267: Bookkeeping Things To Consider When Transitioning From Solo to Group Practice With Michael Spencer, BS, MA

As a business owner, if you’re baffled by the world of bookkeeping, then today’s show will be helpful to you. Maybe you’re a solo practitioner considering starting a group practice, or perhaps you want to learn more about efficient financial systems and processes. Join us!Our Featured GuestMichael SpencerMichael Spencer has an interesting career background as a CPA who became a licensed clinician in private practice. Recently, she started a bookkeeping practice to serve helpers and healers in the healthcare profession. Michael has a gentle presence that brings comfort and safety, and she brings a unique perspective as a therapist with an accounting background. WebsiteYou’ll Learn:●     How Michael transitioned from being a CPA to becoming a LPC, then went on to coaching before starting a bookkeeping business on the side●     What’s involved in bookkeeping, which means tracking and recording all the financial transactions in a business●     How to understand your “numbers” and what they mean for your business●     Three financial tips in considering starting a group practice:●     Take an honest but gentle assessment of your current bookkeeping system, relationship with finances, and business goals.●    Have a bookkeeping system and some sort of payroll system or service.●     Create monthly or weekly bookkeeping rituals to stay up-to-date and reliable.●     Why bookkeeping will become overwhelming and challenging if you try to “do it all” when you don’t enjoy it●     The importance of realizing where our strengths and weaknesses are found as business owners●     The need to develop and expand our business that meets needs and serves the worldPODCAST SPONSORHushmail: Hushmail is a secure, HIPAA-compliant way to communicate with clients via email and to fill out clinical forms like intake packets securely. Please visit sellingthecouch.com/hushmail and let them know that Mel sent you =). TRANSCRIPTMelvin:Hey, Michael, welcome back to Selling the Couch.Michael:Oh, thank you so much, Melvin. It's great to be here.Melvin:I'm just one grateful for our friendship and two just for the privilege and honor to be able to see the ways that you have both grown as a person and as a business owner. You and I have gotten to know each other through the health casters community, and then through our mastermind community as well. And so I'm just so grateful for you.Michael:Yeah, thank you. And I'm really grateful for you, too. You've been a real constant over the past couple years as I've gone through all sorts of different changes professionally, so I really appreciate you.Melvin:You're so welcome. For folks that don't know you, you are a therapist, but you had a career prior to that. What was that career?Michael:Yeah. So right out of college, I was in accounting and auditing. I was a certified public accountant. My license is currently on inactive status. But I did hold that license from 2001 to 2008; and I did auditing of nonprofit organizations and governments, as well as some small business bookkeeping.Melvin:Nice. And then what happened in 2008?Michael:I guess it was a little bit earlier than that my license was still active and in 2006, 2007, I was just kind of becoming unfulfilled with that work. It wasn't really speaking to my soul and so I decided to go back to school for my Master's in mental health counseling. And I pursued that career, I loved that career, I was a licensed professional counselor and that license right now is also an on inactive status. And so I'm not currently practicing in the field.And what happened there was I was doing a lot of trauma therapy, and eventually just became kind of burnout. And so then I transitioned into doing some coaching and really loved that as well. And then this year, no, we're in 2021. No in 2020, at the beginning of 2020, I started doing some bookkeeping, to supplement my income, and I had been doing bookkeeping for my husband's business for about seven years, and then I was also doing bookkeeping, for my own counseling and coaching practices.So I was never totally out of the accounting realm. And in 2020, I just started doing this side work and it started growing without a whole lot of work and effort on my part. I just sent a couple emails out to family and friends and said, “Hey, I'm going to start doing some more bookkeeping and clients have been coming.” And then a few months ago, I decided, you know, I really want to see about focusing in on serving therapists and coaches and helping professionals in private practice, because I know these worlds, I know these folks, and I know that there's a lot of need for support with the money side of things and the financial tracking of things and it has been fantastic so far.Melvin:Yeah, I feel like you are so uniquely qualified because you have the mental health experience. So like you said the verbiage, the struggles, all of those different things, the roadblocks, but then you have the CPA side of you. So you're very, like, it's an amazing skill. I just wanted to tell you to be able to, like, navigate both of those worlds the way you do.Michael:Thank you, I really enjoy it and it's been really gratifying to be able to talk especially with the folks who are in the therapy realm and hearing them say, “Thank you for not judging me and I feel safe asking you questions. There are folks out there who have questions about their bookkeeping and about their finances, and who don't feel like they have a safe place to go to ask those questions because they feel like well, I should know that, I'm in business.And so when we feel inept, and yet we don't feel like we have a safe place to go to ask questions and build skills and confidence, it can be a dangerous place in terms of dealing with one's bookkeeping, because then it tends to be something that gets put off and put on the backburner.Melvin:Yeah, that makes a lot of sense. I wanted to ask you, and maybe I didn't want to make assumptions when we were talking. But I know that even the word bookkeeping, like I wasn't that familiar with it until a couple of days ago. So what exactly is bookkeeping?Michael:Yeah, the way I think of it is simply tracking and recording all of the financial track transactions that happen in a business. And so a lot of times, these are the things that and with -- so there are a couple of different ways of doing bookkeeping, and you can do it on the cash basis or the accrual basis and I'm not going to go too far into that.Most small businesses are on the cash basis, which just means that income is recorded whenever cash is received and expenses are recorded whenever that cash leaves the bank account, or the check is written. And so it's a matter of taking all of that information, all of those payments that are going out and the income that's coming in, and putting it into a system where you can actually make use of that data.So you can produce a financial statement. It's often called an income statement or a profit and loss, to be able to see the revenue that's coming in, the expenses that are going out, and then we've talked about the bottom line; what's left?Melvin:Yeah, absolutely and again, I feel like having a bookkeeper, for me has been one of the best things I've done for my business. And I think for me, it has been being able to make business decisions based on numbers based or like for example, really practical thing; I've been wanting to improve my video quality for a long time, and so I watch a lot of YouTube videos, and all this kind of stuff on lighting and stuff like that.And there's this light that, a lot of YouTubers recommend, this light is almost like $1,000, just for the light plus the setup, right? And so, I think if I didn't have a bookkeeper, if I didn't know my numbers, I could just be like, “Oh, I'll just charge it, whatever.”But why I was able to do is I was able to set aside a little bit of money over the span of multiple months. One, I'd like to do that, because it makes me sure like, okay, this is something I really want; is this a need versus something like a nice to have kind of thing. And then I think, but I don't know, it just gave me I think clarity and a peace of mind because then I was able to say, you know what, I have the money and I've saved up for this. And now I can purchase this and not go into debt in order to do it.Michael:Absolutely right. So you can have a sense of what you want to invest in and why and then to really understand your cash flows and this is something that in 2021 really wanting to develop in my business is to be able to help more...