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This episode is a business coaching course that talks about bookkeepers.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Lesson Nugget: A great bookkeeper will make sure that the digital and physical count of your inventory is the same for tax and accounting purposes.
  • Lesson Nugget: Your bookkeeper has to know the bills you are paying are legitimate and if you actually owe said money.
  • Things Your Bookkeeper Needs To Do : 9. Loans Payable - Track how much money you've borrowed.

[THEME MUSIC PLAYING]

-Neo, have you ever checked to see if it was still in? No? That's what I'm talking about. So they need to track your inventory and actually do a physical count versus the digital account. Does that makes sense?

MELISSA: Mm-hmm.

-So digitally, it says we have 2,706 things, but physically, we have one thing.

MELISSA: Is that just a lazy way to equal out the books? To balance the books?

CLAY CLARK: Yeah, but see-- the book-- the bookkeeper, what they'll do is they'll say, well, your inventory, you have $7,000 of products, Melissa. And so your tax on that is this.

MELISSA: Yeah.

-But a good bookkeeper will literally say to you, Melissa, I need you to do a physical count and make sure those two reconcile. A bad one will just not bring it up.

MELISSA: Gotcha.

-And then you end up paying tax on stuff you can't sell all year that you don't even have.

MELISSA: True.

-This happens all the time. If you're a contractor? Come on. How many nail guns have you bought this year, buddy? You've bought a lot. If you're a muffin maker, you're Maggie's Muffin-Making Company in Massachusetts, you're just making muffins in Massachusetts like a boss.

And guess what? You're losing because people are eating them. People are eating your cost of goods, your COGs, at some shrink. This is the stuff you have to bring up to your person,

OK? Next thing is accounts payable. Accounts payable. This is stuff where you owe money. Let me tell you about Jack Assery.

There is a dirty company in Tulsa, Oklahoma whose name I shall not mention but I want to. It takes everything within me not to mention it. Just whisper it. It's like, [WHISPERS]. Anyway, this company sends my dad, whose our bookkeeper, letters. And they say late-- they put the red on there with a red pen, you know?

So they send a document and it says "delinquent notice of fines," or, you know, some official-looking BS. And the total is like $18.13. Well, my dad, being that he's a smart man, my dad checks and goes, son, did you want to buy a booth at a certain bridal show? And I say no. And he says, oh. Well, they just sent us a bill saying that you didn't pay and they're charging you interest.

I didn't send them a check. And I'm like, are you kidding me? So I call person boop-boop-boop-boop-boop. Hey, homes. Are you billing me for things that I never agreed to and then saying they're late as an attempt to trick my bookkeeper into paying you?

Oh. I'm sorry. I didn't know. So I called other people in the industry. Hey, did you get a letter from such and such saying that you were late on a show you never agreed to? And they're all saying, yeah! I'm, like, did your bookkeeper pay for it? Yes.

MELISSA: Oops.

-I'm not even kidding. This is like the biggest, oldest scam in the world. If you want to get in the scam industry, we don't have a lot of videos on how to become a scammer, but if you want to scam, this is where you need to get started. This is a core move. You just bill people small amounts for things that are late with threatening little notices. And most people are just like I don't know. It's $47. I'll just pay it.

Literally, probably every month, I get bogus-- at least one or two bogus bills. But usually between $50 and less. This is an ambitious person. I credit this person for their ambition. Awesome. Way to just bring-- you know. But does that make sense?

MELISSA: Yeah.

-So your bookkeeper has to know if the accounts they're paying are real. And so that means they're going to have to talk to you. And remember, most bookkeepers want to not be reached by you. And if you call them, they charge you for a phone consultation at the low, low price of $100 an hour. That's why you want a flat rate. Does that make sense?

MELISSA: Oh, yes.

-Now I am not even kidding. We got a bill that was sensational this year. And I just, I'm like, how did we spend $13,000 on-- and I'm not exaggerating. A contractor, literally, tried to tell me that we owe, like, $27,000. And I'm going for what? I didn't even hire you. And they were like a sub who worked for the contractor. And they literally tried to bill us and if my dad had not been like a vigilante of just truth and justice, we would have definitely paid that.

MELISSA: Crazy.

-My previous bookkeeper paid that stuff all the time.

MELISSA: That's a bottomless pit.

-It is a bottomless pit. It makes you want to punch yourself. OK, so moving on here. So next is loans payable. Loans payable. Loans payable. This is a pretty self-explanatory. It's just tracking how much money you borrowed. You have to have this thing called the debt to income ratio. You don't want to have too much debt versus income.

So let's just say that I am-- if you're watching this from Greece right now you're going to this guy hates us. He's so mean to us. Calm down there, buddy. Just have one of those-- what's a Greek sandwich they make? What's a good one there?

[SNAPPING]

It's like, I feel like it's-- you know what it is. You know the kind of sandwiches you eat there in Greece. And you have-- have some lamb. Have a lamb sandwich right now. Have a lamb sandwich.

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Definition Magician: Debt-to-Income Ratio - Compares an individual's debt payment to his or her overall income.
  • Things Your Bookkeeper Needs To Do: 10. Purchases - Track any raw materials or finished goods that you buy for your business.
  • Lesson Nugget: You want a bookkeeper who is extremely detailed. Generalities will cost you money and resources in your business.
  • Things Your Bookkeeper Needs To Do: 11. Owners' Equity - Track the amount of money the owner contributes to the business.

[MUSIC PLAYING] -But just to show you that in Greece. This is what they do in Greece. This is true. So I'm not making this up. Greece spends 1.4 times more than they bring in. So they spend 40% more than they bring in. I mean, who's in charge over there? (IMITATING PERSON IN CHARGE) Well, that seems like a good idea. What we'll do is I-- you know, honey, we bring in $1 billion. Let's spend $1.4 billion. It'll all work out. Dumb! Well, what happens is most bookkeepers are dumb. And they're not thinking about your debt to income ratio. So this is what happens. You go into a furniture store for your business. And the furniture store says, Melissa, guess what? You qualify for $13,200 of magic furniture credit! And there's no payments for 18 months. And so you're a winner winner chicken dinner! And your bookkeeper's like, I think it sounds like a great deal. No interest? I mean, the best way to make money is using other people's money. I read that book last night. You know, that's what most bookkeepers do. They say that. They say stuff like that. They say fallacies so often in their mind they become truths. They start to say, you know, the best way to make money is with other people's money. And you're going, where did you read that? (IMITATING BOOKKEEPER) Well, I was online last night watching a get rich show seminar. And I found-- And that's what they do. And they're advising you bringing in their own weird world view. So then you start to get this debt going. And then you go to buy, I don't know, a house or a car or something that you need. And they go, wait a minute. Your debt to income ratio is too high. You don't qualify. And you go back to your bookkeeper and you're like, [CRYING NOISES], I pay you to keep the books! What are you doing? And they say, I-- I mean, I would have-- if you would've called, I would've helped you. But because you didn't call at the lowly rate of $100 an hour, I couldn't help you. And that's just how it is. So most bookkeepers, this is the stuff they do. I'm just telling you all the games they play. The next thing here you have, OK, is purchases. They need to track any raw materials or goods that you buy for your business, bottom line. You need to say, how much did I spend? They need to go, $9,206.02-- $0.02. That's the kind of bookkeeper you want. You want the kind of bookkeeper that has a-- most good bookkeepers are going to be kind of-- if you're a good bookkeeper and you don't look like this, it's fine. But just work with me. The kind of bookkeeper I want, he's got a lot forehead here. He's got, kind of, the Andy Rooney eyebrows going on here. He's got kind of that squinty deal. He's got big old glasses on. This is kind of my bookkeeper I want right here. This is my guy. And he's got a bow tie. He has to wear a bow tie. And he has to have like a pocket protector kind of thing. And he has a series of pens. He has like 18 pens. And he has a dress shirt on but it's a short-sleeve shirt. And his name is, like, Bernie or something like that. That's the kind of accountant that I want. And that's the kind of accountant you want because Bernie-- you're like, so Bernie, how much money did we spend? He's like, well, we spent $962.10. Now, actually it was $0.11 but I, sorry, rounded down. And you're like, wow, Bernie. That was awesome. That's the guy you want. But these broad generalists-- I got a CPA and I talk in generalities idiots-- these people, there's no place for them on the planet except for an accounting firm or the IRS. If you work for the IRS, I'm sorry you work for the IRS. But that's what it is. So you just look for Bernie. Look for Bernie. Look for someone like Doug. There's a good accountant named Doug I met years ago. Doug, you say, how are we doing? How's our debt to income ratio? Doug's like, well, I want you to know your debt to income ratio is, right now, 1.1. You need to pull that down a little bit this quarter, otherwise you're not going to be able to qualify for the-- and you're like-- MELISSA: Dude. -Boom. You know, Doug will call you. Can we meet? I want to meet you once a week, and it's been a week. I haven't met you in a week. Can we meet? I want to make sure we reconcile the books? It's very concerning to me. We're off by $7. [SIGHS] You know, that's how Doug is. Literally, these are people who get anxiety attacks if you don't reconcile your statements once a week. That's the guy you want. Don't hire the sales guy. If your bookkeeper is a salesperson, run for the hills. Get away from them. OK, now, the next thing here is owner's equity. This is the final thing, owner's equity. It's the amount of money the owner contributes to the business. Well, how is this different? The other one was we were talking about-- I'll back it up a couple here. What you're talking about is, if you debt deferred, where you say, I'm getting paid. You know, I have money that I'm getting paid. But I kind of choose to basically go, I want to take the money I'm getting paid, retain my earnings, and put it back into the business. That's a retained earning. You're taking income and you're retaining in the business. But we're moving on down here. We're past that. That's in the past. We're moving on here. Owner's equity is just money that you and your husband are contributing. It's not even money you've earned. You're taking it from a different place.

Featured Coaching Excerpt - Notes & Transcript, Part 3
  • Lesson Nugget: Do not just pick any bookkeeper. They are not all the same and you need to find out who will do the job right.
  • Lesson Nugget: Have three options for every decision or choice in your life...except for your spouse...unless you're a polygamist...
  • Lesson Nugget: If a bookkeeper seems hesitant or unsure if they can complete your tasks or aren't clear on their price, they are not the bookkeeper for you.

[MUSIC PLAYING] CLAY CLARK: So it's like you're rating your savings, you're taking money from a 401(k)-- it's not money you've learned. And when you start a business, you probably won't earn anything yet. So you're not retaining any earnings. You're just contributing from somewhere else. And they need to know that because tax time, there's this little thing called write-offs. And I hate to be disparaging of bookkeepers, but it's just so fun. But the thing is that the last-- what was it? Four or five years ago. I literally got a letter from the IRS, and they said, due to your failure to whatever, whatever, whatever, whatever, you owe boom boom boom. And I'm going, boom boom boom. That's a lot of money. Boom, boom, and boom? So I found out that the IRS was under the suspicion that I should have been counting certain people as employees and not contractors. Now, the state of Oklahoma felt like that they were supposed to be contractors and not employees. Basically, the IRS and the state disagree. Federal and the state disagree. And I am not exaggerating. I literally got huge sums of money back from one group, and I had to pay huge sums of money in from the other group. And the bookkeeper that I had at the time thankfully had their stuff together, and they were able to go and pull up this stuff and clearly show what my equity was, what my retained earnings were what my end-- it's very detailed. And so as [INAUDIBLE]-- I love you. But [INAUDIBLE] was our IRS agent who audited us. And she was very kind, very courteous. She was very nice. And she came in, but we had all the numbers together. And it made it so easy because if you're not-- lack of detail is very similar to lying. It's kind of like a close cousin. So most people who are trying to lie to the IRS are actually just going to be sort of, oh, it was miscommunication. I was disorganized. I didn't know. That's code for I've been burning all of my receipts. I've been hiding my cash in Folgers cans. And the IRS will come down on you with a hammer if your bookkeeper's disorganized. So again, just review. I want to go through these again. You need to make sure that you know the amount of cash-- you're bookkeeper knows weekly how much cash-- weekly accounts receivable, weekly cost of goods sold, weekly retained earnings, weekly payroll expenses, weekly how much sales, weekly where the inventory's at. Weekly. None of this by quarterly stuff. Well, twice a year we'll come in and look at your inventory. What are you talking about bro? I'm selling men's hair gel. That stuff goes bad in six minutes. I got to get it, sell it, move it. They want to come by once a year. Are you dumb? No. OK. So inventory, accounts payable, loans payable, purchases, owner's equity. And why am I so passionate about this subject? Because if I'm not your advocate to push for you to be intense about the bookkeeper-- would you let a random dude use your checkbook? Would you just-- sure! Have at it. Probably not, but that's how people are working with bookkeepers. And because they have a certification, people give them a hall pass through life, and you shouldn't do that. You should really treat them with an [INAUDIBLE]. Like is this the right person? When you find your Bernie, it's like going to Narnia only there's less downside. SPEAKER: How do you find Bernie? Are there some tricks to identifying Bernie. CLAY CLARK: That's a great question. What I do is I have a rule of three just for life. It's a rule. And just calm down if you're watching this and you know what I'm saying. It's the rule of three for life, and it's kind of like an added bonus. This is not for your wife. It rhymes, but it's true. Rule of three for life, not for your wife. Work with me. Happy wife, happy life. What am I saying? You need to have three options for everything in your business except for your wife. So what you want to do is you want to say-- I married you-- a little bonus marriage too. I married you. Therefore I commit to you even though I'm a man-bear-pig. I'm going to stay with you forever even though I'm an idiot, and we're going to work it out. With your accountant, this is the opposite of how you want to be. You want to go, here's the deal. I've called three of you here today. So you have a meeting with Bernie at 10, Jeremy at 11, and Karen at noon. And you interview Bernie, and you're like, well, Bernie seems pretty good. Bernie can you give me a weekly report of all this, and can you guarantee it's tight, it's right, and it's a flat rate. Tight. Right. Flat rate. Make sure it's right. Flat rate. Well, I'd be hard to tell. I just heard this last week with a client. Makes me crazy. He said, it'd be hard to tell what I would have to charge you. It could be as little as a couple thousand. He bills the-- I swear to you-- bills the lady from her $7,000. Said, it could have been 2,000, but it's hard to tell. Well, it's like three times more than you said. The point is-- so you got to meet with them. And if they won't do this weekly and they won't give you a flat rate, then you get them out of here. And you call the next person and the next person. And so usually if I interview potential employees-- I'm not exaggerating-- I probably have to interview 10. And of those 10, six will show up on time. And of those six, five are not on drugs. Four can read. Three have a brain, and two are currently hireable, and they're not going through some life drama. So two out of 10. That's how it's going to be for bookkeepers too.

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