Setting Up Business Finances for Success

Feb 24

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Finances can be one of an entrepreneur’s least favorite topics. In this episode, Kayla Prusinski from Savvy Bird Consulting breaks down how to set up your finances — and how they might be the secret to success in your business.

Savvy Bird Consulting works one-on-one with small business owners providing bookkeeping services and tailoring training solutions to their workflows, habits, and skill levels for QuickBooks® software.

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The episode:

Katrina Widener: Hi, everyone. It's Katrina with another episode of the Badass Business Squad podcast. Today, I am here with Kayla Prusinski of Savvy Bird Consulting. Kayla has been a guest expert several times for us talking all things QuickBooks and bookkeeping and a little bit of taxes. Kayla, I don't know if you wanted to jump in a little bit and tell us what you do and what your team members do and all that kind of stuff so everyone can get a little bit of an idea of what Savvy Bird Consulting is.

Kayla Prusinski: Yeah., I'll share on that one. So I started the business over five years ago now and I do training on QuickBooks software specifically for small businesses and started out also doing bookkeeping as well and it's been a handoff between the two. Sometimes different seasons clients want to do it their own and learn how to do it best and then other seasons clients just want us to do it for them. So we have a good rhythm now where we have four bookkeepers on the team who are doing the bookkeeping for small businesses um, mostly in the area of the Twin Cities. And then I focus on education and training and I get to do fun things like podcasts and speaking engagements at networking groups and things like that.

Katrina Widener: So today we're going to be talking a little bit about like business basics for your financials. And I know that this is something that a lot of people get intimidated by is the financial side, which is why it's so cool what you guys do -- both with the QuickBooks side but also I know that you have some bookkeepers on your staff. Because I feel like it's something that most entrepreneurs when it comes to finances don't know anything. So why is it so important to get your, like the foundation of your financial system set right from the beginning?

Kayla Prusinski: Yeah. I think that it's so important right from the beginning just because a lot of times in the beginning, you're actually spending a lot more money than you are bringing in and keeping a close eye on where that money is going in the beginning is really key to your success. There are a lot of businesses that will throw money out the door hoping that it will come back in and not all of those avenues are going to be profitable.

So knowing like where your money is going, whether it's going to hiring people to do the work with you, contractors or employees right off the bat, or it's money that's going out for different tools that you're going to be using with your clients, money that's going out for different advertising -- being really conscious of where that money is going and seeing where you're actually getting that return because you may end up spending money down a road for a lot longer than you should have without getting the type of return that you're really wanting to get from that. So I think that's really important. Just knowing that from the get go of where that money is going, and it's also really easy to spend more than you think without actually tracking it and writing it down.

You may be spending more than you think on a subscription and those monthly subscriptions add up and you realize you're spending $500 a month when there may be another tool that can consolidate that or maybe you don't need half of those tools because you've found other tools. So just being really conscious of where those numbers are going especially when you start out as you're trying to gain momentum to get the clients in.

I know when I started my business, I did as many free tools as I could to get by and then once my business started picking up, I was like, okay, I need to get serious about things now. I had someone else design my website and I got it on a really great platform. Whereas when I did it, when I started I made my own really terrible website and that's what I could afford at the time. Knowing that and saying okay, in order to get the next level of sales, I'm going to have to put a little bit more skin into the game and now that I have cash in the bank, I can do that.

Katrina Widener: Totally. That makes a lot of sense. And I think it's also one of those things where at the beginning of your business is when you can also set the habits that are going to be super helpful, long-term in your business. So it's like if I'm starting to track this now, then when I am dealing with more expenses and more income coming in, then I'll be able to make sure that I'm tracking it then too. So I think that that's really an important thing. So I'm excited that you're going to talk to us about it today. The first thing that I wanted to ask is basically what's your number one tip? What's the like first thing that you want to make sure that everyone does when it comes to their business financials?

Kayla Prusinski: Yeah. So one of the first things, like whether you're just starting out now, or if you don't have this you should get this now, is separate bank account for your business. So I've talked to a lot of people just starting out and they will not necessarily separate their business, either income or expenses from their personal accounts. Sometimes I think I've more likely seen people will start a separate business account and put the revenue into the business account, but they'll still use personal bank accounts or credit cards for those business deductions, those business transactions. And that does make sense a lot of times, because there's not always enough money in the business bank account to pay for those expenses, which I totally understand.

But one thing that I suggest is to really do your best to keep it separate. So for any business expenses, have it come out of the business account. And if you need money in the business account, then do a transfer from your personal to your business account. The other thing that I wanted to add is that there are some banks that don't allow sole proprietors so if you're operating without an LLC name, a lot of banks won't allow you to open up a "business account" or like a "corporate account". So if you just set up a separate bank account, even if it's in your like, First and last name, that's totally fine, but we just want to keep it separate so that you can draw a line in the sand and say, this was all business related; this is all personal related. And that's really important for just tracking like how much am I spending, how much is coming in also really important for. Your tax return at the end of the year, it makes it a ton easier if you're just looking at one bank account and maybe there's transfers in and out from your personal, but you're looking at all of the expenses that are in your bank account and you don't have to go to your X number of personal credit cards to see, you know, it makes it a little bit easier. If possible that's the kind of the number one, the first thing that I really encourage entrepreneurs to do is to have that separate bank account.

Katrina Widener: I know Kayla, you and I were in the entrepreneur book club together back when I was running that and we read Profit First. And that was one of the things too that I loved, that they had like your bank account, which a lot of people like you were saying maybe do have, but they just hold their like revenue in it, as opposed to thinking about your taxes and your expenses. And the book's called Profit First because they want you to also set aside some money for profit first. But I loved that that also held space for all of those different spaces and learning that right at the very beginning of your business, if you can, or at least implementing it as soon as you do learn about it is so important because like you were saying, it really helps come tax season, or even just the day to day of managing your income and managing your expenses and saving money for taxes and all that kind of stuff.

Kayla Prusinski: Yeah. Yeah. Even if your business accounts are one for revenue, one for expenses, like if you have multiple business accounts, that's totally fine. But the main important thing is making sure as much as possible to keep business separated from personal. We think sometimes entrepreneurs that like our business is our baby, and look at it as something like, your business is its own thing. It's not you. And you going out for food and happy hour and like your rent, if you keep it separate it's just gets a lot easier when you have to dig into those numbers and see, where is my money going?

Katrina Widener: That makes complete sense. So what would be some other things that you would give people advice in terms of setting up their business finances for success?

Kayla Prusinski: Yeah. So the other thing that I wanted to mention, I know that I am focusing on QuickBooks software and I train people in QuickBooks, and I'm very pro QuickBooks accounting software. And I'll say that I'm not against other accounting softwares per se, but that is just the one that I've worked in for the last like 14 years. So it's one that I'm just extremely proficient in, but when you're just getting started, using Excel is just fine. If that's what you can. What you can handle for your business.

The important thing is that you're tracking where your numbers are going and where your numbers are coming from. So if it means that you just get a download from your bank account and you put it into different buckets of where this money is going in Excel, that's great. If you want to do something else, another online tool, there are some free ones out there as well.

If you want to use like one of the free ones versus, using a different paid one, do whatever, feels right for you. I will say with that, like the amount of information and kind of analytics or metrics that you can get from those tools is you really get what you pay for. So using Excel, you're going to get really flat information. And my, my really only hesitancy with using something like Excel is the risk of just error, you do like a sum of all these cells and then you add a couple lines and then you forget to re-sum. So different things like that, where you think you've got it all. And then you look and you've actually, you didn't add it up correctly.

I know that Katrina you and I talked about like deductions and one of the things that I mentioned in those is under your expenses, which are all of your business costs that go into running your business, it's important to keep track of the different -- I call them buckets, QuickBooks calls them categories -- just the different areas that you're spending money in.

So if it's advertising, if it's insurance, payment fees or payment processor fees. We accept money from people, but they pay with a credit card and we have to pay someone do that processing. Those office supplies is really like a broad category. So it can be anything from like physical office supplies, paper, paperclips, all the way to like the digital versions of those now. So that could be different software subscriptions that you need for your business. So different things like that. Those are all different categories that it is important to track separately. The tax return is going to be asking for those separate ones, but it's also to see like all of your expenses, just aren't one big bucket of it going outward.

But then the revenue, that one is actually very malleable of how you track it. So on like the tax return, I always base it off of that because that is the one reporting you definitely need to do every year. And I call that kind of the base level. So for the tax return, really the IRS just asks one question: How much did you make? They don't really care if it was from individual coaching or group coaching or workshops they just want the final number.

But in that tracking of where your numbers are coming from, maybe you want to know how much am I making from group coaching? How much am I making from individual coaching? How much am I making from workshops and see okay, how much does it actually cost me for my time or my energy to put into those things. And what's the return that I'm getting?

So where other people who are maybe making some product, being able to group those other products into something where you can say, okay, how much am I making from each of these products? Is one more profitable than the other, and that's what I did with my business, because I was like, I'll do bookkeeping. And then people who are like, I need you to just train me. And I was like, I guess I'll do that. What I track is like, how many hours am I spending for training versus how many hours am I spending just like doing it for someone else? Because I want to see over the last five years how has that trend moved up and down and what are the needs of clients. So there's a lot of different ways that it can it can guide you in your business.

And then the other thing with that too, is you could even track, where your numbers are coming from. I have this on my contact form on my website, did you hear from me from like a networking group? Was it Instagram or Facebook or was it like a Google search? Because I want to know where to spend my time, where to spend my money, to keep cultivating those relationships. A lot of those people are coming from those areas. There's a lot of different ways you can track the revenue. Some of them are definitely like numbers based. You can do that. And some of them QuickBooks now has this new thing called tags, and you could essentially just tag where your revenue stream came from too. So there's a lot of different things you can do, but I think explaining it in the way that's this is how it's helpful for your business is what helps people realize " Oh, I should be doing this for my business" because I think a lot of people are like, accounting is boring, terrible. I don't want to do this.

But when they realize Oh, I can actually get good information about how to run my business better, then it gives them a little bit more momentum versus " Oh, I just have to do this for my tax return".

Katrina Widener: I love that like reframing how you look at finances and how you look at like the business side of all of that kind of stuff because I do think a lot of people are just like, okay, so I know that I need to do this for taxes, but like, how do I do it? And what do I do? And this seems like a lot of work, but when you think about it and put it in context with this is how you can help your business, this is how it can help your marketing, or whatever it might be it makes it click in people's heads a little bit better. So that's awesome. Do you have any other things like last second, like the very end of the podcast interview tips or tricks to share with everyone?

Kayla Prusinski: I do actually have one last thing that I want to, it's almost like a small request for small business owners and that is that business owners not use Venmo or cash app to pay people or to receive payment. I have a whole blog about it at my website, but the two reasons that I have. The first one is both of those programs, those services are meant for personal use only, and your accounts can actually get shut down if they find out it's for business. So yes, it gets scary when it's no, they can just take your money away from you. Which I've had. I actually had my own personal account locked. I wasn't using it for business. They thought I was.

Katrina Widener: Oh, wow.

Kayla Prusinski: Yeah, it was annoying, but I, we got that all figured out. And then the second thing is it's just a lot harder to track just for the money going in and out type of a thing, even if it is connected to your business bank account. It's just not a great tool. You can set that up really quick and easy as a business PayPal is a great option if you want to do those like quick transfers, but yeah, please don't use things like Venmo. That's my one request.

That's I think probably a very good thing for us to end on because I know that people do that and they're gonna be like Oh, Nope. Nevermind. Thank you so much for coming on here, Kayla. I love like being able to bring the sort of intimidating topics and make them feel a little bit more bite-sized, a little bit easier to tackle, so I really appreciate it. How can everyone find you after this? Where can they find your information and everything that they need to know?

Yeah. So the best way to find me is either on my website, SavvyBirdConsulting.com. Otherwise Instagram is probably one of the best places and that's just @SavvyBirdConsulting. We also have a Facebook page. A lot of that info is the same as Instagram, but I will post some links of like news articles or something that I find is helpful on Facebook because I can't really do that on Instagram very well.

Katrina Widener: Thank you so much and I really appreciate your time and energy and all of your information.

Kayla Prusinski: Yeah. Thanks for having me!