Kevin McCoy CPA

Budgeting & Cash Flow

2011-08-17T06:43:00.000-05:00

This video is meant for personal finance, but I believe it applies to business as well. You can have a terrific business, but if cash isn't rolling in, you're doomed.

[youtube http://www.youtube.com/watch?v=jdpjXvwLLLI&w=425&h=349]

Here is the original post by Carl Richards.

Numbers+

2011-08-04T09:33:00.000-05:00

Bean-counter. Number-cruncher. 10-key jockey. That is what most people think accountants are.

Yes, we can do those things for you. But I prefer to let technology automate as many of those simple tasks as possible. That's because I like interpreting the data to see how it can help my customers be more successful.

This article from the NY Times touches on a few examples of how a little accounting knowledge helped save some businesses from early failure.

Are we making money?

Are our customers paying us?

Are we spending our money wisely?

These are a few questions a business needs to ponder, maybe with the help of a friendly CPA. Like this real life example:

Last week I was talking to a customer of our firm. They had been using a software package since I've been involved (about 6 years or so) that they had outgrown probably even a few years before then. We advised them nearly every year during our meetings that a new software package ~~might~~ would likely give them better information. But business gets in the way sometimes, so only recently did they commit to a new accounting system. It went live earlier this year.

The customer's head finance person is sold. She told me the reporting was so much better that they are now actually able to tell how profitable each job is. She said the project managers were in awe of the level of detail they were now getting and were already making changes based on the information. Changes that would help them increase profits and possibly even shut down projects that were not cutting it.

That was a High Satisfaction Day.

Legos

2011-08-02T08:54:00.000-05:00

I don't know about you, but when I was a kid Legos were my favorite toy. Heck, my brothers and I still dump out the big tub of Legos and start building when we go to my parents house...of course they are for the grand-kids to play with. Yeah right.

Legos come with directions, but most of the time, after building the kit we would take it apart and mix the new pieces in with the older stuff. I barely remember playing with the actual "thing" we built with the Legos - it was more fun to constantly build, tear it apart and rebuild something else.

Business is kinda like that I guess. Build something up using the directions (Google "how to start a business" - see how many hits you get), play with it for awhile, if you don't like it you can start something else. Business is constantly evolving, it is always a good idea to take a look at your processes and see how you compare.

For example, most accounting used to be done by pencil and paper - a tedious exercise that would take forever and encompass many, many pages of green, lined ledger paper. By the time the accountant was done, he was probably too tired of footing columns to care what the numbers were saying.

Contrast that to today where accounting software and technology has almost allowed us to view real-time reports of what and how the business is doing. It is clear a paradigm shift is happening in accounting, unfortunately not all firms are happy with this. Did I mention you can do this from just about anywhere via a mobile phone or laptop computer?

It is truly an exciting time to be in my profession. We have so many cool tools at our disposal. The coolest thing about them? Seeing how they can help our customers achieve their business goals.

Cave Drawings

2011-07-13T09:55:00.000-05:00

This is a little comic I passed out at my BNI meeting for my 10 minute presentation a couple weeks ago. My cohorts seemed to like it and appreciated the (attempt at) humor.

One goal I had was to give an example of how to bring up the topic in conversation. Enjoy!

Flow

2011-07-08T06:25:00.000-05:00

Read this blog a few minutes ago.

Add QuickBooks or whatever accounting system you are using to the "other basic tools" and I'd venture to guess there are a few ways you or your staff could save time.

What would you do with an extra 30 minutes or hour per day? I'd love to come in and sit down with you to see if we can improve your flow.

kevinmccoy.cpa (at) gmail (dot) com

Why Accounting?

2011-07-07T08:10:00.000-05:00

One of my Thriveal co-horts, DeepSky, posted this excellent entry about why they are in the accounting business.

It got me thinking about why I do this for a living and still enjoy it after almost 13 years.

It started with a love of numbers. I thought accounting would be a better fit for me than a bland business degree. I thought it would be fun to look over all those numbers and try to make sense of it all. To turn all that data into a nice, clean financial statement or tax return. All these years later I realize that numbers are a mere fraction of this business. It is really about relationships.

Yes, those financial statements and tax returns are very important. But so is making sure my customers are getting the results they want out of their business, whatever that may be. And like the DeepSky folks, I think accounting can deliver those results.

So my "why" has really evolved over the course of my career. Seeing my customers succeed, based on their hard work and my input, is why I get up and go to work in the morning.

Small Business Record Keeping 101

2011-06-16T04:47:00.000-05:00

I've recently co-hosted a couple seminars with Lori from On Target Bookkeeping to help small business owners streamline their accounting process and hopefully save them some time crunching numbers. The seminars primarliy focus on using QuickBooks to accomplish this.

As a primer to the QuickBooks tutorial, I introduce some basic record keeping tips and resources, so I thought it would be a good idea to re-post that info here.

Why Keep Business Records?

Is the business making money? To me this should seal the deal - how will you know if you're making money without any data?

Who is buying from us or owes us money? (customer info) This type of data can be used for marketing, cross selling or simply to keep track of accounts receivable.

Who are we paying? (vendor info)

Financial statement preparation - transactional data can be compiled into easy to read financial statements that give management (or third parties in the case of financing) an idea of the health of the business.

Tax compliance - income, sales, payroll, etc.

Substantiation for items reported on tax returns (no records = no tax deduction = lost money)

What Records Should Be Kept?

Gross Receipts - deposit slips, invoices, credit card and cash register reports (if applicable)

Purchases for Resale - vendor invoices, purchase orders, cancelled checks, credit card statements

Expenses - cancelled checks, credit card statements, receipts, expense reports

Assets - when/how acquired, purchase price, subsequent improvements, depreciation schedules

Travel/transportation, entertainment and meals have special requirements - see IRS Publication 463.

Employment related expenses also need special care - see IRS Publication 15, Circular E for examples.

How Should Business Records Be Kept?

Can be as simple as a business checkbook or as complex as a large, multi-user computerized accounting system, depending on the business size and complexity.

Technology often allows for automation of routine tasks.

Find a system that works and use it - even the most complex system will fail if the data is incomplete.

Bottom line: More time spent keeping records = less time spent working on your business

For more information also see IRS Publication 583 - Starting a Business and Keeping Records.

What type of record keeping system do you use? How is it working? What would you change if you could?

I Want to Hold Your Hand

2011-05-17T06:26:00.000-05:00

No, I'm not going to post a video of me singing this Beatles classic. It wouldn't be pretty....and I wouldn't want to shatter your monitor's screen. I'll leave the singing to the pros.

Accountants are typically thought of as "numbers people". In fact, I first got into accounting because I am good at math. We are trained to crunch numbers for our customers - whether it be preparing tax returns or financial statements, or any other project we work on.

Recently though, I've had an epiphany. Numbers are what get a CPA in the door, but building a relationship is really what this business is all about. I only wish I had figured this out a few years ago.

Now I'm normally a pretty introverted guy and don't like to toot my own horn, so to speak. But sitting down with a customer and helping them solve a business problem gets me way more excited than preparing a tax return ever will. Don't get me wrong, I like preparing tax returns, but let's face it - dealing with the voluminous tax code is pretty hard to get fired up about.

Why then, do most CPA firms discourage client "hand-holding"? For you non-CPAs, the term hand-holding refers to spending extra time with a customer - perhaps training them to use their accounting software or maybe guiding a customer through proper internal control procedure. This seems completely backwards to me. After all, if our business is all about relationships, shouldn't a CPA WANT to spend time with their customers, solving their problems?

I believe the answer to this question is the dreaded "billable hour". Because most CPA firms bill by the hour and strive for efficiency, they see the time spent sitting and chatting with a customer as "non-productive". That's time that could be spent preparing a tax return!, they'll say.

But what if 15 minutes spent having coffee with a customer led to a discussion about a problem the customer was having? Say their cash flow is not what they would like. And what if the CPA had the know-how to assist his customer solve that problem? Suddenly, this supposed non-productive use of time has become very valuable to both business owner and CPA.

For this reason (and others which I will rant about in the future) I do not bill my customers by the hour. I price my services for value created and I demand my customers keep me accountable for delivering that value. They spend their hard earned money on my services, and deserve my attention and creativity. I don't care so much about efficiency that it negates being an effective adviser to my customers.

Speaking of being creative, I think I'll go listen some good music...anybody know any good tunes?

Friday the 13th

2011-05-13T07:00:00.000-05:00

Strange things happen on Friday the 13th. Or so the urban legend says.

Yesterday I was reading one of my new favorite blogs and was struck by this reply in a comment made by the author:

"blame is common, thank-yous are rare"

Man that seems backward to me. Why are we so afraid to recognize those that inspire, help or contribute to our lives in some way?

In honor of Friday the 13th and being strange, I want to thank the following people/groups:

my customers, for keeping me motivated to learn and constantly bring new ideas to the table. Anything less is a disservice to them.

my friends in BNI - Directly Connected, who have taught me a lot about the non-number side of business and inspire me to think entrepreneurial thoughts. I hope I can help you all grow your businesses.

my wife, Stefanie and my 2 children, for being there to celebrate my high satisfaction days and when I have a bad day - encouraging me to do better next time.

my colleagues in Thriveal CPA Network - who knew there were so many cool CPAs out there? You guys kick ass!

the folks at Verasage - who have opened my eyes and rejuvenated my excitement about this profession.

my parents, for not killing me when I dropped pre-med halfway through college.

There, that wasn't so hard.

Refresh

2011-05-12T10:37:00.000-05:00

If you've been here before, you probably noticed all the old posts are gone.

Truth be told, I wasn't that proud of anything I wrote before. So it didn't really hurt to delete the 40+ posts I wrote over the past 2 years.

I know I can do better. So I'm starting with a blank canvas. I don't know how often I'll write, so check back every now and then.

I hope you find what I have to say useful.

Kevin