Never Worry About Bookkeeping Again

When you think of the word bookkeeping, what comes to mind? Most people cringe. We're talking with Phillip Aronoff from By the Numbers B and A. He's got some great tips so you don't have to worry about bookkeeping any longer.

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Never Worry About Bookkeeping Again

Tim Fitzpatrick: When you think of the word bookkeeping, what comes to mind, if you're like me, you may cringe a little bit and most of us don't like doing books, but having accurate books is an essential element in allowing us as business owners to make great business decisions.

Tim Fitzpatrick: That's why I have a special guest with me today. And we're going to get into some tips to help you so you don't have to worry about bookkeeping ever again. Hi, I'm Tim Fitzpatrick with Rialto Marketing. Thank you so much for tuning in. I am super excited to have with me today Phillip Aronoff with By the numbers, bookkeeping and accounting. Phillip, thanks for taking the time in and welcome.

Phillip Aronoff: Thanks, Tim. I appreciate it. Thank you for inviting me to be here. I really do appreciate it.

Tim Fitzpatrick: Absolutely. You know, I mean, you and I, we have a good relationship outside of this. And I appreciate your friendship and the business that we do together. So I love having you on. And you know what you're talking about. I know you're going to add a bunch of value here. So I'm excited about it. Bookkeeping is not my thing so I love to pick up tips whenever I can. Selfishly, these interviews that I do, I actually gain just as much as I think anybody else will.

Tim Fitzpatrick: So I always look forward to this. Before we jump into these questions, tell us a little bit more about who you are, what you do and how you help businesses?

Phillip Aronoff: Great. So my name's Phillip Aronoff and I'm with By the numbers, bookkeeping and accounting. And I have been helping my clients with the uncertainty that they have when it comes to their numbers. How much money do they make? Are they spending their money in the right places? And how do they understand the money that they're spending? And how does it affect the top line and the bottom line? Because believe it or not, it really does. It affects both.

Phillip Aronoff: And the best way that I can describe this and I've just started to come up with this, if you think about a sandwich, right. Your gross revenue is the top of the sandwich. Your net income is the bottom. And it's all that stuff in the middle that affects the top and the bottom. It's about a sandwich. It's all the stuff in the middle that you really love. The bread is just there to hold it all together.

Tim Fitzpatrick: Yeah. Yeah. That's right.

Phillip Aronoff: That's really what I help people understand and I try and make it easy for them and not painful bookkeeping. Accounting is not a scary thing. It's only scary when you don't understand what you have.

Tim Fitzpatrick: Yeah. If you're armed with the knowledge that you need, it's not really a very scary thing.

Phillip Aronoff: Right, exactly. Yeah.

Tim Fitzpatrick: And actually it can be empowering.

Phillip Aronoff: Very, very empowering. Right. If, if I can say to a client and you can understand this, if they're spending money in their marketing and if they're really looking at that marketing, in other words, tracking it, just see where their revenue is coming from, then they can make the right decisions in their marketing that's going to benefit them the most. And then from there, they start going down to the next some of the money that they're spending and how is it affecting the top line?

Phillip Aronoff: So it becomes very empowering because then they can really make decisions that really affect their business and then they can start to see it. And they can actually start to see it. Man, it is a powerful thing and a lot and 85% of my clients, their business will take off because they can see it and they can target it and they, they just really go for it. And that's the best part of what I do.

Tim Fitzpatrick: Yeah. It's when they're armed with the information and the data they need, they can make great decisions based on that data.

Phillip Aronoff: Right. And the thing about you is you can help provide that data. Right, in their marketing.

Tim Fitzpatrick: Yeah. Yeah, absolutely. From a marketing perspective, I mean, a lot of times when we talk to clients, they don't know whether their marketing has been working because they're not tracking anything. And when you don't track the right metrics, you can't make good decisions. So, yeah, I love the analogy because they're very similar between bookkeeping and marketing.

Tim Fitzpatrick: So now a lot of business owners I know initially when they're starting, they don't feel like they can hire a bookkeeper. They're doing it themselves. What's the benefit? Or the benefits in hiring a bookkeeper rather than trying to do it all yourself?

Phillip Aronoff: Well, I think the benefit would be and again, if you hire the right bookkeeper, the benefit for me, if someone comes to me and they're just starting when I have a client like this is not just starting, but he's been in business for a while, but not making a ton of money. His mom actually does bookkeeping, OK? And so he and I are still working together. She's doing some of the day to day work.

Phillip Aronoff: And I'm being used as a consultant to make sure everything is being done right or if they have questions. So in the beginning, maybe I help that client do some of the things themselves to keep what it costs for me down. But they always have me there if they have a question or if they're not sure about something. So I think hiring the right one, the one that's willing to work with you, because for me, I can work with clients for as little as 127-147 dollars a month. Because that's a couple of hours a month. They can do some of it. I can do some of it and we can work together so that they're still getting that important information that they need and but they're not doing all the work. And the benefit is, is really that they're not doing it and they're able to take the time that they need to do what they're really good at.

Tim Fitzpatrick: Yeah. Because the books don't necessarily drive the business. It's an expense. So if, if they hire somebody they're freeing up time.

Phillip Aronoff: Yes.

Tim Fitzpatrick: If they hire the right person, they're getting confidence that their books are accurate.

Phillip Aronoff: Yes.

Tim Fitzpatrick: They can now make great business decisions and frankly, they've got some peace of mind. Right. That just I can relax a little bit knowing that this is being done correctly and that now gives me the ability to really focus on, like you said, what I need to do to really drive my business forward.

Phillip Aronoff: Right. And for me, one of the things that I do and you know this because I do it with you. It's not just me doing the work for them, it's me understanding their business. And what can I bring to them? What do I bring to the table for them as far as people I may know that may be able to use what they do.

Phillip Aronoff: So it's not just about for me. And it's not just about doing the bookkeeping for them. It's developing a relationship, making sure their information is correct so they have it, but it's also helping them grow their business and bring people to them. Because if I do that. That's my best marketing tool that I can ever have.

Tim Fitzpatrick: Yeah, yeah, I totally agree. And that kind of leads into the next question we were going to talk about, which is kind of what makes you different from other bookkeepers. So you obviously touched on this. The first one is just you're not just there to help them do their books. If you can add value to their business in some way, shape or form, you're happy and more than willing to do that.

Phillip Aronoff: Absolutely. I mean, I think there's a few things that make me different. I've been doing it since 1982. When I started doing bookkeeping, accounting, I was doing manual sets of books. There was no Quickbooks. Things didn't exist. I mean, years ago, I worked on a DOS base, a DOS accounting software. It was the computer that I had was the M?rner was this huge piece of equipment.

Phillip Aronoff: The computer was a huge piece of equipment. And so I've been doing it for a really long time. And I still today, if I had to, I could do a set of books manually. I don't need a computer. So that's one thing. And I've worked actually in CPA offices as a contractor, as an employee. So I have a very good understanding about what CPAs look for, what they want in a set of books and what's important for them to have. And I don't find a lot of other bookkeepers out there in Colorado that can do that.

Phillip Aronoff: If I'm doing my job right, then when the CPA gets the information, the tax returns should be very, very simple.

Tim Fitzpatrick: Yeah, they shouldn't have a lot of questions.

Phillip Aronoff: No, they shouldn't, and if they do, I should be able to answer those questions. The client never. I always tell the client, if your CPA has a question on what I've done, have them call me and let me take care of it for you, because I'm looking at your books. I know what's going on. And that's the other thing. I take that burden off my client. At the end of the year, I send the CPA a whole package of what they need and then I answer questions as they arise.

Phillip Aronoff: And so it should all happen in the background, really. And the client should only know that it's done when he gets a call from the CPA and says the tax returns are complete.

Tim Fitzpatrick: This brings up a really interesting point, because if your bookkeeper is not also your CPA. Right, because some CPAs offer bookkeeping, some don't. If your bookkeeper is not or if you're looking at hiring a bookkeeper, that is not your CPA as well. It sounds like one of the questions that you should be asking them to figure out whether they're going to be a good fit for you is how do you work with my accountant?

Phillip Aronoff: Yes, absolutely. Absolutely. From the very beginning when I started doing this work back in California, one of the things that I remember is how we would work with the CPAs and my and I worked for my mom. She started her company and she's been doing it just a little bit longer than I have. And she still has these relationships with the same CPAs that she had when I started working for her. So. And they love her.

Phillip Aronoff: Because of that, because we are able to communicate, we get them when the CPA calls and says, I need something, you know, we get it to them right away because we understand there's an important they don't just call you because they want to keep you busy. They actually want something and they need it. And so, yes, you have to be able to understand what a CPA is looking for and be able to communicate that communicate with a CPA really, really well. I think to be an effective bookkeeper today. And if they can't, then that's something that you definitely need to look at when you're hiring someone or when you're going to hire an outside service.

Tim Fitzpatrick: Yeah, OK. So I've got to if they need to be able to answer that question, how are you going to work with my CPA? Well, what are there other questions that we should ask when we're interviewing a potential bookkeeper to help us make a good decision?

Phillip Aronoff: Yeah, I mean, well, first and foremost, does the bookkeeper understand what your business is doing? I mean, do they because your marketing business is different than a construction business.

Tim Fitzpatrick: Yes.

Phillip Aronoff: You know, your restaurant is different than a doctor's office. So, yeah, they need to, you know. Do you understand how my business works? Right. On that work for. Have you ever done this before? I mean, I get that question all the time, right? I've told them I've even if they know I've been doing this for 39 years, they'll still ask the question, well, have you ever done work for them?

Phillip Aronoff: And there are businesses I have not that I've not done. But what I try to say to them is. I have resources that I can go to and ask questions, but which I think is great for me. I've been doing this a very long time, so I have CPAs that I can call I can call my mom in California and talk to her. If I haven't done it, I'm sure she has. So, yeah, it's just what do you bring to the table?

Phillip Aronoff: What's your experience? How long have you been doing it? I mean. If someone comes in and says, you know, I've been doing it for 2 years, I might be a little concerned. I think experience speaks volumes for what you're doing. But again, what is that experience? Maybe someone that says they're a bookkeeper. I've only done accounts payable and that's all they've ever done. But they think they call themselves the bookkeeper. Well, they're really not.

Phillip Aronoff: Accounts payable clerk. Yeah, OK, so when I think bookkeeper, I think someone that can do accounts payable accounts receivable, general ledger payroll, talk to my CPA, all of it now. That's what the word bookkeeping means to me. I mean that to everybody else, but that's what it means to me.

Tim Fitzpatrick: OK, I like that. So we got to how are you going to work with my accountant? What's their experience? Do they understand some of the nuances with bookkeeping that are specific to my industry? And look, I think it's unrealistic to expect somebody is going to know everything. So, you know, when they don't know the answer, do they have resources? And I also think what are you doing to stay on top of trends and changes?

Tim Fitzpatrick: So I love that. So those are all great questions to ask to help qualify a potential bookkeeper. You're looking at hiring and making sure that you hire the right person, because how do you and I were talking about this before. You're given some great tips here, but how do you never worry about bookkeeping again? It's all about hiring the right bookkeeper.

Phillip Aronoff: Yes. Yeah. And whether that's an employee or whether that's an outside service like myself. It is always about finding that right person. You know, but also as a business owner to you, you have to be available, right? Available to answer questions that may arise. Some of the toughest things for someone like me as a bookkeeper or anybody else is if the owner of the doesn't have the answer.

Phillip Aronoff: So it's a partnership. It's a partnership, and that's how I look at it. All my clients are partnerships. I am there to help them and be their partner in growing and building their business.

Tim Fitzpatrick: Got it. So that's a great way to lead into our next question. A lot of people I don't think they think about this. But it is possible. How can a bookkeeper help my business grow?

Phillip Aronoff: Well, obviously, the easiest thing is to make sure the books are current up to date and that the owner of the business or the people in charge are looking at them every month and then they're understanding and that they're catching problems before they become big problems.

Phillip Aronoff: I'll give you an example of how I help someone and I met with someone who owned a restaurant, and when I was looking at their books, things were not making sense based upon what I was told that was being done by the previous company. And what happened was, is that I was told that they were doing certain things, but when I was looking at the books, they weren't done. So I went back to my client and said to the prospective client and said, this is what you're telling me.

Phillip Aronoff: This is what I'm seeing. And they don't make sense. And so she went back to her previous company and said, hey, this is what's going on. Tell me what ended up happening is we got a refund of 4000 dollars. Because they were charging her for work they were not doing. So that's one way I can help people because are they getting everything that they need? Again, we go back to giving them back time, right.

Phillip Aronoff: So for someone, let's say for you, for example, let's say your hourly rate is one 100 dollars an hour and you're spending 5 hours a month doing your bookkeeping work. So that's five hundred dollars that you're not able to make. Now, you hire someone like me, probably takes me a couple of hours a month. And I don't charge you one 100 dollars. I charge you 85 dollars. Right now you're spending 170, but you're making 500.

Phillip Aronoff: So how can a business grow? That's the simplest way that I can say because you're not spending the time and doing it. I can also help them by, again, tracking and looking at some of the key indicators when it comes to where their money is coming from, their marketing, some of their overhead. Can they be spending less money on their overhead? Can we do some things to where maybe we can get some of their stuff at a cheaper cost?

Phillip Aronoff: Where can we go get things, all kinds of things that we can break down on a financial statement that helps them? Maybe they don't even earn more money, but maybe we cut some of the expenses. And so the bottom line looks better. It's probably about going out and making more money. It's about are we spending our money smarter?

Tim Fitzpatrick: Yeah, well, it would also seem to me too, that it makes perfect sense. You're freeing up time so that the business owner can focus on what they do best, which is hopefully going to be to driving their business growth. But I think too it's also as you identify those efficiencies that you can improve, right, or you can save money here, here and here? Well, if you really want to grow your business, you can take that money that you saved and reinvested in areas that are going to help grow the business, whether that's sales or marketing or whatever it may be.

Phillip Aronoff: Maybe can hire other person that will help you grow your business. Exactly right. I need to hire a salesperson.

Tim Fitzpatrick: Yeah. So it's really about identifying all the efficiencies that they can gain, putting those things in place and then helping them reinvest that money into places that are going to help drive their business growth.

Phillip Aronoff: Right. Right. And. I mean, that is the biggest thing that I can say over the years that I've helped clients do is grow their business by making changes, minor changes or finding. Maybe there's a person that's working for them already that I've been able to see how they work because I'm either going to that's the other thing about me. A lot of bookkeepers today like to do it virtually. They don't like to go to a client. I will go to their office and work.

Phillip Aronoff: So it just helps develop that relationship going on between me and the client. And maybe I find maybe in doing that, there's somebody there that's really good and maybe they should be in a different place in the business that would help the owner make more money or whatever. And I can see that because I'm a business owner, I'm an entrepreneur. And these are things that I look for when I'm running my business. So I'm looking for the same thing when I'm going out and working for my clients.

Phillip Aronoff: I mean, one of the things that my mom did in her business when we were in California, she's taught hundreds of people how to do bookkeeping and accounting, people that were where English was a second language for them. But she would go into these stores that we would do work for and she would teach the office people how to do the work so that things were getting done and taught them a whole new skill. So that's what I'm all about.

Phillip Aronoff: I'm there to help my client grow and really become a large business and do very well. And maybe I find someone there that can help them that they didn't even know was there because they just weren't paying attention.

Tim Fitzpatrick: So I don't think we can end this conversation without talking about mistakes, because there's a lot that we can learn from the mistakes of others. What are some of the biggest mistakes you see people making with their bookkeeping?

Phillip Aronoff: Well, obviously, the biggest mistake is they just don't do it.

Tim Fitzpatrick: Put it off.

Phillip Aronoff: Yeah. They don't look at it as something that is important in the business. Like, I'll deal with that later or whatever. That's the biggest mistake, right, because then what happens is, is they get so far upside down or they're making a lot of money and they're doing really, really well, but they don't have any idea. And then they get to the end of the year and they get their taxes done and they have this huge tax bill.

Tim Fitzpatrick: The big surprise.

Phillip Aronoff: Yeah, they don't know how they're going to pay and that that can put a person out of business. Right. Some of the other mistakes. Sales tax is a big problem. And I can tell you now with everything that's going on in the country, with the pandemic and everything that's happened, the state governments are hurting because sales tax revenues come down. A lot of things have come down. So they're going to start to look for ways that they can make money.

Phillip Aronoff: So they're going to start to do maybe do a sales tax audit or they're going to start looking at things. So if you're not taking care of that and doing it properly, you're going to. And that is a huge thing. The states, they don't mess around with sales tax.

Tim Fitzpatrick: Oh, no. When I was in the distribution business, we went through a couple different sales tax audits.

Phillip Aronoff: We're in California, right?

Tim Fitzpatrick: Yeah.

Phillip Aronoff: Yeah, California is so synonymous with doing sales tax audits.

Tim Fitzpatrick: Yeah, and believe me, it's not fun having one of those auditors sitting in your office while you're trying to do work looking through all these papers. Now, fortunately for us, nothing ever happened. They never found anything because we were doing it correctly, thankfully. But sales tax can be really, really confusing.

Phillip Aronoff: And it is getting even harder because of all the laws that are changing because of this thing that went down in North Dakota and all of that. So, yeah, that is one huge area that people need to pay attention to I do sales tax, I help my clients. I've done sales tax in multiple states Colorado, California, Arizona, Washington State. I've done payroll. Payroll can also be. Here's a mistake people make. Is this person an employee or is this person a contractor?

Tim Fitzpatrick: Damn, that's a big one.

Phillip Aronoff: Yes, and it is a big one. And, you know, what are the rules? Because there are rules. That that determine. So that's another mistake. And that's why it's important to have a bookkeeper that will and a lot of clients don't like it, but you'll hold their feet to the fire and say, no, this person is not a contractor. They are an employee. And they may still do it that way, but at least if you explain all the risks that are involved, they know and that's the thing that you have to do.

Tim Fitzpatrick: Yeah, OK. I love that Sue not doing them at all or just waiting. Sales tax and not classifying employees or contractors correctly.

Phillip Aronoff: Yeah, those are some big mistakes. Those are bigger mistakes. I mean, you know, or a client trying to do it on their own and not understanding what's a balance sheet and what's an expense and what's not. Those kinds of things that I've sat down on a set of books and seen like loan payments on a profit loss statement or an income statement, which we know is not correct, those kinds of things.

Tim Fitzpatrick: Not classifying things correctly.

Phillip Aronoff: Right. Because in their mind, in this makes sense. I mean, if you think about it in their mind, it's an expense to them. It's an expense that's which makes sense. They don't think about it like, no, that's really actually a liability to the company. It's not really an expense. There's an expense piece. The interest, but they don't most business leaders don't think that way. And I get it so.

Tim Fitzpatrick: But it would seem to me so like, for example, in my business, yeah, we have a ton of expenses, but some of those expenses can be classified as cost of goods sold. Yes. Some can't. Yes. If you are not classifying things correctly, you're not going to have an accurate idea of your gross profit. And if you don't have an accurate idea of your gross profit, you may not even know that you're not charging enough money.

Phillip Aronoff: Correct. People sometimes they don't charge enough.

Tim Fitzpatrick: Yeah, but if you're not if you're classifying things as expenses and they should be going to cost of goods, you have no idea what your gross profit is.

Phillip Aronoff: That becomes really important when they're dealing with retail. Retail places or people that are manufacturing something or things like that. Yes, that becomes super critical because maybe you're not doing enough for that piece or have you even looked to see what the market will bear for you to charge you, you know? So, yeah. So all of those things turn out to be a big thing when you're looking at your overall picture of your business.

Tim Fitzpatrick: Yeah, I love it. You've shared a ton of value. Bottom line here, people, if you don't ever want to have to worry about bookkeeping again, hire the right bookkeeper. And Philip is giving you a ton of great information about how to actually do that. The things to look for. If you are looking for a bookkeeper, reach out to him first, because great guy, he knows what he's doing. So start there.

Phillip Aronoff: If they want to hire an employee, I'm more than happy to help find the right person.

Tim Fitzpatrick: There you go. Man, we see that all the time with marketing. Right. Business owners trying to hire a marketing person and they don't really know what that marketing person should be doing and what they're supposed to do.

Tim Fitzpatrick: So, yeah, absolutely. If you're going to hire somebody in-house, find somebody like Phillip. They can help make sure that you hire the right person. They can properly qualify that person in a way that you may not be able to. So I love that man.

Tim Fitzpatrick: Where can people learn more about you Phillip?

Phillip Aronoff: They can find me By the numbers B and A dot com, or they can actually go to Chief Number Cruncher, and they can find me that way as well, either one. And that takes you to my website. There's a place on my site where you can actually put in your name and information and I'll get an email and I can contact you and help you in any way that you need. I just love I love helping people. And so any way that I can help.

Tim Fitzpatrick: Awesome. I love it. You've added a ton of value, man, and I really appreciate you taking the time. I want to thank everybody that has been tuning in, watching, listening. Thank you for doing so again. I am Tim Fitzpatrick with Rialto Marketing. If you want to gain clarity on where to focus your marketing efforts right now, pop on over to our website at rialtomarketing.com. That's R-I-A-L-T-O marketing.com. Just click on to get a free consult button. I guarantee you will get a ton of value from it and walk away from that call knowing exactly where you need to focus your marketing right now. Remember, marketing your business shouldn't be a challenge. All you need is a plan. Till next time, take care.

Connect With Phillip Aronoff

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Links From The Episode

• By The Numbers Bookkeeping and Accounting

About the Host Tim Fitzpatrick

Tim Fitzpatrick is the President of Rialto Marketing. At Rialto Marketing, we help small businesses & entrepreneurs eliminate the confusion of marketing by focusing on the fundamentals. As a marketing partner, we help clients put in place and manage a simple marketing plan so they can grow. Marketing your business shouldn't be a challenge. All you need is a plan.