The sad truth is that most entrepreneurs do not keep their books, they don't manage their money and they have no idea what is going on financially. Learn everything you need to know about bookeeping and how it works here during this powerful training taught by Clay Clark, the SBA's "Entrepreneur of the Year".
Featured Coaching Excerpt - Notes & Transcript, Part 1
Essential Elements of Bookkeeping: 1. Amount 2. Date 3. Source 4. Revenue 5. Expenses
Lesson Nugget: If you don't have this bookkeeping information, or keeping track of this information is a struggle for you, hire a bookkeeper.
Ask Yourself: Do I want the IRS to help me discover these five things or would i rather have the help of a bookkeeper?
Lesson Nugget: Forensic accounting is when an accountant goes back and researches your financial history.
Bookkeeping: Bookkeeping refers to the task of recording the amount, date, and source of all business revenues and expenses. Bookkeeping is essentially the starting point of the accounting process. Only with accurate bookkeeping numbers can meaningful accounting be done.
netflix for accounting and time management
-My name is Caleb Taylor, and I'm one of the hosts here at Thrive15.com, provider of online trainings for time management, branding, marketing and more. Today, we'll be sitting down with Clay Clark, CEO and visioneer of Thrive. He's going to be teaching us some important aspects of accounting-- specifically bookkeeping, and why it's important for you to understand how it works. As you know, here at Thrive15.com we believe that knowledge without application is completely meaningless. So as you're watching, always ask yourself, how can I apply this to my life, personal, or business? If not, today's episode could be more meaningless than paying for a large when there's free refills.
-All right, Clay. Welcome to your own studio. Thrive15.com.
-I was waiting here. I knew you'd eventually show up.
-I'm glad that we're doing these five minute bursts here. And the goal is to define certain topics that possibly aren't known by everybody. And you even say many entrepreneurs don't know the true definitions of these topics, correct?
-And not only that, we don't know why we even need these things? Because we're talking about something today that I didn't even think I needed until like, seven years ago.
-So that topic today is bookkeeping. We're going to be defining what that means, how it applies to your business, and why you need to watch episode right here.
-And maybe we can talk about why there's a crazy sounds in the background. If we have time, we'll get back to it.
CALEB TAYLOR: Good. There will be sounds. Stay focused. So the definition that we have here of bookkeeping "refers to the task of recording the amount, date, and source of all business revenues and expenses. Bookkeeping is essentially the starting point of the accounting process. Only with accurate bookkeeping numbers can we meaningfully account for what's been done."
-I'm going to ask our super producers to put this on the screen right here. But here we go. One-- if you can just kind of give me the fingers. One, we need the amount. Two, we need the date. Three, we need the source.
-Give us the source.
-The source, Luke. Use the source, Luke. And that's for all business related revenues and expenses. So go ahead and give me two more. Revenue, expenses. Bam. That's what it is. So again, you have to have the amount. The date. The source.
-Thank you, Luke.
-Then you have to have the business revenue and expenses.
-And you have to have all of that to create the bookkeeping.
-If you don't have this information, you need a bookkeeper. So I'm just saying, if you don't have it, you need-- now, some of you are going, no, man. I don't need this information. I have my own system. No you don't. And I've been audited by the IRS-- in-ireted, that was an interesting word-- we'll be talking about that on a later episode. But I've been audited by the IRS and I can only tell you that it is a special feeling. It's like when you have a friend who you kind of remember from third grade who gets hits you up on Facebook. And he says, hey buddy. We should get together.
And you really don't know who he is but you go ahead and agree. And then you show up at Panera Bread or some kind of restaurant. And he ambushes you with some high pressure sales presentation. That's what it's like having the IRS ninjas come to your office and help aggressively examine your expenses.
-When did that happen to you?
-In 2007 I was asked by the United States Small Business Administration to fill out a packet of information because I had been nominated for the Entrepreneur of the Year award. I filled out the packet of information, and after I filled out the packet of information, at some point, I got a call from the IRS-- not congratulating me on my award, no, no.
-What? They didn't send you a gift or anything?
-No. What they did is they said, we're going to be coming to your office now. Actually they said, we're in your office now. And we are here to help you discover your, again, the amount, the date, the source, of all business revenues and expenses. And that's what they did. So if you don't hire a bookkeeper, they get to help you keep your books.
-That's wonderful. So here's my one issue, though. What if I don't like doing that?
-Well if you don't like doing, you have to hire somebody to do this.
CALEB TAYLOR: It really has to get done though?
-Yeah, I'm just being real. Because we're growing Thrive. I want to spend like, I don't know 0% of my day doing this. But I have to know those numbers. For not only myself, but for-- again, it's sort of like a rain gauge. And let's just said I'm obsessed with the rain. You set the rain gauge out. You know how much rain came in.
You know that kind of stuff. Well, if you're into rain and tracking weather patterns, you want to know that. Because if not, you might just speculate and go, it rained four inches.
-Yeah. But this is more than a fun little hobby. This is something we've got to do.
-This is real life. This is real talk. This has to happen. This is as real as one of those very touching segments on Opra.
-Well, Clay, one reason why I love sitting next to you, not just your ascetic beauty-- but the fact that you can talk to us about this topic and draw from real experiences. I mean this is not theory. Clay did not go to school to study accounting. He's experienced this. He knows what happens when you don't focus on bookkeeping.
-I'm going to stop joking for a second because this is terrible. My wife and I would cry-- like when I say cry, as in like tears leaving our face, getting so dehydrated that we almost pulled our hamstring.
CALEB TAYLOR: It's because you didn't have air conditioning, right?
-No. Because we were getting audited. And the fear of getting these letters and being told that you owe money. And the bills are massive. And then having to hire an accountant to go back in the past-- they call it forensic accounting. They're researching in the past to see what you might have done. That's crazy. You want to talk about some marital drama. That makes it exciting. My wife and I had some drama. You say when you're working out, if you cause stress, you get buff? Our marriage was getting buff.
CALEB TAYLOR: That's not good.
-We were getting stressed out. We're growing stronger.
-Well, I thank you for sitting down, sharing with us your experiences in giving us action steps on how to deal with bookkeeping.
-And I want to say this for anybody who's right now thinking I'd like to date Caleb, he's not available. He's not available. He's going to get married soon and I just want you to know.
-It's not here yet, but just--
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