More Money Podcast - 302 Navigating Your Finances as a Small Business Owner - Joe Collins, CPA, and Partner & Owner of Avalon Accounting

Episode Date: November 10, 2021

I’m so excited for this week’s episode of the podcast because we’re talking about the money side of owning a small business and going freelance. I’m joined by Joe Collins, CPA, who is the partner and owner of the accounting firm Avalon Accounting.  Joe's accounting firm Avalon Accounting focuses on working with Canadian small businesses because he believes they have a significant positive impact on our world (and I'd have to agree with that!). After some failed attempts at entrepreneurship, Joe still wanted to be a part of that world and decided to merge his passion for entrepreneurship with his affinity for numbers. This led him to go back to school and start his own accounting firm. As you can tell from his interview with me, he’s passionate about helping Canadian small business owners get to grips with their finances so that they can focus more on growing their bottom line.  What you can look forward to in this episode is Joe answering small business owners' most pressing questions on taxes, write-offs, and common beginner mistakes to avoid when starting a business for the first time. I was so excited to talk to Joe since I’ve often referred back to his YouTube channel that shares hard-to-find answers to common questions multiple times. Whether you’re a freelancer, small business owner, or are just curious about what to know when it comes to starting a business...this is the episode for you! For full episode show notes visit: https://jessicamoorhouse.com/302   Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, and welcome back to the More Money Podcast. This is your host, Jessica Morehouse, and this is episode 302. And for this episode, well, if you are a small business owner like myself, or a freelancer or a contract worker, or have a side hustle, or maybe you are not any of those, but maybe you're curious about it or what you wish to be aspired to be one day. Well, this is the episode that you're definitely going to want to listen to. I find myself looking online, there's a lot of information that is like aspirational or like motivational about, hey, quitting your nine to five, et cetera, et cetera. Not as much information or maybe just not as much interesting information, because I guess it could be a dry subject, about the financial side of things, business finances, accounting, bookkeeping, sales tax,

things that you actually do need to know if you're going to run a successful business. And for me, you know, I've made a few, you know, blog posts and videos on my YouTube channel, check me out under Jessica Morehouse, about these things, just because I'm like, well, I know this stuff. And who else would, you know, I'm sure someone else would be interested in this kind of stuff. And, you know, I like talking about money. But, you know, as I was making these YouTube videos, I was discovering a bunch of other YouTube channels. And that is where I stumbled upon the wonderful Joe Collins of Avalon Accounting. He has a great YouTube channel, which you can definitely check out at youtube.com slash C slash Avalon Accounting.

I'll link it in the show notes. So don't you worry. Just go to JessicaMorales.com slash 302. Anyways, he has a number of amazing, really educational videos about the things that you need to know, like real specific things. Sometimes like if you're incorporated, should you take a salary or a dividend? Like real specific stuff that is actually really important. And there's really not that much information about it. It's difficult to find this information. So I wanted to have him on the show to really explore a lot of these really important questions

that people have. I mean, honestly, I get inundated with questions from people that read my blog posts or watch my videos. I'm like, you know what? Let's have an actual expert on this because I'm not an expert when it comes to accounting and taxes, as much as I love the topic. Someone like him, who is a CPA and CA and runs his own accounting firm. Yeah, he'd probably be the person to have on the show. So I cannot wait to have Joe on the show, because you're going to love him. And also, he's got so many great resources on his website, avalonaccounting.ca. But anyways, before I get to that interview with Joe, I just want to share a

few words about this podcast episode's sponsor. This episode of the More Money Podcast is supported by Harvest ETFs. I talk a lot about ETFs on this podcast, but not all ETFs are created equal. Although in the late 90s, ETFs first started out as products that would track the movements of a broad market index like the S&P 500, now there are a plethora of active and niche ETFs to choose from. For example, if you want to ensure part of your investment portfolio is investing in clean energy companies, you may want to check out HCLN. That's Harvest's Clean Energy ETF. It invests in the 40 largest clean energy issuers from North America, Europe, and Asia. And if you're interested

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so excited to have you on the show. Yeah, really happy to be here. Happy to chat with you today. Absolutely. Absolutely. Well, I discovered you, I think, gosh, I don't know when. It was either this spring or the previous spring, 2020 and 2021 kind of melded together. So I don't know when it was either this spring or the previous spring 2020 and 2021 kind of melded together. So I don't remember even what year it was. But I found your YouTube channel and binged a bunch of videos. I'm like, Oh my gosh, this guy explains such complex things so simply. And I find because I have a few videos on my channel, just about like my experience as a small business and just like, you know, things that I've had to do, like how to sign up for GST, HST. And so I get so many comments being like, this stuff is so complicated or I wish there's

more information about this. So I'm so glad I found you because I'm like, well, what better, you know, topic to explore in this episode, but also, you know, what better guest to have than someone who, you know, has his own accounting firm that can answer those questions that everyone has. Yeah, maybe that's maybe that's why there's no not that many channels like that out there. All the accountants are really busy right now. Fair enough. I mean, yeah, that's, I guess, a good spot to be in. But, you know, I feel like you might agree, because of the pandemic, I feel like

small businesses have kind of exploded, everyone is starting a side hustle, or taking the big leave, leaving their, so many people are leaving their jobs, right? You see that in the media, everyone's like the big, what is it? The big exit or something like that. So people, you know, are taking this, making a big change. But what I even found when I left my job almost five years ago now is, and I really didn't know what I was doing. I had a bare minimum idea of how to run a business. It isn't sometimes super easy to understand this information. And the government's website isn't sometimes very easy to really grasp like, but what do you want? I don't want to break a law here. So we have lots of things

to talk about. We're going to dive in. I've got a list of questions. But before we really dive in, tell me a little bit about yourself and your accounting firm. And because I know what attracted me to you and your firm is you really do focus on small businesses. And I feel like a lot of accounting firms are like, oh, you don't have enough money. Bye. Yeah, that's definitely a sentiment people get. So yeah, I started Avalon about six and a half years ago. And it was for really that reason. I got into accounting to, well, actually, after sort of some failed attempts at entrepreneurship. Oh, interesting.

I had tried to start a few businesses and I kept falling flat on my face. So I could never seem to separate myself from the $100 it took to get a business license. Yeah. So it shows you how strong of an entrepreneur I was. But I thought, OK, well, if I can't be an entrepreneur, I at least want to help them. I want to be part of that world.

And I thought, OK, what are my talents? And I thought I was pretty good with numbers. So decided to go back to school and do my accounting designation. And yeah, sort of fell into that. I fell into being like my own business as an accounting firm. But that wasn't really the purpose. The purpose was really just to be helpful to small business owners and be in that world. So it kind of all worked out really well. Yeah. I'm curious, as you mentioned it, what were some of those businesses that did not work out?

Oh, I had like a, one was like a house organization service. I like to organize things and label. Oh, I love that. Yeah. I like to label all my spices and like have all my pantry organized like Instagram style um another one was a coffee roastery I visited a a plantation in Australia and I was like oh man this is awesome and I love coffee and um thought to do that but I was like oh man there's so many coffee roasteries out there already started. Like I was going to be the first coffee roastery or something.

Oh, I like the organization. Like that would be up my alley, too. Because you know what? I feel like that makes a lot of sense that you'd be into that being an accountant, you know, like organization and structure makes a lot of sense, actually. Yeah. Yeah. I still love doing it, but mostly for myself. Yeah, that's awesome. Well, maybe that could be your second life once you, you know, retire early or something like that. That could be your second thing. Um, well that's awesome. I I'm curious, why did you really want to focus on helping small businesses? Cause you know, I find like kind of on the other side of things like, um, financial planners, I find there's not a lot

of financial planners that will help people with low income because you just don't make that much money. You make money with high net worth people. And I kind of find that with accountants, I get so many requests from people like, hey, do you have any recommendations for accountants? And I know a few, but as they grow, even my accountant, she's like, kind of do it, you know, letting some customers go because they just don't, they aren't bigger businesses and stuff like that. And so why did you want to make sure you kind of helped, you know, I know you help kind of all varieties of companies, but also, you know, especially starting a YouTube channel helping, you know, people just starting out. Yeah. Well, I mean, you hit the nail on the head, which is it's challenging to service, you know, startup businesses because they don't have a lot of capital or money to spend. So the YouTube channel is a big part of that. I think, you know, we try to put out as much free information as we can. And that works in a couple of ways. So one is that,

you know, we feel good when we tell people like, okay, you wouldn't be able to afford us quite yet, but please use all this information that we're trying to put out there because you can help yourself with it. And then when they do get past that and they've consumed all of that and they've gotten to a point in their business where they can hire us,

it's really a success for us. And I think as part of our branding, we're going through a rebrand right now. And one of the things they really asked us is, okay, one, why small businesses? And the reason why small businesses, and we try to use the term owner-managed businesses, is that we really feel they can, they are the ones that are improving our world and our communities, like more than NPOs, more than, or nonprofit organizations, more than government organizations.

They're so nimble on their feet, employee people really, they're where the rubber hits the road and they like, you don't have any room for excuses when you're a small business owner so they can really change the world and so we want to be able to help them and the tagline we had come up with around that was that good ideas should not fail for a lack of financial know-how and so many people get stuck in that. It's like, ah, like a bind on filings and that leads to stress. And then that leads to, you know, sometimes giving up like because you just can't like can't handle that stress load. So we want to minimize that. I think that's part of our mission is to minimize that worry. And like the filing, like you mentioned, how complex it all can be. We just want to simplify it and make sure people know that, hey, this is something we can do together. Yeah. I mean, like you said, it is not easy. And it's one of those things that I've been

reflecting on a lot, especially since it seems like more and more people are starting their own small businesses and, you know, sharing about it on social media. And it's interesting being someone who's been doing this for five years now. So and I really have been through an interesting, like an evolution from where I started to where I am now. I'm like, oh, it's night and day. Because I really didn't know what I was doing at the start. But one thing I, you know, you kind of kind of touched on was, it's not easy, it is stressful. And a lot of people give up and not necessarily because it's a bad idea, or they have a bad business, you know, it really has to do with sometimes not knowing a few things

and just getting overwhelmed and calling it quits. I see that all the time. I've definitely wanted to quit this business so many times. But so I guess I'd like to kind of know what are some things that, you know, especially new startups or owner managed companies, especially, you know, when you're just starting out, how can you prevent some things that I see all the time? Like, you know, overstress, burnout, especially. I see burnout, especially in like the first one or two years.

It's pretty common. Yeah, I think reaching out for help is the biggest thing. I think like I think being like when you're starting out, I think there's a almost an instinct to not tell anybody or to want to do it all by yourself. Like an entrepreneur's mindset of like, ah, I just have to like do this all myself. Um, but reaching out for help, uh, is, is important and finding your tribe, I think is, is really helpful. Um, you know, whether it be financial information or marketing or, um, even just other people that are in the same place that you are, um, is really, it can be really helpful for a lot

of people just to bounce ideas off of in that. So that I think that's probably one of the biggest places to start more specifically for finances. If people don't want to get like, you know, off, off to a bad start is to really just as simple as opening a bank account that's business only and using a separate credit card. It could be a personal card and just worry about that too much. But keeping the data set separate and almost the mentality shift of having this business sort of birthed into the world as its own being and taking care of it and thinking of

it as separate from you is one of the biggest mindsets we, we try to, um, get new business owners to think about. Yeah, no, that's so helpful. And that's, um, when I had kind of my, my side hustle before I made this full time, I don't think I had that differentiation really. And that made things like, I didn't have a separate bank account. I didn't have a separate credit card. And it got very confusing when I'm like, wait, what are my business expenses? And then looking through your statements, you're like,

was that for business or was that not? And then it's terrible. That's like a great suggestion. Everyone have a set, like keep it separate. I think a lot of people think, oh, don't you have to wait until you're not a sole proprietor, you're a corporation to, you can still have that mentality and set it up separately and kind of pretend like you are a corporation. Like that's, I mean, that was, I don't know if you've read the book profit first, but that's kind of what it kind of talks about. Right. Like it's, yeah, she did a review on, oh, yeah, there you go.

And it's like, I didn't read that until like a year ago. I'm like, well, this would have been helpful. My first year of business, it had some really good tips, but it's like getting yourself in the mindset that this isn't just like a home home run business, you know, or people are like, oh, I just work from home or I'm self-employed. But thinking of it more, it's like, no, this is a business. This is separate for me personally and having that differentiation. So besides having a separate bank account and credit card, one thing that I see a lot

is when people are just getting started and they're like, OK, what's my first step? They always get stuck on this idea of registering a business. They're like, should I register? Do I have to register? What does that actually mean to register a business? Do you want to kind of share a little bit more about that? Like talking more about if you're going to be a sole proprietor? And what does a sole proprietor actually mean? For anyone who doesn't know? Yeah. So as a sole proprietor, I mean, it is you legally, legally, it's the same entity as as you personally. So that's all that sole proprietor really means. You file a T1 tax return and have a business schedule that you fill out.

So legally, it's the same person as you. But as far as registration goes, really, there's not a ton to do. I mean, GST, HST is the number one thing. If you're going to get a business number, you register with CRA. But if you're under $30,000 over a rolling four quarter period, I guess, speak as an accountant, like pretty much over the last year. If you are under $30,000, you don't have to register. So you could really run a sole proprietorship with nothing but a municipal business license. I think that's the only thing you would really need depending on the municipality you're in. I think that's pretty much it. But then I think

what we try to stress is that you should be targeting more than 30,000. I hope your goals are more than 30,000 a year. And to run that business, just register early because you do get money back and stuff. So GST, HST seems to be like a sticking point for people, but it's actually not a super complicated tax. It's not. It's not, but it can be. And it can actually win.

Yeah, it can win for you. I think for one, I try to say, you know, if you're a service-based company and you're not charging GST, like your clients might think like, what is going on with this person? Like how small are they? Or, you know, or that. And then if you're buying a computer or something, you get that money back. So worthwhile to register for GST, HST. Do you want to kind of explain what you mean? Because I'm sure someone's listening like, what do you mean by getting my money back? So you're talking about input tax credits? Yeah. So GST, HST is a refundable tax. And it's supposed to be charged

to the end user, either like the end consumer of something so if you're running a business and you're charged gst or hst they call those input tax credits and you get that money back so if i buy a thousand dollar computer and i pay 13 hst it's 130 bucks when i go to file my hst return i just put input tax credit $130 in there, you get that $130 back cash money, there's no like percentage or anything, you get it back fully, with the idea that you're going to charge your end user, the GST and HST on your services. So it's worthwhile, it can add up, it really can add up. And it's, if you're working as, say, a digital marketer or something, you have business end clients, they get that money. The money that you charge for HST, they get that back, too.

So I think there's some reluctance around how much more it looks to charge when you have HST on your invoice. But they get that money back, too. It's something worthwhile explaining to your clients if you get any pushback about charging HST. How do they get that money back? Do you want to kind of explain that a little bit further? Yes, so for their business, your service becomes their input tax credit.

So it's passed along. I think it's passed along to the end user, the consumer at the very, very end of the product cycle. So yeah. But yeah, like, for instance, if I'm hire contractors, they run their own businesses, I charge them GST, HST, and then yeah, it's kind of and then they hire a contractor and something like that. We all kind of get that money back with the end user, the customer at the end of it, we'll have to pay for it. But what I've personally found, because I have heard that like, well, won't it look like I'm charging more money to my customer and won't they won't

want to buy my thing or hire me it's like when do you actually pay attention to tax like when you're buying something as a consumer right like rarely do you like i've never been it's shipping people will be like oh no well i'm not buying it if it's not free shipping but when it's sales tax you don't really care right yeah so it's not really people forget But when it's sales tax, you don't really care, right? Yeah, people forget about it. People forget about it. It's kind of out of sight, our mind. Now, one thing, obviously, when you're doing something like that is got to keep things organized. And I think that is a big struggle for people, unlike you, who love to organize things. How do you set that up? Is a spreadsheet a good place to start when you're just beginning? Or should you really take a look at some accounting software? Or is it worth it to hire a bookkeeper? What makes

the most sense? Yeah, I'm a big proponent of spreadsheets to start. We have a free template on our on our YouTube channel. So there's a free Google Sheet bookkeeping template, which includes GST HST. I think it's our number one video. It's downloaded a lot. Yeah, we get a lot of good feedback on it. And I still get requests for people to edit it. You have to take a copy. Yeah.

You have to take a copy. But that's probably the best place to start is with a spreadsheet and get to know how it actually works. And what I like to recommend a lot is like, you don't have to jump to the software. You kind of know, if you know the background workings, you know how much time it's saving you. So if you're like going through and you're invoicing

and you're creating a Google sheet or a Google doc or something like that, and you're playing around with that, maybe software starts to make sense. If you're charging multi currency, if you're charging USD to your US clients, maybe software makes a lot of sense. But if you have like super simple business money in money out, a spreadsheet can work really well. And, you know, you know, everything that's going in it and how it works. And that can work for a lot of people long term. Absolutely. Yeah, that's where I started. Because it's, I think also to when you're a startup, you're like, how can we stay within our budget and not spend any money. And so starting with

a spreadsheet that's free is always a good, you know, place to start. But I think, yeah, like you mentioned, it's like, you'll definitely know at what point in your business, you're like, we need, you know, this is taking up too much time, which is preventing us from earning more money in our business. So maybe it makes sense to do this. For me, the main thing when I switched to software instead of just doing, you know, a Word doc for an invoice and a spreadsheet was when I just like had a lot more clients and tracking all those invoices. Like it got a little overwhelming and it's like having software. You can see like, oh, they took a look at my invoice but haven't paid me yet that's like that feature in and of itself is so worth the money you're like oh great i'm gonna follow up that pay now button for for a

lot of people like you know up your prices by five percent and eat that three percent credit card fee for having no um no accounts receivable well worth it for a lot of businesses i've seen that and it's like you know electrician came to my house fixed up a couple things he had the pay now button i'm paying like immediately right yeah when you rather get your money now than 30 to 60 days later yeah it's like send an e-transfer to this or worse is sometimes they don't tell you how to pay it's like now i have to follow up with you and like hey, how do you want me to pay this invoice? Says like, very few customers of yours are going to actually ask you. Exactly. Yeah, the best thing that I learned early on was make it as easy as possible to get the money from the customer. Because yeah, it's like if they have to search

around or email you, they're gonna be like, I'll email tomorrow, and then they won't email and then you have to make it as easy as possible. But, you know, that's another thing is like if you do use software, then it is, again, a business expense. So that is something to think about. Yeah, definitely. So since I mentioned business expenses, that's the other kind of like most common. I'm sure you get questions about that all the time, as do I. I think people are very confused, especially since like, honestly, whenever I think of business expenses, I just think of that Seinfeld episode where like, just write it off. And they're

like, what does anyone know what that means? No one knows. Do you want to kind of talk a little bit about what is a business expense? And what does that mean? It can be tax deductible. Yeah, definitely. So I think I do get the question a lot of like very individual type expenses. Can I expense blank? And it's, you know, and the answer is almost always it depends. Yeah. it's related to earning income. And that's the, that's the real question. Um, what would you spend that money? Otherwise that's kind of the, the, I guess the mentality that you have to have when, when thinking about whether to expend something for your business or not. Um, so with some exceptions, so of course meals and entertainment and like yachts and things like that, like, there's some specific exclusions, golf dues and things that are in there. But for the most part, I, you know, I have a client that, um, deducts horse grooming for her

business because, um, the product that she sells, uh, is used in the horse community and she uses her horse for some, um, uh, for some promotional activity and things. So off the street, if someone comes to you and says, hey, can I deduct my horse grooming? You're probably going to say, well, no, I can't think of a scenario where you could do that unless you can make an argument for how it benefits the business. So that's kind of the mentality that we have to look at with

every business expense. And the other is that you don't say you don't spend a dollar to save 50 cents in tax. Like, don't just go out and spend money. I think that's the write off thing. And the joke around that Seinfeld bit is like, you don't just spend money because it's a write off. You spend money because it's gonna make you money. And if you can, you know, you know, if you're a dental office, and you've got magazines in the, in the, um, the waiting room, you know, that's going to help people feel more comfortable while they're in. And yes, that's a business expense. That is something that you, you know, you spend money on. You're not just, you know, buying a Nintendo switch and putting it in there and no one touches it or something like that.

Um, so just that keeping that in mind is that we don't just go out there and no one touches it or something like that. So just that keeping that in mind is that we don't just go out there and spend money. We, we want to do it because it's going to provide some sort of return for us as business owners. Definitely. Yeah. It seems like pretty, you know, straightforward, but yeah, I get questions like that all the time. I think where the confusion is for sure is, is this a personal expense or a business expense? But like you kind of mentioned, it really, you need to basically, and that's what my accountant told me years ago. It's like, you need to always ask yourself before spending money, um, you know, on a potential business expense. Is this to help my business? Is this to help me earn more revenue long-term? If the CRA

came a knocking and they questioned you, would you be able to be like, no, no, no, I, this is, I can explain. Let me explain. Yeah. That is the real test is like picture yourself sitting across the table from a CRA auditor. Can you with a straight face argue that this is a business expense? If the answer is yes, then it's probably deductible. Yeah. But yeah, like you said, another weird like myth or something, but it's been floating around forever is this idea that it's like, I don't want to earn too much money in my business. So that's why I'm going to spend more because I'm afraid of paying taxes. What is this fear? Like, I don't know.

I don't really get it. But it's like this fear around taxes. People would rather spend all of their profits instead of paying personal taxes. Yeah, I think we have some misconceptions around how we're taxed in Canada. And I don't know where that stems. I think people fill in the blanks. We don't really get taught in school how taxes work. And we had a potential client reach out recently that thought that they were going to be taxed

on the cash that was in their bank account at the end of the year and so wanted to get rid of that cash by buying things for the business. Right. And it took us a while to figure out what was going on. But then I was like, oh, you think, OK, let's deal with that. So really, you're taxed on the income that you produce. And only profitable companies or profitable businesses are taxed. If you're in a lost position, you're not going to get taxed. So paying tax is really a product of being successful and profitable.

So I don't think it's something that people need to be worried about for the most part. I think people spend a lot of time on the tax piece when they could be spending a lot more time on how can they be more profitable and run a really great business. And yes, profitable companies get taxed. It's just the way of the way, the way it is. Yeah.

Like that's normal. It's fine. I feel like we all think that like the rich people, because they don't pay taxes, we shouldn't pay taxes or so. I don't know what it is, but yeah, there's a tax.

Yeah. There's like a 0.01% of, you know, the top richest people in Canada that have access to your tax lawyers and loopholes and offshore accounts and things like that. And they are chasing the dragon. Like they're chasing, um, the latest loophole that lawyers have cooked up and guess what? They're not sharing that information with the rest of the public. And it's just the nature of how our tax system works. So I don't think we need to be worried about it for the most part. We can run a successful business and have a pretty good lifestyle being part of the 99.9%. Yeah, absolutely. So yeah, don't focus too much on taxes um you know with that uh said that sounds because that could be i think a big mistake when you're just starting out or trying

to figure out what your business strategy is but what are some other common mistakes you see that new small businesses or startups make that you want people to not make in the future. Yeah, definitely the tax piece is a bit much sometimes. You know, it's kind of like putting the cart before the horse. But the other things we see, I think, and honestly, like for me, this might be the wrong sentiment, but they reach out and try to get everything perfected in their systems and everything early, get accounting all lined up and bookkeeping and everything. And really, when you're starting your business, it's time to ring the cash register. Like sales is the number

one thing you should be worried about. Not like the background in my video, my zoom videos, all the things that we do to, to, um, procrastinate from doing the work. Um, but getting our, our product or service in the hands of our potential customers and clients is the number one thing we should be doing when we start our business. Cause you're going to be able to iterate on that and see what's, what's profitable. What's not, what are you really good at? What are people buying from you um you can't do that until you start testing the market i think that's one of the biggest things is um you know going to market with an imperfect plan is is the the the biggest thing we see um and then being open to feedback after that like your your clients and customers will tell you if you're if you're

willing to listen what they what they really want from you and kind of being able to move off of your original plan is, is, uh, so important. Yeah. Yeah. There's no way you could have a perfect plan at the get-go. Cause it's like, well, you just started, like, how would you know? Right. But I get it. People's biggest fear. I find this with small business owners are just people that want to get into finance, you know, their personal finances is they're afraid of making a mistake because a mistake could cost the money. And no one wants to feel stupid, you know, being like, ah, I wasted money on this thing.

But that's sometimes the only way to learn. But yeah, I think that you have great advice is your your number one priority at the beginning should be making your business profitable. And the other things can that's what i i i see that with so many people they want to line up all of these oh i got my bookkeeper my accountant and i have this person and this person or like they get a full staff before really getting off the ground it's like start small and then slowly expand yeah it's with software too we see it with software i mean with people is one thing and then software is the other and you see wow this piece of software is gonna you know help my business

go from zero to 100 and you know it's hard to know that at the beginning i think you fill in systems that's why the spreadsheets are yeah start with a spreadsheet for pretty much anything that you're yep you're i still use spreadsheets so many spreadsheets for my business like because it's like i use software but yeah with, it can get so easy to go down the rabbit hole and just spend so much money on software. Cause some of these softwares are like thousands of dollars. You're like, Oh, but it says it's going to help me grow my business. And don't I want, it's like, again, it's like, you don't need to have everything. And then for me, I like, because I, you know, track my expenses and

everything like that. I'm always taking a look at like, am I even using this program anymore? No, I'm going to cancel it. Cause that's, you know, money out of my pocket that I don't need. We actually will do a, um, like a GL general ledger report for our businesses. We work with sometimes just here's your software for the last three months. Like, can you just comb through this and see what you're still using and what you're not and that can honestly be a huge money saver they're like oh no i'm still paying for yep yep i see that too with uh especially because you kind of mentioned this a lot of people feel like they need to get the the best equipment like especially like you know for example if you want to start a podcast or a youtube channel and stuff like that, people think you need to have all of the bells and

whistles. It's like you really don't like some of the best channels started out with like a phone or just like, you know, very basic stuff like you don't need the best. My podcast equipment is the same Focusrite box I've been using for six years. It's great. I'm going to use it until it dies. That's amazing. Yeah. It's so easy to go down that hole. Oh my God. I've been doing it actually. It's hard. So I want to kind of talk about this question I also get is, let's say you're a sole proprietor for a bit and you're considering incorporating. That is kind of a big evolution. That's something that I was able to do the past couple months. So that was, it was a challenge. I feel like it was very overwhelming. I did have a lawyer in my accountant work with me. And that was really helpful, because I had a lot of questions. But the biggest thing at the get go was, for me,

figuring out, does it make sense for me to go? I was a sole proprietor for, you know, over four years. It was a big decision. So when people are considering that, like, why should someone incorporate if they have maybe been fine as a sole proprietor? What are some of the things that might be good for them? Yeah. So, I mean, two main reasons. One, legal.

I mean, if you do speak to a lawyer and they say, hey, you've got a risky business here and you should be incorporated to provide that added liability protection, like, you know, no arguments there. You just go out and get incorporated. I think that trumps all other considerations. But if we're into the other considerations like tax, I think tax would be really the only other consideration, then it's important to understand how that's going to help you save tax in the long run. Or if it is, I think people jump to incorporation on tax because they think that's going to help them and you get access to low corporate tax rates and things um but you think of it in in terms of your yourself like your whole financial outlook and rsps are still the number one tax efficient way to shelter your income from tax like they're so cheap you can go robo investor and just money in there. And you get lots of room for a lot of people.

It's like if you're making $156,000 or something and under, and you put 18% a year away, you're going to be sitting pretty. Yeah. So I don't think that should be underestimated. I think people jump to incorporation when RSPs can work. But there's other considerations. I mean, if you're trying to grow your business, I think that's one. So if you are looking at expanding your business long term, creating some real value in it where it could sell,

then incorporation earlier than that $156,000 can make sense. And the reason why, those low corporate tax rates are there for a reason. They're a policy decision on the government of Canada's part to encourage small businesses to grow. So you get taxed somewhere between 9% and 15%, depending on the province that you're in, for your small business every year. And you can retain more cash in the company. And what that means is that you can buy more equipment, hire more people.

You've got more of your profits available to reinvest in yourself. And so that's a really important consideration. I think if you're intent on growing to like a million dollars plus of of sales then it really makes a lot of sense to incorporate because you can maintain profitability and keep doubling down on um investment in your business and then plus on the flip side if you are looking at at selling your business one day if you sell the shares of that you've got access to the lifetime capital gains exemption um which is nothing to sniff at it is a significant incentive for small business owners to grow a business

that will survive them again policy decision on the government of canada's part to encourage people to start businesses that can be sold can be can run themselves. Um, so that if you die, you don't leave 15, you know, employees in the wind because you had a business that was completely relying on yourself. Um, so that's over $900,000 in tax-free income, um, that, uh, you can get by selling the shares of your qualified small business corporation. So that's a definition there. Yeah, that's so helpful. And I think that's another thing to think about. I think if you want to start a business and eventually want to maybe leave it to your children or grandkids, like you said, it's like once you're incorporated, that entity will surpass you if you die or leave. So it'll still exist. So that's another thing to

think about. Yeah. But on the flip side, like, you know, if you're a plumber, and you you're a technician on the tools, and running your own plumbing business or something, and you make around $150,000 a year, and you're contributing to your RSPs, do you need to be incorporated? Probably not, you can insure yourself out of liability. So you have, you know, professional liability insurance and you can cruise with that. Just a personal tax return and, you know, contribute to your RSPs and do your thing. your videos about this that's why it's like so familiar like yeah actually when i was still like considering like should i should i not like i'm not sure my biggest thing and i kept on talking to my accountant about this was i'm like well i still have plenty of rsp room so i don't think it makes sense like i'm just gonna probably do that until i max it out and then need some other way to be you know tax efficient and so that's actually pretty much what i did for four years and that worked well for me but also But also another consideration was as my business was expanding and I just wanted to have a little bit more protection because I do talk about personal finances and have an investing course.

I'm like, I don't want anyone to, I mean, sue me personally. You know what I mean? And so I wanted to have that extra protection on top of my professional liability insurance for sure. Yeah, and that's where it can make a lot of sense. Like I said, Trump trumps all the legal legality trumps all. Yeah. So one kind of last thing I want to chat about is scaling your business, growing your business, outsourcing. Again, this is something that I've personally experienced doing pretty much every single job in my business in year one, burning myself out that recommend. And then slowly kind of,

you know, now I just hire contractors for specific tasks. I found I found personally, it's very difficult to find a unicorn, like a duplication of me who knows how to do all these different things. So makes sense for me just to find like experts in certain fields like, oh, great, you're, you know, my podcast editor, you're an expert with editing, you're going to do that specifically, I'm not going to ask him to do my video editing, I'm going to get someone specific for that task. So for me, it's taken me years to kind of find the right people and really determine what can I outsource so I can have more time to build other parts of my business so it can be more profitable. It's not as easy as it sounds. So where should people when they're thinking of like,

I need help? Where should they start? Because it can be like, there's so many things that you can do. And everyone I talked to, like, just get a virtual assistant. And it's like, but maybe that's not the right fit. Yeah, man, I we've done a lot of work on this. And I think every entrepreneur goes through their journey with, with this on how to scale. And really challenging thing to do. And I don't think it's enough credit. When you meet someone with a million dollar business, like give them a pat on the back because that is not an easy thing to accomplish.

How I try to think about it now, and I wish I had listened to Michael Gerber a little bit more, was the organizational chart on a business. Most businesses of a certain size look the same and they look the same for a good reason because it works. It is the way that businesses are structured. I think I spent a lot of time, you know, growing my business and thinking that, you know, we're special and we're a flat organization and this and we're that. And

now that, you know, we've surpassed that, it's like, okay, we kind of look the same. Yeah, every other business internally. And from an org chart perspective, I mean, we allow people, we want to hear from people and keep it flat that way. But it still looks kind of the same. And so how we structure that is kind of, well, one is knowing yourself. So being fully honest with yourself as an owner on what you're good at and what you're not. And that makes it really clear that you don't actually want to hire another you

because you want to do more of the things you like. You don't want someone else wanting to do all the things that you like too because then you're going to double down on all the stuff you guys like to do and neglect all that other stuff. So you want to find someone that's complementary. But from a cost perspective, it actually makes sense to kind of work a certain way in that work chart.

Kind of think of different departments in the company. You've got your strategy and your board side. Then you've got sales and marketing and sales. Then you've got sales and marketing and sales. Then you've got some sort of production work. So all the stuff that goes into producing whatever it is you're producing, whether it be services or delivering services or products or whatever.

Then you've got sort of admin, administrative HR things or all the background stuff that has to go on, responding to emails, lining things up, doing all of that. And then you've got your finance side. So make sure the money is counted, invoices go out, you get paid, all of that. So we kind of work backwards out of that. So finance is kind of the number one thing you can outsource early, I think. And I'm not just saying that because we've worked in finance outs outsourcing but it tends to be something that it's kind of low impact to the business but still really important like owners shouldn't really be doing I mean long term all their finances because there's people that are really good at it they do it really efficiently and like as a business owner you really like are you really adding a ton of value by doing your own bookkeeping? Like I don't think so. And then admin.

So the VA piece is huge. Like having somebody there that can handle all of the traffic. I think that's one way to put like what we do as entrepreneurs is like handle traffic. There's so much traffic that's thrown at us and have someone there that can deflect the low quality traffic for us, frees us up to think about the more impactful things like production, like producing what we're actually selling and getting better at that and listening to our customers about what they like,

what they don't like, making things better. We can spend more time in there, which means we can spend more time in sales and marketing. As we move in that direction, higher and higher value stuff, all the way to the board level, which is strategy level, which is the highest value things that we can be doing as entrepreneurs, is the strategy around what our business is. Because guess what? No one sees our business like we do. Like being the owner, we see how it all fits together, the moving parts, the trade-offs

that we have to make, all of that stuff. And that's where we can really, I think, add value. But where we like individually are in the company can vary a little bit. So knowing your strengths makes you kind of like zero in on, you know what, I'm an operations like person. I know how this stuff works. So I'm going to really double down on that, but I'm going to outsource maybe some of my marketing work. You know, that might be a way that you can, once you're done with the finance and admin stuff, like where you can be really impactful in your business can depend on your strengths.

Yeah, absolutely. Yeah. No, I, I, yeah, the first person I hired was an accountant just to make things just like, you know, helpful, especially during that first year, I highly recommend it. But yeah, this year, I finally after doing my own books for four years, I'm like, why am I still do I think part of it, especially because it's like I run this like personal finance company, I felt like I had to, but you know, then I'm like, I don't have to just because I know how to do something does not mean I have to do it. And it does take me a lot of time. And I really don't like I used to enjoy it. I'm like, I don't enjoy it anymore. It's annoying. And so I hired a bookkeeper. I'm like, well, that was easy. And I should have done that a long time ago. And it's also too, like I switched accounting softwares. And so for me,

it would have taken me so long to like learn how to use this new program. And she was already an expert with it. So I'm like, this is kind of a no brainer. It's yeah, like you said, it's really taking a look at what is something that's taking me a lot of time and time away from, you know, building my business or being more profitable. For me, it was like, yeah, actually, the bookkeeping was taking me hours. And that was not efficient. Yeah, it can be finicky, right? If you're not doing it day in and day out, you're coming in once a week or once a month and you're trying to, oh, yeah, I got to figure out how to do this.

Or this thing is left over from last month. And now it becomes an albatross. And it's hard to shake. So yeah, really important to, to outsource those kinds of things where there's a lot of help out there that's really good at it. Um, and it can freeze you up to do so much more impactful things, I think. But in the beginning, I mean, yes, chief bottle washer, like we do it all. We have to, it's just part of it. Um, you know, I think I was reading the, uh, David C. Baker book last night, the business of expertise. And he talks about that quite a bit as number one, like you got

to know what you like and what you don't. But in the beginning you have to be disciplined about the things you don't like doing. Like it's easy to just focus on the stuff you enjoy, but you got it. We still have to do all those things we don't enjoy in the beginning. It's easy to just focus on the stuff you enjoy, but you got it. We still have to do all those things we don't enjoy in the beginning. It's just the nature of running a business. It's just how it goes. Yeah. It gets easier. That's kind of the big benefit of sticking to it and just taking, you know, just being

in your business for a longer period of time is it gets better. The first year for me, it was like just, it was not a train wreck, but it was the most tiring year of my life because I'm like, Oh gosh, I really need to make this work. Otherwise I'm going to, it's not going to be pretty. So. Oh yeah. And yeah, that was the same way. First, first year or two was just burning the candle at both ends. It was, it was so much work, but I mean, that's your garage story, right? That's what you go back to and the beginnings and how you survived it. And that's, that's the fun found you so many great freebies great YouTube channel that talks about such specific like questions that you cannot find the answers to online you have them in your YouTube channel but also like I download a bunch of your freebies too to take a look and there's so many great resources you want to kind of share where people can find this what are some things that

they can find on your website yeah so we're actually launching a new website in November it's very soon yeah so we got a new resource center coming. It's, um, very soon. Yeah. So we got to have a new resource center coming through there. So we try to really make it, um, really easy to navigate, download all of that and new branding and everything's really excited. Um, so that that'll be launching early November and, um, it's avalonaccounting.ca. It's all there right now, but it's going to look nicer in November. Um, but then i've been doubling down on youtube because i i just have so much fun with it and um yeah and that so it's just uh avalon accounting is the youtube channel and try to put out a lot of putting out a lot of use hopefully

useful information for canadian entrepreneurs there yeah well that's the other thing there's not a lot of information when it comes to um taxes or small business for canadians that's the other thing. There's not a lot of information when it comes to taxes or small business for Canadians. That's the other thing I hear. Very hard to find this specific information for Canadians. So your stuff is very valuable. Yeah, I wanted to be really specific because, you know, looking for that kind of help on, you know, it's nice to have somebody that can explain things to you for the specific situation. I didn't see anything out there for Canadians, really. No, there's like nothing, which is why I found you very easy. I'm like, oh, finally. Well, thank you so much for taking the time to come on the show and answer all my questions.

I'm sure people have more questions for you. You can subscribe to his YouTube channel or visit his website. Is there anywhere they can follow you on? Are you on Graham? Are you on Twitter? Yeah, so a couple Instagram. So one is Avalon Accounting or Avalon CPA is our Instagram handle.

My assistant is trying to convince me to get onto TikTok. I've done one, like a rough one, but I don't know. We'll see about that. And then you can follow my hair on Instagram too by the way. Really? Instagram account for my hair. It's

Joe's hair because we don't have an office pet and everyone always makes fun of my hair so I was like. It's lovely hair. That's it. I'm making it I'm making an Instagram account for my hair. I love it. That's a joke one but it is there. I post to Instagram account for my house. I love it. That's a joke. It is there.

I post to it once in a while. I love it. That's amazing. Well, thanks again for taking the time to come on the show. Awesome. Thanks so much, Jessica, for having me. And that was episode 302 with Joe Collins. He's the partner and owner of Avalon Accounting.

You can find more information about that at avalonaccounting.ca. You can follow them on Twitter at Avalon CPA, as well as Instagram at Avalon CPA. And like I mentioned, and there's so many great resources on his YouTube channel, youtube.com slash C slash Avalon Accounting. I will include all this really helpful information. And also he has great, honestly, I've downloaded them, online courses and free guides on his website, avalonaccounting.ca. But anyways, check him out on the YouTube. He's awesome. And he's just like the nicest guy, the nicest guy. So make sure to check all that. Again, I'm going to link everything in the show notes, jessicamorehouse.com slash 302. So make sure to check out the show notes for this episode. Okay, got

lots to share with y'all. So stick around. I just want to share a few words about this podcast episodes sponsor. This episode of the more money podcast is supported by harvest ETFs looking to add some sustainability or growth equities to your portfolio but still want to be a long term index investor like myself. Well, that's why I've got index funds in my core portfolio and a satellite portfolio to explore other types of securities that are non-index based. Now, some investors like to use their satellite portfolio to pick stocks, but you can also use it to invest in specific ETFs for potential higher returns without having to sacrifice diversification. For example, I know a lot of us want to invest in

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lineup, and even just to learn more about ETF investing in general, Harvest hosts their own Harvest Talks podcast. Visit HarvestPortfolios.com. Once again, that's HarvestPortfolios.com. Okay, so what are some things that I've got to share with you? Well, obviously, I dropped the big bomb last week that after a month, but it felt like a year of house hunting. Me and my husband have found a house. So honestly, there's only going to be a few more weeks that we're living in this townhouse. Then we're going to be a bit displaced living in an Airbnb, then going to my parents' house for a couple weeks. And then we'll be in our new place in the new year. And I can't wait because honestly, I have so many ideas, but setting up a proper

podcast studio, you know, maybe even get like a different microphone. I don't know. Like, let's do something. I've been using this microphone, which is fine. It's great. I mean, my husband's the expert in this field. He's the one that chose this mic for me for six plus years. But I'm like, is it time to change? I don't know. Maybe. I don't know. I'm going to see what's out there and see what's going on. But also like get things like, you know, some like sound proofing panels. No, they're not called sound proofing. I remember I was saying that. And my husband, Josh is like, no, it's not sound proofing. It's some other thing. Sound muffling? I don't know. My editor is going to listen to this and he's probably just like pulling his hair out. Anyways, lots of exciting things.

Lots of exciting things with that. But anyway, so that's there's I don't even know what to share with you because nothing has happened yet. I'm not even in the place. But I'm looking forward to just like having a proper, you know, studio and set up and making more YouTube videos because I also have like a proper place where I can set up the lights and whatnot, as opposed to just having this one tiny second bedroom. That was my office, YouTube studio, podcast studio and everything in between. So yeah, that's very exciting. Another thing I want to remind you of if you're just jumping into the show, I'm always giving away things, mainly books, because why not? So if you go to jessicamorehouse.com

slash contests, that is where you can find all the current books that I'm giving away. There are actually four books. Let me remind you what they are. I'm just going to type in. It is at jessicamorehouse.com slash cont contest is where you can find all that great stuff. And currently you'll find I'm giving away a copy of Redefine Wealth for Yourself by Patrice Washington, The Wisest Investment by Robin Tobe, How to Figure Out What to Do with Your Life Next by Jennifer Turliak, and Breaking Money Silence by Kathleen Burns Kingsbury. So lots of books there, but I'm going to be adding a number of more books as there's more authors that are going to be on the show. And gosh, we still have two more months, guys. Yeah, I'm actually taking this show the latest. I think I usually do usually kind of wrap things up in mid-December, but I'm going to be taking you all the way to December

23rd this season. Very exciting. So anyways, make sure to go to jessicamorehouse.com slash contest to enter to to win one of my book giveaways. Another kind of plea because I did my last episode. Make sure to check me out on Instagram. How do you get there? Instagram.com slash Jessica I Morehouse or just find me at Jessica I Morehouse. Also, there's the podcast has an Instagram as well where you just kind of share episodes to kind of let you know what's going on at More Money Podcast. And I recently, obviously, last week was a huge milestone, we reached 300 episodes away, made a special little video that I shared on Instagram and all my social channels. So make sure to follow me on Instagram, because the goal this year, one of my goals, like I'm, I'm so close to reaching almost all of my

goals. Like I think there's two that it's just, it's not, it's not going to happen, uh, for a few reasons that I will, uh, mention actually right after this. Um, but one of my goals is to reach 10,000 followers on Instagram. So, you know, please follow me. Okay. So, uh, what are some things that I'm not going to be achieving this year that I really thought I was going to? Well, um, and I think I should probably make a little video about this. Like I used to always do at the beginning of every new year, make a YouTube video about what my goals are for the year. And I think I should probably make a little video about this. I used to always do, at the beginning of every new year, make a YouTube video about what my goals are for the year. And I just kind of dropped off. I haven't done that for the past few years, but I'm going to get back into that. Anyways, two big goals that I had were to first pass FP2, financial planning 2, through the

Canadian Securities Institute. I think I did talk about this on the podcast. I failed, took it in the summer, took the exam and didn't pass. So that's super fun. I don't know, quite honestly, with just everything that's going on in my life, if I have time to take it again before the end of this year. I mean, yeah, technically, I have like two more months, but then I don't necessarily want to be studying and taking the exam over kind of Christmas holidays. Believe me, I think I actually did that a few years back when I was taking my final exam to become an accredited financial counselor Canada. And you know what? It's not like super nice to go to your parents' house. You're like, hey, I'm here for Christmas. Sorry, don't bug me. I'm studying. So I don't know if I want to do that again. That's not a nice thing to do. So I may push that back a few more months. But the other

thing that I wanted to do as well, kind of in conjunction when I was doing that was, you know, I've been talking a lot about my second course. So I obviously have my Wealth Building Blueprint for Canadians Investing course that is available, jessicamorehouse.com slash WBB, or just go to my website or the show notes, there's a link in there. So you can apply to enroll. But I wanted to create a precursor to that course that is more about financial planning, like a do it yourself financial planning course. And it just keeps on getting delayed, delayed, delayed for a number of reasons. I mean, the big reason was like my whole fall was just taken over by selling and buying a place. So I don't think I'm going to be crossing those off this year. So I should probably change the timeline on the landing page for my waitlist for that second

course. But, you know, I think that's it's going to be I'm going to try really hard to to make it happen. So it is available early 2022. I just want to make sure it's really amazing. And I'm a perfectionist. So this is why these things take forever, basically. So anyways, that's the update on that. If you're wondering what the hell is going on with that course, it's just not, it's not done yet because life took over and these things happen. Anyways, that is probably way too much talking for you. So thank you so much for listening. I will see you back here next Wednesday with a fresh new episode of the More Money Podcast. A big shout out to my podcast editor, Matt Rideout. If anyone's ever looking for a podcast editor, I know a guy. His name is Matt. He does my show. He's great. So thanks for listening. I'll see you back here next week.

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