East West Bookstore Seattle Event

Saturday, Feb 4th at 7:00 - 8:30, at East/West Bookstore Seattle, I presented a talk on "Making Peace with Your Finances".


East West Bookstore sells the physical book, "Radically Simple Accounting" for the same price as Amazon.com, so you can have your copy today!

My plan on how you can "Make Peace with your Finances" is to understand a few spiritual laws of money. One is that money is currency, it flows, so if you want to hold onto it you need a container--an accounting system.

The next one is...well, you just had to be there. I'll do this every year in Jan, as a way to give back to the community that has so richly supported me. Naturally I answered questions, and there were lots of questions on filing systems, and how to improve income.

We covered how to create categories to setup up an accounting system. Accounting is software independent, so you can use QuickBooks, Excel, or any software you chose.What counts is that you've "Got Numbers".

Credit Unions vs Banks

My friend told me that he loves his credit union, since his banker does his bank reconciliation for him. That's terrific. A shout out to Mallory Thrush at Oregon First Community Credit Union for helping the guys stay on track with their bookkeeping.

My experience with a local credit union, BECU, was not so good. I wanted to buy a car with financing, so I lined up some loans. BECU came in at 4.5%, as did Key Bank, and another place came in at 5%. I chose BECU, since it was a credit union. They would only qualify the loan for 30 days, and it took me 4 months to find a car, so I had to re-qualify over and over again. I was at the auto dealers, closing the loan, only it came in at 5%. I was stunned, since weeks before I had gotten a qualifying letter stating 4.5%. BECU said my credit score had gone lower in the last couple of weeks. I think my credit score went lower because they pulled my score so many times. The .05% difference will cost me $1200 over the life of the loan.

Overall, credit unions are the better bet, since they aren't for profit. More money stays in the bank,  so they can offer more and better loans. But in this one case, it didn't work out better for me.

Radically Simple Accounting is a Textbook

Radically Simple Accounting has been used as a textbook for awhile. Recently, it's been picked up at the university level. And not just any University, but Northeastern University in Boston, MA. Believe it or not, that is the university I attended for my freshman & sophomore year. I was an older student, turned 21 in the dorm, so I was more motivated than my classmates, studied hard, and became valedictorian my sophomore year. And now they're the first university to use my book as a textbook. It's a small world!

Northwest Enterpreneur Network (NWEN)

Last night I won this fabulous, rather large gift basket from the Northwest Entrepreneur Network (NWEN) event, thanks to Pacific Real Estate Partners. 

NWEN supports entrepreneurs bringing new products to market. Link to Northwest Enterpreneurs Network

My father was an inventor. He worked at DuPont and invented Tyvek on their time, their dime, so no royalty checks for moi. It's a risk to take your own time to invent a product, and be willing to take it to market with your own equity. I respect anyone who's willing to take the risk.

Backup QuickBooks Daily

VIRUS ALERT. If your QuickBooks data is backed up daily, you'll be fine.

The Philippe Matthews Radio Show

Phillipe Matthews has a very interesting radio show, worth listening to. His motto is "If you like O, you're going to love P".

He recently rated, Radically Simple Accounting book as PHILIPPE'S BEST!

The Phillipe Matthews Show Rated Best Link

Bank Fees -- Getting them waived

About every three years they want to start charging me bank fees again. This months statement had $21 in bank service fees, so it was time to see if I could get them waived again?

Securing free checking is a business dance where not all of the steps are choreographed at the start of the dance.But so far, I've always succeeded in securing free checking for myself, and for every client too. Think how much money I saved for my business today? ($21 month, times 3 years = $756 saved). Why should you get free checking? As a business customer, even though you have more transactions than a personal account, you maintain a larger overall balance, which the bank invests for profit. So not only is it possible to get free checking; it's your right, and my privilege to help you.

The Value of an Accountant

If you pay a bookkeeper $2,000 a year, and they lose you $6000 on taxes, you're out $2,000, plus you've left $4,0000 on the table. If you pay a better accountant $5K a year and save $6K on taxes, you've gotten your accounting done for free, and now have a $1K profit. 

Profit drives business, so people who focus on costs only are missing out.

Plus, with the higher priced accountant, you’ve protected yourself from future problems.  Accountants and dentists are very similar in one way. You're paying them for the absence of problems.  If I go in for a teeth cleaning and routine check up every 6 months, and there are zero problems, it costs me about $600 - $700 a year.  That seems like a lot of money for no dental problems. But before I  bit the bullet on paying this expensive dentist, I was having all kinds of teeth problems. I credit his care with not needing a $1500 root canal. I appreciate the fewer dental visits and less pain. It's counter intuitive to pay for the problems I'm not having any longer. However, if the saying, "an ounce of prevention is worth a pound of cure" is accurate, it's 84% more profitable. 

What do you think?

Payroll Training

For many business owners outsourcing payroll is the way to go. But some clients want to do payroll in-house for a variety of reasons, especially job costing.

I had an opening in my schedule, so I decided to attend a $250 day long QuickBooks payroll seminar. What I learned is the best way to teach payroll. From now on, I want to walk clients through the whole setup. That's not only the best way to teach payroll, but we'll solve problems you didn't know you had in the first place.

What do you think?

"wwmd" stands for "What would Madeline do?"

One of my favorite clients told me that they have a saying in their office, "wwmd". That stands for "What would Madeline do?". It's a lovely compliment, because it means that I'm adhering to standards. Accounting is all about standards.

Some people think my book is not a true accounting book, but they are mistaken. Accounting is all about standards. The Profit and Loss Report and Balance Sheet are the same reports no matter how difficult it is for you to learn how to generate one for your business.  Fraud is all about deviating from standards, so if you employ the "wwmd" accounting standards, you'll have a line of defense in the war against fraud. I want to make you money on the upside and downside, so you can improve your profit!

As a matter of fact, the client who made up "wwmd" acronym is taking accounting classes towards a business degree. If I wasn't answering her questions correctly, she would have figured it out by now!

Update: I thought this new client was jerking me around. He said, "are you kidding? You're the quick books Jesus". That was funny. I've been called Guru before, but Jesus is a new one. Hey, I'm happy to be of service, in my own small way. 

Gold and Silver Investing

According to the IRS, gold, silver, platinum, and palladium are “collectibles” when held in the form of coins or bullion. A collectible includes items such as stamps, coins, fine wines, precious metals and gems, antiques, and fine art. As a result, the tax treatment of capital gains and losses from the sale of precious metals is different from that of investments in stocks and mutual funds.

First, let’s define what a capital gain is.
A capital gain is the difference between what you paid for an investment and what you received when you sold that investment. If you made a profit on the investment, you have a capital gain. If you lost money on the investment, you have a capital loss.

Now, let’s look at the tax rates.
For 2010 tax returns, short-term capital gains (assets held one year or less) on the sale of precious metals are taxed at your ordinary income tax rate -- 10, 15, 25, 28, 33, or 35 percent. This is similar to the way short-term gains are taxed on stocks and mutual funds. However, long-term capital gains (assets held longer than 1 year) are taxed at a flat 28%.

Which is better – long-term or short-term? Well, it really depends on your individual tax situation. If you are in a tax bracket that is higher than 28%, then long-term gains may be better. If you are in a lower tax bracket, then the opposite may be true.
Where do I report my gains or losses? You use first in, first out method of calculating short or long term gain. Your report what you bought, month/year you bought it, how much you paid for it, and then the same for the sale side of the transaction on Form 1040, Schedule D. You can use Quicken to remember your investment purchase details or keep the paperwork handy. Gains and losses are reported for each transaction and once all of them are figured, you will either have a net loss or net gain from all of your trades.

What happens if I sell my precious metals at a loss? That's difficult these days, but if your overall capital losses are more than your capital gains, you can claim a capital loss deduction. You can use your total net loss to reduce your income dollar for dollar, up to $3,000 -- or you can carry over any unused parts and treat it as if you had incurred it in the following year. If part of the loss is still unused after that, you can carry it over to later years until it is completely used up. This is a compelling reason to use the same tax preparer every year.

How do I protect my business?
Remember that taxes are just one element of investing in precious metals. Private dealers require cash. Even online dealers charge a premium for you to use credit cards. If the IRS audits your business and the following is true:
  1. you didn't use business checking or business credit cards to buy precious metals,
  2. you're not taking write-offs from the private checking account or credit card you used to buy precious metals so those accounts don't appear in your QuickBooks file.
  3. and you didn't write off your safety deposit box fee (or other investment expenses) as business deductions.
then you've shielded yourself from the IRS looking into your personal finances in case of an otherwise routine audit. You aren't required to separate business and investment finances, you just have to have accurate accounting records, but business protection may be a compelling reason to move in that direction.

Also, be sure you get advice from your financial advisor and/or tax advisor, as the information discussed in this article just scratches the surface on the topic. There is often new tax legislation on the table and rates change from year to year.

What do you think?

What would you do with more profit?

As I watched clients use my accounting help to improve profitability, I assumed they would use their new-found money to expand the business. (Probably due to reading too many business journals.) Imagine my surprise when it turned out that most clients wanted to take more vacations! This makes perfect sense since every small business is a triad of the customers, the business itself, and your private life.

New Audiobook

The audiobook version of "Radically Simple Accounting" is finally published. Like every creative project, it took twice as long as expected and cost more than budgeted. My motto is, "anything worth doing is worth doing twice." People are saying nice things about the audio quality. Here are some of the retailers who are selling it now:


 CD Baby

Learn Out Loud 

If you love the audiobook, I would really appreciate your 5-star review.