Hi and welcome to this week's episode of Money with Alpha. Today I'm going to talk about something that I get very passionate about and I will try not to go off on a rant, but it may end up a little bit in that direction. It's in relation to what happens with your professionals in terms of what can your accountant and bookkeeper do for you, what they don't do, and which is essentially why I do what I do because of the things that they kind of either can't do or won't do. Quite often it's, it's can't because there's just too many things. So I wanted to, to talk about sort of some of the layers of the things that you need to have when you're managing finances, specifically as a, as a business owner. Some of this also works in personal, but it's primarily will be impacting business owners the most. So the first thing is like compliance versus strategy is what I see a lot in terms of. The expectations are different between what we want a professional to do, so we expect strategy and we often get complian compliance. So I'll delve into that a little bit more. But so compliance, what it is strategy, what that actually is, especially financial money strategy. And then as a result of those things, what your accountant generally can and can't do and what they do and don't do. And it's important to clarify those because they are different for each, each accountant. And then why this is an issue that sends me into a bit of a ranty phase and then what you can do about it as well. So I'll start talking first about the. What is compliance? We hear this word a lot and it's not. There's, there's compliance in so many things. You know, there's safety compliance standards that, you know, we meet, there's building standards that, you know, they have to comply with. You know, there's all sorts of like, duty of care. There's so much compliance that exists in the world and especially in our Western world. And I know a lot of the time we're kind of like, oh, there's just too much admin, there's too much bureaucracy, too much compliance. To a certain extent. It's why we have the, the beauty of the, like, the life and the, the confidence that we can have in the houses that are built, the, the standards of, of, you know, public transport and cars and all sorts of things. So while it can sometimes go a little bit too much over the top in that direction, the origination or the, if that's a word. But the, the, where it originated from came from a good place. And, and I, I personally, I do like the fact that there is, there is some compliance. I do realize that it has sometimes gone a little bit too much over the top and it's, you know, there's a lot of regulation that kind of sits on top of compliance that could be dialed back a little bit more. But generally speaking, when it comes to money and accounting, you've got the compliance of the things that you are required to do from either it's a government body or some sort of regulatory or industry body to make sure that you're doing the things correctly, that there's a certain standard and that people know what they need to do. So there's like this, processes and frameworks for stuff. So as an example of tax return, that's an example of a piece of compliance. We need to, you know, we, we live in a system where we have a social structure that gets funded through taxes. So in order for, you know, the system to know how much to tax, then we need to lodge a tax return. Whether tax rates and all of that. I'm, I'm not even going to buy into that, that discussion because I'm sure there's always ways to improve things. Nothing's ever perfect. But the tax return is, is considered part of compliance. If you're a business owner and you lodge a business activity statement, you know, quarterly PAYG or even monthly depending fringe benefits, tax returns, even calculating capital gains tax, there's, there's so many different things that go into, to compliance as a business owner. Payroll tax work cover lots of different layers of complexity and compliance. So that, that's, that's what's compliant. So you're going to get your professionals, especially accountants and bookkeepers who will help you with that sort of stuff. You know, they're there to sort of like, you know, make sure your banks are reconciled to your accounts, that everything's categorized, that you understand what you're taxable, you're claiming the right tax deductions. So that's, that's very compliance driven. There's also then the strategic side of it and this is where I think a lot of us, you know, the compliance side is kind of boring day to day. It feels very much like just you know, filing and, and just data entry and data like analysis and stuff. And to a certain extent it is. But the strategy side is from my opinion, equally important. Having started out my, my career in an accounting firm which was a Large enough one, like I worked at kpmg. We had compliance and we had strategy and we had different people who specialized in different areas of strategy too. So we had things like for high net worth individuals, we, we had R and D, which was research and development. You had gst like your goods and services tax or your VATS specialists. There were other areas as well. You had business structuring. So there's, and there was a real boundary between accountancy and law. So there was like tax law that we dealt with on a daily basis. And the strategy that you have has to kind of take all of that into account. And not every accountant is either willing to do that or can do that. It depends on what they want to do as well. Like some, some brains just are really great at compliance, other brains are really good at strategy and trying to find too, which is why quite often when you get bigger, you go to the bigger firms because they're going to have different people with those different brains all in the one place and they can confer and work together with you. Finding that in a single accountant is often quite challenging, which is why I'm very, very careful when I, when I refer people. Because I found a couple of accountants who are great at both. And that is, is relative, from my experience, relatively unusual to be, to be good at both and to think in both. Like you can put one hat on and then switch to the other, but it's understanding that you've got the right tax structure or the company structure in place or business structure to be able to support how you run your business but also support other things in your life. You know, you still need to have your lawyers involved to understand the estate planning side. So they need to have enough knowled knowledge about that to be able to ask the right questions and to help you in a way that makes what they do more complete. But it's really, really important to understand your business and your numbers and everything too. And again, a lot of accountants won't do that. They won't necessarily help you to understand cash flow forecasting. You know, what are your key metrics for your business. I mean, there's things like you can look at profit, you can look at, you know, spending churn, cost of sales, you can look at all of those sorts of standard things. But some things might be very specific to your business. If you're an E comm business or you've got a physical shop front, if you're a service provider in terms of, like you're a trade, you provide a Trade service or a coaching service. There's so many different ways that you can run your business from that strategic perspective to be able to look at, you know, what products. I've been doing a piece of work with a client at the moment to try and figure out which one of the services that she offers is actually the most profitable. And one resoundingly, the one that actually, interestingly enough, makes generates the most revenue is actually the one that creates the most drain on her business financially. Because there's a lot of complexity in that and the ultimate money that's left over is negligible. So it's, it's doing that kind of analysis to go, okay, well, what is it? And if you don't want to do it yourself, then you need to find somebody to help you do that. An accountant could help if they are that way inclined. Because it's not everybody's cup of tea, like delving into that. I love that. I like this, like forensic. It's like a, you know, a problem to solve. You know, there's a puzzle in here. We've got to figure why is this happening there and what's that, and what is that leading with? You know, there's. I love detective stories, always have. And I see it as a bit of detective work. But not everybody looks at it that way. So you need to also, you might have a bookkeeper who has that in them as well. So you understanding what your metrics are, what your d. Have you got the data set up in the right way to be able to tell you that. So that's where if you're expecting something like that from your accountant or bookkeeper and it's not happening, have that conversation with them because they may provide that service, you probably will have to pay a little bit extra for it because you know, there's another skill set there, and then small time as well. So just to have those expectations clarified up front, and if they don't do that kind of thing, you might need to bring someone else in to help with that. And sometimes it's just a dedicated piece of work to help you understand it, and then you can run with it, or you might want to have them just like monitor this for you on an ongoing basis, depending on where you are in your business and. And what you like to delegate. So, like everything to do with money, the answer is generally it depends, which I realize is frustrating, but it happens in so many different fields as well. It's not just even in money, it's even in health. You know what it depends what you want to achieve. So, yeah, so that's, it's important to understand those differences. And I get really, really passionate about this because understanding what your accountant does and doesn't do is, it will save so much time and effort. And it also means that the gaping hole that's being missed because understanding your metrics and monitoring them and recognizing what success is for you and whether or not you dial up, you know, promotion of a profitable or a not profitable service or understanding where your money's going and also then in your personal life, like, no one's really looking at that. And that's the other thing too. You know that even if your accountant is lodging your personal tax return, that they're not helping you with cash flow management. That's not their role. And I don't think I've ever found an accountant or a bookkeeper who wants to help, you know, their clients with their personal cash flow management. Some might. And that, that is great. But again, you need to clarify that to understand if that's the sort of help that they can give you. And that is one of the reasons why, I mean, I'm not a bookkeeper. Its one of the reasons why I do what I do because I, I love to help. Just a lot of it is organization and understanding where things are at the amount of times I hear, oh, I'm actually pretty fr. I'm quite good. And I had a, had a client this week where we were having that conversation. I was like, well, you've spent $11,000 on takeout so far this year. And they're like, really? I'm like, yeah, it really adds up. Every time you tap that card, it doesn't feel like it does. And then there's other areas where, you know, they're paying a lot for subscription services or insurances. They've ended up with like three of the same policy they're paying, which they didn't realize. I was like, you may feel frugal because you're not spending on obvious things like shoes and clothes and bags. And you, you might like shop at OP shops and you walk out and you're, you're shopping for, for the month is like $50 at the local op shop. That's fantastic. But there's lots of other things that are in there that are actually impacting you more than retail shopping that you could actually deal with. So that's understanding who's looking at that, who's like, delving into to some of that. And that's where again, you've got to make sure if you are expecting that to happen and it's not, then that's a problem. If you want to do it yourself, fantastic. But you actually have to do it. And then having that between your business and personal, that is also something that you probably won't see most of those professionals doing. Which is again one of the reasons I do what I do because it's that optimization. I was like, you work so hard for what you, the money that you make and you're so passionate about what you do. And there's generally, I find a lot of the people who get attracted to me have an impact driven business or impact driven life in general and you want to be able to amplify that impact. And the only way you can do that is if your money is sorted. Some of it is the stories and the mindset work, but then there's the actual practicality of that. So you got to really blend these two and go, why am I avoiding it? What do I need to do to progress it? And I may not be there yet, but I will get there and I know how I will do it. It's not just like magically going, oh, someone's going to fix it all for me. Yes, somebody can. But you've actually still got to do. It's like you can't just expect to win the lotto without buying a ticket. It's a, it's a little bit, you know, you have to still take action to do something in order to, to actually make some changes and see it. Quite often it's just being aware of, of what's going on and then with that information that knowledge is power, as that saying goes. That is very true. But yeah, so I, I get very, yeah, very passionate about this topic as you can probably tell because there's so much that gets spoken about in the fields of, or the compliance world and just, you know, helping businesses function. But then how does that actually serve you in your life? So really start to think about that. If you're not living the life that you want and you're feeling stuck, start to work on your money stories, have a look a little bit more deeply at what's happening. You can start with your personal finances or you can even look at your business as well. But ultimately your business is there to generate your income. It is there to fund the lifestyle that you want. So you've also got to get clear on the lifestyle that you want to fund, how much money that's going to need, what that will, what, what you're Doing now is going to give you in the future. If you're not clear on that, it's important to get clear because without that, your money doesn't have a purpose. And I half want about this one too. Your money needs a purpose, otherwise it's going to just drift around. If you think of what happens and I, I see this happen, I finish high school and, you know, I'm going to take a gap year and that gap year turns into another year. I'm watching this happen with a family member at the moment. I'm like, let's see how long this second gap year goes for. So we're already in the second year of the gap year. And yeah, and I just, you know, there's that lack of direction and I, I just want to, you know, my, I like to problem solve and I just want to, like, swoop in and go, let's figure this out together. And I'm like, well, that's their journey. I need to, I need to allow that. So while it is your journey here, am I prompting you to start to think about this? What do you need to do to actually get things in motion? Start to feel more on top of it, more confident with your money, and then that level of safety and security will start to kick in and it won't feel so scary anymore because the confidence will spur you on. But you've got to do something first. So just to, to pull all that together, what I started talking about was the difference between compliance and strategic and strategy when it comes to what your finance professionals are probably helping you with. And just to make sure that your expectations are clear, you understand what they can do for you and what they can't do for you. And then if there's a gap in there, you have to either fill it yourself or find somebody else to fill it. If you want to have a free clarity chat with me, it's 15 minutes completely, no obligation. We can just have a bit of a chat about this if you're not sure and then I can help direct you. I can even help with some questions you may need to ask your accountant or bookkeeper. And if you want to go on and work with me more, that's great. If not, that's totally okay too. I just, just don't like seeing people stuck because they have a few questions and they just don't know who to ask. So with that, I will take a breath, stop my rant, and I hope you have a lovely week and yeah, I will catch you in next week's episode.
