I am super pumped for this episode with Kimberly Ferguson the Co-Founder of Emerald Expectations Accounting. Kimberly created her company on the principle that small businesses need to be taken care of throughout the year – not just during tax season, in order to make the biggest impact on their finances.
In this episode we will cover:
- Bookkeeper vs Accountant vs a CFO
- Business Owner Mindset
- Tax Benefits for Small Businesses
To learn more about Kimberly and Emerald Expectations Accounting check out their website!
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The Legalpreneur Podcast is advertising/marketing material. It is not legal advice. Please consult with your attorney on these topics. Copyright Legalpreneur Inc 2022
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Episode 249: All About Bookkeepers, Accountants, CFO’s and Taxes with Kimberly Ferguson Transcript
Andrea: [00:00:03] Welcome to the Legalpreneur podcast. I’m your host, Andrea Sager, founder and CEO of Legalpreneur Inc. As a serial entrepreneur and someone that works exclusively with small business owners legally protecting their business, I’m dedicated to covering common legal issues faced by business owners, providing you with the business knowledge you need to catapult your business’s growth and showing you just how some of the world’s most elite entrepreneurs have handled these legal and business issues themselves. In true attorney fashion, the information in this episode is not legal advice. This is for informational purposes only, and you should always consult with your attorney before implementing any of the information in the show. Hello there and welcome back to another episode of the Legalpreneur podcast. Today’s guest is Kimberley Ferguson of Emerald Expectations Accounting. She has her own accounting firm. She’s an outsourced CFO. I am really, really excited to chat with her because as we’re coming up on year end, it is. Extremely important to make sure all your books are up to date, making sure that you know what you’re looking at tax wise coming into the new Year. Because as a business owner, you can have some ugly, rude awakenings if you’re not on top of it. Kimberly, thank you so much for joining me today.
Kimberly: [00:01:25] Yeah. Thanks so much for having me.
Kimberly: [00:01:27] I’m super pumped to chat with you, so if you can just give the audience the rundown of you, your background, tell us how you got to where you are today.
Kimberly: [00:01:37] Yeah. So I actually went to school for aeronautical science. Wow. Which I know. Which is a long way from where I am now. But basically I was going to school to become a pilot and I was taking some business classes because I had a professor who said, If you’re going to be a pilot, you’re going to make $1,000,000. You need to know kind of how to handle your money. Right?
Andrea: [00:02:00] Makes sense. Absolutely.
Kimberly: [00:02:02] So I was taking some accounting classes and the teacher was like, I’ve never had anyone get 100% on my exams. You know, this is a really tough class. So have you ever thought about doing accounting? And I was like, No, but thanks, bye. You know.
Andrea: [00:02:18] My gosh.
Kimberly: [00:02:21] Yeah. So anyways, when I moved, when I got done with school graduated, I moved to a different state, put in some job applications for some jobs that made sense, like working at the flight school where I was at and things like that. And the only callback I got was from a bookkeeping company. So that kind of started everything. And when I was working with them, I realized that a lot of CPAs, a lot of tax preparers just don’t seem to care that much about their clients during the rest of the year. And I didn’t care for that because I’m really a people person. And so not taking care of my clients really kind of eats me away in the inside, you know? So I went back to school, got my master’s degree in accountancy, went to the IRS, got my enrolled agent status, and basically started my business to help clients throughout the entire year doing kind of a little bit of everything for small businesses.
Andrea: [00:03:17] Oh, my gosh, that’s crazy. So did you ever did you ever work as a pilot? Were you ever licensed?
Kimberly: [00:03:25] I do have my license, but no, I haven’t worked as a pilot.
Andrea: [00:03:28] Do you ever fly? So.
Kimberly: [00:03:31] Not right now, but that would be definitely a goal as my business continues to grow and I have more people that can kind of help me because right now it’s just me and a couple other people. So we’re kind of small at the moment. Yeah.
Andrea: [00:03:43] That’s awesome. I did not know that about you being a pilot, So the pilot accountant. That’s really cool. So I’ll tell everybody a little bit more about how you support small business owners.
Kimberly: [00:03:59] Yeah. So we tried to support small business owners basically in every phase of their business. So when you’re first starting your business, a lot of people have not a lot of money, but a lot of time. And so we basically give them the ability to learn how to do their own bookkeeping through our do it yourself program so they can walk through, take the time to learn how to do it themselves so that at the end of the year, when they’re handing over their stuff to their tax professional, they’re not embarrassed because that happens a lot, unfortunately. And then as they grow, we can take over that bookkeeping and payroll all that day to day back and stuff. So because they’re running out of time, right? As you grow your business, you have a little bit more money, a little bit less time. And then, of course, as you continue to grow and grow and you’re actually at the point where you’re trying to be more strategic, that’s when we’ll come in and we’ll help you as your outsourced CFO, help you kind of look at the financials on a regular basis, help you sort of start to be more strategic about your tax planning, making sure you can minimize that tax liability, all the fun stuff, but we can step in and help you and kind of all the different phases.
Andrea: [00:05:09] Gotcha. Okay. Can you kind of explain what is the difference between an accountant and a CFO or an outsourced CFO? I personally am kind of confused on the differences as well. So this is selfishly a question for me.
Kimberly: [00:05:25] That’s okay. So the way I kind of look at it is there’s actually like three facets of the accounting industry, people that you’re going to work with. So the first one is bookkeepers. So a bookkeeper is basically going to look at what you’ve done in the past and they’re just going to document it, basically. And then the accountant is somebody who’s looking at the present. They’re trying to give you data that’s happening right now, you know, kind of give you a little bit of insight as to what’s happening in the business right now. The CFO is somebody who is trying to look forward and be proactive. So we want to look at what’s your tax liability going to look like? How are we going to grow your business? How are we going to keep your people happy with their employment situation? Because we all know turnover is a huge thing right now.
Andrea: [00:06:11] So yes. Yeah, that’s a really great explanation. I’d never thought about it like that. Bookkeeper Past Accounting. President, CFO Yeah, that’s really cool. Good to know. So when would you say is a good time to start working with somebody? Because as I’m sure you get questions about legal, I get a lot of questions about accounting. And a lot of times the question is, well, should I do it myself or should I hire someone? As we both know, a lot of small business owners, solopreneur hours, like you said, they have a lot of time, not as much money. So what is your suggestion around that?
Kimberly: [00:06:56] Well, as far as tax preparation is concerned, I would say right away would be best just because then we can help you with what kind of expenses you can have. A lot of small business owners kind of miss that stuff and end up paying more taxes than they really need to in the beginning. But obviously, if bookkeeping is something that’s a little bit out of your range, then I think that’s something you could probably handle on your own for a little while. But usually, I mean, once you’re hitting like the $200,000 revenue range, I definitely think it’s valuable to get a bookkeeper involved. And then for the CFO stuff, maybe like 500,000, to be honest, it’s kind of more of a mindset thing to me than it is a money thing, because if you’re ready to grow, it doesn’t really matter where you are. If you need someone to come in and help you be strategic, then any phase of revenue is going to work. But those are kind of some markers if you want to be kind of.
Andrea: [00:07:49] Yeah, exact. Right, Right. And let’s talk about mindset for a second. What is I’m sure you work with all types of different business owners. So for those that. Come to you. They’re very, very small. Having a hard time growing. Can you talk about the mindset that you see of those people versus those that have the big business that already have Maybe they came to you and they have grown since? Like, can you talk about some of that mindset? Because I know we all struggle with mindset and I think hearing this from somebody on the accounting side because I talk about it all the time from the legal side, the mindset. And so I would love to hear that from you.
Kimberly: [00:08:29] I think that the biggest struggle that people have when they start going into business is the employee mindset, right? It’s a little bit more working in the business and how to get the day to day going, which is totally understandable because most likely, you know, you were a an employee before you started doing this, right. So I think the difficulty is switching to working on the business and kind of becoming the CEO of your own company. So a lot more thinking about investing money into the business to grow the business. So investing in trademarks, investing in tax planning, the kind of stuff that’s going to help you in the future versus.
Andrea: [00:09:09] Yeah, that’s such a good way to look at it, because people always see, especially legal, they’re like, Oh, it’s just this awful expense that I have to have in the business. But really and really I try to help people see like it really does empower you in your business. And I think you heard the story of the client that did make $25,000 just because she had a registered trademark and it’s because she actually made the decision to invest in her business. And she clearly didn’t see an immediate return on it. But a year or two later, it had, you know, a thousand time return on her investment. So these are just some of the little things that can make a huge return on investment when you know how important when you realize how important the legal stuff is, the accounting stuff is, and I think with legal and accounting. A lot of it is just having that peace of mind because we get people that come to us with so much fear, like, Oh, I have to hire an accountant, I have to hire a lawyer, and then I know for you you’re very similar to me in helping clients realize like, Hey, it actually isn’t that complicated. We’re not scary people. Your numbers aren’t scary. It’s just something that we’ve been brought up around. And then we help them realize like, Oh my gosh, this actually isn’t that scary. And then they’re at peace and they’re like, Oh, I should’ve done this so much sooner.
Kimberly: [00:10:42] Especially with the older clientele who maybe had parents who lived through the Depression or grandparents who lived through the Depression asking them to spend $2,000 on an entity or a trademark or something like that probably feels like a really big deal. But it’s a good mindset shift to realize that you can make more money, especially in business. It’s not like being an employee where, you know, you only get so much per month. It’s kind of up to you what you want to do.
Andrea: [00:11:10] So yeah, exactly. Now, coming up on year end, can you give us some tips? Like I don’t know if you have a few tips for those listening, whether, you know, maybe they haven’t even kept up with their books. Maybe they just do it all at the end of the year, which I know. I know. That’s a big no no. So if you could talk to those people or even just some general like, hey, don’t forget these expenses, things like that. What are some tips you can share with this?
Kimberly: [00:11:39] Yeah, well, my biggest tip for small businesses is if you haven’t already, go ahead and start tracking your mileage now, because two months is better than no months. That’s a big one that people hate doing. And I get it because it’s a little bit more work. But with technology nowadays, there’s tons of apps you can download on your phone that make it as easy as like swipe right for business. Swipe left for personal. So, I mean, we can take it down to very minimal work. The other thing is everybody thinks that a credit card statement or a bank statement is enough to be counted as, you know, verification of your expense. Unfortunately, it’s not. So start keeping your receipts. If you haven’t been doing that already, you can actually scan them, make them digital. If you’re someone like that, you want to keep them in an app or you want to just keep them on your computer as a PDF or something like that. That’s going to be way better than, again, no months of receipts. So other things people tend to miss. I think the Home Office is one that people are scared of because so many accountants have made it sound intimidating and made it sound like you’re basically asking for an audit. But there are ways that we can do it that make it better, you know, And you’re not going to be attracted for an audit just because you do the Home Office. So you need to just kind of step away from that for a second. But basically going in and keeping track of your home expenses for the year so you can go back and check on those two and you can use that to give you a little bit more of a deduction.
Andrea: [00:13:13] So going back to mileage, if somebody has a small business or I’m sorry if somebody has an online business. What they may think. I have no mileage. What are some things that they may not realize? Like, Oh, this is actually mileage for the business.
Kimberly: [00:13:33] Yeah, I mean, it depends on how you use your business, obviously. But like, let’s say that you have to go to the post office to mail something, you know, mail letter, get posted, stuff like that. You can use that as mileage if you have to go to like Walmart or some sort of an office store to get paper or ink and stuff like that for your printer, that could be mileage for you to to count. A lot of people who have online businesses don’t meet with people in person. But if you did going in person and having coffee or something like that could be a business deduction. So there’s definitely a lot of things that could still apply to an online business.
Andrea: [00:14:09] So one question that I have I would love to hear your opinion on it is meals with spouses or partners, whether they are actual business partners or just romantic partners, because some people are of the mindset of, Oh, I’m talking business with my spouse or partner. So this is a business meal. I just I would love to hear your opinion on that.
Kimberly: [00:14:36] Yeah. Generally speaking, I would say it’s probably not deductible. I know that’s painful for some people, but of course, if your spouse does help with your business and you do go out to eat and you do discuss business, you know, talk about growing your business or talk about different ideas that you have for your business or maybe client issues that you’re dealing with, then you can totally consider that a business deduction. And the nice thing about that is it would be more like business development, I’m going to call it. And so you could actually potentially deduct 100% of that versus the standard 50% rule. So but if your spouse is not involved in your business and you’re just kind of chit chatting, then I mean, that’s kind of normal spousal conversation, right? So it’s not going to be a business deduction usually.
Andrea: [00:15:25] Yeah. And what about travel? Because. A lot of entrepreneurs travel for business, but they may also turn it into a vacation. What are the rules around that if you’re turning also turning it into a vacation?
Kimberly: [00:15:43] Well, for sure. The time that you would have been there for the business is obviously deductible and the rest of it kind of depends. So let’s say that you have a business meeting on Monday and then you have a business meeting on Friday. So you have two business meetings and it doesn’t really make sense for you to go home. So you take those three days in the middle to kind of do whatever you do in the area that you’re visiting. Then basically that entire visit becomes a business deduction as far as like your hotel and potentially some meals and travel, other travel expenses, depending upon if your spouse is part of your business or not. Yeah. So there are ways to make that trip fully deductible, you know, except for things like if you go to Florida for business meetings, Disney World doesn’t really count as a business deduction, although many people like to think it does.
Andrea: [00:16:40] But that’s one, right? Well, if you’re if you’re in Chris Carter’s mastermind and he takes you to Disneyland, then yeah, that’s a little different because this past year and our meet up right after dream bigger and we actually went on my birthday so it was That’s awesome. Cool birthday present. Yeah. I was like, well.
Kimberly: [00:17:05] See, for him that probably was deductible.
Andrea: [00:17:07] I was like, Chris, thank you for forcing everyone to celebrate my birthday and for making us all do it. And Disneyland. Greatest birthday ever.
Kimberly: [00:17:18] Yeah.
Andrea: [00:17:19] And I went home and I told my parents I was like, “Y’all failed me as parents because y’all never took me to Disneyland.” . Totally joking. My parents are amazing and my parents are. My mom especially, is one of those that goes all out for birthday parties. And I never knew that it was like that for all kids until I grew up. And so definitely had no shortage of birthday parties. But it was a fun joke to share with them. Like, Well, Chris took me to Disneyland for my birthday.
Kimberly: [00:17:54] I know sometimes my sarcasm comes across that way too. When I joke, I’m like, You didn’t do this for me. How rude. Just kidding. Just kidding. I’m just kidding. Guys, it’s okay.
Andrea: [00:18:04] Exactly. That’s funny. Well, so going back to the entrepreneur that is scared to make the leap because they’re scared and scared to make the leap of hiring it out because they’re scared. Oh, I can’t afford it. Or this. Can you give some realistic costs of let’s say they want to completely outsource bookkeeping and tax preparation, maybe tax planning? What is a reasonably speaking, what is just like the average you would guesstimate?
Kimberly: [00:18:35] Yeah, I would say that bookkeeping is definitely a lot less expensive than most people think it is. You know, even working with a tax firm or a bookkeeping firm is going to probably be more like just a couple of hundred dollars, two or $300, to be honest with you. For most small businesses, tax returns are going to depend on your entity. But, you know, 500 to $1500. So and that’s obviously once a year. So that’s not outlandish either. And then the thing with tax planning is that those usually start a little bit higher. 3000 maybe, but that’s basically with a guaranteed return on investment, because if for some reason we can’t find anything for you to save on, then we’re just going to return your money. Otherwise, you’re usually seeing at least 2 to 3 times the return on investment in year one. And then that savings continues for every year after that. So it’s usually not really an expense.
Andrea: [00:19:28] Yeah, and I love taxes. So some people know this, some people don’t. But I majored in accounting in undergrad. I so I actually wanted to be an accountant. And then when I went to law school, I was in so I was in college and there was a girl. Her dad was like this big time personal injury attorney in Florida. And I was talking to him. I was like, Oh, I want to go to law school. And he was like, Let me tell you. He was like, If you want to be rich, you need to be a tax attorney, because all the really rich people will pay a lot of money to tax attorneys to get out of paying taxes. And I was like, done, I want to be a tax attorney. So I go to law school to be a tax attorney, and then I get the job at the big firm and I’m like, I want to be a tax attorney. And everybody’s like, weirded out. Like, why do you want to be a tax attorney? And mind you, I wasn’t like fully owning the fact that I just wanted to make a lot of money. I was like, Oh, I just like taxes, like whatever. But I really do. Like, I always didn’t see it as a game. And I just I don’t know. I enjoyed I just think it’s a game. I think taxes and money are a game, and it’s a game that I like playing. And I everybody just thought I was so weird because I wanted to be a tax attorney and I never was a tax attorney. I was a litigation attorney for like seven months at the big law firm. And I was like, Screw this. This is not for me. I need to go serve small businesses. So that is a little bit more back story about my background.
Kimberly: [00:21:01] Yeah, well, it worked out for all of us. Yes.
Andrea: [00:21:06] But that’s yeah, people always ask me like, Oh, should I hire it out? And I’m like, Look, I actually did my taxes on my own the first couple of years in business, but that’s because I had the background and I knew enough. And then eventually I was like, I don’t want to do this on my own and I know that I’m missing things. So it is time to outsource.
Kimberly: [00:21:26] I will say that my husband and I had started a couple of businesses before we went into bookkeeping and tax and all that stuff. And I can tell you from experience that we 100% floundered our tax returns. I mean, it’s hard when you just don’t know what you don’t know, right?
Andrea: [00:21:42] Yeah. Well, Kimberly, if somebody is looking to finally bite the bullet and outsource their bookkeeping, their accounting, where can they find you?
Kimberly: [00:21:57] Well, the best way would be to just visit our website at www.Emerald Expectations.com You can honestly Google us and find us pretty easily too. So if you’re not, if you forget what our address is, that’s fine. Our phone number is on there, email is on there. And of course, if you’re just ready to jump in, you can do that directly on our website.
Andrea: [00:22:17] Amazing and everything will be in the show notes. But Kimberly, I have one last question, and it’s the same question that I ask every guest, and that is what is your number one business tip?
Kimberly: [00:22:31] That is a good one. I would say my number one business tip is to remember that your most valuable asset is your time. So make sure that you’re setting boundaries and always remembering that you can make more money, but you can’t make more.
Andrea: [00:22:49] Time so good. Nobody’s ever shared that. That is a great tip. All really good. Really. Thank you so much, you guys. All of her links. Everything will be in the show notes. Don’t wait. Just go outsource accounting. It’s probably something that’s burning your burning you in your head like, Oh, I know. I need to do this. Same thing with legal stuff. You’re like, Oh, I know I need to do this, but you keep putting it off and putting it off. Make this year the year that you finally just get everything off your plate that you don’t want to do. Do it. All right.
Kimberly: [00:23:21] You’ll never regret the peace of mind.
Andrea: [00:23:24] Yes. Go get it done, and I will see you all next time. I am so excited to share with you that from now until the end of the year, you can sign up for the Legalpreneur membership for almost half off. It is normally $349 a month or $3499 for the year, but from now until the end of 2022, you can sign up for $199 a month or $1999 for the year. You get all access to your own attorney, unlimited emails, 130 minute phone call, a month, document review, access to all of our contract templates, plus a discount on additional services. And once you get started, we get you rocking and rolling with a business audit, which is where we outline exactly what protection you currently have and what protections you still need. We lay it all out for you. That way you can get started working with your attorney, knowing exactly where your relationship is going. Get signed up. The link is in the show notes and we are so excited to serve you in the Legalpreneur membership. Here at Legalpreneur, we’re committed to providing a supportive legal community for all business owners. I know how scary the legal stuff can be. If you found this information helpful, I would be so grateful if you could share it with the fellow business owner. And quite frankly, it doesn’t cost anything to rate, review or subscribe to the show. Your support helps me reach more listeners, which allows me to support more business owners in their entrepreneurial journey. Have any questions or comments about the show? Feel free to drop me a line on Instagram. I promise. I read all of the messages and comments, and if you want to be a guest on the show or know someone that would make a great guest, simply fill out our application form and a team member will reach out if we think it’s a good fit. I’ll see you in the next episode.
