Episode Transcript
Julie Smith:
So Glenn, what is the function of a bookkeeper? Oh,
Glenn Harper:
that’s a great question. It can vary depending on— Do they wear a pocket
Julie Smith:
protector? I’m just curious. You can if you want to be really good at it.
Glenn Harper:
You would wear that. With the green paper. Very important. The
Glenn Harper:
multi-ledger paper and a 10-key is imperative. And if you don’t have those things, you’re
Glenn Harper:
probably not serious about your job. Let’s just be honest. If you want to see
Glenn Harper:
your doctor and they don’t have the stethoscope, they’re probably not doing their job,
Glenn Harper:
right? Correct. Guarantee it. So what ends up happening is in a company,
Glenn Harper:
the owner generally is the person in charge of, hey,
Glenn Harper:
this is what we’re going to bill this customer. This bill is okay to pay,
Glenn Harper:
and they’re going to pay those bills. So the owner is the
Glenn Harper:
person in authority to supervise or to approve
Glenn Harper:
the money leaving the company and the money coming in. The
Glenn Harper:
bookkeeper’s job then is to account for that money and put it where it needs
Glenn Harper:
to to be in the right categories. Like we talked a little bit earlier on,
Glenn Harper:
the function of a bookkeeper is to put it in the right accounts and do
Glenn Harper:
that. At some point, the owner is going to be too
Glenn Harper:
busy to approve all these expenses. Like,
Glenn Harper:
how can they do this, right? There’s just so many things an owner’s doing. Like,
Glenn Harper:
they’re not going to want to be bothered if we got to go to buy
Glenn Harper:
postage for $50, right? So usually they’ll give the
Glenn Harper:
credit card to the bookkeeper. or to the office manager to say, hey, these
Glenn Harper:
are further expenses for the company. Try to keep them under a certain amount. You
Glenn Harper:
can go pay for those expenses. So the authority then changed
Glenn Harper:
to the office manager or to the internal bookkeeper or to
Glenn Harper:
whoever to go buy these things. Well, now the owner doesn’t really see what
Glenn Harper:
happened. It’s now incumbent on the bookkeeper to make sure they account for it in
Glenn Harper:
the right place. Okay? And so there’s this
Glenn Harper:
disconnect then. Well, somebody’s stealing my money. Like, I’m not— I gave somebody authority,
Glenn Harper:
but I can’t see what they’re doing. So you always worry about that. So you
Glenn Harper:
put in these things called internal controls about who is authorized to do
Glenn Harper:
what for how much money. And it makes it very nice to make you sleep
Glenn Harper:
well at night because people are always trying to steal from everybody and that’s just
Glenn Harper:
the nature of it. But you put in these controls and those odds of somebody
Glenn Harper:
stealing from you are way minimized. And so
Glenn Harper:
the bookkeeping’s role is to kind of maybe pay for some things, check something
Glenn Harper:
down. We would say, hey, what’s this check to ABC Company? They put it in
Glenn Harper:
office expense. We don’t recognize that as the external account at Harpo. We’re like, what
Glenn Harper:
is ABC Company? They would though go track down, oh, ABC
Glenn Harper:
Company was actually something, a vendor for
Glenn Harper:
our cost of goods sold account for our production facility. Okay, great. We’d move
Glenn Harper:
that from office expense back up to this other account. So
Glenn Harper:
they are the boots on the ground finding what these things are for. Or
Glenn Harper:
the owner writes a check somewhere, writes a credit card. We don’t like, What is
Glenn Harper:
this company out of California? Oh, that was something personal for me. I
Glenn Harper:
bought it for my wife and I just used the company card by mistake.
Glenn Harper:
Great. So the bookkeeper’s job is to try to find out where
Glenn Harper:
these transactions were to and from so they can put ’em in the right category.
Glenn Harper:
And then as the accountant’s job over here, we want to just kind of confirm
Glenn Harper:
that that’s probably what that is. So that’s the first step of a bookkeeper. So
Glenn Harper:
from— I know you’re probably going to ask this, but what is Harper’s role in
Glenn Harper:
this? Well, our role then is to kind of double-check and confirm
Glenn Harper:
that these places where the bookkeeper and maybe the owner put these
Glenn Harper:
transactions, that’s where they really belong, okay? And if we see
Glenn Harper:
something weird, we’ve done bagajillions of
Glenn Harper:
transactions, we kind of know where things are supposed to go and what it should
Glenn Harper:
probably look like. And we can sense pretty good, see something that looks kind of
Glenn Harper:
funny, what could that be? Is there any strategy to that? Of
Glenn Harper:
us being able to sniff it out? That’s just experience. No, no, no, I mean
Julie Smith:
strategy in regards to, you know, I feel like maybe a bookkeeper
Julie Smith:
sees it very black and white, Does Harper ever see the gray in that?
Julie Smith:
I love the gray, obviously. Great question, Julie. And I meant this
Glenn Harper:
perfect. So what ends up happening is everybody comes,
Glenn Harper:
when you start a business, it’s the greatest Seinfeld episode. Well, Jerry, it’s a write-off.
Glenn Harper:
Well, it’s, what is a write-off? Like, I don’t even know what a write-off— I
Julie Smith:
trust Jerry. Yeah, exactly. Well, it’s Kramer. Kramer wants to write off and Jerry. But
Glenn Harper:
what ends up happening is people think when they own a business, everything’s a write-off.
Glenn Harper:
They get to expense it off, meaning you deduct it from your company’s
Glenn Harper:
profit. So you bring in $100 and you go get yourself a
Glenn Harper:
write-off. That means you spent money and it makes your $100
Glenn Harper:
get smaller. Your profit gets less and less and less because you’re ultimately
Glenn Harper:
taxed on your profit. So everybody says, I want write-offs.
Glenn Harper:
Well, I mean, we all would like to have a write-off, but I don’t want
Glenn Harper:
to spend money to get a write-off if I don’t need it. That’s
Julie Smith:
what I think we call— what did we discuss yesterday? Girl math?
Glenn Harper:
Am I getting a headache? This was a big dinner discussion last night is
Julie Smith:
girl math. No, no. So it’s sort of like the goal is to make
Glenn Harper:
as much money as possible. Generally, if you’re going to put effort and time into
Glenn Harper:
something, you want to make money at it. So the goal is to spend the
Glenn Harper:
least amount of money, quote, write-offs, to make the
Glenn Harper:
most amount of profit. That’s the goal. If I’m lucky
Glenn Harper:
enough where I just literally call on my cell phone,
Glenn Harper:
make a sales deal, and make $1 million, my only expense is my
Glenn Harper:
cell phone. I just made $1 million minus my
Glenn Harper:
$30 cell phone bill. That’s a pretty good deal. We gotta find some of those.
Glenn Harper:
But if I got a company where I gotta go make $1 million, but I
Glenn Harper:
gotta pay 20 employees, I gotta pay building
Glenn Harper:
expenses, I got machinery, and I go bring in $1 million. And by the time
Glenn Harper:
I get done with my write-offs, I made $50. Which company
Glenn Harper:
would you rather have? The one that made you $50 or the one that made
Glenn Harper:
you $1 million? So having a write-off doesn’t mean
Glenn Harper:
that you are good or bad at your job. It just means you want to
Glenn Harper:
have as least of them as possible because you want to be as profitable as
Glenn Harper:
possible. The key we do at Harper is
Glenn Harper:
if you’re going to spend money, how can we make it a write-off?
Glenn Harper:
Right? That’s the key. It’s not, hey, I’m just going to spend some
Glenn Harper:
money over here business-wise and it’s probably all write-off. Then I’m going to go over
Glenn Harper:
here and spend money personally. Well, did you know that if
Glenn Harper:
you were to do this in a certain way, this money you’re spending personally, if
Glenn Harper:
you do it a certain way to make that related to the business,
Glenn Harper:
that’s money you spent that’s now a write-off? Okay.
Glenn Harper:
It’s important to know the difference between the two. And that’s our job is to
Glenn Harper:
help coach and teach people that, hey, something you would
Glenn Harper:
think would be a personal expense because you don’t know how to do it and
Glenn Harper:
how the test you have to have to make sure that it becomes a write-off.
Glenn Harper:
People don’t know that. We help teach them that. There’s nobody’s supposed to pay any
Glenn Harper:
more tax than they’re supposed to pay. And you don’t even, there’s no cheating involved.
Glenn Harper:
This is black and white stuff. I know you like the gray, but black and
Glenn Harper:
white stuff, low-hanging fruit that just people just don’t know when you have a business,
Glenn Harper:
’cause nobody’s ever taught ’em. So our job is to work with the owner, work
Glenn Harper:
with the bookkeeper to say, hey, if you’re going to spend these things,
Glenn Harper:
this is how you should do it. And then before you go buy something, if
Glenn Harper:
you’re unsure about it, Call us and we’ll say,
Glenn Harper:
oh, you know, if you do it this way, I can’t write it off. But
Glenn Harper:
if you do it like this, we can take the write-off. Ooh, I just heard
Julie Smith:
something really important. Good. So it sounds like
Julie Smith:
I shouldn’t bring you a box of bank statements to
Julie Smith:
look over my bookkeeping. I’m going to join you. On
Julie Smith:
March 12th, when my tax return’s due March 15th. Does that
Julie Smith:
seem like a great idea to you? No. And this is the
Glenn Harper:
curse of the small business owner that
Glenn Harper:
doesn’t understand the value of getting their
Glenn Harper:
bookkeeping, accounting, financial statements complete timely,
Glenn Harper:
and somebody advising you proactively as you go.
Glenn Harper:
You come to me in March and give me everything that you did for last
Glenn Harper:
year, we’re dead in the water. We’re just typing in data and there’s nothing I
Glenn Harper:
can really do for you but in a category. You bring that to me every
Glenn Harper:
month, we can do some cool stuff. So you as a
Glenn Harper:
business owner, if you are doing this once a year, you know, that’s on you,
Glenn Harper:
but you don’t know any better, right? ‘Cause that’s what you’ve been told or that’s
Glenn Harper:
what you do. But I’m telling you now, don’t do that. Do your books,
Glenn Harper:
close out your books and your financial statements every month. Get yourself a good bookkeeper,
Glenn Harper:
get yourself a bookkeeper and an accountant, or just an accountant and not the
Glenn Harper:
bookkeeper. You may or may not need one. We’ll help you evaluate that. and have
Glenn Harper:
somebody like ourselves advise you through that process, you get the best result.
Julie Smith:
So I feel like I asked this question at one point, but I’m going to
Julie Smith:
go back and ask it and maybe answer it for you. If
Julie Smith:
someone’s Googling bookkeeping, bookkeeping services, bookkeeping
Julie Smith:
and accounting, what’s the one thing you’d want them to know? Me as an
Julie Smith:
entrepreneur, I want to know, I need to know that
Julie Smith:
I cannot wait till March 12th to bring you I joke about
Julie Smith:
a box, but things aren’t quite like that. It’s very digital now, but I can’t
Julie Smith:
wait to give you all my information on March 12th and expect the best outcome.
Julie Smith:
I need to be engaging with someone like yourself a
Julie Smith:
year prior. I need to make sure that I’m staying in my lane and getting
Julie Smith:
those things done so that you can, you
Julie Smith:
meaning Harper CPAs, can use their strategy and not
Julie Smith:
just be data in and data out is kind of what it sounds like.
Julie Smith:
It sounds like we’ve got to have somewhat of a proactive approach in our
Julie Smith:
foundation of our bookkeeping to get the best result for the best health of the
Julie Smith:
company. I’m hearing what you’re saying. You’re saying
Glenn Harper:
I’m awesome at what I do. Is that what you’re hearing? You’re okay. No,
Glenn Harper:
what I’m, what I’m hearing you say is, as whatever
Glenn Harper:
business you’re in as an entrepreneur, you’re selling widgets, you’re doing whatever,
Glenn Harper:
The pride and passion you take in selling your product or
Glenn Harper:
service, and you know it’s going to help your customer
Glenn Harper:
so much. That’s what they’re paying you for, to do these things. And you know
Glenn Harper:
that you do that so well. If you can put that same
Glenn Harper:
mentality to getting your
Glenn Harper:
bookkeeping, accounting, taxes, if you put that same passion to
Glenn Harper:
that and hire the same professional that you’re selling to, hire somebody to do that
Glenn Harper:
for you like us. That will solve
Glenn Harper:
probably 90% of your money problems that you’re having at your business.
Glenn Harper:
It is monumental change, exponential change. So
Glenn Harper:
hire that professional like ourselves to come in and help you set that up,
Glenn Harper:
the accounting system, work with your bookkeeper, augment your bookkeeper, come in and
Glenn Harper:
do the accounting, do the advising side. That money you
Glenn Harper:
invest in that, not spend, you’re going to invest in it. You’re going to get
Glenn Harper:
a bajillion return on that. And you’re going to have a really nice looking
Glenn Harper:
company to know what you’re doing, what you’re doing right, what you’re doing wrong. Just
Glenn Harper:
like when you go help your customers and they hire you to do something, you
Glenn Harper:
know, you’re making an impact for them. That’s why you’re selling them what you’re selling
Glenn Harper:
them for. So you want to look at this piece as something that’s
Glenn Harper:
critical to your business. Sounds great. It does.
Recent Comments