other entrepreneurs, I think there's a less likelihood of the cash transaction actually being recorded.

And the other thing that cash will do, we talked about the checking account and having everything kind of electronic on those statements. Cash won't show up on the statement. And one thing I was gonna mention with the business credit card, you don't necessarily need a credit card. I know some people don't like credit cards, they like the debit cards, that's fine.

The main reason with a credit card is you want some form of electronic payment. And so your debit card, it's depending on how you think about it, you could view that as cash kind of being recorded in your bank account. But cash will add complexity to the system just 'cause it's one more thing you have to do.

And we talked about being simple, having something that's repetitive. And you could make cash a repetitive nature in your accounting system, but it's just, at the end of the day, it's just tougher. - Yeah, cash speaks. And there are, I think, if you can get a discount by using cash.

I recently had a financial transaction and just one of my things as a part of just about any financial transaction I can is listen, can I get a discount for cash? And the person said yes, I was able to get a discount for cash. But I don't have an excellent accounting system established to deal with that.

So what I did was I made sure to go directly to the ATM, take out the specific amount of cash I needed for the transaction. I got my substantial cash discount by handing over $20 bills. I got my receipt and I had a series of ATM withdrawals, one after the other, totaling the exact amount.

And then that spurred me to have in my mind the amount of money that I need. It spurred me to make a note of, yes, here was the transaction, it's recorded in my accounting system, but I was able to get the discount for cash. Every business might be different.

I gotta imagine it'd be unusual for an accountant running an accounting practice to be thinking about how do I go and get a discount on Craigslist for this certain thing. But I tell you, there are some businesses where having a bunch of cash in your pocket and buying stuff on Craigslist, that can improve your profitability massively.

So you just gotta set up a system that's gonna account for your specific business. - Yep, yep, I have a client that has the same thing. He goes in SwapMeet where basically everything's cash and he picks up some really good deals there. The problem is just trying to record everything 'cause he'll take out, I don't know, a thousand, two thousand dollars, go to the SwapMeet, buy a bunch of things, and it's really hard to kind of break down what each item costs 'cause you're not necessarily getting a receipt at the SwapMeet showing everything.

So if you're disciplined enough, cash can work, especially if you can get a good deal on it. I think that would kind of up your game on the discipline part. But at the same time, it's tough to track. So it has its place, but it's just something to be conscious of.

- My suggestion, envelope, put the thousand dollars in the envelope, take a pen with you. When you buy something, write it on the envelope, what it was, how much it was, put all the change in, and then just bring that envelope back and on the front of it, you've got your ledger and transfer that to your standard accounting system.

It's the best way that I've done. I do that when I'm traveling and you're dealing with foreign currency and a foreign account, and I wanna know what am I actually spending here. Just toss the money in an envelope and write every transaction on the front cover of it. - Yeah, yeah, I've given him some ideas to track it, but he's not in tune with the bookkeeping side of the business, so I just deal with it later.

- So boogie on here. - Yep, so the next tip here is to use some sort of accounting software, and depending on the type of business you have, you can have a lot to track or little to track, and depending on the size of your business, you may have funds to pay for something like this or not, but the accounting software, something like a QuickBooks or a FreshBooks, I think those are the two popular ones out there that I see, it saves you a lot of time.

If you have an Excel spreadsheet to track everything and record all of your expenses into these categories and you have formulas and all that stuff, it's nice to have, but a lot of that stuff takes a lot of manpower to keep up each week or each month and record all the transactions, and it's easy to have user error with those, and then if you have that, it's tough to find them later.

What I've seen with an accounting system, a lot of those things, there's less likelihood of those happening, and the amount of time you need to record a transaction is just a lot, a lot less, and so I see a lot of people that are intimidated by accounting systems, like, oh, I'm not an accountant, I can't possibly run QuickBooks or FreshBooks, I don't know what I'm doing, I don't know, to throw some accounting lingo, I don't know debits and credits and, I don't know, balance sheets and cash flow statements and all that stuff, but I think one thing that's important to know is mainstream accounting software is made for non-accountants.

- Right, absolutely. - So if you're getting ready to send someone an invoice for some product that you sold them, and you literally go to a button and it says create an invoice, you click it, and boom, up pops an actual invoice, and you just fill it out with the client, the address, the item number, and everything calculates for you, and it literally looks like an invoice, and all of the income statement accounts and expense accounts, all that gets recorded behind the scenes for you.

And so, and I say that, you need to kind of set up correctly and you can get a bookkeeper or someone to help you with that decently, cheaply, but it saves a lot of time and categorizes everything for you, especially if you're, it's easy, especially if you're not an actual accountant.

- And another suggestion, because the fees for QuickBooks and FreshBooks vary, they've got the upfront purchase amounts, you can buy the program as an independent software program, you can also do, for example, QuickBooks, you can do QuickBooks online, and then there's simply a monthly fee. There are advantages and disadvantages for, I like the QuickBooks online, their app that they have, which helps, I think, an entrepreneur to be able to often track their transactions a little bit more easily, to be able to do things on the go, right from their phone, pull things up, see their P&L, their profit and loss statement, right in the middle of the month.

But there's also the cost for it, and so some businesses, there may not be the benefit there of paying for the software if it's a very small business. A free alternative that I've used is an open source program called New Cash, G-N-U-C-A-S-H. I'm not sure if you've ever used it.

It's a little bit, for those who aren't familiar with accounting systems, just any kind of double entry bookkeeping system like QuickBooks is probably going to be a tiny bit intimidating for some people. QuickBooks, I think, is pretty doable, but if you want a free version of it, where you can have an accounting software that will go ahead and integrate transactions from the bank, check out New Cash.

I've used that and found it to be perfectly adequate. - Yeah, I'm glad you mentioned that. I actually forgot about that program. I had a buddy that mentioned that to me a few years ago, 'cause he was using it for his personal accounting. He doesn't have a business, but he's using it to track his wages and his tax withholding and all that stuff.

And he mentioned that, and I totally forgot about it, but thanks for mentioning that. - And I think one other just comment that I have from my own personal experience. I think it's important to look at the scale of your business to understand what's actually needed, and then, as we mentioned earlier, and then also to look at what is the makeup of your business.

So in my financial planning practice, for a time, I tried to use QuickBooks, but what was frustrating is because I had set it up and made the mistake of using the bank to, using the transactions, allowing the software to automatically import the transactions from my checking account, that became a major problem, because I couldn't get it to easily reconcile the transactions that happened before money hit my checking account.

And so there were certain deductions and certain expenses and things that would get pooled before the money would actually hit my checking account. So what I came up with that actually worked the best for me, and the other thing is I wanted a system that was slightly manual, because I find value in having a system that's not fully automated, so that I can question every expense.

So I would keep my checkbook registers, with physical paper checkbook registers, and then every few days, I would just sit down and it would take less than five minutes, and I kept one ledger in an Excel spreadsheet, but with codes for each of the different businesses and returns that I would be filing.

I was filing multiple Schedule Cs. And so I just had everything coded, and I'm very good with Excel, so I was able to have a fully manual system, where my system wasn't being messed up by importing transactions, and I was able to fully account for all of the deductions that occurred before my pay would hit my account properly, and I was able to create it that it worked best for me.

So it was free, it kept the level of manual control that I needed to question the decisions and make sure that I was being most efficient with every transaction. So I was able to make it work with an Excel system, but that doesn't scale very well once you get to the point where you're having lots of transactions.

So I think it is important for someone to design something that's gonna be ideal for their system, and my accountant didn't like it. But I also fired that accountant 'cause it didn't do a good job, and I was able to do it more myself. But anyway, keep going. - Yeah, yeah, and I know on the bank import thing, I used to hate that as well, 'cause I didn't want it to mess up and I liked to record it before it actually happened.

What QuickBooks Online and some of the other ones we'll do now is it'll import to like a, it'll import to an area that's not really recorded in your system, and then it'll try and match up what it's pulling from the bank account to what is recorded already, or what you have recorded already in QuickBooks.

And so what I do is I go into, if I'm going into either my own or to a client's QuickBooks Online, I go to the bank area, and then it has a list of transactions there from the bank, and then if it's matched up, it'll have a little green bubble basically, and say, "Oh, do you agree "that this matches up with this transaction?" And you just hit agree, agree, agree.

And if I can't find something, you can manually match it up. Or if it imports and you haven't recorded it yet, you can just select the account that it needs to go to and just hit record. So that was my main problem before by I don't want transactions to be doubled up or anything, but I think they're getting better at it, especially with the online stuff.

Even a year and a half ago, the online versions of these accounting programs weren't that great, especially if you were trying to track inventory. But now I've seen them really make a lot of strides with making them better. - Do you ever think though about, I guess, customizing solutions?

'Cause the software systems are great, but one of the things I've noticed as people have asked me, for example, Mint is very popular. I know people that just use Mint and they actually use it to account for their transactions. It's free, you can do it right on your phone.

But it certainly has major flaws in that it's a, I guess we'll throw out the accounting, it's a single entry system, it's not a double entry system, it's not a proper accounting system that will work for producing your financial statements. But one of the things I've realized is that people, by not doing things manually, oftentimes people don't understand how their systems work.

So do you ever think though about consulting, especially with a young entrepreneur or new entrepreneur and saying, let me teach you how to do it manually for a little while, and then start working your way into a technological solution? Write it down, for example, keep a paper ledger or something like that.

Have you consulted with clients differently depending on their different situations? - Yeah, so I've consulted with trying to help them understand the process in general. The main way that I do that is with the different reports and how the numbers and transactions will show up in different accounts. 'Cause it's easy when you're looking at the accounts to show them the double entry piece of the accounting.

But from my experience, the manualness of accounting, I've seen really no interest in from people because they want a quick, easy, simple solution. And especially if, I've seen a lot of people, they like electronic now rather than a paper binder or something like that. And so I've seen less of a interest in that and more of, okay, I just wanna understand the accounting in general and how it shows up into these, or how it gets to these different accounts on your trial balance or your balance sheet or something like that.

And I've noticed though, after I take people through that, it helps them start to understand what the accounting system's actually doing. 'Cause as we mentioned before, the accounting system is made for a non-accountant. And so by doing it that way, you miss a lot of behind the scenes. And starting to understand how or where things end up helps you to understand what the system is doing and then you can start to get a better grasp of your bookkeeping system.

- Yeah, it's a real challenge for a nerd like me to, why would somebody not be interested in learning it manually? But you're right. And I think the next wave is the mobilization of everything I think is helping. QuickBooks online, having the app and having everything fully integrated into the phone, that helps a ton.

And one of the changes is, instead of just simply, that I see of huge value, instead of just simply trying to take things and apply the desktop computer version to a mobile device, now by rethinking even the interface from a mobile perspective, I think that's helping a lot to have applications that people can just simply use and that are more intuitive and less tied to the computer.

I think that's helpful 'cause still, man, you open up QuickBooks and you look at the ledger on the computer, that's pretty intimidating for many people. But going transaction by transaction with an automated system right on your phone, that's not so intimidating. - Yeah, yeah, that's exactly right. And I know you mentioned the app before, which I think is a great idea and one thing that I recommend to clients that don't have a lot of time and stuff that I use for my own bookkeeping for my business.

And the one thing I would add is to what you said earlier is if you're using the app, I found a lot of people, they don't necessarily feel like they're doing bookkeeping. 'Cause when you think of doing bookkeeping, you look at it and you sit down and you get on my computer and you run through all these receipts and you categorize things.

But if you're on an app, when you're walking, I don't know, from a client to your car, you can pull it up real fast. There's three things sitting there. You can hit the certain buttons to categorize it a certain way and then you're done. And so when you do it that way, you don't necessarily feel like you're doing the bookkeeping or keeping up with all the accounting, but you actually are.

And so that's kind of an indirect way to stay on top of it, which I think is really good. - Right. And I wanna switch the order up on the outline that we're working from here and go to documentation and retention. And I wanna encourage people, one of the things that I have found to be helpful is if you can establish a process for yourself that you go through.

For example, when I was having a lot of financial planning appointments, I would do quite a few meetings. As a financial advisor, you eat a lot, you're out to restaurants a lot, you're tracking the coffee that you bought for your prospective client. All these little, little things. And if you can just simply create a habit where everything is done all at once that supports your bookkeeping system, I think it's a lot less intimidating than trying to sit down at the end of the month with a shoebox full of receipts and figure out here is where they go.

So I developed for myself a checklist. I read years ago a book called "The Checklist Manifesto" and it absolutely convinced me that I need a checklist for anything worth doing. And so I created a checklist for every meeting. And over time, I just became memorized, but I printed it out.

And so I would leave the meeting and I used a mobile dictation. So while I would leave the meeting, I would save the receipt, I would write on the front of the receipt, here was the person that I met with, here was what the business conversation was, I would make sure the amount was accurate, that it was clearly written.

Then I could just simply use my phone and just simply snap a picture of the receipt, tag that, upload it into my system, add it to the accounting software. I used a mobile dictation service, I used CopyTalk, where I would simply phone in and I had a detailed, orderly way of recording client notes.

I met with this person, this is what we discussed, here were the action steps committed to, all of those things. That showed up, flowed right into my to-do list, into my notes, import that into the client file. Sounds complicated, but the point was, by sitting and taking 10 minutes, sitting in my car at the end of the lunch, and not rushing off to the next thing, I would be able to capture everything while it was fresh, I would be able to capture all of the details that I needed to substantiate the expense.

I had, if ever audited, I had the notes for the client appointment, okay, on January the 15th or January the 20th, yes, I did have this transaction, and yes, there was this entertainment, but here were the notes of, everything was substantiated. And so you've gotta build a system for yourself to do it and stay current on it, otherwise you walk away from thousands of dollars.

- Yeah, I think that's exactly right, and that was my main point on the documentation receipts, is just writing on them. You can get, there's a lot of value in your head right after the transaction occurs. - Absolutely. - You know exactly what was purchased, you know exactly what it was purchased for, if you have multiple businesses, you know which business it was for.

Like you were mentioning, if you're at a lunch or a dinner, you know who was in attendance and what the topic was of the meal. And so all of that needs to get out of your head and onto the receipt right after you get it. It takes, and you don't need a dissertation, you don't need a big long paragraph about the receipt, all you need is just certain notes so that when you're doing the bookkeeping later, 'cause it sounded like you had a system that was all right away.

With a lot of the clients that I work with, they do a lot of documentation at their transaction and then they go ahead and record it later with their bookkeeping system. And so if you have these receipts that you're looking at at the end of the week or the end of the month or the end of the quarter, you can look at 'em right away, flip it over on the back and say, oh, this was for Amanda and Todd, I went to lunch for them and we were talking about some marketing, we were talking about a marketing campaign for this product.

Then you have your documentation on the receipt right there and then you can record it accurately in your system. And so if you have like a online version of the accounting software and if your bank imports it, you can go find that transaction online and say, oh, this is that receipt.

You can say, yes, indeed, it was for Meals Entertainment and move on. And some people don't necessarily like to do that 'cause they can look at the receipt and figure out what it was for. And this kind of goes back to your scale thing. At the end of the month, if you're sitting there with 25, 30 receipts from various different places that were all for a general same category like Meals Entertainment, you're not gonna remember which meal was for which purpose and had which attendees.

And so if you can get it on the receipt right after the transaction occurs, it makes it a heck of a lot easier later. You don't have to rack your brain trying to figure it out. It saves you time, it gives you more brain power to be doing other things on your business.

- I think also if you have these records, and please correct me if you disagree, but I think if you have detailed records, you will feel much more confident with your system in order to be properly aggressive with your tax reporting. Many times I think people are, they don't know the rules.

And so if you don't know the rules of what counts as Meals and Entertainment, what is just me goofing off, which is a non-deductible expense versus me having a business meal, oh, but it's connected to this entertainment expense and what do I need to know to, what was this entertainment, was there a business purpose?

And people don't know. And so then when they don't know, they tend to be vague. And if you're vague, then you're like, well, I'm just gonna, you don't keep good records. I say know the rules, follow the rules very carefully, and document them like crazy. Set up a good system because the benefits of doing it financially are massive.

But you wanna make sure that A, you know the rules, that you're following them carefully, and with every transaction, that way you can substantiate your expenses. And because you know and are following the rules and have a good system for accounting them, for them, you will feel much more confident.

Instead of feeling like the IRS is this big bad bully that's gonna come and beat you up, you're gonna feel confident. I have followed the rules carefully, I've accounted for them, and I have a system that works so I don't freak out if I get an email from the, or a letter from the IRS saying, you know, our local revenue agent is gonna come for a visit.

- Yeah, I think that's exactly right. And from a tax advisor perspective, we are inherently less risky with your tax return because if something's audited and changed and you owe more taxes, that comes directly back on us. And so if you have, and I take a more aggressive stance, aggressive approach with taxes, you could say, but if there's not good documentation, I'm very hesitant to do that.

So if you send me a paper or a Post-it note like, oh, I gave $4,500 in charitable contributions this year, me as a tax advisor, I'm not gonna necessarily like to put that on the tax return because all I have is basically that you said you had this amount to go on the tax return and so I gotta go through the whole spiel, you know, hey, you could be audited and if you don't have documentation, this could all be thrown out.

You know, I just wanna verify that you have receipts for all these expenses on here, for at least the charitable contribution side and kind of push it back on them. But if you have good documentation, I can see that either as a bookkeeper or as a tax advisor, I really like that, it makes me a heck of a lot more confident in the tax return that I'm preparing or reviewing and you can be a little more aggressive with the IRS and get the benefits that come with that, which is essentially a lower tax bill that you are entitled to because these are actual business expenses that are deductible under the tax law.

- Right, and a better run business because you'll be able to know how profitable is my business, I know the numbers, I have controls in place, and I know that this is a worthwhile use of my time. So it's a win all around to set up a good system.

Do you have any suggestions for how to actually hang onto this stuff and file all the information properly so that you have it for the needed amount of time? - Yeah, so I like to scan all of the receipts. I think it's easier, it gives a lot less clutter and you can organize it better.

So with a paper file, you can't do a control F or do some other search through your receipts. If you have a big box of receipts and you're looking for something, you literally have to look through every single one and hope and pray that the one you're looking for is towards the top so you don't spend a bunch of time looking at all these receipts.

And so, and I say scan, but a picture works, just some sort of electronic receipt. And so what I do is I, I think I'm a little meticulous on the documentation side with the receipts more than a lot of people like to do, but I like to have each receipt a separate file, either a PDF or a picture, and I like to organize it by date, vendor, and account type.

So if I took, if I had a business lunch at Chili's or something like that, I can do 2015, 20, or sorry, 2015, '01, '20 for January 20th, 2015, do a space, do Chili's, another space, Mills Entertainment, and then when I'm scanning my receipts, it has all the data I need there that you'd normally need when you're looking for a receipt.

It has the date, vendor, and expense type, especially if you're trying to go from your accounting system and find the receipt for that transaction. And I will say on a lot of the apps or online versions these days, they have a way to attach a receipt to the transaction.

And so you don't necessarily need to keep a separate folder either backed up on an online storage or just on your computer. You can tag it right there to the transaction. And so when you're looking at it online, you can just click it open and boom, you can see the receipt right there.

Some people will do, they like the paper files still, and I think it's a viable option. Again, it makes it harder to actually find something. But if you're gonna go that route, I would organize by vendor. A lot of the times, if you're looking, especially if you do a lot of purchasing, like inventory, a lot of times you'll be looking for a receipt from a specific vendor, not necessarily from a specific timeframe.

And you can have both, but most of the time you're gonna be looking for a specific vendor. And so it's a lot easier to scan through vendor invoices that all look the same when you're trying to look for something as opposed to a big pile of stuff that's different sizes and different categories and different vendor types.

And so, and then another thing on the paper filing system is I would highly discourage trying to do it by, well, depending on how many transactions you have, but I would discourage to do it less by time. So what I see a lot of people do is they'll have a shoebox or something for each month of the year, or even for the entire year, and they'll just throw receipts in there.

Which it's fine from a retention standpoint, but I guess from a documentation and trying to find something, it makes it really difficult because at any specific timeframe, there could be a lot of different categories and a lot of different receipt types in there. So I would encourage to do by vendor.

I see a lot of people do by year and by vendor. - Yeah, that makes sense. Do you, so when you're doing it electronically, are you just keeping those as PDF documents in a file in Windows Explorer or whatever system you use? - Yep, I do, yep. I upload it to something like a, or I keep a folder on my computer that's synced to something like a Dropbox or a OneDrive or something like that.

And it's just one folder. A lot of people like to use multiple folders, and I don't necessarily like to do that. I find it tougher to find stuff. And so if I'm looking for something, I literally have to click into every folder. If I don't know where it is, I have to click into every single folder to find something as opposed to if everything was just in one folder.

You can scan real quick. You can even search by file name or by date to kind of narrow down the topics. But yes, it is, I do all PDFs. Each PDF has one receipt named with the date, vendor, expense type, and then it's all in one folder that's uploaded to the cloud.

- What about Evernote? Do you ever use that or ever suggest to somebody they use an Evernote file for their receipt organization? - Not necessarily for the actual documentation of receipts, but I have recommended it before for taking notes about various transactions. And so this would be a good one, like I was talking about before, the client that goes to the swap meet and buys a bunch of stuff.

That would be a good one for him to pull it up, type into his phone what he's buying and what the cost was so that he can track it and we can record it later. But I haven't recommended it and I haven't seen a lot of people want to kind of use something like an Evernote to track their receipts and document them.

- You would certainly need, I can't imagine how you could do everything with Evernote, but I've been using it more and more. And with how good the phone cameras are, with how good the text speech recognition is, and with how fast the connection is with a phone, the hurdle of entry, of data entry, has gone down so much that I can see, so I have a way, one of my projects at home, I have bins that I use in my garage to store different items.

I like to use bins and the bins are numbered. And one of the cool things is to know what's in them. It's super easy for me. I lay the items out on a table, snap a picture with my phone, and then I just use the speech recognition and speak into it.

And I can say, "Bin number one," for example. I have an entire bin filled with electrical cords. And so I can say, "Extension cords," all the different types of cords. I can just look at everything on the table. I can speak it all into the phone. Then I can just, at any time, if I'm wondering where's my generator power cord to connect my generator to my house, then I just go into Evernote and I just type generator power cord and it brings it up.

So one advantage of having everything integrated, of the way Evernote allows you to integrate a picture, speech to text recognition, an audio file, and have everything tagged, I could see somebody, and I haven't set this up myself, although I do it a little bit, I can see you snap a picture of the receipt, you hit the speech recognition, you describe, "I had a lunch appointment "with John and Jane Smith today.

"We talked about their estate plan. "We met at Chili's and this was the outcome of it." And for either free or whatever their minimal cost is for the premium version, you can have a system where everything's in one place, and then if you can set up a way to transition that over into your accounting system, I could see an intelligent way to design that with all that different input.

You can even record a voice memo if you need to, or append any, or include and attach your PDF file. I don't know, I'll have to look and see if somebody's designed something like that. I haven't fully designed it, but I can see how to use it in my head.

- Oh yeah, I think that's good, especially the voice part, 'cause that makes it quicker, easier, and simpler for the business owner that's trying to record all their transactions. - The voice part is so good now, and just driving down the road, you basically have a free dictation service on your phone, and you can at least have the notes that you need about what you talked about, and it might lower the friction of actually entering it in and having the documentation that you need.

- Yep, that's exactly correct. And then the last tip that I had here, we've talked a lot about changing your mindset and getting your electronic statements, and getting some sort of software package, whether it's QuickBooks, FreshBooks, or I think it was NewBooks that you said, or NewCash, what was it again?

- Right, NewCash, G-N-U-C-A-S-H, NewCash. - Yeah, and so now, you just need to get it done, right? We talked about all these ideas, and as a business owner, you just need to get it done. And so if you don't have, we talked about some on-the-go ideas that I think are helpful and help minimize the time that you need to do your bookkeeping, but I always recommend that people set a specific time at a certain interval to review their books and take a step back and say, okay, do I have everything here?

How's my business doing? What do I have carrying forward? What are my business needs in the next month or quarter or something like that? And so what I found is if you do not set a specific time, what I found that works better is, or the best is either weekly or monthly.

If you don't set that specific time, the bookkeeping and accounting starts to not get done, and then all of a sudden, you're in January, trying to do your tax return, and you got, of the last year, you have January, February, March done, and then the rest of the year needs a lot of work.

- Right. - And so the point here, basically, is to set a time, stick to it, to do your bookkeeping, and it'll help minimize the load at any specific time throughout the year. The most, there have been many times over the last six years of my running a business, several years, I get to tax time, and I have to sit down, clear my schedule for three or four days, and go back through and reconstruct the records.

And what finally helped, actually, is I figured out that if I just did a little bit, just about every day, if I kept my checkbook registers up to date, and I would do that, pull open my bank app, double check, verify my checkbook registers, everything's reconciled. If I did it every day or every other day, it took about a minute.

In the morning, I sit down at my desk, reconcile my checkbook registers. And then, if every few days, or at least once a week, I made sure that everything was loaded into my spreadsheet, and then, if at least once monthly, at the end of the month, I would sit down, and what happened is I would receive my commission checks bi-monthly.

And so I would make sure to schedule just a half hour to sit down, and every time I received the check, bring everything up to date. And then, at the end of the month, I would create my monthly P&L to review with my wife. And I included on my P&L all of my business, it was a business and a personal P&L.

I look at them all as integrated, so we could see everything on one page. And she is not a numbers person, and so she could handle about five, she likes about a five-minute discussion on the numbers. But at least I was able to say, here was what our profit margin was last month in our life, look, here's the trend of this category of our spending, or this category, here's what we're doing.

And that kept me on track. It's fallen apart the last six months that I left. And so now, I'm recreating, yeah, I'm recreating and getting back on track the last couple months to fix my accounting systems, 'cause they fall apart without regular care and feeding. You gotta set that time to do 'em consistently.

- Yeah, and from my perspective, I have a lot of clients that are emailing me the first two weeks of January, like, hey, what am I gonna need out of pocket in April, or what am I gonna be receiving in April? And I can field a lot of those questions pretty quick, because most of my clients, we have a monthly schedule or a quarterly schedule where we're doing everything, and so I can give a pretty dang close estimate the first 15 days of January, where they're gonna end up, as opposed to a lot of people, it takes them into February or even March to try and get that net income number from the previous year.

So keeping up on the bookkeeping and having a set interval definitely has its advantages. - Right. I wanna ask you about one more thing. - Okay. - Well, actually, two things. I wanna ask you first about, we talked a lot about tracking income and expenses, but I wanna ask you about balance sheets, 'cause that's on our outline.

And then I wanna ask you for your advice on working with a bookkeeper and/or an accountant and how to effectively do that. But we skipped over the balance sheet section. Walk us through some tips and reasons why we should be tracking both the balance sheet and the income statement.

- Okay. We talked a lot about tracking income and expenses, and we mentioned a double-sided accounting system. And what that double-side accounting system is is you get the one side on the income statement, on the other side, you get a balance sheet. And so I've seen a lot of people that completely disregard the balance sheet.

Even in your personal lives, balance sheet can be important. So let's say that you're with someone somewhere and you go ahead and buy dinner for everyone so it's just on one card, and then everyone is supposed to pay you back. If you don't have a balance sheet, you're not gonna know that these people owe you a certain amount of money, and that the entire charge that went on your credit card isn't an actual expense to you.

Your expense was a lot lower. And if people don't know what a balance sheet is, a balance sheet is essentially, it's a report that tracks your assets, liabilities, and equity in your business. And so one example I like to talk about that I think gets across to a lot of people is putting it in the perspective of purchasing a home.

And so for most people, homes are, you can't buy 'em in cash. You need some sort of mortgage to, for the average person to be able to get into a home and afford a home. And so if you're buying a $100,000 house and you're coming with $20,000 down, you're gonna pick up a mortgage for the difference, which is the 80,000.

And so if we're looking at your balance sheet, you're gonna have an asset worth $100,000 'cause that's what your house is worth and you own that house. And then you have a mortgage against it for the 80, so that's your liabilities. And then your equity piece is the difference between the two in the house.

And so if you turn around, and we're gonna ignore selling expenses and stuff. If you turn around and sold that house in the next month or two and got your $100,000 back, you're gonna end up with your 20,000. And so when you look at the balance sheet, it helps you understand some of those things, but oh, I got this big old asset over here for $100,000, but yeah, I don't own all that because I have this mortgage on it, so my equity's a lot lower.

And in business, it's really important to track some of these things because if you're planning for a purchase, I need to purchase a new computer system or I need to purchase a big old piece of equipment or I need to pay my taxes even in the next month or two, and you look at your bank account, and you're like, man, I have 10, 15, $20,000 in there, you're gonna wanna know what sort of liabilities are out there that you're gonna have to pay.

And so some of them that come up a lot are things like sales tax 'cause sales tax, you collect from customers, and then you have to turn around and remit it to the government. But you need to know what you collected so that you can turn around and give it to the government.

If you don't have a balance sheet where you're just tracking your inflows and outflows from your checking account, you're never gonna, you're not gonna, sometimes you may not even know the sales tax liability's even there. Another common one is payroll tax liabilities. When you, if you have employees and you're paying them, you have payroll withholding that you withhold from their check and then turn around and give to the government.

If you don't track your balance sheet, you're not gonna know exactly what you need to give, what you need to give to the government. And then one of the maybe more important things on the balance sheet is accounts receivable. So accounts receivable are things that you've sold to customers and then they haven't paid you yet.

And so it's important to track who owes you what and for which invoice and how long it's been outstanding. So there's a lot of these things in the balance sheet that are really important for a business owner to know about that if you are just tracking the income and expense in the checking account, you're never gonna pick up and you're not gonna be able to accurately plan for the needs of your business going forward.

- It's ultimately also just the balance sheet is what tells you if you're actually holding on to your money. One of the things that I find interesting is people often forget about this and often in the online business world, people crow about how much income they have. But the balance sheet is what determines what you're actually, it's not what determines your profit, but it shows you what you have.

And you need both of them. I mean, you need all four accounting statements really, but the two big ones are gonna be your income statement and your balance sheet. And those two, seeing how they work from one to the next and work from one to the next, 'cause we talked about it, accounting is the language of business.

That's what tells you the process and how things are going over time. And every business will be unique. Some businesses might be cash heavy, and so therefore you see that reflected on the balance sheet. Some businesses might be property heavy, and some businesses might just simply be equity heavy, where there's very little cash and you're looking at it, but we've got a massive shareholders equity portion.

Now, how do we build a plan to get out from that? And all of this is ultimately the information that we need to bring back over into personal financial planning. And sometimes you gotta figure out, oh, we just got plenty of cash. And sometimes, man, we got all this equity, but how do we divest of this equity?

Whether it's on the massive scale, that's all an IPO is practically for many, an initial public offering is for many companies. It's a way for, the Facebook IPO is a way for Mark Zuckerberg and his friends to go from being massive mega billionaires on their balance sheet with shareholders equity to being massive mega billionaires with cash that is not all tied up in the future of the company.

That's what the purpose of an IPO is, is to allow the owners of the company to cash out. But people, I think, often don't understand that 'cause they don't understand how the balance sheet works. - Yeah, that's exactly correct. And we've mentioned a lot about, okay, these are important to track, and these are important to know, but I guess tips for tracking the balance sheet, the balance sheet's a tough one because it's a very meticulous process, especially if you have a lot of transactions and you have a lot of different customers.

You almost need one of those accounting softwares to be able to track it in a, putting forth a reasonable effort from yourself 'cause it could start to be really laborsome. If you do it manually, you'll need to be able to track, okay, I sold this thing to this customer and they haven't paid me yet, and then when that check comes in, you have to go back and update that so that, to show that they don't owe you money anymore.

But a low transaction company with not a whole lot of either inventory or customers out there for people that they owe, if they just get paid as they either do their service or as the transaction happens, and if you have a lot of your transactions that you put on a credit card, it's easier to do in Excel because you can just add up the transactions as they occur and then know at the end of the month, okay, here's my credit card balance or here's the sales tax that I collected, and then you'll be able to zero that balance out in your Excel file really quick.

But I think for most businesses, especially if you sell a lot of product and you have a lot of inventory, that's where the accounting system really starts to become important 'cause for each piece of inventory, you have different amounts that it costs you and you have different quantities on hand that you're selling and then buying all the time.

And so the accounting software on the balance sheet really, really helps out. - So that brings us perfectly to where I'd like to end up, which is talking about scale. And one of the things that I've tried to emphasize on my show is applying a little bit of formal accounting practice to our personal lives 'cause the reality is each of us is, in some ways, an individual business.

And even if we are earning a salary, I still think it's a useful, if nothing else, a useful mental concept to view ourselves as self-employed and our employer simply happens to be our number one customer at this point in time, whether we have one customer, an employer, or whether we have multiple, ranging into our business.

But accounting systems can and should and do scale. So I don't see any particular reason for somebody who's working as a middle school teacher to be using QuickBooks and double-entry accounting to track their financial life. All I would be doing in that situation is keeping a checkbook register, taking out some big categories, looking at it purely in rough numbers, and then perhaps every month or every quarter, making a note of my balances, how much equity I have in my house, what the balances are on my debts, how much are in my accounts, or even just once a year sitting down and comparing, well, January 1, last year I had this amount of net worth, January 1 of this year I have this amount, how am I doing?

It should be simple, and it can be done completely manually with a pen and without even a calculator, although a calculator can be useful. Now on the flip side, a business like you mentioned with inventory and, I mean, a large business, you're gonna need an accounting department, or you're gonna need, sometimes you're gonna need a bookkeeper, sometimes you can't.

So you've gotta scale this stuff appropriately. And I think this is one area where I personally struggle with is knowing when and how I should scale my systems up. When you feel something's not working and I need to change something. Do you have any advice for how to figure out where you are in that process and how to figure out when I should hire a part-time bookkeeper, when I should hire a full-time bookkeeper, when I should scale up to a staff accountant, that type of process?

- Yeah, so I think it's a pretty simple decision. And for me, if I'm an entrepreneur, when I don't have enough time to do this anymore, or I feel like I have a really good grasp on it, and I guess my time is more valuable doing other things, I think that's when you really need to start to think about bringing in someone, whether it's a part-time bookkeeper or someone that runs a bookkeeping business that you can hand your stuff to for them to do each month or each quarter, whatever you do.

I think that's when you really need to start to bring people in. And then, if you're talking about bringing in an actual staff accountant, I think you really need a larger business to do that. Because once you start to bring on a full-time employee that's an accountant, they can sometimes start to cost quite a bit.

And so if you don't have your business scaled up and some hard recurring revenue each month, each quarter, you maybe not necessarily wanna bring on someone full-time to be doing your accounting. - Right. Do you think, and this is advice that I have read from people that are far ahead of where I am in my entrepreneurial journey, but I often read CEOs say there are two things that you never wanna get your hands off of.

You never wanna outsource completely. And one of those things is sales and marketing. You need to understand, even if you're not doing it, you need to understand what is happening with sales and marketing because that's what drives, that's what gives you the revenue to run your company. And number two is the numbers.

You never wanna take your hands off the numbers 'cause you need to start to identify. And it's very different to be a CEO of a billion dollar company and you're basically sitting with your CFO and just simply looking at these metrics on a regular basis. But you need to understand them along the way.

And I see all of this as part of being good business people is important training. And I see it as going back and forth. The training that you need for your personal financial statements translates over to business. The training from business should translate over to your personal statements. And properly applied will build wealth over time.

I'll give you the last word. - Yeah, and so I would say if your business is small enough to where you're working with, either you're doing the bookkeeping or you're working with an outside bookkeeper, a lot of the times, even if you outsource all of it, you're not really gonna get your hands off of the financials because there's information that the bookkeeper needs in order to accurately account for various items.

But if you're really good with the documentation and writing on all the receipts and everything in your checking account, a bookkeeper can do a lot of the work without necessarily having to ask you a bunch of questions. But at the same time, if you're doing all that, you're probably gonna have a good idea of what sorts of things are running through your account and what kind of expenses you have.

And then if you have a good bookkeeper, they should be providing you with some sort of report, either at the end of the month or the end of the quarter, whatever your interval is, and kind of walking you through it and seeing if you have any questions. And so you can kind of get back to the numbers that way.

But bookkeeping, I guess to wrap it up with the final word, bookkeeping is important. It's the language of business. It can be really hard or really simple, depending on the either type of business you have or what systems you set up. I'm more of a fan of a simple system.

It provides a lot of value and gives you more time to be doing other things that probably add a lot of value to your bottom line with the strategy of your business or developing content or whatever you do as an entrepreneur in your business. - Any useful resources, particularly valuable books, podcasts, websites, tutorials, guides, that you like to refer to that would be helpful for people that need to enhance their knowledge a little bit?

- Yeah, so that's, YouTube is probably the best resource out there for basic, either for basic knowledge if you're just starting out learning or even to get some more detailed knowledge if you know quite a bit. A lot of the stuff out, I haven't found a good podcast that talks about these things.

And a lot of the, if you can call it a blog or writing out there is more applicable to either the practitioner that needs a lot of detailed information or just really basic stuff that almost tries to leave it without giving you information as a sales pitch. But I've noticed YouTube is very helpful for tutorials on how to use QuickBooks, how to use FreshBooks.

If you have a certain issue that you have in your transaction, you can Google the question in YouTube and probably someone's made a video about it. But I would point people towards YouTube if they're getting started with bookkeeping or trying to increase their knowledge. - Sounds like you need to create the website and the podcast and the resource for people.

So get busy, Ryan. - Yeah, well, I just, I know you did a few podcasts on it. I did my goal setting and some things back at the end of December, early January. And more of an online presence in some of those materials is on that list. So through 15 and into 16, I'm hoping to get some stuff out there.

- Well, keep us in the loop and we'll help you publicize your info. Ryan, thank you for coming on and for the information. Super valuable. I know that probably for many people can seem a little dry to go through these things, but it's important. And this is the level of knowledge.

And even though this is in many ways an introductory discussion, these are the factors that drive wealth. And if you want to become wealthy and stay wealthy, this is the information that's needed. And you at least need to be aware of it so that you can make sure things are being done properly.

So thank you for making the time to come on and getting up so early to do this interview. - It's my pleasure. Thanks for having me on. (electronic whirring) - Now you have to get busy and implement the system. It's one thing to learn about it, one thing to listen, but now you got to get busy and actually do.

So hopefully you've got enough instructions. I'm going to post in the show notes today kind of the detailed outline for our conversation, the topics that we walked through and that we discussed. You can see the, it's basically the outline that Ryan was working from through the call. And then, you know, thinking about, I might have him back in the future.

So if you've got tax questions or things like that, I'd love to set up a kind of a stable of experts who can contribute when questions are a little bit beyond what I'm ready to answer myself, or at least to feel confident in my answer. So hopefully maybe we'll hear from Ryan and I'll work to get some other experts on the show as well.

That's it for today's show. I thank you all so much for listening. It's been a busy week for me. I am, I've removed the membership program from the website. You'll see that is gone. Irregulars, I will be in touch with you soon with details and information on what I'm doing.

You'll get it first. I'm in the process of working on a Patreon page. So that'll be ready to launch, hopefully in the next couple of days. If I can get it out tomorrow, I'll do that. If I can get it out Thursday, it's just a matter of getting it done, which is always a challenge.

But I'm working hard on it. I'm going to, I've figured out, I made a bit of a misstep when I set up the membership program. And so I figured out how to do it a little bit better. And I feel good about the direction that I'm going in. So hopefully, stay tuned for that.

I want to have a great big launch. But I feel confident in the direction that I'm taking the show. I'm learning. We're all learning together. Sharing with one another and enjoying the sharing economy where we can gain as we go through life. But thank you all so much for your support.

I would normally tell you something about the membership program, but today I won't. I'll just simply say thank you for your support. And I will ask you as we go to do two things for me. Number one, if you've never told anybody about the show, would you mind telling somebody?

That is the most effective form of advertising that I have is for you telling somebody about the show. So if there's somebody that you know who you like would like to help with money or you have a specific topic, would you let them know? I would sure appreciate that.

Number two, if you would make sure that you're subscribed on iTunes or Stitcher, or I've got a brand new app coming any day. It's supposed to be done by now. But also make sure to leave a review in iTunes. If you haven't done that yet, that would sure be helpful.

That matters, and that helps in the iTunes rankings, which helps people find the show organically. That's it, I'm out of here. Thank you all so much, have a great day. (upbeat music) Thank you for listening to today's show. If you'd like to contact me personally, my email address is joshua@radicalpersonalfinance.com.

You can also connect with the show on Twitter, @radicalpf, and at facebook.com/radicalpersonalfinance. This show is intended to provide entertainment, education, and financial enlightenment. But your situation is unique, and I cannot deliver any actionable advice without knowing anything about you. Please, develop a team of professional advisors who you find to be caring, competent, and trustworthy, and consult them, because they are the ones who can understand your specific needs, your specific goals, and provide specific answers to your questions.

I've done my absolute best to be clear and accurate in today's show, but I'm one person, and I make mistakes. If you spot a mistake in something I've said, please help me by coming to the show page and commenting, so we can all learn together. Until tomorrow, thanks for being here.

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