Law Talk with the Flock

Stress-Free Accounting: Understanding Your Numbers with Maddie Brown

December 02, 2020 Jeana Goosmann, Maddie Brown Season 1 Episode 32
Law Talk with the Flock
Stress-Free Accounting: Understanding Your Numbers with Maddie Brown
Show Notes Transcript

Maddie Brown, CPA and the founder of Smashing Numbers and Host Jeana Goosmann, CEO of Goosmann Law Firm, sat down to talk about the importance of staying on top of your numbers. 

In this episode they discuss: 

  1. How Maddie started her women-owned business, Smashing Numbers. 
  2. Why it's important for businesses to have a CPA.
  3. Business planning advise for 2021.

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Goosmann Law Firm :

Do complex legal issues hold you back? Let's get energized and bring clarity to your top legal questions. This is Law Talk with the Flock by Goosmann Law Firm.

Jeana Goosmann :

Hello, I'm your host, Jeana Goosmann CEO, lawyer, author, and woman business owner here to help navigate you through the law, your business and life as a leader. And I'm very excited to have with me for today's episode, Maddie Brown, Maddie is a CPA and the founder of Smashing Numbers. Welcome Maddie .

Maddie Brown:

Hello, Jeana. It's good to be here. This is my favorite thing to do in the world.

Jeana Goosmann :

Outstanding. That's just incredible. I love it. And Maddie , can you tell everybody about yourself and what is Smashing Number?

Maddie Brown:

Well, you know, I passed the CPA exam in 1981, so that dates me a little bit, but I have been working with small business owners for the last 40 years on understanding tax law and understanding what their accounting records tell them and helping them be more profitable and successful and making sure they're paying themselves. And we work mostly with small business owners across the country. We're a lot of our businesses virtual, and we call it Smashing Numbers because that's what some people want to do to their numbers is smashed . And then, and then there's some possibility that we do some smashing of our own, but the result is always smashing. And so, you know, you can just take that however you want to take it. It is excellent. It is excellent information. Um, we take it seriously, but it's a safe space to come. You know, I talk to people all the time that they're having conversations with me that they don't have with their spouse, because money is a very sensitive topic. And there are very few people that you open up your checkbook and say, here, this is what I did with my money for the last month. Isn't that great. I had Starbucks coffee every day. You know, I mean, we just don't tell people and everybody wants to create an impression of doing better than they are. And so I've learned in the last 40 years that nothing is what it appears and there's a lot of guilt and shame and we make it a stress free zone to take care of our people so that they can do what they're here to do in the world.

Jeana Goosmann :

Well, and a lot of business owners, just because they're great at their craft or what their service or their , uh if they manufacture something, whatever their item is, it doesn't necessarily mean that they're great with their numbers .

Maddie Brown:

Well, most people did not go to school to be accountants and , and frankly, all accountants are not created equal. And one of the reasons that people go into accounting is because they think they can hide behind the numbers. And accounting is essentially at its essence storytelling and the books, the accounting tell a story about you and your business and priorities, and what's important to you and you need someone in your life that looks at those numbers and helps you get perspective on your business. And it's important for everyone to pay attention to their numbers, but if you're in business, it really is critical that you understand what your numbers are telling you so that you can make good business decisions. And secondarily , you're going to prepare some tax returns because tax returns go with the territory. Okay. But you're not, I don't perceive the accounting as secondary. I consider it primary. The reason for the accounting is so that you can run a better business and you can be more successful. And that's what I like to help people do.

Jeana Goosmann :

And Maddie Smashing Numbers is a woman owned business too, isn't it?

Maddie Brown:

Yes, it is. Um, one of the saddest statistics that I, that I quote and I quoted it everywhere I go, there's 12 million women owned businesses in this country and of that 88% of them are generating less than a hundred thousand dollars and less than 2%, less than 2% are generating seven figures. And those are statistics that I would really like to see changed because it's not right. And people get into business because they want financial freedom and they want to control their destiny. And too many of those 12 million women owned businesses are struggling and frustrated and not making enough to live on and generating debt .

Jeana Goosmann :

Well, you and I have that in common , as women business leaders and women business owners, we do love to help those other , women entrepreneurs as well, as well as really, we help anyone, but it's always extra special when we can help them.

Maddie Brown:

Yeah. Well, and you came from a woman owned entrepreneur referral, and it's nice to have someone in the legal realm that understands business because you need an accountant, you need an attorney, you need an insurance agent and, and those three people are really integral to your team.

Jeana Goosmann :

Absolutely. And it's been great to get to work with you, Maddie and get to know you and your business and how we can partner together and spread the word about what you do and how come you put a CPA in that group. But explain that to our listeners.

Maddie Brown:

If you could say that again?

Jeana Goosmann :

I know a CPA is very critical. Every business is going to need one. And honestly, I usually see people hire their CPA first in that group, but how come it is so important for business owners to have a good CPA on their team?

Maddie Brown:

Well, let's see, let's imagine for a minute that you're going to open a restaurant. Okay.

Jeana Goosmann :

In 2020, that would be dangerous.

Maddie Brown:

Yeah. That would be dangerous anytime. Okay. But do you go out and start buying tables and chairs and dishes and all those things first? No, that's not the first thing you do. The first thing you do is you determine if there's a market for what you want to do. The second thing you determine is where you want to be in the world as in terms of competitive advantage. And the third thing is to create projections, that model your business, that show you, that you have a prayer of being successful. Okay? And if you can't make them projections work in a real world scenario, then you should save your money and not put it into the business. If you can't create a business model that is profitable and successful and makes the kind of money that you need to make in your life, then you need to choose to do something different and it may be sell more. It may be raised prices. It may be all kinds of things, but you want that business model financially projected before you ever start, because that's how people save their retirement accounts. And that's how people save themselves from running up a bunch of debt because you're clear on where you're going. You need, you need to be specific and go and know where you're going financially.

Jeana Goosmann :

In my book, Worth It, Business leaders: Ready, Execute, Deliver what you just described is the ready. You have to get ready before you try and execute. And so many people lose that step. And then there are a few that never execute, right? All they do is plan and they talk about what they're going to do. So it is a good blend of both, but you absolutely have to take that time to plan and get ready and do those financial projections and understand your numbers before you launch a new business. Absolutely. And then once you're in business, before you take on a new division or maybe acquire something, you got to go through those same scenarios all over again.

Maddie Brown:

And , and the reality is that paperwork that you're doing, that you think is for the bank is not for the bank it's for you to understand so that you know, that you're making a good investment of your time and your money, which is the most important money, the money you already have and protecting it and making it a priority is essential to doing well in business.

Jeana Goosmann :

So many . What advice do you have for business leaders as we look at 2021?

Maddie Brown:

Well, that's really tough to answer Jeana

Jeana Goosmann :

Where is your crystal ball at Maddie?

Maddie Brown:

Uh, yeah, that's, that's, that's really tough to answer there. One thing that I think is certain I'm certain that taxes are going to be going up, not down, and I'm not certain what that is going to look like, but I think that businesses are going to find themselves paying more tax in 20, 21 than they have in 2020. And I think that , um, there's going to be a lot of change.

Jeana Goosmann :

I think, I think that you're exactly right with that. And , uh , sometimes it's good to pull back a little bit, and I know a lot of businesses are doing that. I've talked with some banks and they've all said that their, you know, their deposit accounts are higher than ever. And that's because people are conserving whatever they can because they they're afraid of the unknown. And they want to be prepared because I think most everyone got caught last March when we had the shutdowns and, and we've been through a lot of change and we know that , uh , if you have that safety net, it certainly is nice to lean back on both personally and in your business.

Maddie Brown:

Absolutely. And what is true is that I'm giving advice that I haven't given in 40 years as a general rule in any the years that I've been associated with business. I am encouraging people to take in more income in 2020 and not defer it to 2021. Now that is not normal tax advice. And it doesn't have no , you need to conserve your cash. You need to be smart. And if you can bring revenue in, I think tax paid in 2020 is going to be in general, less than tax paid in 2021.

Jeana Goosmann :

Whatever kind of advice changes have you seen as you've dealt through 2020 and just this crazy year that we've had?

Maddie Brown:

Well, the piece of advice that I always give people, the number one way that businesses overpay taxes, everybody does, everybody wants to pay less tax, but you can just , just add me in. Okay. But the most critical thing that happens is they lose deductions because they don't keep good records. And the mileage record is the primary example. People don't keep track of how many miles they drive at 59 cents a mile. That means every hundred miles that you drive is a $59 deduction. And at 30% tax that's $20. So for driving a hundred miles, you say somewhere in the neighborhood of $20 worth the tax, why are you not keeping your records? Why do you not have the details? If you keep the records and your specific and your details, you're not going to lose any money that you should be keeping.

Jeana Goosmann :

Well, I love the way you boiled that down. You made it nice and simple and clear to understand. And , and it really drives home. The why , right? A lot of times people are told to do something and if they don't understand why they're less likely to do it, I personally once had an employee and I told him , every time you do something, I need the receipt. And he was just horrible. I'll give you receipts. And finally, I told him , I'm like, well, first of all, you're not going to get reimbursed. If you don't have the receipt anymore. But in addition to that, you know, our likelihood of being audited because I'm a business owner and I'm a lawyer is so much higher than most. And if we don't have that receipt, someday , I might have to pay a tax on that, that I didn't have to pay, because you didn't keep your receipts . So once he got that and he understood my why, I wasn't just being hard on him. Uh , all of a sudden it helped motivate him to actually do what we were requesting. So I love that you incorporated the why .

Maddie Brown:

Well, it's , it's very simple. And most people will to tax savings and people call them, that's the first thing anybody ever asks is what's the deductible. And, and, and on the answer to that question, is it , it depends. I , you know , um, it depends on you. It depends on your business. It depends on who you want to serve in the world and what you're doing. If I'm an Applebee's restaurant, I need big screen TV. As a CPA. I don't need big screen TVs. Okay. There's no reason for it. So there's no ordinary business purpose for it, but I might have a reason that comes up. And so you've got to look at the primary purpose, being business, document it, keep track of it, put it in a folder, file it. And I pretty much recommend everything be digital these days. I hate paper. I don't like to save paper and , um, take the deduction if it's primary purpose business, and don't worry about it. As long as you've got it documented,

Jeana Goosmann :

How does someone start to work with you? How do they get in touch?

Maddie Brown:

Well, the best way to get in touch with us is our website smashingnumbers.com. And we, there is a link for a free consultation. There are documents that you can download. There's a document called 25 Tips, which really looks into what you need to have for a business record keeping system. There is an on-demand webinar that you can download and watch about 30 minutes, and you can call the office, or you can email maddie@smashingnumbers.com . I'm easy to get ahold of.

Jeana Goosmann :

Outstanding. Well, thank you so much, Maddie, for sharing your insight with our listeners today. I really appreciate your time, and I want to thank everyone for listening and to remind you to go make it worth it.

Goosmann Law Firm :

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