4 - Assembling Your Financial Team
Listen to full episode :
-
Get the Money Right: Episode 4 – START
[INTRO MUSIC FADES IN]
Joe RodriguezHello. My name is Joe Rodriguez and you're listening to Get the Money Right with Todd Butcher. Todd has decades of experience in giving real estate agents the training and resources they need to get their finances on track. In this episode, Todd will be describing the roles and responsibilities that compose your essential financial team.
And now here's Todd.
[INTRO MUSIC FADES OUT]
Todd Butzer
Thanks, Joe. Hi, everybody. Welcome to episode four of Get the Money Right. Last week we talked about separating your money. And this week, we're going to make another fairly bold move. And that is we're going to build our financial team. As a small business owner, you wear a lot of hats. You know, you're head of sales, you're chief of operations, you're VP of I.T. You're probably president of custodial operations. You know, in short, you pretty much are doing it all. There should be one notable exception, though, and that's this do not hold these positions when it comes to your money. Now, you'll remember back early, I think it was episode two, we talked about myths around money, and one of the myths was that, well, hey, I've already got an accountant and they take care of all this. For me, that is still a myth. We don't rely on these professionals to take care of it for us. We have to manage our money. We have to give oversight to our money. But these are the professionals we lean into for their expertise and advice, and that's the team that we're going to be building now. Forming a fantastic financial team is not that difficult, and if it's done correctly, it's not that expensive. In fact, a good team will make you money. Well, wait a minute, Todd. Hey, it's just me. I don't have a real estate team. I'm just getting started. Why do I. Why can't I just do this on my own? Well, I do hear that a lot from agents. And what's curious is right after they say that to me, why can't I just do this on my own? Then they jump in the car, and they go over to a for sale by owner to convince the for sale by owner that they shouldn't try this on their own. We need expertise, especially in this area, folks.
All right, so who's on the team? First off, bookkeeper. Now, these are not in any specific order, folks, but bookkeepers right at the top of my list. Now, just to be clear, a bookkeeper is not your accountant. I mean, they could be, but typically they're not your accountant and they're not your tax strategist, which we'll talk about in a little bit here. Even if your business is just getting off the ground. I highly recommend that you get somebody right now to start taking care of your books. A good bookkeeper enters your financial data into accounting software such as Quicken or QuickBooks or Net Suite or Zoho Books, or there are several out there. They reconcile your accounts, credit cards, checking savings accounts, loans, other long-term commitments. And in many cases, depending on your relationship, they can even pay your bills and then generate your financial statements for you. Even if your finances are limited right now, I highly recommend you go about finding a bookkeeper. The reality is, for most small businesses, like a real estate sales business, you won't need a full-time bookkeeper. Some of you may, but the overwhelming majority of you will not need a full-time bookkeeper check around. Providers are usually plentiful. Go on social media. Check in on LinkedIn or wherever you like to go to search for this kind of activity. Indeed. You know, in the in my past life, it would be Craigslist, but whatever works for you to go out and search. And probably the best way to go about this is talk to colleagues of yours and ask who's helping them. Just go through four personal referrals. When you do get a name, you want to check them out thoroughly. Get references. Find out their hourly rate. You're going to find it's normally fairly reasonable, folks. This will take a little bit of groundwork, but it's going to be well worth it. Our real estate businesses are normally not that complicated. So a bookkeeper should not need to bill you for a lot of hours, maybe an hour or two per week. I know some agents that have substantial real estate businesses and their monthly bill from their bookkeeper is just in the few hundred dollars a month range. So that can give you a little bit of an idea. It doesn't need to be that expensive for you. So the truth is our businesses are not really that complicated in terms of receivables, payables, inventory and so on. These are pretty straightforward businesses for a bookkeeper to take care of. So bottom line, don't try this on your own. So here are some of the services a bookkeeper will typically offer. They'll record your receipts. They'll enter bank credit card, petty cash expenses. They'll reconcile your bank statements. They'll take care of expense reimbursement. General journal entries, which we're not going to get into right at the moment. But you know, they can make adjustments into your general journal. Financial reporting to your CPA or your tax professional. They can build prior your books from scratch if they need to. They can fix your current bookkeeping mess if you have one. They can help you maintain cash flow. They'll help with invoicing if you have some of that that you need to do. They can take care of accounts receivable. Typically, we don't have a lot of accounts receivable, but you may have someone who owes you money for something. Accounts payable if you have it, payroll. If you if you have employees and payroll taxes affiliated with those employees, they'll file your year-end W-2s and your 1099. Now, all of that is in the realm of a bookkeeper. And trust me if you're launching your real estate sales business. You don't want to be messing with that because you can hire a professional who can do it with great ease and great expertise and keep that part off your plate so that you're better equipped time wise to go spend time with your clients.
While your bookkeeper absolutely has their place on your team, there are some things they don't do and should not be asked to do. They typically do not strategize regarding your tax liability and how to manage it. So, I recommend engaging a tax strategist. This is typically a CPA or maybe an enrolled agent. You can Google the difference there, but they aren't tax professionals. Now, they not only help you limit your tax liability to the full limit of the law. We're never talking cheating here or fudging. We're simply saying we don't want to pay more than our fair share. They can oftentimes help you with other financial planning services. I normally use estate financial planning services from a financial planner. However, my CPA is also very involved in making sure we're maximizing those contributions. They will also help you structure other investments, such as income producing real estate. Now, real quick, let's not confuse our strategist with a tax preparer. Again, nothing wrong with the tax preparer except for the fact now that we're running our own small business, we're going to frequently tap into the expertise of the tax strategist. If you're getting that from your preparer, so be it. That's great. The preparer is normally not interested in helping you minimize your tax liability or shelter, future income, or plan for the sale of an asset or the acquisition of one. They're not someone you consult with when incorporating your business, hiring employees, setting up retirement benefit plans for you and your employees. They're really in the business to create and file the tax return on your behalf and get you the biggest refund if that's on the table. They are a great service, to be sure, but it may not be the service that you need to operate your small business. A tax strategist is exactly that. They help you strategize throughout the year to maximize your net income and minimize your tax obligation. This isn't about cheating or avoiding tax, like we said earlier. It's simply about not paying more than your fair share. I believe your strategist will be someone you will engage with multiple times throughout the year. So, I went to my Tax Strategist website just to give you an idea, and I found the following services listed, and I'm not going to read them all, but I'll just give a few of them. Tax Preparation and planning services. Reviews and compilation financial statements. Bookkeeping and write up IRS Representation, payroll services, financial projections and forecasts. Mergers, Acquisitions. Sales Limited Business Valuation Accounting Services. QuickBooks Accounting set up an assistant estate trust planning, tax preparation, cash flow and budgeting analysis and on and on and on. That's just a partial list of what these folks do. How do you find one? Talk to people that you deeply respect in terms of money and find out who's helping them. I would go through personal referrals for this one. It's going to be your best, best option, I really believe.
Next, we need general counsel and we're not going to most likely need them often. But when you do need them, you're going to want to have access to them. Again, these aren't people you're writing checks to throughout the year, unless, of course, you need their services. So, the next professional is your attorney. I'm not talking about a litigator. Hopefully you'll never have to go to that that side of the business. I'm talking about a business attorney, someone who can help prepare and review ownership documents, provide advice on business structure, ownership, stock buy, sell agreements and so on. This is not something you have to have on retainer. It's just somebody that you can call when you need to. Here's a list of common services that you may use from your business attorney. The formation of your business, the choice of the entity that you're going to be. A buy-sell agreement. Contracts. Mergers and acquisitions. Or dissolution. Those are the services that a general counsel, corporate attorney, business attorney, if you will, would help you with in addition to the business attorney. I highly recommend that you have a relationship with an estate planning attorney. And you might be well served by having a revocable trust or a non-revocable trust or other estate planning vehicle to make sure your wishes are carried out and that your loved ones are properly cared for and that you minimize tax liabilities upon your death. This can be complicated, and I really highly recommend you don't wing this or go online and try to figure this out. It's your estate that we're talking about and your wishes that we're talking about. So here are some of the services from an attorney providing estate planning. They will do overall estate planning. They'll do wills, revocable and non-removable trusts, life insurance trusts, powers of attorney, health care directives, family limited partnerships, retirement asset planning, beneficiary designation planning, and on and on. We've all heard that most Americans do not have a will or a health care directive. And you may not need anything terribly sophisticated. You might just need a just a basic general will that talks about what your wishes are upon the time when you pass on. And so, we want to be able to honor those wishes. So, get yourself a will. That sounds like I'm lecturing, but get that part done. You're going to feel better about it.
Okay. So, one of the obvious questions is and, actually Joe and I were talking about it when we were getting ready to produce this segment. How much is this going to cost? The answer is it depends. All right let's move on. No, it depends, because most of this is going to be hourly rate, folks. And so, it's going to depend based on how much you use them. Your most regular contributor here will be your bookkeeper. And then second, I think it'll be your tax strategist. And then most likely the attorneys beyond that. Okay. So, you're not going to be writing checks out of your business account here just to get things started? For most of you, anyway. I have personally witnessed. Extreme distress among partnership ownership business groups because they don't have properly written operating agreements, they don't have the other necessary business documents. I've also personally witnessed great distress from individuals who did not have their end of life wishes. Figure it out. And it gave them great distress at that time. So, we can have all of this taken care of by having the proper professionals working with us.
Next, let's look at a financial planner. One of the tremendous values that comes from owning your own business is there's multiple, multiple advantages. One of the great ones is, is business retirement accounts or retirement savings accounts for small business owners. They are varied. They can be somewhat complicated, at least for me. And they can be an enormous financial benefit to you and your family that can maximize your saving and investment opportunities. Now again, your CPA or tax professional can also be a big help here. But these are some of the questions that the financial planner in your in your CPA can help you with. Are you maximizing the amount of money you're setting aside for retirement? I can tell you from experience and talking with a lot of real estate agents, we are woefully behind in this particular area, even though there are so many terrific plans to help us retire comfortably. What is the absolute most you and your significant or spouse can contribute? If you own a small corporation, can it also contribute to your retirement plan? Are you at an age where there are catch up provisions that allow you to put away more money than the rest of the population? How much risk can you tolerate and how much time do you have before you may need these moneys? So, I highly recommend you get a planner who is truly interested in what you want to accomplish, not thinking about what financial product they can't wait to get you into. Normally, I think it's best. Like I said, when they get paid based on the upside of your account, not the products you've purchased, but talk around, find someone you trust and ask them for a referral. Regarding this financial planning area. They are not all the same. I am going to be interviewing a certified financial planner to have them discuss how they go about helping people plan for their financial future and how they go about it from a fiduciary standpoint. And again, they're not trying to sell you on a CFP by any means, but just give you some insight as to what that part of your team would look like.
Next, you are going to need an insurance agent. We're not going to go real deep here, but you're going to need to protect your liabilities. Typically, is what we're taught. So you may need life insurance. You may not depending on your circumstances and your net worth and so on. You may obviously need protection on property and on your business. So you're going to want to see a competent insurance agent ask around and you'll have friends that and you may have one already, but you are going to need insurance as a part of your team here.
And lastly, your coach is a part of your team, part of your financial team. Who are you accountable to? You might be thinking, “Okay, well, here's where Todd's going to try to sell something.” Nope, I'm not trying to sell you anything. I just. I just know that when it comes to business, we normally do better when we have someone that we're accountable to. Same with money. Who who's asking you the tough questions regarding your business? What's happening with your income? Why are your expenses creeping up? What's going on with your cost of sale? What can you do to improve your margins? A coach is essentially like a partner of sorts. They're not your friend. They're not there to laugh and joke with each week. They're there to challenge you to be the best that you can be. So, your coach is a valuable member of this financial team that you're putting together.
One more time. We have a bookkeeper. You can go out right now and look through LinkedIn, social media and so on and start asking questions. How much do you charge and have them? Take a look at your business with you and find out how many hours they think it would take per month to start working with you. You're going to find out it's not as complicated and not as many hours as you may think it is. We need a tax professional, a tax strategist, if you will, financial planner. We need our attorneys. We need a business attorney to help us. The set up the proper documents in the proper entity, and then an estate attorney to make sure that our wishes are taken care of. We're going to need an insurance agent so that we're protected and we're going to need a coach. And that's really our team. Now, one thing to stress here, folks, number one, you're not going to start writing checks to all these people. These are these are relationships you're going to look for and then you're going to tap into them as you need them. The next big thing to remember and we're going to wrap with this. They help you with your money, but they don't manage and take care of your money. You do that. These are advisors. These are this is a support group. These are professionals that will give their expertise to you when you ask the questions. But it's up to you and I to have the questions. We are the ones in charge of monitoring and managing our own money. We're the ones responsible for getting the money right.
[OUTRO MUSIC FADES IN]
Joe Rodriguez
That concludes this episode of Get the Money Right. To stay up to date on the latest in Get the Money Right. Follow us on social media and be sure to subscribe to your podcast platform of choice. If you want to support the show, please leave a five-star review and share with your friends. If you're a real estate agent who is getting their money right and want to be a guest in the show, please submit all inquiries to getthemoneyright.podcast@gmail.com. Links to everything we discussed today in the episode description.
Thank you for listening and have a wonderful day.
[OUTRO MUSIC FADES OUT]
Get the Money Right: Episode 4 – END
In this episode of Get The Money Right, Todd will be describing the roles and responsibilities that compose your essential financial team.
Subscribe to stay tuned for more real-time financial strategies that will improve your real estate business!
If you are a real estate agent that is getting their money right and would like to be featured on the show, please email getthemoneyright.podcast@gmail.com
Show Links:
Get The Money Right Website
LinkedIn
Instagram
Credits:
Hosted by: Todd Butzer
Produced by: Joe Rodriguez