Championing Entrepreneurship, Content Type, Person | March 1, 2018
Many entrepreneurs and small business owners are masters at what they do, whether it’s creating amazing products or delivering great services to their clients and customers.
However, just as many struggle with the basics of bookkeeping. We get it – unless you have a background in accounting or finance, spreadsheets and financial reports are probably not your cup of tea.
Fortunately, we connected with Bob Wang, founder of bookkeeping service Legacy Advantage. This Futurpreneur-supported entrepreneur is committed to providing bookkeeping for small businesses and helping entrepreneurs keep their companies in the black.
Though I was born in China, I grew up in the Czech Republic. My parents had an opportunity to start a business there in 1989 and they jumped at this opportunity. In just 10 years, they built an import/export business that lifted us out of poverty.
Watching this made me want to build a business as well. They changed our family’s destiny and I decided I wanted to build a legacy as well. In fact, that desire was the inspiration for my company name—Legacy Advantage.
In 2001, we immigrated to Canada. I went to UBC and then worked at a “Big Four” accounting firm where I realized that people struggled to find bookkeepers that added value to their organization. This led me to found Legacy.
Our goal is to provide clients with trusted and competent bookkeeping services. We want to democratize knowledge and understanding of finance and accounting so that entrepreneurs gain insight into the process, even if they don’t have a finance background.
Legacy Advantage is a CPA firm that exclusively provides bookkeeping services. Our goal is to give entrepreneurs the peace of mind that comes from knowing that their bookkeeping is being capably handled.
We coach them through the process to give them a greater understanding of their own financials and offer them financial insights and analyses. Why? So they know where their business is at and can leverage those numbers to optimize their processes.
I believe we really found a high-demand niche. We have grown to $1M+ in sales in two years, and are on track to double that again in our third year.
I strongly believe that entrepreneurs are not well-supported with timely financial information. Entrepreneurs are smart, creative problem solvers — if they know what problems they need to solve. But most of the time, they are in the dark regarding their finances.
Most don’t know their gross profits, KPIs or cash flow. Many don’t even know if each project or job they undertake is profitable. These are incredibly important pieces of information of which every entrepreneur needs to be aware. Having the right information at the right time would go a long way to helping entrepreneurs better manage their finances.
Entrepreneurs are passionate people. Many start a business because they want to focus on their craft, but they need to remember that they are running a business too. A very common mistake I see is that some entrepreneurs love doing what they do so much that they are willing to do it for free — sometimes they do! That’s why they struggle.
I have a good friend that is passionate about martial arts. He priced it so it would be accessible for anyone, but he hadn’t taken a look at the unit economics. In other words, he didn’t know whether or not he was making a profit off of each student. I took a look at his business model and realized that he was losing $100 EVERY TIME he held a class. That’s totally unsustainable.
When you’re starting a business, you must examine your business model to ensure that you’re making a good profit each time you do or sell X.
The best time to prepare for taxes was last year. The next best time is now. There are two components to a tax season. First is compliance. Filing taxes becomes super easy when your bookkeeping is in order. If it is, you just send your records to your accountant and you’re done. If you don’t have your books in order, you’re going to have to spend a lot of time doing catch up. It’s a huge pain. Try to prepare for next year’s tax season by having your bookkeeping in order.
The second component is tax planning. This comes into play when you have a corporation and you want to minimize your taxes paid. You can do this by setting up a holding company, family trust or hiring your family members to do some part-time work for you. When you go to see your accountant, ensure to ask him/her how to minimize your taxes.
The first thing, and the simplest thing is to separate business expenses from personal expenses. Set up a new set of bank accounts and credit cards just for your business. Next, demand to see a “Profit and Loss” statement every month and actually take a look. This takes discipline, but it’s tremendously valuable because you’ll actually be able to see how your business is performing.
Bookkeeping sounds incredibly boring and you’ll be tempted to push it to the side and keep working on your business. But sometimes, the most boring things are the most fundamental. You don’t have to do bookkeeping every day, but you can’t forget about it. You can’t drive blind, and you can’t run a business that way either. At the very least, make sure to receive and review your financial statements every month.
Written by: Jasmine Williams, Social Media and Content Specialist, Futurpreneur Canada