GOALS—Fourth Quarter 2021

A PU BL I C ATI ON OF

Go Figure Accounting

FO URTH QUARTER 2 02 1

Watch Your Step The Poop Bandit, aka Michael Wright, built a booming business

Make the holidays count.

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Mr. Big Sh t

Michael Wright makes the most of a crappy situation with The Poop Bandit.

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6 Points of Interest

The Great Resignation by the numbers; The childcare crisis explained; The gender education gap; El Salvador’s new Bitcoin law; Building strong habits; Building a stronger community; and more.

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16 Taken into Account 20 Questions Everything you need to know about getting started with Profit First.

CPA Q&A Rachel closes out the year with your pressing Q4 business questions.

24 Wrapping Up Year-end tax planning cheat sheet for small businesses Employee Spotlight Our newest team member, Hannah Joseph

24 For What it’s Worth Balancing bias in the workplace.

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KEEPING TRUST

FOURTH QUARTER 2021 VOLUME 1 NUMBER 4 A P U B L I C AT I O N O F

Rachel Siegel, CPA Owner, Small Business Development Expert Cindy Lovan, EA Accounting, Tax Kirstin Pastorick Bookkeeping Beth Kisner Communication Coordinator Hannah Joseph Accounting

Strong families.

Strong communities.

Every child deserves a safe, stable and loving home.

Together, we can make that happen.

Become a foster parent.

Start your life-changing journey.

To get your questions answered about becoming a foster parent, call 866-90-CHILD or visit www.embracefamilies.org/next-steps.

Northeast office: 732-374-9641 Southeast office: 407-855-6648 gofigureaccounting.net

PRODUCED BY

Jamie Ezra Mark Publisher Heather Lee Editor __________ Rheya Tanner Art Director Josh Clark Designer Wendy Mak Designer Caleb Jensen Web Garrett Reardon Digital

407-573-6061 hello@emagency.com emagency.com @EMagencyinc Goals is published quarterly by Go Figure Accounting.

Volume 1 Number 4 Copyright© 2021 Go Figure Accounting.

All rights reserved. Reproduction in whole or in part without written permission is prohibited. Opinions expressed in the articles are those of the authors and do not necessarily represent the opinions of Go Figure Accounting.

R A C H E L’ S D E S K

And just like that ...

The year 2021 is at an end. There is truth in the saying, the days are long and the years, short, don’t you agree?

Like most, we can say unequivocally that this year has been a tumultuous blur of, “Yes, and …” moments.

Joy, and sadness. Grief, and delight. Success, and setback. Failure, and fortitude. Elation, and exhaustion. Hard work, and playfulness.

Understanding, and confusion. Longing, and thankfulness.

Was Go Figure successful? Yes! We are thankful for financial stability, an expanding ProfitFirst portfolio of clients, a growing team in both our Florida and New Jersey offices, and exciting opportunities on the horizon. We are equally delighted to report that most of our clients saw their businesses reach new milestones as well, which you will read about throughout this issue of GOALS. And still, real life snuck into the gaps. The diagnosis. The breakup.

The phone call in the middle of the night. The complications. The loss. The thick and thorny kind of real life that no amount of success can assuage.

But here’s the good news: Progress doesn’t have to be perfect to be powerful. And a setback doesn’t mean we give up. In this season, we encourage everyone to celebrate the good within the hard, personally and professionally. That can be as simple as: Have one better reaction to stress today. Hash out a new set of goals.

Spend time with friends. Ask for a hug. Better yet, give one! Respond with gentleness and humility. Believe the best about someone instead of assuming the worst. Make this a day we do more listening than talking. Celebrate someone else without feeling threatened.

Cheers, my friends. We are so grateful to know you and to serve you.

May your holiday season and New Year bring you heaping servings of joy, peace, and prosperity.

We are thankful for financial stability, an expanding ProfitFirst portfolio of clients, a growing team in both our Florida and New Jersey offices, and exciting opportunities on the horizon.

Rachel Siegel, CPA rachel@gofigureaccounting.net

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POINTS OF

The Great Resignation Adios. Sayonara. Bye, Felicia.

The Bureau of Labor Statistics recently announced that 4.3 million Americans, or 2.9% of the entire workforce, quit their jobs in August—breaking the record set just the month before, when 4 million quit. There’s plenty of speculation online as to why, the most compelling evidence simply being post-pandemic fallout. But here’s what we know for sure: The term “The Great Resignation” was coined in 2019 by

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Anthony C. Klotz, a professor at Texas A&M University. He predicted that workers would “start to resign en masse following the pandemic as burnout and working remotely trigger a shift in people’s identities.”

Resignation rates are highest among mid-career employees between the ages of 30 and 45.

Resignations are highest in the tech and health care industries.

The largest increase in the number of quitters happened in

Georgia, with 35,000 more people leaving their jobs, followed by Kentucky and Idaho.

According to the Workforce Pulse Survey by PwC, 45% of Gen Z and 47% of Millennial employees would give up 10% or more of their future earnings for an opportunity to work remotely. Only 38% of the Gen X and 14% of Boomers would do the same.

Has your business been affected by employee exodus? We want to hear about how your business is surviving and/or thriving. Send us an email at hello@gofigureaccounting.net

The Child Care Job Crisis Child care is down 126,700 employees since the pandemic started, a drop of more than 10%. According to the Department of Labor, more than 10,000 workers have left for other industries since June. Why? According to The Washington Post: • The median income for the industry is $25,460, putting it in the bottom 2% of all professions.

• Child care workers regularly make less than $15/hour—lower than most retail jobs at this point.

• College graduates who major in early childhood education earn the least out of 137 majors, according to a report from Georgetown University.

Big picture: The Treasury Department has called the child care system “unworkable,” with more than one-third of child care providers considering quitting or closing down within the next year.

President Biden’s recently passed social spending bill includes about $400 billion earmarked for universal preschool and affordable child care as well as an extension of the child tax credit through 2022 and a paid family leave provision.

Will that be enough? Only time will tell.

Are you an entrepreneur or business owner in the child care industry? We’d love to hear your perspective.

FA C T S & FIGURES

$6,270 The average credit card debt in the United States

582 MILLION

the number of entrepreneurs in the world

90 Percent

The number of United States billionaires who are self-made

40

%

The percentage of Americans who have less than $300 in savings

3.

8 MILLION

The number of young women who submitted a college application in the United States—compare with just 2.8 million applications from men SOURCES: The Federal Reserve, WealthX, Ellevest

A Little Bitty About Bitcoin

At Go Figure, we are cautiously curious about bitcoin. Enough to know the tax implications and rules, of course, but not necessarily rushing to the mining fields ourselves. What we are watching with great interest is El Salvador, where “the pupusas are warm and the bitcoin is tender.”

(Really wish we would have coined that phrase, but credit goes to TheMorningBrew.com).

In September, the Central American country passed a law making it the first country in the world to accept bitcoin as legal tender, meaning it’s now an official currency alongside the US dollar. In essence, El Salvadorans can pay for groceries, haircuts, cars, and even taxes, using bitcoin. And businesses are required to accept the tender for goods and services as well.

Then, in November, President Nayib Bukele announced plans to construct a “Bitcoin City” at the base of Conchagua volcano that will be entirely funded by bitcoin-backed bonds. To the tune of $1 billion or more. Also worth noting: Geothermal energy from the volcano will be harnessed to power the energy-intensive mining process necessary for bitcoin.

Bukele believes that by being an early crypto adopter, the country could become a destination for foreign investment in bitcoin mining. Will it work? That remains to be seen.

Bukele has said that Bitcoin City will be free of income, property, and capital gains taxes.

Certainly an investor’s dream. Yet, despite the buzz surrounding crypto—i.e., the renaming of Los Angeles’ Staples Center to Crypto.com Arena—cryptocurrency hasn’t actually been used as legal currency at scale.

Bottom line: Bust out the popcorn and pull up a seat. However this shakes out, it’s bound to be interesting.

Have an opinion? Tell us about it!

Email hello@gofigureaccounting.net

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POINTS OF INTEREST

“Habits are the compound interest of selfimprovement.”

skill to develop at any stage of your career because it retains the most important asset in life: your time. How do you value your time? Say no to whatever isn’t leading you toward your goals.

Say no to distractions.

(We’re going to add another tip: Eliminate the word “maybe” – James Clear, Atomic Habits from your vocabulary. Maybe is simply a distraction cloaked in It’s no secret that Mike Michpoliteness. If it isn’t a “hell, yes!” alowicz is our favorite author. it’s a no. Period.)

However, James Clear is a close To change habits, change second. He is the author of the how you identify yourself. bestselling book, Atomic Habits, Clear calls these identity-based as well as the entertaining 3-2-1 habits. Rather than worrying weekly newsletter, where he about the results you want, focus dishes out “life-changing insights on becoming the type of person like T-shirts on a college camwho could achieve those results. pus,” according to Morning Brew. If you want to quit smoking, inWe’re such big fans of Clear’s stead of telling yourself, “I wish to work that we’re sharing some quit smoking,” tell yourself, “I’m of our favorite tips here. When not a smoker.” Instead of worryyou’re ready, buy the book from ing about losing 40 pounds, focus your favorite bookseller, or on being the kind of person who simply sign up for his email at doesn’t miss workouts. jamesclear.com Start small. If you’ve worked The ultimate productivity with us at all, you know start hack is saying no. Clear says small is a GoFigure mantra. Clear that saying no is an important calls this the 1% approach. One

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percent improvements add up surprisingly fast, “the compound interest of improvement.” Rather than starting with 50 pushups per day, start with five. Work in sales? Don’t think about 100 leads, start with one. A monster to-do list? Start your day with the smallest action item first.

Choose systems over goals.

“You don’t rise to the level of your goals, you fall to the level of your systems.” Think of it this way: Your goal is your desired outcome. Your system is the collection of habits that get you there. In practice that would be spending less time focusing on outcomes and more time focusing on the habits that precede the results. For example, rather than worrying about finishing the novel, focus on being the kind of person who writes every day.

Favorite quote. “Your personal experiences make up maybe 0.00000001% of what’s happened in the world but maybe 80% of how you think the world works.

We’re all biased to our own personal history.” —Morgan Housel

PHOTOS (FROM TOP) COURTESY OF FARMGIRL FLOWERS, JEFF’S BAGEL RUN

Clearly Speaking

How You Can Help:

Rise and Thrive

1. Donate items from the Building Pathways wish list, available buildingpathways.com 2. Donate with a one-time gift or a monthly gift.

Building Pathways helps teens and adults with special needs learn important life skills that allow them to enjoy more independence.

PHOTO COURTESY OF BUILDING PATHWAYS FOUNDATION

Most everyone wants to live and work on their own, and have a safe place to learn. But for teens and adults living with special needs, traditional schooling at the middle and high school level might not offer adequate preparation for the social demands and skills required for independent living.

Patty Myers knows this firsthand.

Her 20-year-old son, Charlie, lives with autism, just one of many developmental and emotional disorders affecting 20% of Americans.

It was her experience raising him to

be self-sufficient that showed her just how large the skills gap was for kids like him, and ultimately the catalyst behind establishing Building Pathways in 2018.

The nonprofit’s mission is to provide individuals with special needs hands-on training that can get them ready for life on their own in the future. Through partnerships with local businesses, Myers and Assistant Director Jennifer Pinckney work to give participants hands-on job opportunities within their communities. And through their on-site

1 in 26

American families reported raising children with a disability.

3. Share the Building Pathways programs with your network on social media.

day programs, summer camps, and support housing programs, they teach young men and women the basic skills needed to live on their own, such as cooking healthy meals, doing laundry, and working exercise into their routines.

How vast is the need exactly?

According to a 2020 Centers for Disease Control and Prevention report, approximately 1 in 54 children in the U.S. is diagnosed with an autism spectrum disorder and 1 in 6 U.S. children had a developmental disability. And more than 75% of special needs adults are without employment. That’s a huge issue for the differently abled community, and those who care for them.

Still, it’s so much more than a paycheck or diploma. For Charlie, Livy, Brooks, Jackson, Bella, and hundreds of other young adults benefitting from Building Pathways, the dignity, satisfaction, and pride that come from independence is simply priceless.

For more information, visit building-pathways.com

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Mr.

Big

Sh t

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Some people are willing to take a lot of crap.

But Michael Wright, owner of The Poop Bandit, has made it into an art form.

STORY HEATHER LEE PHOTOGRAPHY FRED LOPEZ

pit bull with a lisp and a loose stool. A schnauzer with a memorable schnoz. A duo of dainty maltipoos with frighteningly large feces. Just another day in the life of Michael Wright.

As the owner of Orlando’s The Poop Bandit, a dog poop removal service, Wright is easy to picture as a colorful mashup of your favorite Pink Panther characters: David Niven’s Phantom jewel (in this case, poop) thief only to be foiled Peter Sellers’ Clouse Clouseau —

who literally steals the show. Or, in this case, the shit.

“It’s a crappy job, but someone has to do it,” Wright deadpans.

It wasn’t always this way.

Michael Wright was once a professional talent manager, rubbing elbows with heiresses,

Hollywood producers, and Michelin-starred chefs. So how does one go from the jet-set life to, errrr, waste management?

“Well, that’s a loaded question.

Pun intended.” Wright laughs.

“Basically Poop Bandit started as a job for my oldest son, and named for my dog, Bandit. He — Lucas, not Bandit — was having a hard time finding a job when he turned 16, and I was like, ‘Well, why don’t we just create one?’”

Doing His Business

The pooper scooper business plan wasn’t their first idea, but it was one Wright kept coming back to.

“I can’t say that it was my original idea. I knew someone in Michigan who had a scoop business, and he was very successful. Ran that business for, like, 20 years. So I did a little research, and there was nothing in the area like it. So one Taco Tuesday, my wife and I sketched out a business plan, came up with the branding, and put a one page website together. In all

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my years in business, it was actually the fastest idea-to-implementation ever. Tacos, cervezas, and then bam! We were in business.”

Wright is deflecting, of course, using his infectious sense of humor to keep the conversation light.

Truth be told, The Poop Bandit couldn’t really be called successful five years ago. In fact, Wright says the business just stumbled along.

“Lucas really just wanted to make enough to pay for his car insurance, gas, and have a bit of cash in his pocket. So he had a handful of customers, probably like eight or so, and that was it. Then when he graduated high school and went into the Marine Corps, the company just limped along. We kept a handful of clients, mostly friends, but that was it. I was in the shit, literally, with my other company, and didn’t have the time or resources to put into scooping.”

For more than a decade, Wright’s primary business was running Domestic Estate Management Association, an association for personal chefs, butlers, estate managers, nannies, personal assistants, and such.

DEMA connected high-quality, vetted service people with high net-worth families.

Founded in 2007, he and a partner built the company from

scratch, growing it from just a handful of members to 22 chapters across the U.S., plus one in Monaco and one in London.

“By 2016, we were poised to expand even further, but realized we were spread too thin. So that’s when we decided to double-down and bring on an investor. It was a real life version of Shark Tank, only not as fun,” he says. “The investor started stealing money from the organization within about six months, and the whole thing just mushroomed into a big, messy divorce in 2017. Friends I had for a decade. It was heartbreaking,” Wright remembers.

Fresh off the heels of that debacle, Wright transitioned into private service. “I was reeling from the partnerships and didn’t trust anyone, so I basically became an independent consultant. A headhunter talent recruiter for billionaires. They would come to me looking for people to run their homes or estates, and I’d find the people. Eventually that grew into consulting, where I’d go into their estates and diagnose their staff issues and, you know, help them with a battle plan to fix it.”

“Those three years were a lot of work, but it was really fun. I mean, I got to work and consult for some wonderful, high-profile people. One day I’m talking to George Lucas. The next I’m dealing with Hollywood producers and celebrities. It was exciting and challenging and really high pressure, everything that I loved.”

And when COVID hit in March 2020, it all just … stopped.

Wright’s private practice went from thriving to dying.

“Obviously, no one was hiring, “ he says. “Especially the wealthy, because they didn’t want people

coming in and out of their home any more than needed. So just like that, it was like a water pump getting shut off.”

Like most of the world, Wright just hung out for a bit. “I did what everyone else did, watched Netflix and gained 30 pounds,” he jokes.

“But it was pretty clear to me after the first month that COVID wasn’t going away. I’m not one to just sit around, either. I kind of go stir crazy if I’m not working on something, so I started to revisit Poop Bandit.”

Duty Calls

Despite the chaos of COVID, he still had a handful of clients, so it was time to decide: will The Poop Bandit die, or will it try? “I still believed it was a great idea, with untapped potential in this area, but to be totally honest, I was having a massive identity crisis,” says Wright. “Here I was, a guy who gave advice to billionaires for 20 years, and now I’m going to pick up shit? There’s no nicer way to say it. I really struggled.”

For the same reasons it made sense for his son to do it in 2016, it made sense to Wright now: low overhead, high potential. So, in the end, getting over that mental hurdle didn’t require a therapist or psych degree. It just required doing the work. And landing his first really big account.

“I doubled down and worked those remaining 8 or 10 clients. I asked for referrals. I did some local marketing.

I updated the website, focusing on SEO and Google Adwords.

The business grew, but it was a painstaking process. One client at a time, inch by inch, scoop by scoop.”

But then one day, while driving through a new local housing development, Wright had an epiphany: He could offer the

service to HOA communities. “In Central Florida, especially here in Winter Garden, there are tons of these communities that have pet stations and dog parks, and they are never being serviced. The bins are overflowing. The bags are always empty. And there is still poop on the playground, literally.

I figured I could build a whole business just dealing with overflow, and I was absolutely right.”

In fall 2020, Wright landed his first HOA, then his second by the end of the year. And with each success, any personal issue he had with scooping, diminished.

He embraced the “if you can’t laugh at yourself” adage and just decided to have fun.

And that he has. “In January 2021, it all just clicked at the same time, and I’ve been on an absolute rocket ship ever since.”

These days, the King of Ka Ka has a warehouse, three trucks, and five employees. And he’s actively looking to hire more people.

Though technically The Poop Bandit is five years old, Wright really believes the company is just

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a year old. “From June of 2020 through now, it’s been working hard, keeping my head down, doing what I know will work. Even when there wasn’t immediate success, you just keep doing the work. This year, so far, I have basically doubled the business every three months. It’s growing at just an incredible rate, better than I ever imagined.”

That says a lot coming from a guy used to building six-figureplus businesses. But Wright is the first to admit, he’s in new territory.

“In the past, I’ve always built my businesses with the end in mind. I would figure out the big, audacious five-year goal, and then I would work backwards, figuring out how to hit that goal. And this is the first company I haven’t built like that. COVID made the entire world rethink business, to do it differently, and I’m no exception.

Instead of going all macro on a business plan, I just decide to work really hard, try to make good decisions, treat everybody as well as I can, and offer a great service and go over the top with the service and the communication.

And it worked. It totally worked.”

That’s not to say he hasn’t made plans for 2022. More trucks, more employees, more commercial accounts. Perhaps another warehouse. But his most audacious goal is “to develop a process to turn the pet waste into compost instead of having it just go to the landfill.” And 2022 is the year he tackles Profit First.

Getting His Sheets Together

“I’ll be honest. I didn’t think I needed accounting

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help,” says Wright. “I’ve managed my own books for so long that it just didn’t cross my mind to hire it out. But there’s just something about Rachel [Siegel]. She’s such a genuine, easygoing person.

She’s not a hard sell. She just lays out the facts and lets you decide.”

The two had met as members of Central Florida’s Horizon West Networking Group last year, and Siegel became a Poop Bandit client during COVID. There was an easy camaraderie between the two, but it was Wright’s wife who first proposed the idea of hiring Go Figure.

“My wife is a smart woman,” he laughs. “Obviously, there are a lot of advantages to having someone else handle the books. My wife and I are both entrepreneurs and we like growing successful businesses, but we’re also at the stage where we enjoy our down time, too. So I was like, ‘well, I think I should talk to Rachel’—as if it was actually my idea.”

He and Rachel first started talking business over a cup of coffee. “I just asked her what she thought of our business model, what her philosophies are, that sort of thing,” Wright says. “She didn’t really push Profit First; she didn’t really need to because my wife was already on board with the idea. But I was playing it cool, like, ‘Let me let me read Profit First, you know, and get back with you.’”

Rachel encouraged him to listen to it on Audible. “She said, ‘All you do is drive around for the most part, so it will be much more entertaining.’” Wright listened to the entire book in 24 hours and hired Rachel the next day. “It made so much sense that I was mad I hadn’t thought of it myself!

So hiring Rachel was a no-brainer.

She’s a Profit First Professional, the only one in the area, and this is the system I’m going to want to do. So the next day I texted, ‘All right, I’m in.’”

“Mike gets so excited about things, and his enthusiasm just pulls you in,” Siegel says. “But we did have to dial it back a bit. We are working to get his books current, and we will do some Q4 and annual planning to make sure we set him up for success. But really, our goal is to start him on Profit First in January.”

“Funny story about January,” Wright recalls. “Last year, I was at a Horizon West meeting and we were doing a workshop where we wrote down our goals on a piece of paper and shared them with the group. Normally, most people write that they want to make X amount of dollars, or grow their business revenue by a certain percent. I didn’t. I wrote down that I wanted three trucks and a warehouse. That was January 2021. And it happened. It happened in the first three months of this year, maybe four. So January … yeah. The perfect time to start Profit First. The perfect time to start anything, right?”

So what would he write on that piece of paper for January 2022?

“Oh shoot … I still have time to figure that out,” he says. “Stay tuned. But I’m sure it will be a shit ton of awesome.”

“…yeah, it’s been pretty awesome. I’ve had a few different successes and failures, but I’ve never had anything — anything — grow this fast in a 12month period. I’m still shocked by it all. Poop. I just can’t believe it.”

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PHOTO BY FARKNOT ARCHITECT, ADOBE STOCK

TAKEN INTO

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20

Questions Everything you wanted to know about Profit First, but were too afraid to ask.

THE BASICS

1. What is Profit First?

Profit First is a system (and a great book!) from small business finance expert Mike Michalowicz.

2. Ok. Besides that, what’s Profit First, really?

In business, we’re always told to pay ourselves first, but we’re never taught how. Profit First rethinks traditional accounting by prioritizing profit before paying any expenses. We take income, prioritize a percentage for profit, and use whatever’s left as our budget. If there’s not enough, we have too many expenses and need to make cuts.

If Profit First were a mathematical formula, it would look like this: Income - Profit = Expenses

3. I’ve heard it’s like a diet plan for finances.

How does that work?

There are four key principles that are similar to the idea of dieting: • Use small plates. Smaller plates equal smaller portions.

5. Parkinson’s Law? What’s that?

Author and historian C. Northcote Parkinson theorized that demand for a resource changes to meet the supply of it. In other words, when we’re given two weeks to do a project it takes two weeks, and when we’re given eight weeks to do the same project, it takes eight weeks. We’ll easily spend a $10,000 budget, but we’ll also make the most of a $1,000 budget if that’s all we have.

Profit First makes Parkinson’s Law an asset. By removing your profit from your budget, you force yourself to find ways to get the same things done for less money.

Smaller portions equal fewer calories. Fewer calories typically leads to weight loss. In Profit First, smaller plates are dedicated bank accounts.

• Start with the good stuff first.

Satisfying hunger with vegetaT H E BA N K A CCO U N TS bles rather than chips leads to a healthier balance, and lower 6. How does Profit First overall consumption. In PF that work in practice? means paying yourself first.

Think of Profit First like the • Remove temptation. If cheat cash envelope system. You foods are inconvenient to get, cash your paycheck and then you’ll eat less of them. divide it into various enve• Find your rhythm: Don’t wait lopes for different purposes: until you’re hungry to eat. Plan Groceries, Gas, Clothes, ahead to manage hunger, which Utilities, Rent, etc. When avoids binging and results in the envelope is empty, the fewer calories consumed. money has run out for that The result — for Profit First category. The only way to and dieting — is a leaner, spend more is to pull from fitter, and more profitable another envelope. business.

Profit First does the same thing, but uses bank accounts 4. Does it really work? instead of envelopes, allocatYes. It changes your mindset ing income across them in and educates you on your specific percentages. These finances. Profit becomes percentages are adjusted over something you plan for, rathtime, so that profit increases er than something you hope from say 1% to 10% over 2 for, meaning you’ll budget years, and operating expenses your expenses more carefully, decrease from 65% to 45%, a la Parkinson’s Law. for example.

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Yes. But don’t panic. We can help you figure that out. The 5 Profit First accounts are: • Income. All of your income is going to be deposited here before being distributed to your other accounts. Chances are, you already have this as your business checking account.

• Profit. This acts as a cash-cushion/rainy-day fund as well as a quarterly source of profit distributions.

• Tax. The government always gets their money, so you may as well allocate it.

• Owner’s pay. This where your salary comes from. And yes, you should always be paying yourself a salary!

• Operating expenses (OpEx).

This is your business budget.

What you see in this account is what you have to work with.

8. More bank accounts means more bookkeeping. Is Profit First really worth the effort?

Yes! In fact, the extra bookkeeping is negligible, and possibly even more efficient than using just one account. With Profit First you simply reconcile the deposits and periodic transfers from the Income account. All expenses and payments come from the OpEx account. And all the other accounts are typically a single transfer in and a single transfer out on the 10th and the 25th. If you’re really lost, though, we can help!

9. What’s this about the 10th and 25th?

Profit First calls this the 10/25 Rule, where you allocate mon-

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ey from the Income account to the other accounts on—and only on—the 10th and 25th of each month.

10. Why does it matter when or how often I do my allocations?

By allocating and paying bills twice a month, you are not only more consistent and efficient, but it helps give further clarity to your cash flow trends and statements than smaller transactions throughout the month.

11. So should all these be checking accounts?

The short answer is no, but it depends on how exactly you’ll use those accounts. As a general rule, savings accounts yield interest but limit your number of withdrawals, while checking accounts allow unlimited withdrawls (and allows you to issue checks!) with the drawback of not yielding interest.

Since the Income account accumulates all deposits until they’re allocated, incoming funds “sit” for approximately 28 days a month—plenty of time to generate interest. So setting up the Income account as a savings account and all the other accounts as checking accounts allows the most flexibility for withdrawals and writing checks, while accumulating the most interest. Win, win!

GETTING STARTED

12. How do I determine what percentage goes into which account?

It starts with an Instant Assessment, which you can do

on your own, or you can work with a Profit First professional firm (like ours). It requires analysis of the company’s P&L and balance sheet, and a review of the owners’ personal tax returns. From there, we can develop your specific allocation percentages. We use industry benchmarks to establish goals for what those percentages should be for a high performing company, and create a map for achieving those goals over time.

13. Should I be using Total Income or Real Revenue?

Total Income is the top line revenue of a business. It represents all cumulative sales. Real Revenue is the Total Income minus the cost of materials and subcontractors.

Think of it as the difference between gross and net gains.

The rule of thumb is if you’re a service-based business with fulland part-time employees, base your Profit First process on Total Income. If you are a manufacturer, retailer, restaurant or a service provider, or otherwise spend a significant portion (20% or more) of your operations on materials and subcontractors, do the Profit First Process based on Real Revenue.

14. Is Real Revenue the same as Gross Profit?

No. Gross Profit is the total revenue minus Cost of Goods Sold (COGs). COGs can include materials, subcontractors, employee labor, project costs (e.g. project related travel), and ancillary costs (e.g. shipping costs).

Real Revenue is a simpler calculation and less subjective. It is

PHOTO BY ELECTRICEYE, ADOBE STOCK

7. Wait! Five different bank accounts?

total revenue minus materials and subcontractors. For example, a home builder may have $10M in annual revenue, but requires materials and subcontractors that cost $7M a year.

This builder really has $3M of “real revenue,” and needs to operate like a $3M company rather than a $10M company.

15. Since Profit, Owner Pay, and Tax are all for the benefit of me, can’t they all be in one account?

management. Running up expenses to reduce taxes is the same as spending ten dollars to save three, it is very damaging to the business. The goal is to run the business as profitably as possible (that is the only way to achieve financial freedom), and you should work closely with a Profit First Professional to additionally reduce your tax liabilities as much as you can.

While the money allocated to I S I T F O R M E ? these accounts do all benefit the owner(s), the use of 18. My business isn’t profthe money is distinct. The itable yet. Is Profit First Owner’s Pay is for your salary doable for me? or regular recurring distriAbsolutely! Even better to get bution; the Profit account is those good habits hard wired more like a quarterly bonus or from day one. In fact the soona rainy day fund; and taxes, er you start with Profit First the of course, are different from faster you will master financial either of these monies. The discipline and ensure that accounts need to be kept sepyour business runs efficiently. arate so that you can instantly Plus, by paying yourself first, tell what money is allocated to you are more sustainable and what purpose. therefore more motivated to keep growing.

PHOTO COURTESY OF MIKE MICHALOWICZ

16. Why is the Tax Allocation 15%? That seems pretty high.

The Tax account is intended to pay both corporate and personal taxes. When the owner has periodic taxes due, quarterly or otherwise, the business “pays” for the owner’s taxes. And since the money is being allocated on the 10th and 25th, the taxes should be reserved well in advance to offset any panic when taxes are due.

17. Shouldn’t I run up expenses to cut taxes?

That is one of the most damaging myths of money

you can. No matter what, keep doing the profit allocation of Profit First every 10th and 25th. This sounds crazy since traditional GAAP accounting would be having you pay debt first, but you MUST build the habit of always taking your profit first. Then when you do your quarterly profit distribution, take 95%-99% of that distribution money and use it to crush one of your debts. The remainder (1%-5%) is used for you to celebrate. This process has you constantly chipping away debt while remaining profitable.

F I N A L T H O U G H TS

If you know Go Figure even a little, you know we are deeply committed to helping business owners better understand their financials, so they can experience peace of mind around their company’s money.

By adding Profit First to our services, we’re putting more fo19. My business is already cus on helping business owners profitable. Can Profit take home more of what they First still help me? earn. And one year later, we’re Of course. Who doesn’t want even more excited about Profit to be more profitable? By using First’s potential for you and your Profit First, your business will business and for the opportuniprogress more quickly to meet ties it’s giving us to create deeper, your long term goals. more meaningful — and even more fun — relationships with 20. My business is in debt. our valued clients.

How do I pay it off and still take a profit?

Pay all the minimum fees out of your Operating Expenses. Then use any remaining money you have in the OpEx account to pay off your smallest debt as fast as

Finance Expert Mike Michalowicz ProfitFirst, in a nutshell: • Before you pay expenses, pay yourself first.

• Run your business based on what you can afford to do today, not what you hope to be able to afford someday.

• When profit comes first, it is the focus, and it is never forgotten.

Most commonly asked questions sourced from GoFigure staff, “ProfitFirst” and ProfitFirst Professional assets by Mike Michalowicz. If you still have questions and want to learn more about how it could work for your business, email hello@gofigureaccounting.net.

gofigureaccounting.net / 19

CPA Q&A

Rachel Siegel, CPA

Tying Up Loose Ends

Rachel answers your most pressing business questions.

Not to sound like a Scrooge, but is donating to charity really a good yearend tax strategy?

Contributing one lump sum this year may help lift your deductions above the standard deduction amount and allow you to itemize.

to offset capital gains in taxable accounts. Here’s the caveat: Investments you’ve held for a year or less are taxed as ordinary income, but investments you’ve held longer are taxed at the long-term capital It can be. Because of the worldwide gains rate, which ranges from 0% pandemic and related restrictions, to 23.8% (including the 3.8% surtax on net investment income). your donations are needed more After matching losses against than ever. And, with charitable tax gains in the short- and long-term, deductions, your generosity will be rewarded. For the 2021 tax year, any excess losses can offset the opposite kind of gain. If you still wind you can deduct cash donations of up with an overall net capital loss, up to 100% of their adjusted gross you can use up to $3,000 of that income. Before 2020 and after loss to offset ordinary income and 2021, the cutoff is 60% of AGI. roll the rest over to the following Donations to donor-advised funds year.

Note that once you sell an as(DAF) aren’t eligible for the higher set at a loss, you must wait 30 days limits.However, putting money, before reinvesting in it or buying a stocks, or personal property in a substantially identical investment.

DAF allows you to deduct the entire contribution in the year you make it and decide later how you want to I dabbled in crypdole out grants to charities of your tocurrencies this choice. Contributing one lump sum year. Should I be this year may help lift your deductions above the standard deduction concerned about tax implications? amount and allow you to itemize.

I’m concerned about capital gains. Is there any way of offset that income, or mitigate the taxable portion?

The good news is that the tax code allows you to sell investments that have fallen below your purchase price and use the resulting loss

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on the sale or exchange of a capital asset. Here’s what you need to know.

Calculating Taxes: When you buy and sell cryptocurrency, comparing your net proceeds to your cost basis isn’t the only step in figuring how much you owe in crypto taxes.

You also need to consider the length of time you held the asset, as this determines the type of capital gain or loss you recognize.

Short-Term Capital Gains and Losses: When you buy and sell an asset within a 365-day period, you recognize either a short-term capital gain if it sold for more than what you paid for it, or a shortterm capital loss if it sold for less.

Short-term gains and losses are subject to the same tax rates you pay on ordinary income, such as wages, salaries, commissions, etc.

The IRS has seven tax brackets for ordinary income ranging from 10% to 37% in 2021.

Long-Term Capital Gains and Losses: If you buy an asset and Well, if you keep your digital cursell it after one year, the resulting rency as just that, you won’t pay difference between your net sales any penalties. It’s only when you proceeds and your cost basis is a choose to convert into actual curlong-term capital gain or loss. Typrency that Uncle Sam weighs in. ically, you’ll pay less tax on a longCryptocurrency is considered term gain than on a short-term property for federal income tax gain because the rates are generally purposes, meaning the IRS treats lower. Currently, there are three it as a capital asset. This means you tax rates for long-term capital gains pay the same as the taxes you might – 0%, 15%, and 20%. The rate you owe when realizing a gain or loss pay depends on your income.

PHOTO BY SEVENTYFOUR, ADOBE STOCK

Wrapping Up The fourth quarter is the time for some proactive tax planning to lower your 2021 tax bill. For business owners, tax planning shouldn’t be a once-a-year exercise when filing your taxes.

However, many of us make that mistake. Which is why we’re sharing some common tax planning moves that may help lower your total tax bill.

Review Your Business Retirement Plan One of the best ways for small business owners to slash their tax burden is to invest in a retirement

plan. This could be anything from a SEP IRA to a Solo 401(k), up to the combination of a 401(k) with a defined-benefit pension plan.

SEP IRA. If you are self-employed, you can contribute 20% of your self-employment earnings into a SEP IRA, per year, with a maximum contribution of $58,000 for 2021. There are no catch-up contributions for SEP IRAs. With no year-end deadline, a SEP IRA can be set up just before filing your taxes for the previous year.

Solo 401(k). Business employees are allowed to contribute up to

Year-end tax planning cheat sheet for small businesses. $19,500 for 2021 plus a $6,500 catch-up contribution if they are at least 50 years old. Additionally, the business will be able to make a profit-sharing contribution, up to 25% of payroll. That means a grand total of $58,000 (or $64,500 for those over 50) could be saved provided the individual contributes the maximum amount allowed by the IRS ($19,500 for 2021) and the business contributed the maximum allowable amount for payroll.

You can also benefit from a Roth Solo 401(k) for the employee portion of your contributions, $19,500 plus a $6,500 catch-up gofigureaccounting.net / 21

is that you can now get a 100% first-year bonus depreciation for qualified used and new property that was acquired and placed in service during your 2021 business year. To put this more plainly, you may be able to get a tax break for the entire cost of assets purchased in 2021. If you are having a big income year, you may want to consider moving up some planned purchases before December 31, 2021.

Claim First-Year Bonus Depreciation

As it stands now, the 2021 federal income tax brackets are like the 2020 brackets, with a few small adjustments for inflation.

One of the positive changes from the Tax Cuts and Jobs Act (TCJA)

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Be Proactive

If you expect to be in a similar or lower tax bracket next year, you may want to try and defer some income into 2022. Likewise, you may also want to move some tax deductions up into 2021. You would take the opposite approach if you are expecting to be in a higher tax bracket in 2022.

For the self-employed, minimizing taxation is one of the best ways to increase the net profitability of your small business. Be proactive and work with your certified financial planner and CPA to develop a strategy.

Not sure where to start? We would love to help! Send us an email at hello@gofigureaccounting.net

PHOTO BY SEVENTYFOUR, ADOBE STOCK

contribution for business owners over the age of 50.

Defined-Benefit Pension Plans are the most complicated of the small business retirement plans to set up because the plan design is complex and time-consuming.

Contribution limits will depend on age and income, but they can often run north of $150,000 per business owner per year. The tax savings can be huge, especially for those in high-tax states like California, New York, and New Jersey.

SPOTLIGHT ON THE TEAM THAT PUTS THE “GO” IN GO FIGURE

Hannah Has It Handled

The newest Go Figure member is also the youngest. But don’t be fooled: Hannah Joseph has a penchant for problem solving.

How long ago did you join the Go Figure team?

deposit dates, so it was kind of like a scavenger hunt. Although it was time consuming, the satisfaction was well worth it. My own personal game of Clue.

Where did you go to school?

What’s the one thing clients can do What’s your best habit? right now to improve their finances? Being on time. When I was young-

It’s been a little under three months. I am so grateful to find a job in my field right out of school.

I have a bachelor’s degree in accounting from Valdosta State University. Technically, I finished this past summer, but I’ll be walking the stage officially in December.

Significant other?

I have a tall, dark, and handsome husband whom I haven’t met yet.

(Laughs)

Separate business expenses from personal expenses! Some people use their business card for any and everything, and it gets messy.

Even the smallest amounts can really add up at the end of the year.

er my parents made us get ready for everything super early. Missing out on my weekend beauty rest was annoying but now being late makes me nervous.

Any productivity tools you love?

Coffee in the morning. It can be hot or iced, but it has to be from Dunkin’.

I like the screen timer on my phone that shows me exactly how long I spend doing tasks like emailing, What’s the best part of your job?

It doesn’t feel like work. Honestly, researching, texting, and being on when I tell people about how much social media. It’s shocking to see where you spend your time.

I love my job it just sounds make believe. But it’s so true!

Is there a specific client challenge you like to help solve?

Recently, a client sent an Excel sheet with a list of payments down to my ankles. We had to combine the payment amounts to match the deposits in QuickBooks.

The list was not in order and the payment dates did not match the

with friends. The conversations are so funny and relatable. I try to keep my office door closed so people don’t think I’m in here laughing at nothing.

Favorite songs or podcasts?

Every week I listen to a podcast called, “We Said What We Said with Rickey and Denzel.” Sometimes they have motivational pieces where they talk about knowing your worth and being careful about what you manifest into your life. Sometimes they discuss their experiences while traveling or out

Anything you can’t live without?

What keeps you motivated?

My excitement for the future.

Every day is a new opportunity to shine bright.

What’s the most interesting thing on your desk right now?

I have a painting of some sheep in a field hanging above my desk.

It seems random, but my friend gave it to me recently because of an inside joke she remembered from three years ago. It makes me feel loved. gofigureaccounting.net / 23

F O R W H AT I T ’ S W O R T H

Not Your (Stereo)type

Reflecting on ways to take the bias out of your business..

Stereotypes are, in a word, problematic. To put a label on a person or group of people who are assumed to share one characteristic is not only elitist, but downright dehumanizing.

Racial prejudice is a plague on our country—one we hope to see diminish in our lifetime. But for

24 / goals / fourth quarter 2021

the sake of this article, we’re talking about more “innocent” stereotyping, the kind that can sneak by if we aren’t vigilant: It’s “girls suck at math” and “men are so insensitive,” to more derogatory slang.

It’s easy to laugh about someone who has a different body

type than you, or to rant about “the lazy unemployed,” when you have never been subjected to those challenges or that judgment. While we may say these

things without malice, we can do better by learning how to recognize and stop using language with derogatory origins, meanings, or connotations. Especially in business.

So … what’s the answer? One word: Empathy.

Being able to empathize means being capable of understanding another person’s feelings without having experienced them for yourself. It is the ability to bear witness of the world from another person’s perspective; to walk in their shoes and to imagine what it feels like to have that experience.

The way we use language influences the way we see people and the way people feel. A fact that was readily evident in the stories we received from friends in our local community. They share their personal experiences of stereotyping in an effort expand the conversation, so that maybe, just maybe, we can make a commitment to do better in our daily interactions.

Rachel DeSando Speech for Life Therapy, on the In-Person Bias

Therapy is our passion, kids love technology, and our treatment is creatively unique to each child. However, as a 90% virtual business we have had to overcome the stereotype that

virtual learning is boring, ineffective, and leads to more work for the parents.

I’ve had many people call to inquire about therapy, but when I say it’s virtual, they cancel the complimentary consultation before even giving it a try. Thanks to the pandemic experience, many people think that virtual doesn’t work, but we aren’t public school. We carefully select topics, rewards, games, and crafts that your child loves to capture their attention and inspire their progress. The people who have given us a try love it, but we do have a much-larger stigma to overcome, thanks to COVID.

“You never really understand a person until you consider things from his point of view, until you climb inside of his skin and walk around in it.”

– Atticus Finch in To Kill A Mockingbird

by Harper Lee

Savanna Westwood

The Savvy Sitter, on Career Elitism

One of the issues I experience is having to explain that my business is a legitimate career. To this day, many people consider pet sitting and dog walking to be a side job, or an odd job for teenagers. I can’t tell you how many people say, “You do this full time?” or “Don’t you have a real job?” There’s always this undertone of disbelief, or even derision. But here’s the thing: My business turned 6 years old in June, and my schedule is full.

So I’ve found the best way to deal the negative feedback is to simply share my success. When they can’t get on to the calendar because it’s full, they figure out that The Savvy Sitter is legit pretty quickly.

Rachel Siegel

Go Figure Accounting, on Classism

I can’t tell you how many times in the last few months I’ve been involved in or overhead conversations where someone or something was referred to as ‘trailer trash.’ For years, I just let it slide, but as a business owner, I felt it was time to raise my voice. gofigureaccounting.net / 25

Francisco Nieves-Taranto RentCare Property Management, on Ageism

I grew up in a trailer park. My family was poor, but we were loved. We were taught the value of education and were highly influenced by our grandparents and aunts to work hard and dream big. We were surrounded by good people who, perhaps, had fallen on hard times, or simply chose a more affordable way to live. It wasn’t for us to judge why. We simply took our neighbors and all the people we encountered and interacted with at face value.

And we forged our way ahead.

My brother and I work incredibly hard, and we are both running successful businesses. Having met either one of us, no one would imagine calling either of us ‘trailer trash.’ But why is that even a thing? Why do we feel the need to dehumanize an entire group of people because of where they live? We can do better.

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Gina Rubel

Furia Rubel Communications, on ethnic stereotyping

I never appreciated the stereotypes and slurs used against Italians and Italian Americans. As the grandchild of immigrants who were persecuted because of where they were born, derogatory words do nothing to perpetuate the positive influences our heritage has contributed to the world. The same holds true for covert language that does nothing to elevate or even equalize members of minority communities. It is up to each of us to do better.

Green behind the ears. Newb.

Gumby. All terms used to describe and diminish young professionals with new or little experience.

My personal experience goes back to 1993 when I was 24 years old and fresh out of real estate school. No experience, no center of influence in Central Florida, and no money.

Every listing and management appointment, I had to battle with seasoned brokers and at my young age, people used to treat me like a kid. I had to work twice as hard to prove myself and prove to others that age is not an impediment. That as a REALTOR and property manager representing my clients, I would be firm enough to engage in negotiations, make assertive arguments, and maintain positive landlord/tenant relations. What did it take? It took hustle, determination, and perseverance.

Would it have been easier if I did not have to overcome the stereotype? Yes, but I think it helped me build work ethics and character, and tremendous respect for those in the same situation.

That is why mentorship is a top priority for me today.”

I’m Queen of Investing with Purpose Understand how to budget effectively, set reasonable expectations, balance potential risks vs potential rewards, and create a plan for the future you want, so you can live a confident and independent life.

andy ortiz

financial planner

Financial intelligence leads to financial freedom

13790 Bridgewater Crossings Blvd., Windermere 800-558-7969 / iqportfolios.com IQ Portfolios (IQP) is an independent State Registered Investment Adviser Firm located in Windermere, FL. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/ or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. A copy of IQP’s current written disclosure statement discussing IQP’s business operation, services, and fees is available upon request.

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