01. BOOKKEEPING-THE RHYTHMS AND MYTHS WITH ERIC JOHNISEE

SUMMARY KEYWORDS

business, bookkeeper, clients, rob, people, cpas, bookkeeping, accounting, decisions, eric, tax, year, taxes, starting, money, recession, cadence, wealth, dropping, person

SPEAKERS

Outro, Rob, Intro, Eric, Adrian

Intro 

Welcome to the get rich, slow podcast. This is the stuff we and our expert guests Wish we knew a decade ago to get the most out of our financial life will provide you with insight into wealth building activities and practices that can expand your net worth exponentially. get insight from top professionals who will reveal how to build wealth the long way, work smarter, not harder and identify your financial blind spots. With over 25 plus years of experience as licensed real estate professionals and a long track record of winning for their clients. Robin Adrian will teach you what it takes to be an everyday real estate millionaire.

Adrian 

Hello, future millionaires. Thanks for joining us today on the get rich, slow podcast. I’m joined today by my co host, Robert delavan. This is Adrian SHERMER, and we have a special guest today, Eric Jhansi. from Dr. Accounting. Thanks so much for joining us giving us your time today. Eric.

Eric 

Thank you appreciate being here.

Rob 

Morning, Eric. Good to see you.

Eric 

Likewise,

Adrian 

Eric has run drive accounting since you said 1992.

Eric 

use QuickBooks since 92. Started drive in 2000. Nice. So

Adrian 

that’s back when you were feeding punch cards into the computer or

Eric 

Yeah, I’m not not not quite but it was just after Yeah, it was different. We took we take technology for granted. I mean, we’d go things that we wait for now we’re frustrated with it used to take forever. So technology is crazy that way.

Rob 

Well, I’m sorry. You had to go through that, Eric. And thank you on behalf of the rest of us QuickBooks illiterates. So I love it. Today wanted to jump right in. We have a few questions for you. We wanted to interview you based on the fact Eric, I’ve worked with you for what seven years now?

Eric 

there abouts. Yeah,

Rob 

and we’ve gone through all sorts of different business iterations, you have solved a lot of problems for me. The The interesting thing about your world is tax and financial planning, actually, and frankly, which feeds into lending always starts with accounting and bookkeeping. And if you don’t have that foundation, you’re chasing your tail, the the nightmare of every year, the CPA and the box of receipts, right? You have personally made that a thing of the past for me. So I appreciate you for that. starting us off, the first question I have for you is why did you get into your field? And what is your the main driver to improve your craft?

Eric 

Well, I have to two pieces there. I mean, I got into this I was raised in a small family business doing real estate and construction. And I spent a lot of time on the job site the rest of the time I spent in the office and we had learned how to you know keep books with Lotus 123 and on on Ledger’s and then, and then Quicken and then moved over to QuickBooks in 92. And that came out and so I kind of fell into that. And I loved how easy QuickBooks Made it to really pull it all together compared to what it was before. Um, but I kind of did that at the time, because that’s what I knew. Um, I a little bit of background here is I grew my company to 17 employees before the recession in 2007. And we weren’t paying close enough attention to our numbers, we had kind of this perfect storm of a key employees life falling apart the recession, my son being born and I was home more and and I just wasn’t focusing on the business. And then the recession hit and a large number of our clients were real estate and construction related. So things were dropping like flies, I got out of the recession, shrinking down to myself and one person with a huge amount of debt and started digging myself out of that hole. And the reason that we got there is because we weren’t paying close enough attention to our numbers. So that’s frankly, why I do what I do. I mean, it was halfway through this now 12 1314 years ago, and having to dig this out with those mistakes. That really emboldened me and made me passionate about the numbers that we have, because I used to think I could grow this just by working harder, putting more time in and and getting more stuff through. And I realized I was making the wrong decisions. And I needed to make intentional, informed decisions about my business. And I couldn’t do that without information. And of course, we were able to pull all the information together. It’s just that we we weren’t practicing what we preached. So now I’m methodical about it. And it’s one of the reasons I see so many small businesses struggling and it’s because they’re, they’re on that treadmill running as fast as they can, hoping that if I if I just do more It’ll all take care of itself. But it’s usually that they’re not being proactive about their business. And you see that really in times, like what we’ve experienced this last year, we see a lot of businesses down, but I have, I have the vast majority of our clients that are having incredible years, in spite of the rather despite the, the pandemic here, so And it’s because they’re focusing on numbers,

Rob 

which is funny, because a lot of the business folks that I’ve talked about talked to they say they either gained 15 pounds or the COVID-19. Right. And they’re doing it, or they lost 19 pounds. I want Yeah, which one? I am. Yeah. But, and then also with their businesses. Conversely, they also basically had banner years, or they had, you know, worst year ever got into business, all of that sort of thing. And it really can kind of come back to, you know, what are the fundamentals of their business? which is obviously your focus?

Adrian 

Who is it is having a good 2020? Eric, what what industries are you seeing? stretch their legs, rather than?

Eric 

I can’t say it’s industries in general, because I see people in same industries, you know, one that’s making it one that’s not, you know, um, I think the the number one factor that I’ve seen are people who are constantly trying to build a better mousetrap and their business, people who are constantly looking at, okay, hey, this didn’t work, how can I do this better? How can I become more efficient, figuring out where I can trim the fat, and that’s what we get with our, you know, with our income statements, and our, and our budgets and whatnot, paying attention to where our money is going, but also paying attention to where it’s coming from, you know, saying no, to certain things, and really focusing on the most profitable. And again, that’s where I get that from all the information that I have, but it’s the companies that are doing that here, regardless of industry, because I’ve even seen restaurants I know that Rob Rob has a client that has a pizza shop, that is five times I think, is what I think he has five times a revenue. The the verbiage I heard from Chris, our accounting manager was that this guy was bringing in money quicker than he could spend it. And so it’s, which is a great problem to have. But yeah, and other restaurants that have, I think you get a lot of people that are resting on the laurels, you know, who were just kind of coasting. And frankly, you can’t do that in. You can’t do that in business and really succeed. The ones that are making it are the ones that are finding a better way.

Adrian 

Sure, sure. And I think that’s one of our pillars here is the idea that you got to get this stuff kind of ducks in a row, what am I going to do when things get too busy? Not I’ll deal with that once I’m already too busy to deal with it. I witnessed that, as I, you know, analyze financials for people every day, I see the people who are doing really, really well. And I see Yeah, a lot of loss and a lot of missed opportunity. Which sounds goofy when someone’s making great money. But yeah, people want to keep turning the gears themselves. And you got to kind of stop back, step back. And I think, Rob, what was that term, you used fire yourself, every once in a while, you got to get really good at firing yourself from jobs that you’ve just, you know, you’ve got to stop doing or you’re not gonna be able to get that forest for the trees view of everything.

Eric 

Right. And I’ve taken that, that page out of Rob’s book, and it has made a tremendous difference in what we do here at Dr. I am. And that goes back to saying no, we all need to really focus on our strengths. And there are things in our company that only I can do. I get in the habit. And I think we all do have saying Oh, you know what, I can just do that. It’ll take me 15 minutes. And but if I don’t figure out a way to delegate that and get that off my plate, it’s going to take me 15 minutes every single time I need to do it. And it’s taking away from this other stuff that I really need to do. So it’s my big thank you is to rob on that one because I saw you live it and I saw what it’s been doing for you, your business and the people you work with. And it’s been it’s already worked wonders for us. Yeah,

Rob 

I think what was the quote, you came up with Eric,

Eric 

I get a lot more done now that I don’t do anything. I love it. It’s and and it’s it’s true, because it sucks to have too much on your plate and just start dropping the ball. And you know, and triage because you say yes to everything. And it goes back to that urgent and important quadrant if you’re familiar with that, you know, and where we focus a lot of the time on the urgent rather than the important and it’s it is the if that stuff that’s not urgent but important that we need to be focusing on and so it’s, you know, to really grow our businesses, and it’s counterproductive to what happens when you’re in that triage mode playing firefighter

Adrian 

Yeah, yeah. And saying yes to everything is probably how you get that initial boom right? Like people love that energy. Oh, yeah. out there. If you’re a yes. Everything person. I mean, we’ve witnessed this in, in bi, right? The people who are you know, yeah, I’ll take on anything and then you watch it happen. You watch them reach that breaching point. And it’s it sucks because it’s sales, you know, it staggers out for a while, you really got to it takes time to rebuild trust, once you’ve you’ve once you’ve dropped the ball like that.

Eric 

Yeah. Yeah.

Rob 

Which segues us nicely to my second question. And I would actually ask you to focus on like you said, saying no, and saying no, is very important, because it allows us to specialize and be really, really good at what it is that we do. But the second question was, how do your services better set a person up to build wealth? With that saying no in mind, but what building blocks do you provide?

Eric 

So it all goes back to information. I mentioned that I do budgets for expenses, I also do budgets on revenue. And so one of the things that we saw here a drive were, you know, there’s different things that I tracked daily, weekly, monthly, quarterly, and annually, and they’re different things and it takes me you know, five minutes a day to pull, pull all these numbers and look at them so longer when we’re doing monthly and quarterly, etc. But there are things that we’re able to pay attention to, that we that we don’t have otherwise. So in that some of the things that we look at are, hey, what’s so internally, we do a lot of bookkeeping, we do a lot of bookkeeping, cleanups, as well. So these are people, I have a gentleman I’m helping right now that is, last year filed was 2016. For his taxes. He had a CPA that was actually doing his bookkeeping, taxes and payroll, and how stuff updated through mid 18. I saw hear him write her checks through 19. And taxes still aren’t filed. So it’s a it’s a shame, but we do a lot of those. We also do a lot of our QuickBooks consulting, we figured out what it made sense not to do, you know, so so we have a lot of clients that. So I have a marketing client, who wants us to pretty much take care of everything in his business. Now, we could totally do it. But it again, it’s less profitable for us, we end up doing a lot of back and forth that we’re not billing for, we figured out large, large clients that need us more than a day a week aren’t a good fit for us. There are a lot of bookkeepers that will do it. I just passed one on to Scott from our from our BMI group, contract CFO, because he’s able to bring people in and take care of this whole company. So anyway, figuring out what makes profitable sense, what I should be doing, what I shouldn’t be doing and getting that stuff off my plate, that’s the biggest differentiator to make certain that we’re using our time wisely.

Rob 

And a typical person that has basically that shoe box, right? Yeah, what would be the advice that you would give them? Obviously, my advice to them is? Yeah, which I’ve been doing, if you’ve got the shoe box,

Adrian 

you’ve got the problem.

Rob 

But well, where would be a great place for them to start?

Eric 

Well, it’s like that dog that’s barking on the porch. And this is why see barking Well, he’s sitting on a nail, well, why doesn’t he move? Well, it doesn’t hurt bad enough yet. And that’s where a lot of our clients are coming in here. And, you know, frankly, I was a bit in this in the same boat prior to 2007, to where I was running and not getting my own stuff done. Um, and so I know what it feels like to be in that role. And so you, you just have to make a decision that okay, but I’m sick and tired of being sick and tired of this stuff being behind. I’m tired of laying awake at night, not knowing where I’m at, and not being able to plan because I think what I do, and I think a lot of people we offset uneasiness or fear, we offset it with an offset risk with information. And, and so making that choice to actually do something is is that first one, um, as far as actual tactical things, if you’re starting a new business, make certain right away, you have a different bank account, that that’s the number one thing, um, the less commingling that you can do between business and personal makes it a lot easier to bring stuff up. I have a client that had a business account, but also put a lot of stuff through their personal we had to go through their personal account now and every transaction in there and we get to see some things that maybe they don’t want us to see. But you know, go through and highlight anything that’s business related. It’s setting up these processes and this rhythm, this cadence to make certain that it doesn’t have to be a chore, you know, and then then you get into this gallop and you know, Rob, I know you are in the same boat and so is it. We had each we work at the same CPA, and we sat down with her in November and said, Hey, this is this is how we’re looking for the year. This is where we think we’re going to end up, you know, based on this, what should we do? And hey, what are our taxes going to look like, the actual filing of the taxes is just a formality at that point. So it’s, it, it’s those systems, those processes, that cadence that keeps going through, and I’ll tell you what, I don’t sweat it anymore. And I was also able to make some great decisions, which saved me a bunch of money on tax, also, you know, even even in a banner year, so it’s um, but if you’re not in that rhythm, then it always becomes work. And that rhythm may be hiring someone, it may be just a matter of keeping track of your transactions. And once a month sitting down and totaling I’m decent, depending on the size and operations of your business.

Rob 

So I’m going to actually jump forward to I was gonna ask you any tax accounting hacks that you can lay on the audience. Obviously, having a bookkeeper accountant is one of them. Not everybody has the luxury of that. But you mentioned a big one. And that is sit down with your CPA before the end of the year now with your books to date. And then you can actually make decisions. Both you and I talked multiple times about what things you can do to minimize your tax liability. But at the end of the day, you can only do that before a lot of them before the end of the year. Right? Or the years over. You can’t do it anymore. Yeah. What else would you lay on the audience? From a bookkeeping, tax accounting? hack or advice? Just simple things?

Eric 

Yeah. So yeah, your taxes, as you said, should never be a surprise, you should know where you’re at before that time comes. And the you mentioned it being the luxury, I’ll tell you what, if you have a good bookkeeper, if you have someone that knows what they’re doing, they are going to save you more money than you are paying them. And it’s Yes, there’s a compliance piece of needing to pull everything together. But if you have someone that knows the information is right, and they can explain that is right and, and enable you to make good business decisions. Now, granted, I’m biased here, but I’ve seen it and in my own business, I don’t track the books in our own business, I have someone else do that. And then I’m reviewing the top end of it. And I’ll tell you, without that I couldn’t make the decisions that I make. So whether you’re doing it yourself, or having someone do it, get in that that cadence is the most important thing.

Adrian 

For a testimony to the craft. So an accountant has their own accounting, that’s how important it is to have grand is someone else? I

Eric 

don’t know is that Yeah, sure. It’s still someone from my company is doing it. But I’m, you know, doing the books isn’t what turns me on. It’s, it’s what I can do with that information. It’s now it’s that planning. It’s that entrepreneurial spark that we all have when we start this and saying, okay, hey, I can do this and this. And so I end up meeting with a lot of people who have just been beaten down by business. And it’s, it’s become a chore. And you can see it, you can see it in their postures, they’re sitting, there’s a shame that goes around it. And as you’re starting to give them information, and as you’re starting to talk through this, you can see them, you know, start to perk back up, you can see them. You can see that entrepreneurial spark relate and then get re impassioned and emboldened about their business. That’s why I do what I do. I love to see that in people. And so anyway, you just have to start doing something and get in that rhythm. Because if you’re not in a rhythm, it doesn’t. It doesn’t work out.

Rob 

That’s a that’s I love that. Which the so the last question I have for you is, and we ask every guest that we have and will continue to do this is how can the everyday life person figure out whether their accountant bookkeeper is truly top of their field? And just some techniques or some questions they can ask. And the reason I couch this question almost every time with in my industry as a realtor 80% of the revenue is driven by 20% of those in the field. So that means basically the other 80% are only making 20% of the revenue and there’s a obviously a dichotomy there that ya can unpack on a whole nother podcast at some point. But it’s very, there’s a few questions that I recommend asking a fellow realtors that just basically create a stark contrast between whether you’re one of the producers or not. So how would you recommend someone like like myself, who’s a novice in the bookkeeping world, you know, go out and shop for their bookkeeper.

Eric 

So there’s a few different things There. So at drive, we realized that most of our business comes directly from CPAs CPAs. You know, if I’m doing a cleanup for you and your stuff three years behind, we’re not sharing a drink and saying, Hey, I’m three years behind on my taxes. You know, unfortunately, there’s a shame that goes around money, you know, as we’re all. And so as a result, I, you know, one of the things I crave are genuine relationships, I can’t help someone if they’re not willing to open up and be honest and whatnot with me, and of course, with themselves, but um, so with this, they are talking with their CPA. So that’s why we build these relationships with the CPAs. They hate doing this work, I actually got two referrals this morning from two different CPAs that don’t want to do cleanup work and or even the maintenance, they want to focus on their tax. The reason that they refer to us is for a few different reasons they are. So nine out of 10 bookkeepers that I run into, and not read a financial statement. They’re just doing data entry, and they don’t know when they’ve made a mistake. So now, I’m a bookkeeper. I don’t know, you know, I’m doing the best I can. I’m rolling things forward. But I don’t know what it’s supposed to be like, because I only have a small handful of clients. And I’m giving you information, you think it’s right, and you’re making decisions based upon it, and then you find out that it’s wrong. So there’s tax implications. But more importantly, there’s business implications if you’re making important decisions on bad information. So one, they need to know their accounting, and you can tell that if they can explain what’s going on between the balance sheet and the profit loss. And they can tell you, what’s the relationship between the two and everything that’s happening line by line. That’s, that’s a good first indicator that they know what they’re doing. If they can’t explain it, they don’t understand it well enough. So okay, so they need to be able to explain it to someone who doesn’t understand it.

Rob 

There you go. So simplifying it down to explaining exactly what where you’re at right now. Yeah, and and what perspective that provides,

Eric 

well, and comprehensively, I mean, you know, yes, it can be about one thing, but they need to go through. So Rob, have you seen the file reviews that I do is, you know, we go through every single balance sheet and every single profit loss and, you know, account and make certain things are right, and where they should be, someone should be able to do that. And often, there are a lot of unreconciled items and things that aren’t correct on on there, which is feeding bad information. Second thing is, you know, that’s really big for CPAs is bandwidth. So they’ve gone through, they finally found a bookkeeper to refer to, that knows what they’re doing. They they offload a half dozen clients to this person. And, and this person is again, doing the best they can, but now they’re overwhelmed. And they have a couple choices, they can either say, hey, CPA, I can’t take on any more work, at which point, the CPAs got to find a new bookkeeper, and go through that trial and error and everything again, or they take on the work, which, unfortunately, is what usually happens, and they hope they can get it done running faster on the treadmill and their own business as well. Yeah. And eventually they start dropping the ball, at which point the CPAs got to find another bookkeeper as well. So Rob, you mentioned the 8020, with the, with the realtors, that 20%, that’s doing 80% of the work, they’re doing more work, and you don’t become a master at something, unless you’re doing a lot of it over and over and over again, and it becomes second nature. These bookkeepers that have four or five, six clients, you know, 1020 clients, you know, you know, even they, they’re not seeing enough of the spectrum of business to really be an expert. And they may be really good at what they’re doing. The the third one, and I don’t put a lot of stock into this, but there are certifications that you can get as well, but a lot of them are pretty easy. We’re all pro advisors here at Dr. Which means that we’ve given into it some money, we get to put their logos on our site, and we’ve taken their tests, there’s 200,000 Pro advisors in the US. So it’s a pretty low, you know, bar. We’re one of about 1000 into a solution providers. So it’s a program that Intuit reserves to their highest highest QuickBooks and accounting professional. So um, so those those certifications and whatnot matter, you know, they do matter. But the last one is get referrals, if they are references. Rather, if they are good at what they do, they can send you a half dozen CPAs that they’ve worked with, they can send you other business professionals that they have worked with and asked for a past client, you know, often give referrals to or references rather to people that we no longer work with anymore and say, hey, yeah, we don’t work together for this reason. And this is how it worked out is hey, we’re not perfect. We’ve dropped the ball. But I’ll tell you what, I don’t lose sleep because I know one of our core values is doing what’s right because it’s right and i know know when I’m laying in bed that while not every file that we’ve worked on, not every relationship has worked out? Well, if you do what’s right, because it’s right, and you take care of that first and let the money take care of itself, then then the clients in most cases, you know, you know, leave with the good feeling.

Rob 

Yeah, I love that. Obviously, you have a lot of passion for what you do, the tools that you’ve provided to me, for my business are incredible. And it allows you to take that next step in planning, for taxes, planning for finances, financial planning, and what’s ended up happening for me, and this is a direct relationship with everything that I’ve worked with with you is, at the end of the day, when you save on tax, or have reduced tax liability, so tax savings, then you turn around and invest that either back into the business or in retirement, wealth, building activities, real estate, and so on. And it just, it it is the foundation for what we’re doing. In this building. Well, slow, so I just love that. The is there, do you have any other words of wisdom to drop on our, our audience here,

Eric 

small, incremental decisions,

Eric 

um,

Eric 

what you’re talking about is putting that, you know, putting that tax savings away, you know, it doesn’t even have to be much, but you do something and let it build upon each other. It’s that whole compounding, and it works with our behavior as well. And so the, I think that cadence and that rhythm is the is the number one thing that has set me free. It’s a it’s those processes those systems. And I’m saying no,

Rob 

I love it. Love it. With thank you so much for that. Awesome,

Adrian 

yeah, thanks for the wisdom, Eric, I appreciate it. Absolutely, we’ll have to grab another chunk of your time at some point because I feel like there’s a lot more to unpack here. But that’s a great primer on what it takes to get into having an accountant. And hopefully for our audience, we’ve dispelled what may be kind of the myth out there that again, this is just for someone who’s at a higher level. Clearly, there’s a way that you can, you know, work yourself into using someone services like yours, and we’re gonna say this over and over again, guys, but these kinds of services pay for themselves. Eric, you save you know, you you save more money, or you build more wealth than you then you cost obviously, right, as evidenced by many glowing reviews, including Rob’s here. So thank you.

Eric 

Well, I appreciate you guys.

Rob 

Yeah, love it. It’s it’s just those simple concepts that we’re trying to spread to the audience. So thank you for taking the time, especially during this busy tax season. We will definitely try to twist your arm once tax season is over. And maybe we’ll have a whiskey lineup or something like that.

Eric 

I’d love the opportunity and the whiskey,

Rob 

of course. Thank you again.

Outro 

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