When you own and grow a business, eventually you look around and realize you’ve created a complex monster. Instead of focusing on your clients and doing what you love the most, it seems all your time is filled with issues, complaints, pressures, and complexities you never imagined.
Welcome to the part of business that doesn’t make it to social media…
Recently we had a very successful Alchemy member who was struggling to understand what needed to be covered on the financial side of his business, so I thought I’d share the email I sent to him to help him see what needed to be covered given the scope and complexity of his business today.
———- Forwarded message ———
From: Brandon Green <firstname.lastname@example.org>
Date: Mon, Oct 24, 2022 at 10:39 AM
Subject: Next steps with your Alchemy Membership
John (not his real name),
As you’re thinking through everything, I thought it might be helpful to highlight the financial areas that need to somehow be covered by all business owners as they grow. Of course, below is what we do at Alchemy, but whether you hire us or not, one way or another, this stuff must get done. You’ve grown beyond “basic” as articulated below, but I included it for context.
Basic – Ensuring income and expenses in bank accounts reconcile each month, mostly for tax purposes and usually limited to operating businesses sub $200K.
Advanced – Ensuring income and expenses reconcile and are in the right categories. This is bookkeeping for business insight and max tax deduction purposes. Incorporation of credit card accounts comes in at advanced level bookkeeping, as does the cost of sale, or inventory, and/or more complicated businesses such as property management or owned real estate with escrow accounts. Personal books are also usually considered advanced bookkeeping. Balance sheets are considered more advanced bookkeeping services.
Basic – federal and one state filings, estimates, sole proprietor and/or W2 only income returns.
Advanced – federal and state filings, often multiple states, S-Corps and/or partnerships, longer term strategy and planning, mid-year true-ups, and responding to notices from the IRS. Multiple types of income. i.e., W2, 1099, K1s usually triggers more advanced tax work.
Basic – bill payment, invoicing, tracking W-9s, and issuance of 1099s and W2s.
Advanced – payroll, 401K administration, responding to jurisdictional notices, legal administration coordination and filing to ensure legal entities remain in good standing.
Strategy, business planning and consulting, proactive management of financial resources.
I hope this email helps you think through things. It can all be quite overwhelming and it’s tempting to shortcut stuff on this list because, let’s face it, it’s not as fun as talking about the latest acquisition opportunity! But it’s stuff that if neglected will eventually create chaos and cost a lot more money to address later.