Episode 48: Getting Ahead Financially with Sherry Wilson

Feeling behind financially? You’re not alone. Without help, it’s easy to get behind on invoicing, payments, and taxes (eek). Lesley’s bookkeeper Sherry Wilson from Business By the Book joins us today with solid advice (and loving encouragement) to help you get a handle on your business finances.

Episode 48 Show Notes

Key Takeaways:

  • [4:30] Sherry Wilson recommends outsourcing bookkeeping because it lets the designer do what they do best as creatives
  • [5:45] It’s best to have one from the beginning of your business before you get really busy and to give each other time to become a team as you navigate through how your business runs
  • [7:12] A lot of us in the beginning feel like we can do everything ourselves but it’s really not that easy! 
  • [8:30] Unless it’s a natural skill for you, bookkeeping will take away your focus from growing your business, relating your clients, and doing amazing design work
  • [10:46] In design, you use every aspect of bookkeeping – estimates, invoicing, billing, purchase orders, inventory, retainers. It can become complicated, very quickly. It’s much more than reconciling your bank accounts
  • [11:51] Find a bookkeeper who really understands the nuances of the interior design industry
  • [12:50] Let’s talk about sales tax. The rules are constantly changing and we have to continuously adapt to it. If you do that as a designer, you won’t be able to find any creative energy for your business
  • [13:55] Sherry recommended Lesley set up a different bank account solely for her sales tax. Implementing it has made things a lot easier and more organized
  • [15:41] As a designer or any small business owner, you need to understand your responsibilities and obligations to sales tax. Before outsourcing it to a bookkeeper, check out resources your local small business office may have to learn about the fundamentals
  • [20:16] You might be a small business and have a small revenue, but if you aren’t collecting and paying taxes to the government properly, there are definitely repercussions
  • [21:42] Sherry highly recommends Quickbooks online. You can log in, access it wherever you are and bring your business everywhere
  • [22:20] For project management systems, Sherry recommends Ivy. You can send pretty proposals, estimates, and allow your clients to pay online. The majority of their designer clients use Ivy
  • [25:50] Profit first is all about paying yourself first and then putting the rest into your savings, profit account or taxes. People use different percentages based on their preferences
  • [26:42] After you finish your financial statements for the end of the month and then depending on your gross profit you base your percentages on it. Whatever is left over is to pay for your business expenses
  • [27:15] You want to have about 30 percent leftover for your office expenses
  • [27:47] For Kate, she has multiple bank accounts: operating expenses, cost of goods, savings account, and profit account
  • [28:42] She also has two credit cards. One is her primary one for everyday office expenses and the second one is specifically for product purchases
  • [29:20] This is one way to manage your money in an efficient and organized way. It just takes out a lot of confusion and math out of the process
  • [30:45] Even if you have a bookkeeper you should regularly look at your bank statements or credit card statements
  • [31:33] You should be reviewing these every month. You are the only one who can detect fraudulent charges or any mistakes with purchasing
  • [33:01] Other things you should check at least once a month are your accounts payable and your accounts receivable 
    • [33:40] Accounts receivable is money that is receivable to you, your revenue – when you invoice your clients
    • [34:10] Accounts payable are the bills that you owe and products/cost of goods that your purchase
  • [36:05] With everything happening now, it’s easy to let things fall through the cracks. As hard as it is, attention to detail is even more necessary now than it has ever been
  • [37:54] For pending expenses that you may forget or aren’t front of mind, consider doing a 50 percent deposit 
  • [39:18] With this kind of business, you have to be clear with your client that there could be a situation that you will incur extra charges that you have to invoice your clients for
  • [40:56] You can also set aside the money to another account so you don’t spend it until you have to pay for it
  • [43:26] To set yourself up for financial success moving forward, watch your money closely and be cautious on what you’re spending on and expenses you’re incurring. 
  • [44:16]  You  have to create new ways to bring in income and think outside of the box with everything that’s happening around the world
  • [45:27] Small, incremental differences matter! 
  • [45:46] With everyone staying at home, people are starting to see so many things they can work on in their houses and this is a great opportunity for designers to capitalize on. We don’t know what the fall will look like but we’re staying positive! 

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