Episode Details

Have you done your taxes yet? My guest, Danielle Hayden, created The Profit Planner to help business owners know how to analyze their business correctly, generate more profits easily, and gain greater confidence in business and by getting really intimate with their financials. Lucky for us, this episode is all about knowing your numbers. Danielle explains exactly which numbers you need to know and where you can get started. Plus, we chat about accounting software, the importance of building a financial reserve, and what you need to know about self-employment taxes.

Meet Danielle Hayden

Danielle Hayden is a reformed corporate CFO (chief financial officer) who is on a mission to help rule-breaking female entrepreneurs understand their numbers so they can gain the confidence needed to create sustainable profits.

After spending 10+ years in the boardroom as a corporate finance officer, Danielle is now in her sweet spot as the co-owner of Kickstart Accounting, Inc. where she helps business owners with bookkeeping, financial analysis, and education and as the author of the Profit Planner book series.

Know Your Numbers

What numbers do you even need to know? Danielle says she could spend one hour on this question. When someone says, "know your numbers," they want you to understand your financial statements at a high level. Many people are big fans of profit first; so, you can have a combination of knowing your numbers and the profit first allocation. You should also understand your profit and loss statement and how you can prepare for tax season. When you have these things down, that means you are making smart business decisions all year long. When you're making smart business decisions, then you are maximizing your tax deductions. Overall, we need to pay ourselves as business owners and invest enough money in the business, but not too much money.

Where Private Practice Owners Can Start

The very first place you want to start is by having accounting software set up. So you'll always have your client management software, and then you'll have accounting software. It doesn't matter where you are in your journey – it's never too early or too late to get the accounting software you need to thrive. Give yourself grace! Tax management is a critical long-term business decision. Next, you'll need to do "catch up." You'll want to put all your expenses into this software. Once all the data is in, you have a starting point. Think about how much money you brought in, where you spent the money, and any surprises in the process.

Accounting Software To Consider

QuickBooks is an excellent place for private practice owners to work on their accounting. Danielle loves QuickBooks so much that she includes it in her costs. Xero is another popular system, and it's easy to use. Plus, Wave Accounting is free software. It is award-winning financial software designed for entrepreneurs. However, there are some limitations. Danielle says that you should plan for where you want to be. Eventually, you will outgrow a system like Wave because you will want more reporting as you get bigger. Sadly, Wave doesn't have all the reports that you need. Whereas QuickBooks will grow with your practice. Start where you're at and then build on more sophisticated software. Stay away from invoicing software that has turned into accounting software like GoDaddy.

How Often You Should Check Your Numbers

With Danielle, there are three options: weekly, monthly, and quarterly. If you can be in tune with your financials every week, that is the gold standard. That might mean a weekly dashboard of where your cash balance is at. It would help if you also