Simplifying Your Business Finances with Melanie Barker of Promise Bookkeeping

Meet Melanie:

Melanie Barker is a Christian who has a passion for helping others succeed financially, both personally and in business. The greatest joy is found in using one’s strengths to help others become the best they can become. She has a BA degree in Accounting from the University of Phoenix and is a certified QuickBooks Online Advanced ProAdvisor. 

Melanie started her bookkeeping business, Promise Bookkeeping, four years ago to help small business owners not only take the bookkeeping burden off their shoulders but to also help them understand how the numbers create the structure of their business. Bookkeeping is the part most business owners don't want to do, but it is the foundation of the business. 

She strives to help business owners understand how to view and read the numbers to create a good plan for future growth to continue building their dream.

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For the transcript and show notes:
https://laurakamark.com/77

Transcript

Laura Kåmark [00:00:00]:
Hey, everyone. Welcome to the Be Bold Make Waves podcast. If you're looking for strategy, systems, list building, and marketing tips to help grow and scale your business with ease, then you are in the right place. I'm your host, Laura Kolmark, an email marketing and tech strategist who works with coaches and consultants who love their work, but not the tech. Join me for conversation packed with actionable insights, strategies, and systems to help you take control of your tech and simplify your business. Let's go ahead and dive in to this week's episode. Hello, and welcome to this week's show. For those of you who don't already know me, I'm Laura Comark, Evergreen email strategy systems and setup for coaches and consultants who love their work, but not their tech.

Laura Kåmark [00:00:48]:
I'm so incredibly excited about my guest today, Melanie Barker. Melanie Barker is a Christian who has a passion for helping others succeed financially, both personally and in business. The greatest joy is found in using one's strengths to help others become the best they can be. She has a BA degree in accounting from the University of Phoenix and is a certified QuickBooks Online Advanced Pro adviser. She started her bookkeeping business, Promise Bookkeeping, 4 years ago to help small business owners not only take the bookkeeping burden off their shoulders, but to also help them understand how the numbers create the structure of their business. Bookkeeping is the part most business owners don't want to do, but it is the foundation of the business. She strives to help business owners understand how to view and read the numbers to create a good plan for future growth to continue building their dream. Melanie, thank you so much for coming on the show today.

Laura Kåmark [00:01:47]:
Can you tell our listeners a little bit about how you got into the bookkeeping side of helping businesses?

Melanie Barker [00:01:56]:
So I've always loved working with numbers. It just makes sense. They're black and white. They're wrong. They're right. There's no gray area. And so I worked for the state of Utah for several years. I actually have 23 years in with the state, and COVID hit.

Melanie Barker [00:02:22]:
My job function kind of changed. I was doing more traveling. I was, I'm a single mom. I was homeschooling at the time, and I was having to travel more than I was previously. So I was leaving my son at home by himself, and it just it wasn't working out. And so I was trying to find a different position within the state so I could get to my retirement. And God spoke to me and said, that's not what you're gonna be doing anymore. You're you need to quit.

Melanie Barker [00:02:51]:
You're gonna be doing bookkeeping. This is where I'm taking you. And so I did. I quit within 30 days. I didn't even have a client yet. And so I was just going on faith. I did you know, I used the, Dave Ramsey

Laura Kåmark [00:03:12]:
Mhmm.

Melanie Barker [00:03:13]:
Approach. So I had savings. I had money to carry me through for at least a year. And so I I left on faith and started this business, and and I love it. I love helping individual in the well, the individuals who are the business owners, with their books and know how to read the numbers and why the numbers are important and where how to manip not manipulate them, but, you know, move on to where they so that they know what they're doing with their their business.

Laura Kåmark [00:03:48]:
Yeah. So how did you start? So you just went on going on faith, you went and did this. How did you get your first client?

Melanie Barker [00:03:56]:
So my first client happened to be my neighbor across the street from me. She owns a grooming business, and she had never had a bookkeeper. She was like, I have no idea what I'm doing. She actually started her business, because she has a disabled daughter, and she couldn't go out into the workforce to help provide for her family. So she started the grooming business. She goes, I never expected it growing what it is. It was just a way to bring in a little extra income, and it just kept growing and kept growing. And then she found that she was she needed help because she had no idea what she was doing with the books.

Laura Kåmark [00:04:40]:
Yeah. It's I mean, I I have a background in financials of I worked for an agricultural lending company when I was in corporate, and like you, I love I love numbers. I love that it's black and white. I love that you balance out. I mean, we at the end of every day, we balanced out the numbers for all the branches, all the money that come in, all the payments, and it had to equal out to what it should. If we were off by 1p, we would all pool together and, like, print things out and start going through with our highlighters, trying to find that one penny or 3¢ or the transposition of what was off. And if it feels good to balance your to balance everything, it makes that was always a very settling feeling for me, and it was, I know, for the rest of the department. We all were very number oriented.

Laura Kåmark [00:05:25]:
So it's interesting to me now as a business owner who also has lots of friends who are business owners, and that the thing I hear the most is exactly what you talked about, when I read off your bio. It's the thing that I hear business owners outsource the most because they don't like doing their bookkeeping. They don't wanna look at their numbers. They it doesn't make sense to them. They don't know what they should do. They're scared to look at it, and that's not what we should be doing. Can you talk a little bit about that, please?

Melanie Barker [00:05:56]:
So I think in in my experience is that they just don't understand what they are. With clients I've worked with, it's it's like, no. I want this here. And it's like but you can't put it there because that's not what that that is. It's like a liability is not an expense. It's a liability. And so and that's on the balance sheet, not a profit and loss. And they don't understand it.

Melanie Barker [00:06:20]:
They just you know what? I paid this money out, so I expect it to be on my profit and loss as an expense, but it's not. And so it's just teaching them to understand how to read these numbers that are going into their business and how it affects the business, why why they're important to know, like, your I'm gonna use construction as an example because I I love working with construction. I I know construction. So, anyway, like so you have a project. And if you don't buy if you buy the product and you just put it all as cost of goods and you don't divvy that between each project, you have no idea if you made any money on that project. And that's where a bookkeeper comes in to to show you how to put that information into the books so that you can see where your profitability is. Are you doing, you know, remodels and you're losing every time? Then you need to increase your prices. You know? And unless they can see that on paper, they have no idea.

Melanie Barker [00:07:28]:
They might be having an overall end income profit, but they don't know which types of projects are getting them that income. Yeah.

Laura Kåmark [00:07:40]:
So when so for our listeners, there's one thing I wanna touch on that I've heard a lot of people will do, and I'd like to hear your opinion on the first step they should take. A lot of times, entrepreneurs start their business and like your neighbor. It wasn't supposed to be a big thing. It was just some extra money coming in. And so a lot of times, I've seen I know that their their money the business money flows right into the personal account. Yeah. If if someone's listening in right now and they have one bank account set up, that is their personal bank account and all their personal or their business, Stripe, PayPal, anything they're getting, their business stuff is going to that same account. Can you talk a little bit about if they should be doing that?

Melanie Barker [00:08:27]:
No. That is a big issue. So I will say that most people, to begin with, actually do start out getting a business a separate business account. The only problem is then that business account ends up becoming more like their personal account because they don't separate. So you really need to keep your business and your personal stuff totally separate. If you need money from the business to pay your personal bills, transfer the money from your business account to your personal account and pay the expense. That's I I would probably say a good 80%, 70% of people. And it's the IRS frowns upon that.

Melanie Barker [00:09:17]:
The locals, you know, state tax commissions frown upon that. And if you're audited, that's gonna be a big red flag. So it is very important to keep them separate. And like I said and and if it is a personal expense that you oh, whoops. I used my business account. Either let your bookkeeper know or if you're doing your books yourself, you need to, post that as an owner's draw so that that's showing that, yes, I use business funds, but it's personal. So so there is a way to get around it, but you don't wanna keep doing it because, like I said, it is a red flag for the IRS and for the tax commissions.

Laura Kåmark [00:09:58]:
And so as I'm like, I'm a sole prop. I'm not an LLC. I'm not an s corp. I'm just a sole prop right now. Just little old me. When I do when I pay myself from my business account, how should I be expensing that on the business side when I transfer it over to my personal? Is that also going to be, like, an owner's draw? Is that a paycheck expense? How how do you

Melanie Barker [00:10:23]:
As a sole proprietor, you do not take a paycheck because your business is actually just an extension of yourself, of your own personal taxes. They're the same. But to show that different that that's a personal draw, you would just do it as an owner's draw as a sole proprietor. It's not until you are in as a corporation that you would start giving yourself a paycheck. Okay.

Laura Kåmark [00:10:49]:
So then another thing I wanna talk on I I just love this so much. I've been so excited that you're coming on ever since I met you. So just a little background for our audience. I recently met Melanie at the event I talked about that I went to in April. I talked about it in my in April income report that is published on the podcast, at the event in Las Vegas, Experts Connect with Renee Rebar. And when Melanie said, I'm a bookkeeper, I said, oh, you have to come on the show so I could talk numbers to you and talk to share you with my wonderful audience, and talk all things bookkeeping. So I'm so excited you're here. But I wanna know for someone who is listening and they are like, I am terrified of my numbers.

Laura Kåmark [00:11:35]:
I don't know what it's supposed to do. I don't know what it's supposed to mean. What would be, like, the first step that they need to do when they're looking at their numbers?

Melanie Barker [00:11:47]:
So it depends on how much experience they have and what knowledge they have. Honestly, if they have no knowledge, then I would start googling. Start searching. Start, Intuit. QuickBooks have a lot of good information on on how to do basic bookkeeping. And just and if because I know some small businesses, they're not where they can pay for a bookkeeper yet, and and that's understandable. So but there are a lot of good resources online that you can can search and find out how to do the basic bookkeeping, where to put the numbers. Because there is there's different places for each type of expense.

Melanie Barker [00:12:35]:
A liability, you've got assets, equity accounts, revenue, and they all everything feeds into those things differently. And so you really do need to have a background, a little bit of knowledge on that. And so I I I mean, really just there's a lot of really good YouTube videos, people who produce stuff. I don't know anybody off the top of my head, but yes. And so that would be what I would do first is is really research it and see what is supposed to be where. And QuickBooks into a QuickBooks is a really good resource.

Laura Kåmark [00:13:16]:
You so you're a QuickBooks pro adviser. I personally use QuickBooks online for my business, for my husband's business. I've been his bookkeeper, for many years now. I love the stuff. I say sometimes if I could go back and start my business over, I probably would've I should have been a bookkeeper because I just love it. I I just admire everyone who goes and does that because I'll I personally love it. I think it's a lot of fun. I look forward to when I go and balance the books each month, but I also know I am not the norm of business owners because so many people don't like to look at their numbers.

Laura Kåmark [00:13:52]:
But what do you say how often should someone who is doing their own books, how often should they be going in and reconciling, which is just really matching up the transaction showing in your bookkeeping software and making sure it matches with your statements that are coming from the bank account, the credit card, all the places, and making sure everything matches up, so that all the transactions are accounted for. When how often should someone be doing that in a perfect world? Again, I recognize we all, you know, we all need to be sending that weekly email, and not everyone does. It's okay. We're all just trying to do the best we can. So in a perfect world, how often should someone be going in and doing that?

Melanie Barker [00:14:32]:
In a perfect world, monthly. Okay. So I I primarily do it's called after the fact bookkeeping. Mhmm. So I go in at after the end of so right now, this month, I'm working on April's books for my clients. So I go in. I I categorize all the transactions to where they that's come in through the bank and categorize those, do all the reconciliations, request information from the owner. Because that's another thing is it is a partnership.

Melanie Barker [00:15:04]:
And much as an, business owner wants to just throw the bookkeeping away, it is still a partnership because we're not going to know where every expense that they that that they have that it goes to. Right? If they buy for something from Amazon, That's a huge array of areas that can be categorized too. So, so, yeah, so once a month would be, like, ideal to rec categorize, reconcile once a month.

Laura Kåmark [00:15:32]:
Okay.

Melanie Barker [00:15:33]:
Be in there every every day, every week. So and depending on the size of your business, you can do all that. Like, I guess it depend it really does depend. One day, 2 days, something like that. And if you know because you know what categories everything needs to go into, you can do it much faster than your bookkeeper can because you the bookkeeper, again, has to ask the the client where they'll go. So it could take could just wait for the client to get back to us on that. Lot of

Laura Kåmark [00:16:06]:
back and forth.

Melanie Barker [00:16:07]:
Yes. It is back and forth.

Laura Kåmark [00:16:10]:
I know. I'm lucky because my husband's my client, so I would just call him in and out or he's all I'm like, what is this place? What is this for? What's this transaction? What was this?

Melanie Barker [00:16:20]:
Yeah. Yeah. My neighbor across the street is like, can you please come over here really quick so we can look at a few things?

Laura Kåmark [00:16:27]:
So I have a question kinda going back to your construction Okay.

Melanie Barker [00:16:34]:
Knowledge?

Laura Kåmark [00:16:37]:
Example. So Oh. I have a question going back to your construction example that you gave earlier. And so if I have an invoice for material, that came through, and maybe I actually have 10 of them, and it's for multiple jobs and the jobs the the each order might have multiple jobs entwined in it because the material might be used for multiple jobs. How do you figure that out?

Melanie Barker [00:17:05]:
So in the accounting software, you can take that expense and you can split it out. And you you would want you know, for me, I would have to ask the client, where do all these go to? And then you just split that out. And then I actually create a spreadsheet that I utilize. I have a construct I have client in construction, and so I do this. So I have a little cheat sheet spreadsheet for the tax to divvy it up between the individual items so that I get it, you know, exactly which one goes to which client.

Laura Kåmark [00:17:39]:
Okay. I I ask that just because my husband's business that I'm doing bookkeeping for. That's one of the issues I have. I'm like, this is for too many people.

Melanie Barker [00:17:48]:
Yeah. You can just do a split, and you just list them all on those, and it will And then on the customer line, you would put, you know, who the customers were.

Laura Kåmark [00:17:57]:
So in terms of because that made me think too. Oftentimes, I don't get copies of things because it's all sent through email, and I just know that my husband has it. So in the event of the audit, we will go back and dig through, which is probably not the smartest way to do that. Can we talk a little bit about receipt management and any tips or advice? What do we need to keep? I've heard friends say, like, oh, I don't need to keep any receipt that's under x dollars. I know I've told my husband multiple times when you get that receipt for when you go to get gas, you gotta get me an a receipt for backup. Can we talk about that a little bit?

Melanie Barker [00:18:39]:
Well, yes. You you really do need receipts. I actually have a client who was just audited, and that was the issue that the auditor had is that they did not have receipts for everything. And so, yes, it is very important to keep your receipts. And however you wanna keep them, I know some software programs allow you to take an image of the receipt. I'm still not sure if that image of that receipt is acceptable or if you actually have that access to the receipt. I'm not I'm not delved into to research that and find out. Because I I heard one that one person saying that that wasn't acceptable to the IRS as a receipt, so I don't know.

Melanie Barker [00:19:25]:
I would think in our electronic age that that would be acceptable. So I but I just I haven't really worried about it because I tell my client they're the ones responsible for keeping the receipts. So and then, like, I have I will use my neighbor as the example again. I I she pays me to do a lot more than just a regular bookkeeping, so I do keep all the receipts. I do track all of that, and and I will actually just put in my little binder. So I have a just a 3 ring binder, and I just have, the clear plastic sheets, and I just put all of the seats in there. They're not in any kind of order. They're just per year, and she has a dip one binder for each year.

Melanie Barker [00:20:16]:
So if she's ever audited, she can pull out her binder, but all the receipts are there. And and then I she keeps paper records of all of her, business transactions. So I have all of that in there divided by month. And so that's I mean, really, that's all you need is is a 3 ring binder with all your stuff in.

Laura Kåmark [00:20:40]:
Yeah. It's it's a lot it's a lot of paperwork.

Melanie Barker [00:20:43]:
It is a lot of paperwork. And that to me, I found with the I you can also put it in a shoe box. Yeah. Because they'll stack nicely in a closet somewhere.

Laura Kåmark [00:20:52]:
I get the, the big plastic filing boxes, the clear ones, and then I do hanging files, and then I do monthly. My husband gets all has a lot of receipts that come through that are, like, from going into places and buying things and things that get mail the invoice gets mailed to us, not electronic. So there's a lot. We have a lot of paperwork that we're trying to go through.

Melanie Barker [00:21:16]:
So the like I said, the receipts, QuickBooks online is one of those that you can snap the receipt, and it will keep it in the file.

Laura Kåmark [00:21:23]:
Yeah. It's some days, I think I'm gonna do that. I've had I'll have years where I'm like, I'm just gonna scan everything, and then by February, I'm over it. I'm like, it's fine. I'll just put it in the files, and it's fine. Right. So I wanna know when someone's looking at, like, the p and l, the profit and loss Mhmm. Can we talk a little bit about because it's it's can be overwhelming.

Laura Kåmark [00:21:52]:
There's a lot going on there. It has all your numbers that come in. It has all your numbers that come go out. I know there's, like we just had a thing with, the insurance and needing to get insurance renewals done. And my husband wanted to know, you know, where's this number? And I'm like, I don't know if that's the number from before cost of goods sold or the number for after cost of goods sold. I don't know which number they want. Like, I'm like, you have to call the insurance company and ask them which they want because I don't know the difference.

Melanie Barker [00:22:23]:
And they probably wanted the after gross cost of goods. Right? Because did they?

Laura Kåmark [00:22:30]:
I don't know. I didn't I need to

Melanie Barker [00:22:31]:
ask, I guess,

Laura Kåmark [00:22:32]:
the follow-up question. Because you're

Melanie Barker [00:22:35]:
so the so the top of the profit and loss, you have your revenue, and then you have your cost of goods. Well, the cost of goods is what the actual expense was to make that plot. Sorry. I talk with my hands. So your gross profit or your yeah. Your profit is after the that cost of goods because you couldn't have had your product unless you paid for the stuff to make the product. So your gross profit is after the cost of goods.

Laura Kåmark [00:23:05]:
And I think they were asking for, like, sales. And I'm like, well, that would be the top number.

Melanie Barker [00:23:09]:
So the sales would be the top line.

Laura Kåmark [00:23:12]:
I said if they want

Melanie Barker [00:23:13]:
So that I know. Then, you know, you guys that that would be one that I have a question because you want gross sales, or do you want gross profit? Yep.

Laura Kåmark [00:23:22]:
And then what are all the numbers after that?

Melanie Barker [00:23:24]:
So then after so the top part is your your profits. And then after that comes all of your expenses. And you can set up your chart of account, how ever is best for your business to view those numbers. So there are basic categories, your payroll categories, your, you know, office supplies, administrative costs. But if you need some of those things broke out so that you can see in your business where those expenses are going to, then that's where that's where the nitty gritty comes in. It's down in the expenses and where all those line items where is my money going? That to me, that's I mean, your income is good is is important, but the expenses and having those broke out and so that you can so you can see where where they're going. Are you spending too much for rent? Are you spending too much for, office supplies? And what are you including in your office supplies? Are you including software? Because nowadays, we have all the monthly software fees. So do you think you should have a different line item for that? You spend a lot of money on that in your business.

Melanie Barker [00:24:45]:
So that's I mean, each business is gonna look different as far as the the expenses. And then after the expenses comes any other type of expenses and income that and this is also the accountant part of that is where did that come in on your tax form? Because it should be set up to where it would match the tax form. So, like, interest income is gonna come at the very bottom because that's a different line item in your tax form. It's not gross income because you didn't earn that. It was just residual income. So that's down at the bottom. And and, like, home office expenses, that's a big one anymore. And they should be down at the bottom because they are treated totally different as your, for expenses on your tax forms.

Melanie Barker [00:25:43]:
So they should be down at the bottom. Vehicle usage. All of those expenses should be down at the bottom. Separated out because, again, it depends on your business, how that vehicle expenses treatment on your tax bills. And so it makes it a lot easier for your your CPA to go in and do your taxes. Yeah. And then at the very bottom is your is is what you earned at the end of the month, and we all hope that's a positive number.

Laura Kåmark [00:26:14]:
We do. I found because I'm I am one of those people that goes in multiple times during the month and tries to, like, update all my things. I like to know where my numbers are at. I have with my Stripe transactions for a long time. I let it just feed in, and I didn't do it. Now I do a journal entry so that I can see how much because I wanted to know. Like, I was like, actually, I did make more, but I paid more in when but I had fees, and I was just putting in the final amount because that was what that

Melanie Barker [00:26:42]:
journal entry to add the fees back in at a profit, and then it that out. Mhmm.

Laura Kåmark [00:26:48]:
I was like, I did make more than what this is showing. And so then I starting January a couple years ago, I started doing the journal entries for it so that it would I wanted to know what my numbers really were because I like to go in and compare. I compare my current month to I'll do the current year to date, and I'll split it out monthly to kinda get an idea of, like, how much came in each month, how much has gone out each month, what are my numbers at. I'm always trying to find ways to get my expenses down. I spent a lot of time the last couple years getting software that's onetime payment software, lifetime software, you know, switching over to Thrivecart, from MemberVault. MemberVault's a fantastic platform. I love them. But it's time to make the switch to a onetime payment and try to keep some of that software expenses down because it gets, I mean, you know, I have an online business.

Laura Kåmark [00:27:37]:
I work out of my home. I sometimes I'm surprised at how much my expenses can be, just from all this stuff. There's a lot of shiny objects out there.

Melanie Barker [00:27:47]:
Right. And so that's and that's exactly where you start looking and to cut costs. If you're really struggling, you're gonna look at your expense section. And that expense section is only as good as what you've inputted. Yeah. So if you've just put it all as expense I mean, I have I I have a client who says, I want 4 categories and that's it. I don't care to have it broke out. That's not what I want.

Melanie Barker [00:28:14]:
Okay. So that's what I do, but, you know, that's not gonna show him a lot if he needs to see that in the future. Yeah. So so you I mean, the owner of the business really drives how that chart of account looks, and you can work with your bookkeeper with that and determine the best way to break those out so that you can see what's what your business is doing. Because unless you can see those numbers, you have no idea.

Laura Kåmark [00:28:46]:
And that's so true. I mean, knowing because I know for me sometimes like, it it's been interesting. This year, I started doing I was challenged by one of my coaches to do an in a monthly income report to really, like, review the numbers, review my goals for the month, my goals for the next month, like, what I accomplished, my wins, all the fun things, lessons learned. And it's been really interesting. It feels very vulnerable to share that. I've gotten a lot of really great feedback from it, though, because I I mean, we're nosy. We are all such nosy people. We love seeing the inside of people's houses.

Laura Kåmark [00:29:19]:
We like seeing the back end of their business. I wanna know people's numbers. When someone talks about, you know, this $500,000 launch, I'm like, yeah. But what was their ad spend? Like, no one talks about what the profit was after the expenses. Everyone always talks about, and that was something that I always struggled with. And, again, I think it's going back to, like, numbers and being black and white with the things where people would say, like, what's your income goal? I'm like, well, are we talking my sales goal or my revenue goal?

Melanie Barker [00:29:50]:
Right.

Laura Kåmark [00:29:52]:
Are we talking about what we want my profit? It's for me, it's always a profit goal. It's never been a sales goal. It's a profit goal.

Melanie Barker [00:30:00]:
Exactly. Because that's what we get to keep. Yeah.

Laura Kåmark [00:30:04]:
So it's it's been really interesting, to put that information out there, but I have gotten a really good feedback. But the people enjoy hearing the back end of it. And it's again, when I go back and look at my numbers, I try to remember, like, look at my my stuff and look at how far I've come. I went back and looked and compared from the beginning of when I started using QuickBooks, which was in 2018 and did I ran a report for, like, everything from then to right now, and that was fun to see how much I'd I all my sales and my profit. I'm like, okay. Now I feel like I'm doing something a little more exciting because sometimes, you know, we're in this roller coaster business model of the income fluctuates so often, at least. I know for me, it sure does. I don't have a lot of reoccurring monthly, retainer clients anymore.

Laura Kåmark [00:30:52]:
I do a WordPress protection plan where people who need WordPress maintenance and the back end stuff updated, and they're on a monthly reoccurring charge for me to do that. But other than that, it's based I do VIP days. And so sometimes I have projects, sometimes I don't. And sometimes I'm gone traveling to events in Las Vegas, or my kids are on spring break, or summer's right around the corner. And I don't have so much work time, and I definitely see that reflected in my numbers. But I know that because I look at my numbers.

Melanie Barker [00:31:25]:
Right. And that's that's the important thing is to look at your numbers and see what's happening. So

Laura Kåmark [00:31:33]:
Is there anything that you find that maybe has been, like, an moment for a client that you've worked with where maybe they were struggling with some of their their numbers or looking at their numbers. And has anyone had kind of like a, oh, this kinda makes sense now?

Melanie Barker [00:31:51]:
I will say my first client. She, you know, she didn't She still doesn't like numbers. She just is not it it just not who she is. And she but she's understanding it more now. And she's like she she gets why you need to do it, and and it's it's helped her in her business immensely. Because when I first, you know, got her, I'm like, you're not making money because you're not charging enough. And she's like, but I don't wanna charge with my clients more. And I'm like, but what is everybody else in our area charging for your service? You're you're way undercharging.

Melanie Barker [00:32:35]:
And I understand you don't need to be up to where they're at, but you do need to charge more or you're not going to you know? Because she was, at that time, getting to where she really needed to hire somebody to help do the grooming. And she's like, but I can't afford it. I'm like, that's because you're not charging enough. You charge more than you can get somebody to help. And so it's it's it's been a process. I mean, she's been my client for 4 years. Mhmm. And she went from, like, I wanna say basically, she'd more than doubled her her end profits, and she now has 3 additional groomers.

Melanie Barker [00:33:21]:
She's in her own building. She's not out of the garage of her house. So you know what? I I have really enjoyed watching her grow, and it was all because we looked at the numbers. Before that, she didn't know what she was doing. It was just whatever. At the end of the year, I'll just throw all the receipts together and give them to the account room to see what happens. And so now that she's see this, she's more mindful of what she's where she's spending her money and and everything like that. You know?

Laura Kåmark [00:33:57]:
So with clients like that, what sort of thing are you are you getting together monthly and going over certain reports? What if so, what reports are those? Can we kinda dive a little into that?

Melanie Barker [00:34:12]:
So we so I produce a monthly re financial reports, which includes a profit and loss, a balance sheet, and I don't really do a cash flow statement unless they ask for that. So the problem profit and loss is, you know, income minus expenses, what's your gross rev or your profit. The balance sheet, this is the one that really throws people a lot. They really struggle with the balance sheet. People understand money comes in, money goes out. Here's my end. Mine. So the the balance sheet has your your assets and your liabilities and your equity.

Melanie Barker [00:34:58]:
So assets is your buildings, vehicles, any large purchases. The standard for the IRS is any fixed asset over $25100. Now most businesses, it depends on what they work at with their, account, where that line, that threshold. If it's lower than that, it could be $500. But the IRS standard is 25. Anything over $25100 if it's a a fixed asset, not like a supply for cost of goods, but an actual asset like a table, desk, furniture, stuff like that. So that would go on the assets. That's gonna tell you, looks like your house.

Melanie Barker [00:35:48]:
Everybody can understand your home. That's your home. That's your personal asset is your home. And how much is how much is it really worth? So here's the value of that asset, but then you have the liability, which is the bank account, the mortgage. So you have a mortgage on your home. So, really, your assets only they value that 400,000, but you owe 200,000. You only have 200,000 as an asset. And so that's so you have your assets there.

Melanie Barker [00:36:20]:
And a lot of people don't they when they're first starting out in business, they don't understand that those assets have to go in the the balance sheet. And then you have liabilities, which are loans. What do you owe people? And so that's gotta go there. So if you make a a payment to a loan, it it's not an expense for the business. It goes towards the liability that you took out that loan to pay down that that liability of the business. Because, basically, in essence, you bought something which became an asset. This is really getting complicated here. It is.

Melanie Barker [00:36:56]:
It is complicated.

Laura Kåmark [00:36:57]:
It is. It has there's pieces that can be so simple, but when you get into some of the nitty gritty, it gets complicated.

Melanie Barker [00:37:04]:
I don't know. And that's where that's where a bookkeeper comes in, is to understand all that. So then you've got your liabilities, and then and then the last part of your, balance sheet account is your equities account, which is where, like, if you're taking a draw out for yourself, that goes to the equity. So it's how much did you invest in your business, how much have you got taken personally out of your business. That's what the equities account is. So and then, you know, another thing with liability is like construction. So a construction company, say, they take a draw, to begin with, they want 50% upfront. Mhmm.

Melanie Barker [00:37:47]:
So they go buy material. Well, that has to be held in a liability account because it's really not their money until it's spent. So if they get $10,000, they go buy $8,000 in material. It would come out of that liability account to pay for those materials because it's being held in this liability account because it's not your money until you spend it. And the same with, like, the the labor part of it. So if you invoice your client in construction, you know, 20% of the cost of the whole project, then you would pull that out of whatever you took upfront and then the additional amount you would invoice to collect more money from the client on the job. So it can get really complicated.

Laura Kåmark [00:38:33]:
I know. I see that with my husband's business. He has a, custom boat enclosure canvas. He sews and makes custom things, and it's his bookkeeping's hard for me. There's a lot going on when I do mine. It's so it feels so much easier because I don't have a lot of those layers to my projects that I'm doing.

Melanie Barker [00:39:00]:
Yeah. Service industry, like marketing, sales coaches, any kind of coaching like that, it's way easier accounting. Yeah. And, like, retail gets more complicated. And that's the other thing. Retail. Cash. If you're dealing in cash, you need to track that, and it needs to be deposited.

Melanie Barker [00:39:25]:
It's if you collect cash, then your point of sale system should be recording, you know, this is how much cash was collected, then you should see that being deposited into your bank account. And if not, then where did it go? Yeah. And that that that's a hard I mean, because they people like to just take their cash Yeah. From their business. It's it's my it's my money. It's my cash. Well, no. It's really your business' cash.

Melanie Barker [00:39:53]:
So yeah.

Laura Kåmark [00:39:54]:
Oh my goodness. So good. Melanie, I would like you to tell our listeners how what is your favorite way to work with people? What kinds of businesses do you like to work with, so they can find out more about you and how you're helping everyone get their bookkeeping in alignment.

Melanie Barker [00:40:12]:
So I actually I've not really found a favorite business. I I I've worked with several businesses, and, well, obviously, you know, coaching, marketing service type industries, they're they're obviously my favorite. But I do I love construction, and that's because I have a background knowledge of construction. And so it's easy for me to work with the client to to, what, help them through that process because it is more complicated, my county, and whatever. Just really any I I like all businesses. Do They are all the same. I mean, it's all profit and account you know, it's just a matter of how you're doing the book.

Laura Kåmark [00:41:02]:
Do people need to specifically be already using QuickBooks? Do you only work in QuickBooks? Do you work in some of the other accounting accounting bookkeeping systems?

Melanie Barker [00:41:13]:
So QuickBooks online is pretty much all I I work with. I have ventured out and just recently did a job in another software and yeah. It it you know what? I you know, you always complain about what you have until you work with something else, and then you're like, oh, now I this is so much better. Yeah. So I don't know. I I usually try to get my clients to to switch over to Intuit because for one thing, it's gonna be faster for them. For me, cheaper because I can do it faster because I know I

Laura Kåmark [00:41:57]:
love that. I could sit and talk to you about this all day long. This time just has flown by. I do have one final question that I ask everyone who comes on the show, and that is what is one piece of advice you would give to someone who, when they are growing and scaling their business, that would help them be bolder, be louder, and make waves?

Melanie Barker [00:42:24]:
To definitely look at, you know, the numbers. And that's really being bolder because businesses owner felt like looking at the numbers. So doing that and by doing that, you're going to grow your business and and make ways in your industry because you'll know what you're doing.

Laura Kåmark [00:42:52]:
I love that so much, and it's so true. Melanie, thank you so much for coming on the show today. Can you tell our listeners where they can come find you, hang out with you, find out more about your services, maybe reach out to you and be like, help me. Help me. I need you in my life.

Melanie Barker [00:43:07]:
So I don't have a lot of an online presence.

Laura Kåmark [00:43:10]:
I do have a

Melanie Barker [00:43:11]:
Facebook page. I'm not very diligent at doing anything in that. So you can reach me through my email, which is melaniec@promisebookkeeping.com, or you can reach me by phone, 435-893-5812.

Laura Kåmark [00:43:32]:
Wonderful. And I will link both those in the show notes. Thank you so much for coming on today. This was such a great conversation.

Melanie Barker [00:43:39]:
Thank you for having me. I love being on the show.

Laura Kåmark [00:43:44]:
Thanks so much for listening to this week's episode. Be sure to check out the show notes at lauracomark.com slash podcast. And if you're ready to get more sales without more work, save time so you can focus on the work that you do love, and automate and simplify the back end of your business, grab my free resource, how to get more sales from your email list on autopilot. Head on over to lauracomark.com/email. And don't forget to follow the show and leave a review in your favorite podcast app. It helps get this show in front of other business owners who want to grow and scale with ease. Thanks again for listening. I'll see you in the next episode.

Laura Kåmark [00:44:26]:
Bye now.