The Systems and Workflow Magic Podcast 97: Systems to Implement in Order to Grow Financially (Differences Between Bookkeepers and Accountants + So Much More!)
What exactly is a bookkeeper and why do you need one for your business? In this episode, I’m joined by a virtual bookkeeper and CFO for creative entrepreneurs, LoriAnn Kuntz, who gives us the reasons why having a bookkeeper will help bring more money into your business!
The Systems and Workflow Magic Podcast is brought to you by Dolly DeLong Education. This podcast is for creative business owners who want to learn tangible steps to automate their business through workflows, systems, tools, and strategies to go from scattered to streamlined with purpose because even muggles can become automated wizards!
LoriAnn is a virtual bookkeeper and CFO for the creative entrepreneur. Her goal is to bridge the gap between traditional accountants and business owners. With 35+ monthly DFY bookkeeping clients in the industry, she has the insight and experience to help you up-level your business while removing the stress and burden of managing your finances. Whether you are just starting out or have been in business for years, her mission is to help creatives feel peace about their finances while growing their profit and confidence.
Interested in creating a SYSTEM for the numbers behind your business?
Check out the Bookkeeping Template For Creatives (Dolly’s system to better streamline the numbers behind her creative business!) (trusted by 100+ creative business owners and counting)
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Read The Shownotes + Transcript Here
Dolly DeLong: Hello, and welcome back to another episode of the Systems and Workflow Magic podcast. I am your systems and workflow BFF and guide Dolly DeLong. And in this week’s episode, we are going to be diving into something that I wish all business owners had more foundational knowledge of. And I will be honest.
I wish I had known the difference or knew the difference myself because believe it or not, I simply do not know the difference between the two of these topics. And even if it’s embarrassing to admit it, you all know me, I’m very open and honest. So are you ready for it? I don’t know the difference between an accountant and a bookkeeper.
I know what my accountant does. I know I’m so grateful for everything she does. I know what my bookkeeper does. Hi to Anna Marie. I know what she does. But can I explain it eloquently? no, I cannot. Do that at all. And so why am I bringing this up on the podcast today? To be honest, I believe that there is a system and workflow for pretty much everything in your life, especially with the money side of things in your business and life, because it all integrates together.
Sometimes being educated on the differences between knowing what your accountant does, and then knowing what your bookkeeper does can help you differentiate, how you can solidify certain systems that you need to either hone in on or organize in your business because money does help make the business go and you need it.
And so maybe you’re thinking, I don’t really care about this. But I do want to stress, that I think it’s very important to know what is happening, what is going on in your business, especially in every aspect to do with your financial state, because that affects the back end of your business.
So that’s why I’m really happy. To have my new friend LoriAnn Kuntz on the podcast today, and she is the owner and CEO of Profit Priority, which is a boutique accounting and fractional CFO firm helping creatives. Go from unsure to unstoppable, when they are thinking about their finances. Now with over eight years of experience in accounting and small business finance, she has the insight and experience to help you up-level your business while removing the stress and burden of managing your finances.
So whether you are just starting out or have been in business for years, LoriAnn Ann’s mission is to help creatives feel peace about their numbers. While growing their profit confidently business aside. All right. LoriAnn is really just a Midwest gal obsessed with running, reading, iced coffees, and spending time on the farm with her two little kiddos.
So formal introductions aside, LoriAnn, how are you? Welcome to the Systems and Workflow Magic podcast. I’m so excited to have you on.
LoriAnn Kuntz: Yeah, I’m doing good. Thanks so much for having me. I love this topic. I think it’s something that is very confusing for a lot of people, but I’m really excited to, dive into it.
Dolly DeLong: Yeah, definitely. Okay, first of all, I just have to openly admit, that I didn’t realize you lived on a farm and had two kids. I knew you had kids, but I didn’t know you had two little ones.
LoriAnn Kuntz: Yeah, okay, so we’re actually getting ready to get in, a really busy season. Yeah. of, harvest, and we moved to, okay.
A little shortcut here or a side story. my husband is involved with a family farm. They do farming here in the Midwest, Ohio. So lots of grain, corn, soybean, stuff like that. His parents lived on their main home base, but they moved out earlier this year and we moved in. So we are in the middle of it all.
So there’s actually, right now, looking out my window, there’s combines right now getting ready to probably start harvesting tomorrow, I think, or Thursday or something. So yeah, very much into a farm and then starting your little homestead with little chickens and big gardens, stuff like that.
Dolly DeLong: I love it so much.
And you mentioned Ohio. I, again, like I’m making all these connections. Did I tell you that my husband grew up in Columbus, Ohio?
LoriAnn Kuntz: No, I didn’t know that. That’s so cool.
Dolly DeLong: Yeah. So we, I am a big, I married into an Ohio state family and I love, I love every time we visit. I love being in Ohio. So yeah.
LoriAnn Kuntz: It’s like a state that not many people know about unless you have a connection.
Dolly DeLong: Yeah, it’s a good state and the people are really nice and friendly. And yeah, wonderful. So another reason why you all are going to love Lorianne. Okay. So one more question. Yeah. I want to know what made you interested in creating virtual bookkeeping for creative-minded business owners.
LoriAnn Kuntz: Okay. specifically for creative entrepreneurs, I started my business started serving different small businesses. And I would say almost stumbled into the creative space because I was in the online business space and then it just got a few creative clients and then I’m like, okay, these people really need help and someone that can explain finances in a simple and easy and understandable way.
That gives them like, okay, in English, like what is actually going on, to where it’s okay, cool. That’s actually, that’s what it’s telling me. That’s what I need to know. and really just empowering them to really take charge of their finances and make good financial decisions. and kind of break down the whole money is icky and shameful feeling around money and, we shouldn’t talk about it.
And especially with female business owners and females in general. It’s just, it’s crazy to me, just like the whole mindset that, a lot of females have around money and business and finances, because it really plays a big part in how they view financial stuff and really specifically, obviously in business.
So I also love creative people. I would say I’m like a creative bookkeeper of sorts. Like I really Love design work. I love we just did a big house renovation. So I love putting all the design pieces and decorating and stuff together. but I really want to be able to help support those people because I really love what they’re doing.
And all my photographers, are amazing. You guys are killing it. I love you guys. I can never do wedding photography. You guys are amazing. Have a great eye for stuff. So I have a big passion for that and I want to be able to help them grow their business.
Dolly DeLong: Awesome. Thanks for letting me ask you that.
yeah, a question. That’s so great. I know that we chatted about this right before we hit record, but just as a reminder to my listeners, you will be walking away after this episode with some tangible tips from LoriAnn. Like she, we were discussing, right before we hit record, like everything she’s going to be talking about.
So I want to encourage you, especially if you’re driving, obviously don’t take notes while you’re driving, but re-listen to this episode, take notes, and then also like. Listen again, cause you might miss out the first time. cause she has a lot to share, not only about the differences between what a bookkeeper is and what an accountant is, but she has some tangible tips to share with you to apply to your business.
This week, I like action steps, and I’m really excited about it. So let’s dive into the heart of this episode, which is what is the difference between a bookkeeper and an accountant. And why would you need both?
LoriAnn Kuntz: It’s a good question because a lot of people are like, Oh, okay, great. I have an accountant.
I don’t need a bookkeeper. I have a bookkeeper. I don’t need an accountant. And it’s interesting because you said you have both, correct? Yes. I do. Okay. Yeah. So you do have both and you see how they kind of interchange and work together. and I have a feeling you’ll have a better definition after I explain this a little bit going in deep into three different aspects that were different.
but before I get started with that, Bookkeeping and accounting, when you think of it, I want you to think of doctors, for example. they all go through pre-med. They all know what each other’s jobs are. Yes, they could go do each other’s jobs, but then they end up specializing after they do all their residency and stuff.
I don’t even know the exact route. medicine and stuff. Yeah, the medical stuff. stuff. they pick an area of expertise and they work together to accomplish one goal is to heal their patient. So I look at it as we each have picked our area of expertise in the financial world. we know what the other person does.
And yes, I know tax strategy, but I don’t know it as well as someone who does tech strategy every day, all day long. the tech strategist. Knows bookkeeping, but they don’t know as well as someone like me who does bookkeeping and CFO work all day long. So we’ve each picked a special area that we want to focus on in the financial world.
and you can even argue, that you have your bookkeeper, you have your tax accountant, you have your financial advisor who would be advising you on retirement. and you could even throw in your legal team inside of that group of people because it’s all intertwined. But it’s having a good base of financial understanding, but then we each kind of hone in on what we do.
And that’s where I started my journey, I guess, is I grew up in an entrepreneurial household. My parents had businesses and they. I always love numbers. So obviously I’m like, okay, cool. I want to do some stuff with finances. So from a young age, I think I was like 13 or 14. I was like helping manage ARNAP.
So like accounts receivable and accounts payable and stuff in their businesses. And I was like, this is awesome. I love it. and Obviously, I saw how you needed to have clear finances to run a business and grow a business and really to be able to just have clarity on what you need to do next. And so I was like, Great, cool.
The thing that I need to do is go to school become a CPA and go that route. I never did end up getting my CPA license because I started working for a tax firm locally at 16, which is crazy to say. I was doing, I didn’t really do high school. I just skipped and did like all my high school classes were college classes.
So I was in like college classes. Working doing that working at our local CPA firm. It’s a smaller from here. and learning the path. And through that, I was like, this actually sucks. I don’t like this. basically what I saw is people would come into the tax firm, at the end of the year, maybe once or twice a year, and we would go do their taxes, give them a little bit of stuff, and send them out the door.
And I’m like, Okay. wait, we’re sending them out the door and they still don’t understand what’s going on. Like, how can we do that? or we’ll be getting a bunch of their stuff at the end of the year and be doing a whole entire year of bookkeeping and I’m like, how are they making decisions if they don’t know their numbers?
Like, how do they even know if they’re profiting? They might be losing money this whole year. Yeah. And so I’m just like, I don’t like doing this. and the bookkeeping work that we would do, which is why I believe that bookkeepers and accountants need to be separate, but the bookkeeping work that we would do would be good enough to report to the IRS to where if it got audited, it’d be fine, but it wasn’t good enough for a business owner to run their business off of.
it wasn’t split out and structured in a way that would allow them to see what was going on in their business and, really again, back to the simple, clear terms and simple reports to where they like, see, okay, this is what’s happening. I need to do this or that. and so even if we would do the bookkeeping work and give that to them, I’m like, that’s not even helping them.
That’s just like a bunch of random stuff. So that’s like my, where I’ve pulled back then. I was like, this is not happening. I’m not going to be a CPA. And I pulled back and started working for my parent’s companies again. and I started getting some freelance. People, clients on the side, and then I was like, this is really fun.
I really liked that. That was after I had my daughter and I’m like, this is something I could do from home. I can still work. I could work during nap times. And that’s shifted as she got older. but it’s been, it’s really been fun. because it’s going down a path of okay, now I can help people throughout the year, help them actually make a change in their life.
And, Align their business to what they want their personal goals to be and accomplish that. and really have clarity on finances and really, like I said, breaking down the shame and the icky feeling with numbers. and I’ll just leave all the tax stuff to the accountant, which I can explain a little bit more, but yeah, that was a lot.
Dolly DeLong: Wow. I just cannot believe that your journey started when you were 16 years old.
LoriAnn Kuntz: Yeah, it’s really funny because people liked it. Help I’ll listen to other people’s journeys and it’s like this whole long thing. And I’m like, I don’t know, like bookkeeping and finances is like literally in my blood.
that’s what I was made to do. that is me. and I think a lot of it has to do with like my parents having businesses and seeing that. So I quickly was like, this is what I’m going to do. and I just, love it. It’s so much fun.
Dolly DeLong: That is so awesome. thank you for sharing that.
I love that. And I love that you, Explained it in a way. Like like making the analogy of doctors having the same baseline prerequisites and baseline classes, and then specializing in something very specific so that was a really good analogy.
LoriAnn Kuntz: Yeah, it’s the best one I’ve been able to come up with and I feel like it, it hits really good with everyone.
I tell it to, because yeah, we had the base understanding of what everyone’s job is. and then even to think it, take it a little bit deeper some doctors can’t do their jobs without other doctors. Yeah. For example, a pediatric surgeon couldn’t do their job without a family, or a regular pediatric doctor, or like a, whatever it might be, a neurosurgeon, you’ve got to have someone, monitoring someone’s health first before it gets into the nitty gritty to be able to help them, and that’s where, I come in is with the day to day work, which I would say is another like point is, we focus on the day to day stuff.
I’m monitoring the business’s finances day to day month to month or week to week. and my team does it for all of our clients as well. but bookkeepers really focus on the heartbeat and the lifeline of businesses. Whereas like a tax strategist would be like, okay, great. Now let’s take what the bookkeeper’s done and the finances that the bookkeeper has and build a tax strategy on top of that.
and then the same thing goes, like all need to know what the tax strategist is doing in order for me to be able to structure the reports, right? So it’s like a continual cycle of working together. And we do work together with all of our, clients like accountants and tax strategists, because it does need to be an open relationship.
because of what we do, there needs to be communication. same thing with doctors. One doctor needs to know what the other doctor is doing or else they can’t do their jobs right. really focusing, we focus on the day-to-day work, whereas the tax strategist focuses on the, really, ultimately, the year-end stuff for like tax, filing the taxes.
A good tax strategist you should be talking to more than just at the end of the year, but that’s a little bit more. but we really focus on let’s talk through the entire year and get you the finances you need to know as you’re making decisions because you can’t wait until the end of the year to look at your finances.
Dolly DeLong: No, and I’ve been guilty in the past of doing that. And then I’m like, why am I so stressed out? Yeah. Like never again. So that kind of feeling two years ago equipped me and pushed me to hire and invest in a bookkeeper from here on out to keep a pulse on the finances of my business so that she can talk with my Accountant and it’s been wonderful like everything you’re saying.
I’m like, yes, LoriAnn. This is exactly right and goes along with the lines of that medical analogy like it’s what if one doctor prescribes you something they don’t tell the other doctor and another doctor prescribes you something that would counteract in a very negative way.
And it’s like with your finances like your bookkeeper could advise you to do one thing financially, they don’t tell your accountant or strategist, and they tell you to do something. And then you have two very differing opinions working against you.
LoriAnn Kuntz: Yeah. That’s a really good point because, we’ve had some clients that, it’s because it was an interesting.
Let’s just put it at that. but we had advised them. I’m like, they came to us. They didn’t have the, they didn’t have an accountant to do their taxes. And we’re like, Hey, you need to, we need to, I think we went to through one year-end and then they ended up. Not getting one for that year’s end. And then the next year’s end was when everything, some things happened just between ended up parting ways.
But, and this is just me being like real honest, cause I know everyone in business has stuff like this, but we had to advise them to get an accountant. They were not doing this until the end of the year, and then they ended up getting an accountant and their accountant was like, your bookkeeper is doing things wrong.
We want to change the way that they’re listed on the reports. And then they thought we were doing things wrong. And I’m like, no, you didn’t have an accountant. So we couldn’t have that conversation and make sure things are right or like how your accountant wants it. We work with multiple accountants and tax strategists who want the reports laid out in different ways.
We have like year-end adjustments that or if someone moves to a different account and they’re like, Hey, we want to change the way this is around because this is how we do tech strategy. And so if you’re going to bring on both, make sure that they’re in communication because. It’s going to eliminate some, hard feelings and some headaches and misunderstandings because we really weren’t doing things wrong.
We were not like, we have a very extensive year in process that we do and like review of books and stuff. and so there was, and I went in and did three times, like triple check, literally every single classification of everything. and I’m like, there’s nothing we did wrong. It was just that they didn’t have, they didn’t have both.
And so there was confusion and it ended up, there were some hurt feelings on the client’s end and I felt bad, but there was really nothing we could do.
Dolly DeLong: Yeah, no, that’s so good. I’m so glad you brought that up. So listeners, if you’re like, Oh my gosh, like I only have one.
I’m like ruining everything in my business. I would say just take a deep breath. It’s going to be okay. that’s why LoriAnn, LoriAnn is on the podcast today. She’ll walk you through what to do in this situation. But, yeah, I’m
LoriAnn Kuntz: really glad you brought that up.
Yeah, and it’s like I said, it’s something that people don’t talk like for me.
I’m like, oh, I had an unsatisfied client. I don’t like, I don’t like talking about that because I don’t want to have unsatisfied clients, but really it came down to like some of the things that we were talking about is there. It’s a group effort. Your financial team is a group effort. And if you have missing connections, it’s going to create a little bit of a headache and a mess.
Now, if you’re listening and you don’t have either, I would say outsource your taxes first. Okay. Cause I want you to be able to do. Have your taxes done by a professional. That’s what’s getting reported to the IRS. you can DIY your bookkeeping and have a tax accountant do your taxes. If you have a business, don’t do your own taxes.
I’m like, I’ll just put it at that. And really a lot of people are like, Oh, it’s going to cost me a bunch of money. And it really doesn’t. If you’re an LLC or sole proprietor, it doesn’t. It does get a little expensive if you are an S corp, but at that point, you should have a bookkeeper. but if you’re an LLC or a sole proprietor operating under like basically your name, have someone else do your taxes.
It doesn’t cost that much. and it really makes things really clean in case you would get audited. And they can give you some advice. For DIYing or bookkeeping. So you can DIY your bookkeeping long enough to where it can bridge the gap. And then once you get to the point that you’re like, Okay, I’m too busy.
I don’t really understand this. I’ve been trying to make it work for a couple of years, but I really need help. and, or maybe it’s not getting done. You just, you’ve sat on it for nine months and you thought this year you were going to stay on it and you haven’t, then it’s about time to let’s talk about outsourcing.
And then that’s when a bookkeeper can pull in. and I will say it’s like a, it’s like a, What are those things called? Like the balance? A scale? Yes. Yes, a scale. Like a scale to where it’s yes, you can DIY your bookkeeping and have a tax account, but also if you don’t do your bookkeeping your tax account can’t do their job right.
So it’s like a balanced teetering back and forth of If you’re going to DIY, you need to make sure you understand it, and you are 100 percent capable of understanding it. So a lot of times people would be like, I’m not good at managing money, or I wasn’t taught as a young kid how to manage money.
And I don’t know what I’m doing. And I’m always blowing money and spending too much money here and there. And I don’t know, I can’t do it. It comes down to, I can’t. And I want you to know, no matter what and where you’re at, like you 100 percent can, It’s more of let’s take the steps that you like in the actions to really grow yourself.
There are so many resources out there. not just by me, but so many other financial people. you can find a lot on my website, but there’s so much out there that you can learn from and educate yourself on. And so you can DIY your bookkeeping right. and be able to have that. balanced out, but then there probably gets to a point where it’s okay, the business is big enough.
I need a little bit more insight and I need to have it done for myself.
Dolly DeLong: I, was just listening to your analogies and I was like, everything she’s saying, this was me a year ago, like a year or so ago. And I was DIYing my own bookkeeping. And I feel like I had a really good system down, but when I got pregnant with my second, I just.
I could not do it anymore, like mentally, and physically, I was like sick all the time. And so I was like, it’s time to get a bookkeeper. It is
LoriAnn Kuntz: time. It’s funny. Cause I feel like I get a lot of clients to come to me whenever they get pregnant or that are planning to start a family or add to their family.
You’re like, I can’t do this anymore. And I’m like, yeah, I know. Like whenever I had my son, I’m like, there were a lot of things that I outsourced to, so I get it. I didn’t outsource finances, but yeah, I outsource other things.
Dolly DeLong: Yeah. Yeah. It was a lot. So it was, so every, yeah, again, I just want you to know, I was like, yes, this is where I was a year or so ago and I 100 percent agree.
LoriAnn Kuntz: for sure. and I think really. On top of that, a bookkeeper can be more of like a high-level CFO person in your business. Not always, I would say. More uncommon to find bookkeepers who are CFOs or fractional CFOs. but it’s something that I’ve really stepped into this year because it’s really fun to me.
I like building all of the spreadsheets and doing all that, but then we turn around and make it into, again, easy, understandable, visually. Like visual ways that our clients can see what’s happening. and so with that, because we’re monitoring day-to-day stuff, because we’re in there all the time, we’re able to give you more financial advice on okay, should you make this investment?
Should you hire this team member? Should you get a VA on your team? Like stuff like that. Like, how’s it going to impact your finances? How’s it going to impact stuff? Whereas a tax strategist or an accountant really won’t have that because They’re not really in there for that. They’re not in there for growing and having a positive cash flow and increasing profit.
They’re there to make your taxes less ultimately. And so we have been leaning more into that and we do that with our done-for-you monthly bookkeeping clients. we’re a little bit more than just your typical bookkeeper who gives you reports. we give you, a loom video walking you through where we can see you can increase profit every month.
We give you, You have Voxer support and email support and text, like multiple different ways that you can ask us questions and we can be there for you. but on the CFO side of things, we really like to dive into like weekly cash flow projections and budgeting and hiring team members and a lot of high-level stuff, that really tech strategist or CPA.
Could do it, but they don’t do it.
Dolly DeLong: let me like peel it back a little, just for my listeners who may be newer to the term CFO. Do you mind explaining what a CFO is?
LoriAnn Kuntz: Yeah. So CFO is one of I guess the C-suite-like position. So CMO would be like a chief marketing officer.
A chief financial officer would be the CFO position to where they’re really helping make decisions, helping you with like your decision making.
And again, ultimately all of the decisions fall back on my clients because they’re the CEO. So if we’re talking about like really getting like into like organization charts and who has decisions and stuff, in business, you have your CEO and that’s the business owner. Most of the time, whenever we’re talking about, Smaller businesses and then the CFO would be down there supporting the CEO on what decisions to make in the financial realm.
But we do a lot of, like a lot of our clients will come to us and like, can we do this? How will this impact our finances? And they really do lean on us to give them. That’s the go-ahead on certain things. ultimately it’s up to them, but we do help advise on a lot of financial decisions for our CFL clients.
Dolly DeLong: Okay. I feel like this term is thrown around so much, especially in the creative industry, especially towards. business owners who are doing it on their own, solopreneurs, it’s stepping into your CEO role. And I’m like, yes, that’s important. But what does that even mean?
and I think you explained a little, slice of it. It means You are getting advice like you were leaning in and getting advice from somebody who is an actual financial expert and who is going to be guiding you like you need that guidance. You need that teamwork. And so part of me is I think for me, that’s what stepping into a CEO role means for my business.
Like I need to have a team who like. My, my bookkeeper, everything you’re saying, I’m like, that’s what my bookkeeper does. She sent me a little video. She explains things. She, we have meetings together quarterly sometimes. She explained to me about my finances and the way I need to learn and understand it.
And that is me leaning into making better decisions to impact the future of my business.
LoriAnn Kuntz: Yeah. And I would say there gets to a certain point in business where you can’t do everything, and you start.
Growing your team, whether it’s outsourcing to contractors or bringing on employees. At that point, you start stepping into managing your team and growing the business. And that’s your sole job. over the past year to year and a half, I’ve, I have really stepped out of the day-to-day bookkeeping and really focused heavily on our marketing efforts on managing the team on client experience on meeting with my clients.
I approve reports. I still look over the reports of my bookkeepers, when they send them out, I’m, I oversee them, but I don’t go in and categorize every single transaction. and we were continuing to add different levels of that and grow like our own little mini-organization. Yeah. and so it’s been really, honestly, it’s a big transition because when you start a business.
You’re doing what the business is and then you step into a CEO role and you’re no longer really like I’m no longer doing the bookkeeping work as much. And so it’s okay, now I have to learn how to lead a team. I have to learn how to deal with customer relations. there’s literally a big part of my job in customer relations.
and then there’s a big part of Team management and just organizations and systems and like all the stuff that you’re now in charge of. Whereas when I started, I’m like, Oh, I thought I was just going to be like a bookkeeper freelancing. And it’s not that anymore.
Dolly DeLong: It’s so much more. Yeah. you wanted to share three differences. Between a bookkeeper and an accountant. Do you mind if we recap that really fast before we merge it into more action steps?
LoriAnn Kuntz: Yes. Okay. So a bookkeeper manages more of the day-to-day finances. Really, we do monthly bookkeeping, so it’s more of the month-to-month, but, it’s easier to explain, day to day.
and then really going into, an accountant is more on, the… tax strategy side and helping you through tax strategy. and then the third would be like the CFO work is really where projections and stuff come from.
Dolly DeLong: that’s really good. and then I have one action question if you’re listening in LoriAnn and given some great nugget, if anything outsource your taxes first. What would be another action step, in this realm for a creative business center to do?
LoriAnn Kuntz: I want you to obviously have a separate bank account and I know you, I know everyone hears that and you probably have heard that too, but are they really do it literally actually do it? And I can’t tell you how many times I get on like discovery calls or something they’re like, yeah, I have a different bank account but I put all my purchases on my personal credit card and That’s not split. That’s not split. you should have a business credit card. or we get in their business bank account and it’s like a bunch of personal transactions. Yeah. and I do, you don’t have to be perfect. And I’ll say that a lot of people are like, you have to keep it 100 percent separate and you should.
That’s what you’re striving towards. Sometimes, I’ll be honest, I go to my Target app to order, I sometimes get office supplies from Target or something, and I order something and it accidentally charges my business card. it happens. That’s happened to me before, too. Exactly. It happens. No one’s perfect.
But the goal is to keep it separate. The other thing is to get a good system that you understand to do your bookkeeping. make sure that it’s simple and easy to understand because if you don’t understand it, you’re not going to do it. and so there are so many different ways that you can do it. if you’re DIYing it, I highly recommend just finding a spreadsheet that you like.
there’s a spreadsheet on my website that you can grab. It’s pretty easy to use. I have walkthrough videos. and it’s made in a way that’s It’s fun. So if you’re going to do a spreadsheet, maybe find one that’s like aesthetically pleasing because you don’t want your 60-year-old, uncle, that’s a CPA trying to build a spreadsheet.
that’s going to be boring and not fun to look at. So find something that looks pretty. You can make spreadsheets look pretty. I promise. I think that’s the one thing that everyone buys like my spreadsheets and they’re like, this is actually so pretty. It’s fun to look at. I’m like, yeah, I know.
It’s like fun. Yeah. I would say those are some things that I would focus on. Okay.
Dolly DeLong: Thank you so much. So here is, I know I built this up so much to the listeners and they’re like, what is she going to share that Dolly’s so excited about? So like before, again, before we hit record, I was asking LoriAnn, What if you can teach any action steps outside of sharing the differences between a bookkeeper and an accountant, like what should we talk about?
And so we were brainstorming certain things and she shared the point of, what about paying yourself? Like how to pay yourself system on how to pay yourself. And I like was nodding ferociously. yes, that’s what we’re doing. Yes, that is what we’re doing. So as we merge those two differences, LoriAnn’s going to share how to create.
A tangible system on how to pay yourself, because this is something I feel everyone struggles with, not knowing how to pay themselves consistently or having feast and famine months, as photographers or creative business owners, like you have your feast months and then have the months where you are barely scraping pie.
So I’m excited to dive into this topic.
LoriAnn Kuntz: okay. Like she said, a lot of times there’s feasts and famines and, Business when, especially whenever you’re first starting, and honestly, even if you’re like in business for a long time, like depending on your business model, there’s gonna be highs and lows.
There’s gonna be seasonality to your business. but when you’re first starting out, and I’ll use like photographers for example, because I see this the most with photographers because they have they’re really busy months and then they’re really slow months. Yeah. when you were first starting out, I had my clients.
Go through the process of Obviously you need to have your books up to date So, you know where you’re at and what you’re profiting every month. From there I want you to take inventory of what you need. like the bare minimum? What do you need to bring home to be able to pay yourself? Whether it’s a side hustle?
Whether you’re trying to support yourself full-time, whatever it might be I want you to have that number in your head. Maybe you’re able to pay yourself that Every single month, even in your slow months, like if you don’t analyze what that number might be and look into what it might be.
You might not know that you’re actually hit your goal of being able to do that. so I want you to go backtrack. What do I need to bring home from there? What you’re going to do, depending on where you’re at in your feast or famine, like. journey or whatever, wherever you’re at in that cycle, if you’re in your famine, it’s going to be a little bit harder.
but basically, you’re going to just take your profit, whatever you make at the end of the day. basically sales minus expenses, and that’s going to equal your profit. And you’re going to take that and you’re going to pay yourself 50%. And then you’re going to save 25 percent for business savings.
And you’re going to save 25 percent of that profit for taxes. That’s for your famine months. And then whenever you get to your feast months, then you might, that 50 percent margin might be a lot more than what you actually need to bring home. So in this case, I want you to change the percentages around, and you can give yourself a little bit of bonus here and there.
That’s the beauty of having your own business. But ultimately, the months that you have a higher income, that’s going to be able to support the months that are lower.
So that’s why I want you to know like what your bare minimum is, because the first cycle of this in those big sales months, I want you to be stockpiling cash and like an emergency fund or business savings. That’s going to carry you through to the next high sales months. So like the next cycle of things.
So really. What you’re going to do is find that number that you need to pay yourself. That’s going to be your baseline and your high sales months. And then everything else, set aside money for taxes and stuff, everything else I want you to stockpile and like an emergency fund until you hit six months of business expenses.
And again, you won’t know that unless you have your bookkeeping up to date. some of those things you have to go back and look at your numbers. Because that’s going to tell you what you need to do to start creating and rewriting the whole cycle of this feast and famine. Gotcha, I love that. make sense?
Dolly DeLong: No, it totally does. do you mind sharing, would it be good if we did an exercise together of like actual numbers?
LoriAnn Kuntz: Yeah, okay. let’s say. We’re going to look at profit numbers. I’m not going to say sales and expenses because that’s just a lot of numbers to be running around in your head.
let’s say you’re a photographer. It’s January. So it’s January of 2024. And you have made a profit of, let’s just say 1, 000 for that month. So made a few bookings here and there. And let’s say I guess if we back up, let’s say ideally you’d like to be bringing home like 2, 000 every single month. in this first cycle in January, you literally cannot be bringing home 2, 000 because you don’t have that money.
So instead, you’re going to pay yourself 50%, which is going to be 500. And then you’re going to save 25 percent to business savings, which would be 250. So starting that emergency fund, starting to build that up. Okay. Yeah, that’s Yeah, I’ll use the emergency fund as the title now.
Okay. And then save 25 percent for taxes. That’s. 250 for your taxes. And then now let’s fast forward. You have some ups and downs. You do that same percentage, but you start seeing an increase in bookings and sales, and let’s say July. Okay. As we’re starting to get into the wedding season. Yeah. So July we have a profit of, let’s say, 2, 000.
So we’re, we’ve doubled it. Great. That means we’re going to pay ourselves a thousand dollars. Still not at that goal, but we’re, what we’re doing is we’re trying to set money slowly to where you don’t, you can always hit that goal. so you’re paying yourself a thousand dollars in July. You are going to set aside 500 in the business or in the emergency fund and then set aside 500 for taxes.
And this is all based on the profit. That we’re looking at and then let’s say October comes, you have a ton of weddings, a ton of final deposits and we are at, let’s just bump it up to 10, 000 for the profit of profit. yeah, let’s just. You’ve really, you’re, that’s a good big wedding is like all the time.
Yeah. But the thing is I see a lot of people do that and then they pull all that money out or they start investing it to a ton of stuff for buying new cameras. Before you do that, you’ve got to have your emergency fund in place. Okay. So this first, like really high sales couple months, you are building up your emergency fund.
And so you’re going to take that 10, 000 and basically. You could pay yourself that 50%, but instead, we’re going to pay yourself the baseline of 2, 000. And then we’re going to set aside 25 percent for taxes, which would be 2, 500, which would then leave you with 5, 500. You can add stock to your emergency fund.
And that’s what’s going to be able to carry you through to the next cycle.
It’s a lot of numbers that I just threw around. basically, I say emergency fund, but I know there’s going to be expenses that come up and that’s what the emergency funds are for.
So if you come up and you’re like, Oh, I need a new lens. Well, that’s fine. Like you have money there that you can spend. But the goal is to get like six months, like a stockpile of expenses in that emergency fund to where then in your low months, if you can’t pay yourself 2000, you still can. You can pull a little bit from the emergency fund.
Dolly DeLong: Okay, I love this so much and I love that you mentioned like in the feast months because I’ve been there like I, before pivoting more into systems workflow education, I was primarily a photographer, and I experienced those months of wow, like those 10k months like wow I’m making so much money, I am going to buy a new camera body.
I’m going to buy a new website template. I’m going to buy this. And it’s like all the shiny object stuff, but it’s not really helping the financial part of my business.
LoriAnn Kuntz: And I do want to be careful I don’t want you to feel like you can’t spend money because you can. if it’s okay, I do really need a website up because that’s going to help bring in more growth.
that’s a good investment to make. Then get your website done or buy a website template. But then, take that off of that profit number because that’s really what you’re operating off of. and I want to make sure that you understand, I’m not saying don’t spend money.
You only have to build up your emergency fund. You’re not allowed to spend any money. But the goal is, let’s build this up to where you don’t feel all the stress, and anxiety in the lower months.
Dolly DeLong: Yeah, no, that’s good and I don’t want people to be listening in and you’re like, Lorianne is… the worst.
She’s like making no, she’s actually the best. She’s like giving you some, I think she’s giving us some tough love, but very wise guidance. And I really hope that you all take her advice
LoriAnn Kuntz: after this. and the thing too, is to think. Ask yourself the question are you in this for the long haul?
Because if this is just the one-year season thing to just like do and play around with and okay, like you don’t have to set yourself up for a whole entire year of this cycle. Looking really at the photographers because it is like a really yearly cycle. but if you want this to continue to grow, you have to be thinking 12 months in advance, like, where am I going to be?
what is that 12 months going to be looking like? and this is really going to help you get to the point where you can be paying yourself the money that you need to be paying yourself every single month.
Dolly DeLong: I love it. And do you have any advice on, I know I’m like. I’m like really picking your brain in this episode.
Do you have any advice for anybody who is running a business? okay, like you said, the profit is the expenses, the sales minus the expenses. how can they, I feel like a good place to start is assessing your expenses, right? Like how could you, do you have any advice on how to cut back? Wisely, if that makes sense, without tearing it all down, without burning everything to the ground.
LoriAnn Kuntz: Yeah, I think a good, thing that you could do, in fact, I should probably do it for myself, is to print off an actual, just statement. of your like credit card or of your business account. and if you have bookkeeping records, you can do it that way, but I just feel like there’s something to printing off a statement.
And I want you to take a couple of different colors of highlighters and start highlighting with one color. This is why I have to have this to run. Photographers, you probably have to have Oh my goodness. Like Adobe. Yes. We are in the light room and Photoshop and all that stuff. You have to have that, like that.
We’re not cutting that. Yeah. But then there are other things that you might not have to have that you might be like, Oh, I’d like to keep whatever I, if I can make this work, great. That’s going to be another color. And the next color is I don’t ever use this. this really has to go. So that’s a really good practice to get into.
And then you can like, if you’re. There’s a bunch of subscriptions in the color that you don’t use, go cancel those. So I think there’s something to be said about like getting a physical copy, going through and highlighting things in different steps of understanding what you need and what you don’t need, and what you would like to keep if you can.
Dolly DeLong: That’s, no, that’s really good. So do you advise to have business owners do monthly subscriptions or yearly subscriptions? Does that make sense? Because that like really plays into, it because some, like I do yearly. And so a large chunk of my money is coming out at certain times of the year versus would it be wiser to just have like monthly subscriptions?
LoriAnn Kuntz: I think when you’re first starting out, I don’t want you to be paying yearly because I don’t want you to be like putting that on a credit card and literally like having credit card debt because you paid yearly. If it’s going to make you go into debt because you want to pay yearly for things, don’t do it.
If you have the cash to pay it, go ahead and do it because it’s going to save you money. It really can save you a lot of money if you do it yearly. but don’t do it if you don’t have cash. No,
Dolly DeLong: that’s really wise. I end up doing it yearly because I like saving like 20 or 30 percent at a time, but I’ve heard both ends.
So I’m curious what your input would
LoriAnn Kuntz: be on that. Yeah, no, I would say if it’s gonna go on a credit card. And you’re going to have a couple thousand in subscriptions for a year. that’s just mentally, even if it’s is you get a 0 percent interest credit card for 12 months and then it, it just mentally is not necessarily the place that I want you to be in because then it’s always like way on your mind and you’re like, okay, I have to pay this off.
And then you have like pressure and then maybe you’re in your lower months and you’re feeling all this anxiety. Like I got to get money because then I have to pay off my credit card. And I just, I don’t want to have that feeling for my clients and people that are. Following what I am talking about.
Yeah. No, I love
Dolly DeLong: this
Okay. So I know I’ve picked your brain this whole time. And I feel like I’m cheating the system. Like
people would pay
you for this. So. Saying all that, how, do you mind sharing with my audience, like, how they can find you, how they can work with you, and how they can stay connected with you?
LoriAnn Kuntz: Yeah. you can go over to our website. It’s profit-priority. co. there you can find out all about our stuff. there is a free deductions guide that I can make sure that I drop in, or I can have Dolly drop in the show notes, basically walking through what are deductions and what are business decisions.
The expenses and can I write this off type of thing? and so I’ll make sure to drop that in there. There’s also a contact page. If you are interested in working with us. and then I also have a podcast that Dolly’s going to be on soon. and it’s called a profit priority. So you guys can find me there as well and on Instagram profit priority.co.
Dolly DeLong: thank you so much, LoriAnn. And I just want to say thank you again for the millionth time for agreeing to be on the podcast and for walking, like even me, like walking us through a really good system and learning how to pay yourself. And then a good system between why, like a difference between an accountant and a bookkeeper and why you need.
Both to lead you well financially. I really appreciate it. As mentioned, everything is going to be in the show notes. So if you want to, please, after this, go give LoriAnn a follow, follow her on Instagram, subscribe to her podcast, buy all of her spreadsheets, and Learn from her. Hire her as a bookkeeper.
Just do all the things. All right. And also, if you have any questions, feel free to shoot one of us a DM, like to further the conversation because making money in your business should be a priority for you, especially if this is a long-term goal of yours. Anyways, just to wrap up, you guys know, I hope you all have a streamlined and magical week.
You amazing muggle, I will meet you all next week with another system and workflow-related episode. Bye.
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