209 | Tax-Ready Doesn’t Mean CEO-Ready
episode
Your Money, Your Rules | Financial Mastery, Wealth Mindset, Leadership Principles, Intuitive Decision-Making, Human Design
16 min
1 speaker
8 chapters
transcribed 1 month ago
Transcript
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Transcript generated automatically by AI and may contain errors.
Why aren’t tax‑ready financials also CEO‑ready?
welcome back to the podcast today i want to talk about a topic that's a little bit more in the weeds with our business and that is our financials specifically our chart of accounts a lot of founders think that because they have good financials because they were set up by the bookkeeper or the cpa that they are categorized correctly and more often than not they are and also that there is a huge difference between setting up your financials for your accountant your bookkeeper and setting up your financials that are actually useful and provide you information that you can make decisions on and you can see where money moves in and out of your business you know your bookkeeping or your cpa you know that all exists for taxes
But your financial reporting, that should exist for you. And that's data that you need to know so that you can make better financial decisions and make decisions from a leadership perspective. And those two things are very different. So let's dive in. So let me start by saying that most bookkeepers, or if you have a CPA that set up your chart of accounts, they create, when I say generic chart of accounts, when you set up in QuickBooks, if you use QuickBooks, there's just a basic place where You say what kind of industry you're in, and then it sets up a very general chart of accounts. That technically works, and it's totally fine. And it's going to satisfy it from a bookkeeping and a tax reporting perspective.
But it doesn't necessarily give you the information that you need as a CEO to make financial decisions. Questions like, where is my revenue coming from? So if you have several different offers and you aren't splitting that up, how are you supposed to know where your revenue is coming from? If you are wanting to know where are you spending your marketing dollars or which employee group is driving labor costs Or like I said, with the marketing, which marketing is actually paying off? If you just have advertising as your chart of account, which then when you pull your P&L, you're just going to see advertising costs. You're not going to see whether you did... Let's say if you did mailers or you did...
social media or ads, or if you did SEO, you aren't going to be able to see how much money is going to which category or which account. And so I always like to look at it from the place of, you know, the books are for you. Yes, we give our books to our CPA to do our taxes for us. But being able to read your financials, understand your financials, understand where money moves in and out of your business, like I worked for my family's construction business, I was very detailed. And the joke was with the CPA, she was like, Erin, your chart of accounts ledger is so big. And I'm like, I know.
How does a generic chart of accounts hide key business insights?
And I did whittle it down when I got on and I really started to piecemeal and like, what do I want to see? But, you know, we basically had two businesses in one business. We had the construction side that did big construction projects from anywhere from like weeks or months to a year. And then we also had the service side, which were, you know, go out on a daily service call and then it's done and and an invoice is sent. And so I wanted to track each department, you know, the service department, as well as the construction department. And even deeper in than that was, you know, inside the construction department, we had a mechanical and we had an electrical, and then sometimes the service guys would go work on the construction job sites.
And so it was really important for me to be able to see where was the income coming from? What were the costs of goods sold and the expenses? And like, where was the money moving in and out of the business? And when you have very general or generic chart of accounts or categories, think of your chart of accounts as just kind of like your file folder, right? Like you're going to have income and then it's going to be broken down into the types of income. And then you're going to have costs of goods sold and that's going to be broken down.
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Chapters
8 chapters
1
Why aren’t tax‑ready financials also CEO‑ready?
0:01–2:48
2
How does a generic chart of accounts hide key business insights?
2:48–4:52
3
How can you track revenue sources and marketing ROI with a better chart of accounts?
4:52–6:28
4
When should you break down departments and job types in your accounts?
6:28–8:19
5
Why should you design your books for yourself before the CPA?
8:19–10:20
6
Which books help you build the right chart of accounts for online vs. brick‑and‑mortar businesses?
10:20–12:32
7
How much detail in categories is useful versus overkill?
12:32–14:06
8
How can you teach your finance team to turn numbers into a clear financial story?
14:06–16:14
Speakers
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