Navigating Business Finances: Insights from Laura Havard’s Expert Interview

In this interview with Laura Havard, a skilled bookkeeper and financial advisor, we delve into the essential aspects of bookkeeping and the common challenges faced by small business owners. Laura shares her insights on the importance of professional bookkeeping, highlighting how it goes beyond mere record-keeping to involve strategic financial planning and decision-making. She addresses common misconceptions about bookkeeping, the significance of understanding cash flow, and the dire consequences of neglecting proper financial management. Laura also offers practical advice for businesses on selecting a competent bookkeeper and underscores the power of financial knowledge in driving business success. Her expertise sheds light on the intricate relationship between accurate bookkeeping and the overall health of a business, making it a valuable resource for entrepreneurs and small business owners alike.

 

How do you assist your clients with their bookkeeping efforts?

 

 I’m a bookkeeper who helps small business owners keep track of their books. I’ve had many small entrepreneurs approach me with their receipts in a bag, saying, “Hey, I don’t have any bookkeeping done. I need help.” This is where I love what I do. Business owners are often just looking at their checkbooks, and seeing the balance add up. They’re focused on making more money, but they don’t have a clear idea of their profitability, or how much money they’re truly making. Many don’t realize that they could be increasing their prices because their costs have increased. They’re not keeping track of income, expenses, or their overhead.

 

So, at the end of my cleanup process, I can say, “Hey, you have all this money that you’ve been spending on marketing. Many of you get locked into these monthly subscriptions and are bleeding money on software subscriptions without realizing it.” They haven’t sat down to look at a profit and loss statement ever. I love to have a meeting with them once the cleanup is done to explain what a profit and loss statement looks like, where their money is going, and how much they’re actually profiting.

 

When that light bulb goes off, it brings me immense satisfaction to know that I’ve helped a small business owner understand where all their money is going and how much they’re actually making.

 

 What would you characterize as the biggest problem that your clients come to you with?

 

 The biggest problem many of my clients face is that they haven’t filed their tax returns mostly due to a lack of a bookkeeping system to keep them organized when it is time to file. A lot of them come to me with two years’ worth of transactions, having never filed a tax return, and they don’t know where to begin. I tell them that one thing they should invest in is their bookkeeping, especially when dealing with the IRS, and explain that It’s difficult to win against them. I let them know they’ll end up stuck with a lot of penalties, fines, and late fees when continuing to not file their taxes. 

 How do you help them with that hurdle?

 

 I tell them that their financials are like a puzzle or that they tell the story of their business. It’s a matter of me putting together the puzzle pieces and then allowing their books to reveal that story. For example, if it’s a contractor, I track all their different projects and show them which ones are most profitable. I point out the types of projects that are making them money and those that aren’t as profitable as they could be. I help them see where they could have performed better, essentially narrating the story of their business.

 

Once they have a full picture, they get better at making strategic decisions. They can sit down and decide whether it’s time to hire an employee or buy that piece of equipment they need. By the end of the year, they can see, for example, “Okay, I have a large profit. We’re in the fourth quarter, and yes, I can afford that piece of equipment.” This not only helps them grow their business but also serves as a tax deduction.

 

Empowering them to make these strategic decisions is crucial. Another important aspect is that they can see how much they can pay themselves. Owning a business is about making money, and by having everything in order and cleaned up, they discover funds they didn’t know they had. For instance, by keeping track of accounts receivable and staying on top of people who owe them money, they might find they have an extra $20- $40,000. It’s a revelation for them to see they can pay themselves money they didn’t realize was available. This realization underscores the fact that they’re in business to make money.

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 Are there any misconceptions that you come across often that need to be cleared up with your prospects or clients?

 

 Yes, there are some misconceptions. Sometimes, I’ve been put in the position of handling HR-related issues. I’ve had business owners say things like, “Oh, you talk to the employee.” For instance, I might reach out to a business owner to notify them that an employee is working a lot of overtime. They’re unaware because they’re simply writing checks and don’t realize the overtime being worked. Then, they want me to speak directly to the employee about this issue.

 

However, that’s not my role as a bookkeeper. I sometimes have to explain to the business owner the need for a clear separation of duties. I remind them that while I am their employee and work for them, it’s their responsibility to talk to their employees about matters like overtime or taking lunch breaks, not mine. This distinction is important to maintain in our professional relationship.

 What would you say is your specialty?

 

 I would say my specialty lies in keeping clients informed about their cash flow. They need to understand that having $5,000 in their bank account doesn’t mean they have $5,000 to spend. I often have to remind business owners that, yes, there may be $5,000 in the account, but they also have upcoming expenses. For example, payroll might be coming out next week at an estimated $1,800, and rent is due soon. It’s important to ensure they’re not mistakenly dipping into funds because they have accounts payable, as well as accounts receivable, coming down the pipeline. A lot of business owners aren’t keeping track of this cash flow, so that’s where I come in.

 

It’s really about keeping them well-informed. This goes hand in hand with budgeting and making sure they’re staying on track. I look at their profit and loss, observe trends, and analyze historical data. For instance, we discuss projections for the next year, especially if they had a slow period a year ago. We assess whether they’re on track to make the same amount of money or more. Sometimes, if they’re considering hiring new employees, we use budget projections based on historical data. We determine how much revenue they need to bring in to afford a new hire, say, at $60,000 a year. My role is to provide them with the financial insights they need to make informed decisions.

 What do you think keeps more people from getting professional bookkeeping?

 

 Honestly, I think it’s because some business owners believe they can do it themselves. A common scenario I encounter is when they try to handle their bookkeeping but eventually realize they either don’t have the time or the necessary knowledge. Sometimes, if they have payroll, they assume that payroll software will manage everything for them. However, even with payroll companies, there’s a need to go back, reconcile, and ensure that taxes are being filed correctly and payroll taxes are accurate. Tax rates change from year to year, and they might not know how to update these rates at the beginning of the year, which can lead to their taxes being in disarray.

 

Another factor is that some business owners don’t think it’s money well spent. They believe that everything can be automated, but the reality is that you still need a human set of eyes to dissect and revise the data. The value of professional bookkeeping goes beyond just automation; it’s about having expert insight and oversight to ensure financial accuracy and compliance.

 What are the outcomes that you see as a direct result of not getting that help?

 

 Well, as I mentioned earlier, one definite outcome is penalties and fines from the IRS, especially when clients come to me with 2-3 years of unfiled tax returns. They end up facing hefty fees from the IRS. But beyond that, it’s also about ensuring they are charging the correct amount for the products they’re selling and making sure they are spending enough on acquiring their products to sell at a profit. 

 

Without proper bookkeeping, they miss out on making strategic decisions that affect their profitability. Many business owners are solely focused on their bank account balance and the drive to make more money. However, they often overlook the full picture, which includes opportunities to cut costs or adjust pricing strategies. I believe it’s beneficial for them to have their bookkeeping for these reasons. It helps them see the whole story behind their finances, not just the superficial numbers.

 What would you recommend small business owners look for when seeking help from a bookkeeper? What type of qualifications and criteria would you recommend they evaluate?

 

 I would emphasize the importance of experience. It’s similar to hiring an employee within their company. They should check for references to ensure the bookkeeper knows what they’re doing. I would hate for them to hire someone just because they are inexpensive and very junior, only to find out that they can’t deliver what they were hired to do. So, checking references is important, especially because a bookkeeper will have access to your finances. You don’t want to end up with someone who might embezzle from you. They will have access to your entire livelihood.

 

And just like we are now business owners, it’s completely reasonable for them to ask to check our resumes or references. It’s about ensuring they have someone trustworthy and competent handling their financial matters.

I want to emphasize the importance of business owners being in tune with their finances. I always say, “Knowledge is power.” If they understand what’s on their books, they can understand the story of their business. Knowing the financial details empowers them to make informed decisions and guides the direction of their business. So, “Knowledge is power” – that’s the message I always want to convey.

 What would be the next steps to get in contact with you?

 

 They can easily reach me through my website. It’s emeraldaccountingsolutions.com. On the website, they can book a time to meet with me. We can then have a chat about their specific needs and how I can assist them.