The Ambitious Bookkeeper Podcast

186 ⎸ [Q&A] E-commerce, Digital Products & the CFO Title

• Serena Shoup, CPA • Episode 186

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Hey there! Welcome back to another episode of The Ambitious Bookkeeper Podcast. This week, join me as I dive into a treasure trove of archived Q&A content. We’re talking year-end tips, the ins and outs of e-commerce, using that CFO title wisely, and loads more. So grab your favorite drink, get comfy, and let's dive right in. Enjoy!

In this episode you’ll hear:

  • Get the lowdown on stepping into the wild world of e-commerce bookkeeping and why it might not be the best first client without some confidence.
  • Explore what titles like CFO or Controller really mean when offering advisory services and how to choose the one that suits you.
  • Learn some insider tips on handling 1099 issues when vendors are playing hard to get with their W-9s.
  • Dive into a candid conversation about those pesky VC demands and what to do when a client expects full-time employee attention.
  • Discover the best scrappy and budget-friendly platforms to launch digital products without breaking the bank.

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Serena:

Hello and welcome to the Ambitious Bookkeeper podcast. This week is a live Q& A from the archives because I'm in bed sick and I don't want to have to not publish a podcast episode. I have tons of Q& A content that is super valuable and this one I'm pulling out of the January 2024 archive so that it's a little bit more relevant to year end. which we all might still be going through right now. There's some other topics that we discuss as well, such as diving into e commerce, if that's the right fit for you, using the CFO title, if you're working on offering advisory or controllership services, digital products, and much, much more. So if you are wanting to get a whole bunch of random questions answered today, this is the episode for you. So keep listening. Alina says the new client that I got e commerce one, I totally freaked out thinking I wasn't knowledgeable enough, had this awful lump in my stomach and couldn't sleep. I ended up telling him that it was too much work and basically chickened out. How do I get more comfortable in doing bookkeeping? I feel like it would be good to work under someone to get the hang of things and learn. I found this mentor that charges two 50 a month and allows her students to work on her clients books. this is really normal to freak out when you take on a complicated client. sometimes I still have those moments. So it's not something that will ever really go away when you bring on a new client, but when you have confidence in like being able to roll up your sleeves and figure it out, no matter how much time and effort it takes, then that will allow you to overcome this feeling. If you aren't there yet, then it might be a good idea. If you haven't experienced yourself rolling up your sleeves and figuring things out without any guidance, like if you've never been in a role like that, it might be good for you to work under someone else where you have that ability. And a mentor charges 2. 50 a month and allows her students to work on her client's books. That's a pretty good deal. If I'm assuming probably just one client at a time. And if that mentor is reviewing your work and giving you feedback and, and all of that, that's really awesome. The other alternative would be to go work for another bookkeeper and, Be honest about what your background is. I'm not sure if you have your accounting degree or you have some bookkeeping experience or what it is. Just be honest about your background and say like, I'm looking to gain experience. I want feedback, I wanna be able to learn. and be honest too about like eventually wanting to start your own business, because you wanna make sure that that's. All out in the open, but it might be the right option for you to work with this mentor, especially if you already have your own clients and you can learn on one of her clients and then afford that 250 a month and take what you're learning and apply it to the other clients that are also paying you. also e commerce is very complicated and very complex. So don't beat yourself up over that. I would not ever recommend anyone take on an e commerce client if they've never worked on clients on their own yet, or if they don't have sales tax or inventory experience from corporate or something. it is a beast and you have to know the nuances of it. So If that's, you know, not something that you're interested in doing, you don't have to take on that type of client. Like I would stick with service based, entrepreneurs, maybe in a single location that aren't doing us wide stuff. So if there is a sales tax component, you're only dealing with. One jurisdiction. It's a lot easier to learn that way. All those things. When it comes to e commerce, there's so many complexities and integrations and systems and, and things that, if you aren't confident in being able to roll up your sleeves and just figure things out, it's probably not a great fit. So, Good call on that if that's where you're at, but don't beat yourself up over it. And it is something that you can learn, but I would suggest learning that under someone else for sure. okay. Jessica says, I'm kicking around an idea of offering outsourced controller accounting manager services as opposed to calling it CFO. What are some services that may be slightly different in this offering than CFO? This is Jessica. Hello. And I hope this makes sense. I don't feel in alignment with calling myself a CFO yet. That's normal. I, yeah. And it's up to you. You get to decide what you call yourself. I had a difficult time calling myself a CFO as well because my perception of a CFO is very high level corporate CFO that gets involved in investor relations and lending and funding and things like that. And I don't do really any of that for my clients. and controller accounting manager, those roles in corporate also tend to be involved in budgeting and forecasting processes. So I think if you're comfortable calling yourself that and just doing the education with the client, because even if you call yourself a CFO, you still have to educate your client base and your audience about what CFO services you do provide. And so I think it's, Whatever you have to call yourself to be able to be confident in what you're providing is totally fine. And then either way, I think every single accounting role, we all still have to do a component of, educating our clients on what that entails because bookkeeper to bookkeeper also varies. So no matter what, you're going to have to educate the client on what your scope is and what your role is, whether you're calling yourself a bookkeeper or a CFO or an accounting manager. There's so much overlap that we just can't get around that anyway. So you call yourself whatever you need to in order to feel in alignment and confident with it. I'm all for that. But some services that may be slightly different in this offering is, I consider controller accounting manager stuff where you're mainly closing the books. You're not doing the day to day necessarily. And you may be overseeing someone that is on staff, like the bookkeeper or office manager that's doing accounts payable or accounts receivable, and you're kind of just double checking things and all that. But, you can also do budgeting and forecasting as a controller or an accounting manager. So it's really, again, kind of up to you, what you are wanting to offer and then go from there. I hope that helps. Rebecca says, any tips on doing 1099s where the client did not provide a W9 and the vendor does not respond? Okay, so there's a couple options that you can do. Technically, you're still supposed to file the W 9 without the pertinent information. Like, you're not going to have their tax ID, but you can still file it, and you might have their address, and you can still mail it to them, and it's still going to go to the IRS. I don't know if you can actually e file. Forms like that, that don't have a tax ID, they might get rejected. that is a question mark. It might depend on what software you're using, so I would double check the help documentation with your software to see what their process is. for instances like that, you might have to, file a paper return. And then also what needs to happen is an email or a letter to that vendor. That says future payments will be held until we get a W 9. Like we're not going to, and a lot of times this doesn't happen with current vendors. It's someone that they don't even work with anymore, but if they are working with them, you cannot let your client pay them anymore without a W 9. Otherwise they are subject to backup withholding, which is like 20 percent of The amount of the payment. So there's instructions in the, 1099 or maybe even the W 9 form instructions. both of those have this in there, the backup withholding thing. So that is how I would approach that. I would, if you have an email or an address for that vendor, I would create a template for clients to use and either put it on, you know, your letterhead or your client's letterhead. Kind of have to decide with your client what's most appropriate or draft an email for your client and have them send it that says we can't pay you anymore until we get a W 9. We have to issue a 1099 by law. We're going to issue this without your information on the 31st if you don't provide it and going forward. We have to do backup withholding on any future payments or withhold your payment altogether until you provide a W 9. Like that's just, it's just business. So that is how we would approach it in corporate. We never paid any vendors without a W 9. So that's something that I try to pass on to, all of my clients too, is when they bring on a new vendor. best practice is to collect a W 9 before you ever issue payment, even if you think you're going to pay them via PayPal, because something could change and you may not end up paying them with a third party processor that's going to handle the 1099s and you might have to, you know, ACH or send a check or whatever in that case. They need a 1099. So best practice is just ask every vendor for one before doing business with them. Unless you're doing a subscription on a credit card, that's different. All right, Laura. Hello. What are the best digital product platforms for startups to avoid sending you YouTube links as that is how the client might go? I saw Squarespace allows digital products, but it is a video and PDF and it seems they don't allow PDF. I think Squarespace does allow PDF. I'm not quite sure on that, but it depends on their price range. There's lots of, so I'm guessing you are talking about setting up a digital product in your business that you can send clients to for educational purposes. So there's a few options you could do. You could actually just create a Google Drive folder that you share with clients with the videos, especially if they're personalized for them. Just create a trainings folder for them and then share the Google Drive link with them and upload them there on your drive. upload things to YouTube if it's not behind a paywall. you could create YouTube videos and just make them private and only share them with certain people. But only if you're not charging for that, that's otherwise it's against their terms. the other thing, the product platform that I use is Kajabi, but it's pretty pricey for if you're not considering really going heavy into digital products and selling courses and programs, but that does allow delivering PDFs. Videos, audio, communities, email marketing, all sorts of stuff. So it's this all in one platform and I love it. If you're interested in Kajabi, I have an affiliate link, so let me know. and I host my websites on that too. So if you haven't already figured out a website host, Like that could be an option and it could be all under one roof. you can also take payments. If you follow Katie Farrow, she actually sets up all of her clients on Kajabi, subscriptions for their monthly payment. So it just automatically withdraws their money every month. So you can do that as well through there. so if it's just a video and a PDF, yeah, I would honestly consider just. doing it scrappy if they're already your clients. Or like if you're not quite sure what direction you want to go yet, go scrappy and just put it in a Google drive and make the, you know, share the link to people that purchase it or whatever your your processes. It won't quite be that automated, but there's probably ways. This is for a client who is selling video PDF for fitness. The client just felt a lot of platforms are too expensive and didn't want to start a new website since already on Squarespace. Yeah, I feel like there's a way to do this on Squarespace, so I would dig into that some more before directing them elsewhere. an affordable one is Podia, and, I want to say, I'm drawing a blank on this other platform. There's so many out there though, yeah, and Kajabi is probably going to be too expensive for them. Okay, Alina, it cut off. It said the same time I feel weird paying to do work. Yeah, it is kind of odd, but the alternative is you're exchanging your time for somebody else's bottom line if you work for somebody as an employee. You know what I mean? So, you're paying for the mentoring. It's not like you're really paying to do the work. But, and you can. See what their terms are, like, how long does this last? Can it be just three months, or is it, you know, month by month, or is there a year long commitment? Like, what does that look like? and does she guarantee you the work? And yes, you have 12 years as an accountant in construction and a CPA, but never worked in QBO. So if you haven't already, I would go through the QBO trainings to get familiar with how the system is supposed to function. And you already have the experience as an accountant in construction, which is one of the most complex industries. You can handle pretty much anything at that point. You just need to allow yourself the time to struggle through it. Create your processes and gain the confidence, but going to need practice clients to do that. whether that's your own client or someone else's client, and you can always come to this group to get clarification on how to handle certain things. There's a wealth of knowledge in here. Track 1099 allows it without all the info being there for a 1099. You can't do it in QBO. I've had this for several real estate clients. Yes. Thank you so much. I'm guessing you're in it. Now that I do the clients billpayandbill. com, I'll start requiring W 9s. Yes. Absolutely. I want to change from sole prop to LLC. What would be the best streamlined way? I have reserved my name and want to take the leap. I personally, it depends on if you want to go through doing DIYing everything and spend the time on it or you could use something like corpnet and But you've already reserved the name So you probably at this point need to just go and do it yourself on the Secretary of state website where you're at. and then it's a matter of Securing the LLC through the secretary of state I don't know what state you're in, but most states have very clear business setup guidelines that walk you through step by step, like register here at the secretary of state first. Once you have that, you can then register with the department of revenue if you need to do sales tax. And then once you have that, Really, once you have your LLC set up, sometimes you have to do a publication in a newspaper. So make sure you just read all the rules on that. And then you can get your EIN, which you can do yourself on the IRS website in five minutes. So, also there's new reporting requirements. So if you start an LLC in this year, you have 90 days to register with the FinCEN, which is basically a new reporting agency with the, It's not IRS. It's just the government. I'm drawing a blank, but, there it's basically so that they can see who are the owners behind all of the flow through entities that are in the US, to prevent, fraud and crime and all that kind of stuff. so that things can be tracked back more easily to owners. So just make sure that you do that registration too. It is free. I believe to register, but you only have 90 days if you're a new LLC in 2024. If you created an LLC before 2024, we all have until January 1st, 2025 to do this registration. So we all have a year if we've already been in existence, but anything new that starts as of January 1st this year, you have 90 days, from the date of creating an LLC to register it with, The FinCEN. So just a heads up, pass that along to your clients as well if you weren't aware of it. all right. Rebecca says, I have a client that is majority owned by a venture capital firm. The relationship with the client has gone from a very simple mom and pop to putting out fires and meeting tight deadlines required by their venture capital firm. They are one of my higher paying clients, but they are taking up so much of my time. The venture capital firm is basically treating me like I'm a full time employee. Any advice? This probably requires a candid conversation with the owners first, letting them know that, you are a contractor, you aren't on a retainer, I don't think. I don't know what your, scope and relationship is set up as, but. Go back to your engagement letter, look to see what you have as response time and scope and everything. And if it's not outlined, now is the time to maybe create a new engagement if they need that level of support. And just go back to them and say, look, this is what our scope currently is. I don't think it's working for how your company now is set up with the VC. And these are the things that I'm seeing. We can either A, move you to a retainer where you are at the top of my list and I tackle whatever comes my way within 24 hours and the VC firm at this price, or we can keep your engagement as is and someone else on staff needs to be handling putting out these types of fires because I'm not an employee. And you have other clients and all that kind of stuff. So you probably need to have the conversation with the owners and see which way they want to take it. and definitely increase that fee if you're going to go on retainer like that and guarantee response times. But first look at your current engagement letter. So you can kind of figure out where you stand now, where are the gaps of what they need and present them a solution. Go from there. I've charged the client extra for out of scope requests and pushed back on some deadlines, but the VC firm doesn't really care and the agreement is with the client company, not them. So there is no penalty to them. Only my client. Yeah, so definitely discuss with them to see how they. need things handled and just show like understanding and empathy with like, I understand that like my relationship is with you, not the VC firm, but I know that if I don't respond to them, it affects your relationship with them. So I want to come up with something that's going to work for everybody. But right now it's not really sustainable. and Maybe it's a conversation of having them bring someone in house. I've had that conversation with clients that become really needy too, because I don't have the desire to be on a retainer like that with any of my clients. and when they start treating you like an employee, that means that they actually probably need somebody in house. That's going to be responsive within an hour or like at their desk all the time answering emails and phone calls and things. So If that's how it's going, they probably do need somebody in house. And so you kind of have to decide, are you willing to kind of let go? of the whole entire engagement, or at least say, look, I, I really suggest you get, depending on the requests that are coming, right? I really suggest that you get someone in house to do AP and AR and answer phones and work with vendors because this is taking up a lot of time and then all these fires. And then I can focus on closing out the books and meeting deadlines for financial statements for the VC firm. Like whatever it is that's. So if you want to find out if you have a client that's causing all of these fires, get to the root of that and figure out a solution for that. I hope that helps! 1099 question, woohoo! Non employee travel reimbursement. Does this require a 1099? No, you do not want to add the travel reimbursement to the 1099 amount. So it's really important that if you have clients that are reimbursing There are contractors for travel that that contractor itemizes the invoice and separates it out and you have to book those invoices out separately so that they don't get captured together. or so that you can easily split it out. if you're preparing 10 90 nines and you haven't read the instructions, that's your homework this week., go read the 2023 instructions before you Prepare any 10 90 nines. Read it for changes, even if you've prepared them in the past. Skimm over it. Read the section of, current year changes and make sure that you're aware of all these, because this is covered in the instructions as well. Another 1099 question! Is filing 1099 form required, QBO requires you, your firm or the client to be registered in as an IRS system now that IRS requires electronic filing? no, I don't think so. I think the systems that, that are set up to do the e filing are the ones that are registered. It's my understanding. It's not like an, like e filing actual taxes. So if you're using QBO to file your 1099s or tax 1099 or track 1099, like those systems are set up with the interface to e file and all the things that need to happen there. Will you speak again about bill paying for clients? Specifically, options where the bookkeeper can submit AP for the client to approve easily that works well with Xero. I'd love this client to move to Relay, but that may not be of interest to them this year. So the way that I've handled a manual AP process like this, when people need to review and approve things. one, Xero actually has a really nice approval feature for bills and invoices. So if your client, is tech savvy enough to be going into Xero, you can actually let them, you know, you can book the bills as, draft or waiting for approval, and then tell them weekly, send them a weekly reminder, please go in and approve the AP invoices that you are ready to pay and let them know, like some of them are probably due or you can, you know, do it that way. Or what you can do is you just book everything in Xero as approved and ready for payment. And then you send the client. a spreadsheet, an export, or a PDF, or a screenshot of the AP aging and showing them what's due by vendor. Like I do the detail aging, but you're grouped by a vendor so they can see this is a total for this vendor, but it shows all each individual invoices. And then, you know, highlighting this is what's due. This is going to be due next week, blah, blah, blah. and then asking them for approval via email for the AP run of x, y, z amount. And so that's how we did it in corporate, like when we needed, email approvals, I would, I would say, okay, this is the AP run. It's a hundred thousand dollars. This is the AP aging. Of all the things that we're going to pay, is it approved? And then we would, you know, run the ap run and pay everything. So that's what I would suggest. But if the client is really tech savvy, you can have them do approvals on the front end. If they don't have cashflow issues and say, let's set up an approval process that you approve bills as long as they're okay to pay. And I will just pay them when they're due. and having them just approve them within Xero when they agree that they're valid and okay to pay. That really only works if there's not cash flow issues. If there's cash flow tightness, then you want to send them the aging and say, pick and choose which invoices we want to pay or approve this entire run. and then letting them know this is what's coming up due next week and the week after, whatever. So that would be my process on that. For the bill pay question, so can Xero process the payment using the client's bank account? No, you cannot, but if they are set up on bill. com or Relay, you can actually integrate it and have the bills sent. over like Relay. If they do Relay bill pay, you can sync it to where it'll pull in all of the unpaid bills into Relay and you can pick and choose what to pay. So that's going to be really affordable. You can also do something similar with Pluto, but no, you can't issue payment through Xero like you can with QuickBooks and Melio. Can you please specify after the call is fine where in the 1099 instruction that the non employee is excluded? I'm looking at the instruction on 1099 NEC box one, includes travel reimbursement, not account to the employer. Not account to the payer. I'm not sure. Maybe it does include. Okay, if it says include it, then include it., but I think that is probably because if you're paying them, like say their bill is like 500 and a hundred of that was reimbursed for travel and then on their books they have the travel expense. it'll wash itself out, if they're keeping good bookkeeping, but Yeah, so if the instructions say, this is why I tell you guys to read the instructions, don't go by my memory, but if the instructions explicitly say, that it includes travel reimbursement, then include it. All right, cool, all righty, everybody, thank you so much for showing up and bringing your questions All right. Bye.

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