BABY STEPS - STEP 2 OF A 3 STEP ACTION PLAN FOR MANAGING CASH

For a good twenty years, I managed cash daily, weekly, monthly and quarterly at privately held companies I worked for.  Consistently working cash flow so we were prepared for anything.

Step two for managing cash is using a weekly cash management tool.

This is a 52 week spreadsheet that tracks cash flow going in and coming out of your bank accounts. General checking, payroll account (If you have a separate account) savings account, and line of credit. In addition, this spreadsheet tracks accounts receivable, account payable and any credit card debt you may carry. 

Using this tool will have you looking at your accounts consistently and the tool allows you to manage and plan, when you need borrow from a line of credit, pay down the line, and or transfer money into savings.
For the gym, we have a savings account and we sock $500 to $1000 each month to cover the semi-annual real estate property taxes.  In addition, if there is more than enough we will put additional funds aside to cover new equipment for the gym.


Why manage cash weekly? This is the path that provides knowledge and direction for your financial goals for your business. This is so you know where you have been, where you are and see where you are heading at all times. Knowledge is power. Mapping out cash coming in and going out weekly, allows you to see and plan what is needed.


A question I am constantly asked - Why do I need to manage cash flow daily when I use QuickBooks.?


Great question - the answer - CASH is KING. Cash is worked daily, weekly, monthly, and quarterly.  Cash is the lifeblood of every business. If you don't manage the cash coming in from accounts receivable and going out, accounts payable you run the risk of putting yourself out of business.  When you don't manage sales and accounts receivable you run the risk of missing income. (See previous post ) If you are not managing your expenses. i.e. accounts payable you can run the risk of negative circumstances where you have to scramble.  The numbers are only information, with that information, you make choices and decisions how to move forward.


A short story about cash flow. Back in 2008 I was working with a company that sold goods wholesale to large retailers.  There was one company that we had to constantly monitor as there were rumbles of bankruptcy in the air. Frightening, especially when there was over $500k in outstanding receivables. They continued to make promises to pay, however at the end of June we were notified they filed for bankruptcy protection. 


The good news, we had one advantage, our product the business was selling, was their best seller. They needed our product.  I immediately created a letter to the President of the company that filed bankruptcy stating all sales will be paid in advance by a wire. The President agreed. How did we do with cash flow? The cash sales from the bankrupt company funded our growth as the business grew 74% that year. You need cash to grow.


Your business will fail with poor cash flow management, so why run the risk?

Create that new muscle, a new habit and learn how to work your cash flow differently.  Cash happens right now, in this very moment when you receive a payment or are purchasing goods or services. Working cash daily and weekly forces you to look at and plan.  You are the CEO of your business and the CFO. Lead your finances as you lead your business.


Remember, CASH is KING, so you need to know where you are at all times.Creating simple, easy baby step habits opens the door to new possibilities for you and your business.

Next is step three - Cash Flow Management - Planning and mapping out sales i.e accounts receivable, expenses, i.e. accounts payable and credit card debt weekly.


Get in to action, and get cracking on managing your cash daily. If you have any questions or need help with managing your cash, reach out and ask for help, e-mail me at d.rosenfelt@cfomadeeasy.com to set up an appointment to discuss your needs.

Warmly -


Debbie Rosenfelt
President/CFO

BABY STEPS - STEP 1 OF A 3 STEP ACTION PLAN FOR MANAGING CASH

I was reminded back in the summer of 2012 in a blog post by Jeff Walker, creating success happens in baby steps.  I needed that reminder today, to remind myself I am on a journey to building my business and it doesn't happen overnight . . although I would LOVE the success to happen yesterday. A heartfelt YES, and you?

So I thought, why not create a post that supports you the leader, entrepreneur, business owner, CEO, a baby step action plan for managing the heart of your business, cash.

Step #1 - Manage cash daily. 

How you ask?

With the daily, 12 month cash register.

Why manage cash daily? This is the path that provides direction for your financial goals for your business. This is so you know where you are at all times, and so you see where you are heading. Mapping out cash coming in and going out daily, allows you to see and plan what is needed. You know when monthly recurring bills and loan payments happen, so map it out and plan how much cash you need daily..

A question I am constantly asked - Why do I need to manage cash flow daily when I use QuickBooks.?

Great question - the answer - CASH is KING. Cash is worked daily, you need to know how much cash you have on hand at all times. YES, that means creating a new muscle, a new habit if you want to figure out how to work your cash flow differently.  Cash happens right now, in this very moment when you receive a payment or are purchasing goods or services. Working cash daily forces you to look at and think of what is coming up next. If it is next week, the end of the month, next month or next quarter, etc.

When I was working with the privately held corporations, as the CFO I worked and planned cash daily, always looking at each day, each week, each month and each year. My team worked on and updated the financials in the accounting software used. AR, AP, monthly transactions, etc were worked on thru out the month.  Cash and financials are two different animals, cash is cash and financials are the whole picture of the financial story for the business.

Even now, with our gym business, we manage cash daily with the daily cash register. IT's like a checkbook in Excel, that holds 12 months of info in one workbook. Each month has it's own tab, and each worksheet is linked to the next. Every day we look at cash and manage it daily. Each day's deposits are mapped out and updated daily at the end of the day or the next morning. Recurring payments such as payroll, trainers commissions, monthly loan payments, purchasing supplies and advertising. By doing this we are able to make a decision how much to transfer to savings each month.  We put aside the bi-annual property tax payments or plan for additional equipment purchases.  I also balance the bank statement to the daily cash register which is a check and balance system for balancing cash to QuickBooks at the end of the month.

Remember, CASH is KING, so you need to know where you are at all times.

Creating simple, easy baby step habits opens the door to new possibilities for you and your business.

Next, I will share step two - Managing cash weekly with the cash management register.

Get in to action, and get cracking on managing your cash daily. If you have any questions or need help with managing your cash, reach out and ask for help, e-mail me at d.rosenfelt@cfomadeeasy.com to set up an appointment to discuss your needs.

Warmly -


Debbie Rosenfelt MBA CPCC
President / CFO.

WHAT ARE THE TYPES OF ENTITIES

Super EXCITED right now.  Just completed an interview today with Cindy Ashton at Speaker Stardom to support her peeps on creating a solid organized financial foundation.

I went through six of the seven steps of the "How to Be Your Own CFO" 
(Click on the above link to grab your own copy.)

I thought why not share it with those who want to start a business, or who are currently in business  and want to create a solid organized finanacial foundation and gain a CFO's perspective to learn what you need to support a thriving business.

Ready, for creating a solid organized financial foundation?

Step #1  Create an entity:

So What are the types of business entities?

There is no one perfect choice for any business. You must determine which of the options best fits both your current needs and your business plans. Some of the things you’ll consider include:

• The cost and complexity of creating and maintaining the business structures
• Your current income tax situation
• The potential risks and liabilities of your Business
• Your investment needs and income projections

The different business structures include:
• Sole proprietorship
• General Partnership
• Limited Partnership
• Limited liability company (LLC)
• S-Corporation
• C-Corporation

I will provide information on the three highlighted in red since I have personal experience with the three. 

The Sole proprietorship is the most common form of structure in the US for one-person businesses. You don't have to register with the state, pay annual state fees, nor do anything else special other than obtain the required business licenses. You are the business; and while this generally makes paperwork much easier to do, remember that you may end up paying more in taxes with this default option, and you'll be personally liable for all business debts and obligations.

The pros - it's easy and simple, you just need a business license, and of course a separate bank account and business credit card.

The con's - You may end up paying more in taxes and you'll be personally liable for all business debts and obligations.

Limited Liability Companies (LLCs) were a gift to small businesses. Not only are they less formal structures than corporations to manage, they provide their shareholders with the liability protection of corporations and the flexibility of deciding how the business will be taxed.

By default, a single member LLC will be taxed as a sole proprietor and a multi-member LLC as a partnership: the profits or losses will flow through directly to the members. However, you can elect to have an LLC taxed like a Corporation, either C or S. With these tax elections, you get all the benefits of being taxed as a corporation together with the greater simplicity of managing a less formal structure.

Although an LLC does not require the same formal paperwork as a corporation, bear in mind that the liability protection of the company is based upon the fact that it is an entity separate from its owners. To prove that this is the case, the company must be run professionally. All professional organizations document decisions; so don't forget the paperwork altogether.

The pros - LLC's provide their shareholders with the liability protection of corporations.

The con's - Single member LLC's will be taxed as a sole proprietor and a multi-member LLC as a partnership: the profits or losses will flow through directly to the members.

Corporations (S Corp and C Corp) Unlike partnerships and sole proprietorships, corporations are independent legal and tax entities. From both a legal and tax perspective, the company is completely separate from the people who own, control, and manage the company.
The primary difference between an S-corp and a C-corp is how the profit or loss of the corporation is handled.
The C-corporation pays income taxes in its own right. Shareholders of the C-corp pay taxes only on what they take out of the corporation in the form of salaries, bonuses or dividends. The S-corporation, on the other hand, may pay some state and local tax in its own right, but it is primarily a pass through entity, passing the net income or loss to the individual shareholders/owners, who report it on their personal taxes.
A C-corporation exists only in law. Like an individual, it can incur debt, own property, sue and be sued. It files taxes as a separate entity (like an individual) and continues its existence despite changes in ownership or management.
Perhaps the best aspects of a C-corporation are the large number of tax deductions that can be taken and the range of benefits that can be offered..

There are only three ways to get money out of a C-corporation prior to dissolution:
1. as W2 wages;

2. as a dividend, which is a distribution of profit which has been taxed at the corporate level, then is taxed again at the individual level;

3. as a loan, preferably to another entity that will use the money for other investments.

An S-Corporation is a legal entity that is designed for small businesses, where the owners typically need most of the money earned to pay for living expenses. The IRS allows the shareholders of an S-corp to take money out of the corporation two ways:

- as W2 wages, with the attendant payroll and income taxes;
- as a distribution, with attendant income taxes only. No payroll or self-employment tax is owed on this money

The pros - An S corporation, or S corp, lets you avoid self-employment taxes or equivalent payroll taxes on some of the profits you take out of the business.  Often times, in fact, an S corporation saves a business owner thousands of dollars a year in self-employment or payroll taxes. 

The cons - There are restrictions on how distributions are split among shareholders; and unlike C-corporations, there are severe restrictions on who can hold the shares of an S-corp.

Should I form an LLC (Company) or Corporation?

Let’s assume that you’ve decided limiting your personal liability and saving money on taxes is a good idea. Now, you have two main choices – form a Corporation, which is the more familiar approach, or try out the new streamlined Limited Liability Company (LLC). Which do you choose?
Like anything, there’s no one "right" choice. However, there are a few guidelines you can follow.

When an LLC might be a better choice

The LLC is simple and flexible, and therefore makes the better choice for most small businesses. It also combines the liability protection of a corporation with the flexibility of deciding your tax election. This is especially useful if your business will hold real estate that is increasing in value. You certainly want the liability protection in case you are sued by a tenant. However, in a C-corporation, when the property is sold the gain will be taxed as ordinary income at the prevailing tax rate for the corporation. If the gain is significant, this rate can be quite high. Moreover, if the gain is distributed to the shareholders in the form of a dividend, the proceeds will be taxed again at the individual level. In an LLC taxed as a partnership or sole proprietorship, the gain will flow down to the members as passive income to be taxed as long term capital gains without payroll or self-employment tax or double taxation.

This is just a brief overview of a few choices.  I recommend you have many a conversation with your CPA, or contact Legal Zoom to ask questions to help you understand which entity will be right for you and your business.

The more time you spend on research and learning, the more informed you will be.  Repetition, repetition, repetition is my motto and it's how we learn and absorb new information.  Ask plenty of questions and do not take any answer for granted.

Another great resource for you to learn about entities is:

Lower Your Taxes Big Time 2013/2014

Questions??? Reach out to me at d.rosenfelt@cfomadeeasy.com.

Warmly -

Debbie Rosenfelt

Chief Heart Officer

 

 

 

FRIDAY'S STORY TO INSPIRE - The Great Challenge of Life

Today's story to inspire is from Jim Rohn who shares a bit of wisdom - YOU count.  You matter. It takes you, no one else but you to choose what you want. 

How does this apply to business, and finances?  read on . .  enjoy!

The Great Challenge of Life

Here's the great challenge of life - You can have more than you've got because you can become more than you are.

I have found that income seldom will exceed your own personal development. Once in a while income takes a lucky jump, but unless you grow out to where it is, it will go back to where you are.

Somebody once said if you took all the money in the world and divided it among everyone equally; it would soon be back in the same pockets. However, you can have more because you can become more. You see, here is how the other side of the coin reads - unless you change how you are, you will always have what you've got.

The marketing plan won't do it. It's a good plan but it won't work without you. You've got to work it. It is the human effort that counts. If you could send a sales manual out to recruit - wouldn't that be lovely? The major thing that makes the difference is what YOU do.

In order to have more, you need to become more. The guy says "If I had a good job I would really pour it on, but I have this lousy job so I just goof off." If that is your philosophy, you are destined to stay there.

Some people say if I had a lot of money I would be really generous, but I don't have much so I'm not generous. See, you've got to change that philosophy or you will never have "the lots of money." Unless YOU change, IT won't change.

Amazingly, however, when we throw out our blame list and start becoming more ourselves - the difference is everything else will begin to change around us.

Jim Rohn
1930-2009, Author and Speaker
www.jimrohn.com 

What spoke to your heart about this story?  What spoke to your head?  What ever challenges you have in life around finances, it will take YOU to step up and choose to want to do it differently.  There is no magic formula, no magic pill, or magic wand it just takes you.

What's stopping you with your finances?  Business or personal?  How do you know what you don't know?  Start asking questions. Start asking for help. It's that simple, it's that easy.

I would love to be your financial coach,  are you ready?

Please share your comments below and share this blogpost with your friends and colleagues.  I am here to support you with moving forward.  d.rosenfelt@cfomadeeasy.com

Warmly -

Debbie Rosenfelt

Chief Heart Officer

BABY STEPS - STEP 1 OF A 4 STEP ACTION PLAN FOR MANAGING CASH

I was reminded today in a blog post by Jeff Walker, success happens in baby steps.  I needed that reminder today, to remind myself I am on a journey to building my business and it doesn't happen over night . . although I would LOVE the success to happen yesterday. A heartfelt YES, and you?

So I thought, why not create a post that supports leaders, entrepreneurs, business owners and CEO's a baby step action plan for managing cash.

Step #1 - Manage cash daily. 

How you ask?

With the daily, 12 month cash register. (You can purchase it to your right for $150, equal to $12.50 a month, which is equivalent to approximately 3-4 latte's)

Why manage cash daily? This is the path that provides direction for your financial goals for your business or life. This is so you know where you are financially at all times, and so you see where you are heading. Mapping out cash coming in and going out daily, allows you to see and plan what is needed. You know when monthly recurring bills and loan payments happen, so map it out and plan how much cash you need daily..

A question I am constantly asked - Why do I need to manage cash flow daily when I use QuickBooks.?

Great question - the answer - CASH is KING. Cash is worked daily, you need to know how much cash you have on hand at all times. YES, that means creating a new muscle, a new habit if you want to figure out how to work your cash flow differently.  Cash happens right now, in this very moment when you receive a payment or are purchasing goods or services. Working cash daily forces you to look at and think of what is coming up next. If it is next week, the end of the month, next month or next quarter, etc.

When I was working with privately held corporations, as the CFO I worked and planned cash daily, always looking at each day, each week, each month and each year. My team worked updated the financial information in the accounting software. AR, AP, monthly transactions, etc were worked on thru out the month.  Cash and financials are two different animals.  Cash is cash managed daily and financials share the whole picture, the financial story for the business every single month.

Even now, with our gym business, we manage cash daily with the daily cash register. It is similar to a checkbook yet in Excel, that holds 12 months of info in one workbook. Each month has it's own tab, and each worksheet is linked to the next. Every day we look at cash and manage it daily. Each day's deposits are mapped out and updated daily at the end of the day or the next morning. Recurring payments such as payroll, monthly payroll taxes, quarterly payroll taxes, trainers commissions, monthly loan payments, purchasing supplies and advertising are mapped out in advance and updated as needed. By doing this we are able to make a easy financial decisions on the spot. One example, how much to transfer to savings each month.  We use the cas placed in savings for the bi-annual property tax payments or plan for additional equipment purchases.  I also balance the monthly bank statement to the daily cash register which is a check and balance system for balancing cash to QuickBooks at the end of the month.

Remember, CASH is KING, so you need to know where you are at all times.

The key to success for your cash is to create simple, easy, baby step habits that will open the door to new possibilities for you and your business.

Get in to action, purchase the daily cash register and get cracking on managing your cash daily. If you have any questions please leave below or e-mail me at d.rosenfelt@cfomadeeasy.com

Warmly -

Debbie Rosenfelt

Chief Heart Officer

ENTREPRENEURS USE LOGIC & MAGIC

Each morning I have a ritual of caring for me . . take my vitamins, recite a gratitude prayer from the Four Agreements, go to the gym and work out with my trainer or without, come home feed the cats, grab a bite to eat, mediate and read a few inspiring words to support my day.

Below is Monday's reading from Science of Mind and as I read I thought of us . . Entrepreneurs

The mind can calculate, but the spirit yearns,

and the heart knows what the heart knows.

Stephen King

Since we cannot contract the Absolute,

we shall have to expand the relative.

The Science of Mind, page 405

Logic and magic: life is equal parts of either. Their order is reversible.

Sometimes, we cobble together some scheme using our logical

and logistical faculties, later to realize, when our clever thinking will

take us no further, “This is going to take a miracle.” Other times,

we’re thunderstruck by a knowing in the heart, and then have to

start framing out all the practical details. We do not have two separate

mental compartments for logic and magic; they’re more like

two programs in the same computer—one that analyzes data, and

the other that converts that data into sounds, colors, and sensations

to dazzle the senses. We would not be a whole self without both.

Proably, we have a bias toward one way of operating or the

other, so our learning comes in the form of trusting that both our

logical and magical worldviews will justify themselves. The heart

does what it does, and it may take a while for the head to catch up.

The head sets a direction, and it may then take a while for the heart

to buy into it. When they operate smoothly in tandem, we hunker

down, do the math, and then reach into seemingly empty space to

draw in some quality or ingredient that completes the picture. To

balance these energies in our lives, we need only trust that we are

already doing so. SOM June 11, 2012

We have our dreams and desires which can be magical and then, there is logic as well . .

It just so happens at this time Chase bank and Living Social are sponsoring a grant pool of $3 million dollars to be shared among 12 small businesses that are chosen by a panel. The twelve will each receive $250k to grow and expand their business.  An amazing opportunity, isn't it? Any business may complete and submit the application then find 250 people to vote for their business.  It is a gateway to make sure those who are serious about the opportunity to earn their chance.

I applied for the gym, SNAP Fitness in Edmonds, WA last Sunday, June 10th and I have been vying for votes, via FaceBook, Twitter, asking family, friends, members of the gym and business colleagues for votes.  This is an experience of dedication and commitment, supporting other entrepreneurs by sharing votes with each other, creating conversations of support and camaraderie. People having faith, voting before they receive a vote, others saying, I will vote for you only if you vote for me.  I just vote away and give so everyone has a chance to receive a shot of 250 votes. Know the 250 votes, only give eligibility, there is no guarantee. this is where the magic will come in for the fortunate 12. Yet look at the community this $3 million grant has created.  Entrepreneurs, very open and loving to support each other with an opportunity that can feel magical.

Entrepreneurs naturally hold the space of magic, listening to our intuition, listening to a sense or feeling inside that says how can I not do this and then logic what do I need to do.

The 12 entrepreneurs who receive the grant will be elated, excited and will need to logically plan out how to best utilize the money for their business if they have not done so already.  There was a question in the application that asked, "What will you do with the money."

As your Chief Heart Officer, I encourage every entrepreneur to commit to creating a solid organized financial foundation, to track the investment and how it is utilized. 

Note: a 1099 will be issued to the grant winners by Chase bank for the $250k, and income tax will be paid on the net profits for that year.  Best of luck to every business owner and entrepreneur. Make sure you are prepared with an action plan and strategy of how you will use the money.

Warmly -

Debbie Rosenfelt

Chief Heart Officer

PS - Please vote for SNAP Fitness in Edmonds, WA at Mission Small Business and all other businesses that you would like to support with votes.