Monday, January 9, 2017

So you want to start a business. How?

I am listed on Linkedin ProFinder as a bookkeeping provider. It sent me these "leads" and their background and requests which were -- quite interesting. I think these NEW business owners need to be better educated. They need not ONE professional but A FEW. Not one-time help, but long-term, REGULAR Business Partners.

Let me explain:

First, to start a company, you need to decide on what LEGAL ENTITY your company should be. It is a DECISION you need to make, AFTER learning the pros and cons of each.

Basically there are 3 major types of Legal Entity: Sole Proprietorship, Partnership (LLC is like a partnership), and Corporation. Each has pros and cons.

To save some money, start with reading Nolo books which are self-help law books. The libraries have quite some copies.
Else, talk with a CPA who explains from TAX standpoints the pros and cons of each.

Once you have decided on the right type, hire a LAWYER to help you with legal paperwork. A lawyer is ESSENTIAL especially if you have partners or you plan to go BIG. The lawyer also handles security / capital structure, intellectual properties and partners agreement. All are serious issues.

Well, if you are a mom-and-pop shop and you plan to stay SMALL, sole-prop is the way to start, for it is the EASIEST and the CHEAPEST. And you can incorporate later.

If you plan to be BIG and want to be listed on New York Stock Exchange or NASDAQ, you want to be a CORPORATION. C Corp it is, and you issue SHARES.

In between, LLC is flexible and does not require annual directors and shareholders meetings. You do not need to write minutes or resolutions, which is -- nice! And you can do LLC-elect-to-be-taxed-as-an-S-Corp, where you are not subject to self-employment tax. (Huh?)


Now that you have the company formed, next thing is on running the business regularly.

All businesses have THREE functions to cover: Operation, Marketing and Finance.

You probably have staff to handle the first one and two.

The third one, finance -- probably you do a lot of that to begin with.

You do:
- A/R (accounting receivable): invoice clients for work done or service delivered, process payments, keep track and follow up on outstanding invoices.
- A/P (accounts payable): track unpaid bills, pay them by due dates.
- Cash (bank or credit card): post all entries, reconcile to monthly statements provided by bank or credit card companies to ensure all is posted and is correct.
- Payroll: Payroll is complicated. So it is best to have outside payroll agent to handle. The fee is very modest. You just need to post the expenses to the books.
- Monthly reports: generate balance sheet and profit and loss to show you where you stand and how you performed.

You can do a lot of the daily bookkeeping stuff yourself, and have a bookkeeper to tie up the loose-end, correct the errors, and generate monthly reports.

And at the end of the year, have a CPA do your tax returns and year-end tax planning if needed. And if you do stock option as part of employee compensations, your CPA need to do 409A valuation, too. And you can show the valuation to your board and investors.

So, you need: a CPA, a Lawyer, and a bookkeeper.

Monday, November 21, 2016

Linkedin -- It is dynamic. Not static

Just read Stephanie Sammons' book; Linkedin to Influence. And I have some AHA moments.

Linkedin is NOT static.
It is not a place to ADD more connections in count, and forget about them.

It IS a place where you can ACTIVELY ENGAGE your Network, EXPAND your connections, and build your INFLUENCE.

The way you do it:

1) Build a STRONG profile.
Show (not tell) your expertise by:
- posting slides (powerpoint) on
- write high quality posts on regular basis, and ACTIVELY share them.

2) Engage

- follow influencers, publishers, journalists for hot topics (or to get ideas. But, honestly, I am not into group-think or group-talk.)
- re-share quality info found on Linkedin or other online sources.
- read, comment, share posts that you like. Your activities will be seen by all of your connections, hence keeping you on top of their minds.
- engage your audience by thanking, commenting, liking their comments.

3) Build / Expand your Network:

- tag your connections, so that you can quickly pull up people of the right group; i.e. current clients, hot prospects, CPAs, etc. for easy mass-emailing.

- regularly "touch" your connections; by following / commenting on their activities, and share useful articles especially articles on how-to.

- Searching (or Advanced Search) on people, company to find out more about them. Click on the "hamburger bun" to search by people, company, etc.

-  Search your connections' connections. You can do "keyword "search such as title "CEO, owner" or do "advanced search" to add more filters; such as function "sales, business development", company size of different "number of employees" and etc.

- Reach out to your connections' connections by inMail. Mention Shared Connections or shared interests.

Different social media platforms have different characteristics:
- Facebook is about -- fun. fun. fun.
- Linked is about -- useful. useful. useful.
- Twitter is a place where -- everybody talks and leaves the room. No one listening. It is -- rapid pace!

At the end, nothing beats face-to-face connection.
Linked in just pull away the veil of 6-degree-separation. It allows us to see the invisible links, hence facilitates us connecting with our connections' connections.

Tuesday, November 8, 2016

Cold Calling or Social Media?

Last week, I wrote a blog on a success story on cold-calling.

I used to think that Social Media is just that -- for socializing. It kept the "author" busy. It created a "sense of engagement" with the audience -- but is it really? It did not result in sales, which translated into money.

Recently Dr. Sam from Strategism came to talk to our Small Business Program class at Golden Gate University (sponsored by -- Chevron!) His topic was Business Development. He didn't like cold calling nor door knocking which he did in early years. His company now makes $7 million in sales.

And what works for him is -- YouTube.
And he loves it!
He said with these social media / online tools, he can reach audience all over The States.

Strategism does IT, project management coaching and consulting. For him, reaching NEW clients is the key. Finding untapped NEW areas and quickly MASTER the skills are the other keys.

So, what marketing method works?
It turns out to be: know your clients!
Know where they look.
And find them where they are.


The methods I used are:

1) Postcards campaign -- I want to proactively reach out to the targets vs. passively waiting while the targets reach out to half a dozen of providers like me.

2) Cold Calling -- I think being able to talk with the business owners is a HUGE plus. From the tone, you have a sense of how the other person is like. It establishes  human-connection.

3) Getting involved with organizations / communities where my target audience are  - since I seek to work with contractors and architects, I go to AIA SF (American Institute of Architects) to do presentation on Quickbooks regularly as a way to build reputation.

4) Get people to TALK about me: I host meetup and mastermind to bring people to me, so that they will TALK about me. I also GO to places where my TARGETS gather, such as AIA SF, so that I am always on top of their mind. 

When interviewing Gordon Chong FAIA for a class assignment, in response to my incessant questions on "Where do you go places to meet people?"
He said, "You don't just go places to meet people. You keep going. You become one of them. You belong. "

4) Publish quality materials to educate -- I started posting slides from previous presentations on And I also write blogs. These materials once published will do marketing 24/7 forever. It is a great investment. 

Tuesday, November 1, 2016

Is Cold-Calling Dead?

In September, I got a voicemail; "Hi, this is Virginia. I just moved to SF from LA with my sister. I worked with CPA firm before. I did write-up, taxes -- personal, corporate, partnership and I also did training. Do you have a part-time job?"

She sounded like in her 50-ish. The specific of her skills was very helpful.

I thought: She sounded wonderful! But over qualified -- for me. She would be under-utilized. Plus I did not have extra work. But, I really appreciated her gut in cold calling!

I called her back, just to welcome her and to praise her for her gut!

She told me a bit more on what she could do and was VERY enthused.

I told her that I did not have the extra work. And she would be under-utilized.

She persisted, "Do you need someone a few hours a day, or a few days a week?"

I was impressed by her enthusiasm and easy-goingness.

After hanging up, I called Walter Louie CPA; my long-term strong allied. Walter owns a small CPA firm. I knew he has been trying to find a replacement for his former office manager who left for her hometown in Colorado for some months. He said she was his "left and right hands."

He said, "Wow! I would like to talk with her!"

I hung up and called Virginia right back.

I said, "Call Walter's office. Tell the person who picks up the phone "Terry said Walter would like to talk with me."

Virginia kept me posted on her contact with Walter. She affirmed my respect for him; "He is a nice guy!"

Later, she got food poisoning and was out for a week.

When she called again, she said "I am working at Walter's office. Today is my day 2. The system is different. I have a learning curve. Walter knew that. I called just to thank you."

It was just slightly more than a month from the day she called to the day she started working at a CPA firm, with a knowledgeable, respectable CPA. A good job and  a good place to be.

So, who says cold-calling is dead?

Tuesday, October 25, 2016

A Trouble-Free Accounting / Bookkeeping Department

Now and then I got requests from business owners to tech-support their staff or to clean up their QuickBooks files.

The problem is: bookkeeping needs to be done REGULARLY. Mistakes tend to involve tons of entries spanned months or years. It takes a HUGE effort to pull a derailed train back to the right track. Some mistakes were so curiously "creative" and I wondered "How in the world did one do that?" It took a lot of brainpower to uncover the problems and to make them right. Sometimes I have to stop when it was “good enough!”

Once I left, the problems started building up again.

It was a HUGE unnecessary pain. There was no way to run a business that way.

I normally declined the job. 
I wanted to fix the problems only ONCE. 
Then, my team and I should OWN the full accounting department!
It will be a smooth sail from then on. 

*   *   *

When we hire a builder / contractor, we hire one who is licensed. 
By passing the exam, the builder proved that he has certain level of skill.

Bookkeepers do not have licensing requirement. Hence, it is a Wild Wild West.

Why would you pick a bookkeeper who was a chef, an artist, or a photographer?
Because you LIKE them? They have DONE it for years? 
What if they do not even know that they have been screwing up for years?

Bookkeeping is about DEFINING the transactions and RECORDING them correctly based on Accounting Principles.

Try these. These were real situations I encountered:

1) The mother of a business owner repaid her son $100,000 for money advanced throughout the year in managing her apartment buildings. What was it? (The office manager recorded it as Income.)
Answer: It was a reduction of Loan Receivable from the mom.
If left as income as it was, the owner can be expected to pay 25% federal tax plus 10% California tax!

2) A business owner paid $10,000 personal Federal taxes with the company's money.
What was it if it was an S-Corp?
Answer: It was a personal expense. S-Corp shareholder was allowed to take distributions hence it was a Shareholder's Distribution.

What was it if it was a C-Corp?
Answer: No distribution for C-Corp shareholder. He must pay back. Hence, it was a LOAN.

The REAL value of bookkeepers is: we help you figure out the useful REPORTS you need; such as JOBS reports for contractors. We put in NUTS-and-BOLTS; i.e. SET-UP so that the daily tasks are easy TO DO. And at the end of the month, you get GOOD Reports.

To be trouble-free with accounting / bookkeeping, hire a bookkeeper with an ACCOUNTING degree, not the low-skilled office admins.

Monday, October 17, 2016

Online? No, Quickbooks DESKTOP instead!

Quote from Warren Buffett: "You have to think for yourself. It always amazes me how high IQ people mindlessly imitate. I never get good ideas talking to other people."

On investors' behavior, Buffett drew analogy from lemmings; the small rodents found in Arctic. Lemmings experienced frequent population booms and busts. Probably due to population boom, at certain times, the lemmings would get into massive migrations. They swam frantically en-mass in circles until they drown from exhaustion -- the behavior of investors in so many cycles of booms and busts over the past many decades.

Online Accounting software is red hot now.
Quickbooks Online. Xero. Cloud.

The users probably thought that data really lives on the cloud UP THERE.

The data actually lives on EARTH, on some remote servers situated somewhere on EARTH.
AND each and every single piece of data, made up of bytes of 1s and 0s, is transferred over the cable to the remote servers located somewhere on earth.

Each piece of DATA that forms the REPORTS you see, are retrieved from the remote servers somewhere, and reassembled back to your screen by browser. Some of the data were stored in cache for faster retrieval. They resulted from earlier computing. You have to clear the cache to get updated reports. And the reports load -- ONE webpage at A time. And the webpages don't print right, unless they are "printer-friendly". i.e. formatted for print. If you want to see multiple reports, you have to open a new tab for each report.

Well. If you have gig business, Online probably will do.

But, if you have a REAL business, and you have 3 major functions to cover (operations, marketing and finance), I would advise you to stay with Quickbooks DESKTOP, for it is ROBUST.
(b.t.w. what does it mean ROBUST?)

Adam Sterling in his recent seminar on Startup Laws at Nasdaq Entrepreneurial Center said; "INNOVATE! When it come to products or services. Stay BORING, when it comes to LAWS (for you don't want to break laws)."

I can add Accounting / Finance to the "stay boring" category, too, for you want your financial reports done right according to the accounting standards. And the reports are understandable by bankers or investors who will give you MONEY. 

Tuesday, October 11, 2016

Your CPA or Your Bookkeeper ?

I am taking a 10-Saturday Small Business program at Golden Gate University. It is FREE thanks to the generosity of Chevron (Yeah!). And comes with free breakfast!

The first half of the class is a break-out session. We get in a group of 5. Each of us has some times to talk over our stuff and listen to feedback. 5 weeks into that, I got 2 good ideas: use "boomerang for Gmail" to schedule outgoing emails, and connect with Construction Lawyers since I do bookkeeping for contractors.

The Richest Man in Babylon states that one should entrust wealth (i.e. loan) to only people who are skilled in their work. A man who acquired a sudden fortune tends to draw requests for help or investing ideas from friends / families. The book cautions us against both temptations because money is hard to come by. Only when the borrower was skilled in what he did and the preservation of principal was guaranteed should you lend.

I told my recent scare of misreading a team member's email. I thought he was quitting. I realized how important he was compared to my client(s). (Who said clients are always right?)

A team member of mine is a CPA who has been with IRS for 18 years and now working with a CPA firm for 15 years. She could not understand. I told her we work closely with business owners. We go to their site weekly, bi-weekly or monthly. We BOND with the owners. I even drew an analogy of a babysitting business where the babysitters stay with the babies whole day long. Hence she bonds with the baby and the families. If she quit, it is hard to replace her.

The CPA said that I needed to let my clients know that I was the boss. And I can send newsletters to touch base with the clients.

… I was SHOCK that I could not make a CPA understand how the bookkeepers work and our relationship with the clients.

I decided to tell the business owners direct:

1) The CPA saw only the FINANCIAL STATEMENTS a few times a year. They made a few period-end adjustments which made the reports look good at the end-of-the-year. The adjustments do not fix monthly numbers. So, if you try to do a month-to-month or this-month-vs.-this-month-last-year comparison, the numbers are not right.

2) The CPA does not deal with nut-and-bolt (i.e. set-up issues) and daily processing stuff such as invoices and vendors’ bills. The bookkeepers do. The bookkeepers are EXPERTS on those. Your CPAs are NOT.

3) You do OPERATIONS every day. Bookkeeping is the 3rd leg of your business (besides Operations and Marketing) which also needs to be done REGULARLY. If you care to bill and collect money for your sweat, and pay your employees and vendors on-time to keep them happy, then, please DEFER the bookkeeping stuff to your BOOKKEEPER.

Steve Jobs said; "Hire the BEST person you can, and get out of their ways (so that they can do the works.) You want to do that.