Last month, System Six founder, Jeremy Allen, was featured as the inaugural guest for Accounting Leaders Podcast. Hosted by Karbon Founder & Director Stuart McLeod, the Accounting Leaders Podcast curates the best resources in the industry through conversations with accounting’s most significant innovators.
Jeremy and Stuart talk about small-town living, from the culinary limits of the midwest to the blessing of living near family in a slower, tighter-knit community. Jeremy’s recent move from Seattle, WA to Holland, MI, opts for colder, snowier winters but relatively easy access to big cities like Chicago and idyllic towns like Traverse City. While COVID may have changed the work-home balance for many individuals, nothing radically shifted in the operations of System Six. System Six has always been a remote firm with team members across more than a dozen states. While other industries struggled with the forced pivot to cloud-based systems, virtual meetings, and communications logs, System Six carried on with business as usual.
“For the first seven years, we had to convince people why the Cloud was good.”
“For the first seven years, we had to convince people why the Cloud was good, but COVID accelerated that,” says Jeremy. Remote, streamlined technologies are not just a slick option; they are essential to day-to-day business. Offering a work-from-home option for employees used to make System Six stand out among the crowd. High-class talent sought out the rare opportunity to provide quality CAS from the comfort of their homes. But the shift to at-home work for the entire industry means that System Six no longer offers something exclusive. Stuart points out that this shift, paired with the scarcity and challenge of finding and retaining talent, could pose problems for System Six’s growth in the future. Jeremy acknowledges that, in this case, company culture will probably emerge as their unique differentiator.
Growth and innovation have always been in the DNA of System Six. Jeremy founded the business with neither experience as a bookkeeper or training in accounting. What he was keenly aware of, however, was the day-to-day frustrations of navigating finances as a small business owner. Having launched several businesses before System Six, Jeremy found processes for payroll to be antiquated and lacking in technology advances of parallel industries. While accountants were helpful during tax season, they weren’t always supportive throughout the year and lacked the patience and expertise to provide holistic advisory services. Without someone “in the books” from week to week, financial records would become muddy, late, or disorganized, and only the business owner was left to clean up the mess. Amid his own frustrations birthed his most successful business.
His experience not only resonated with other small business owners but non-profits, churches, financial firms, and high-net-worth individuals. He quickly realized that managing the minutia of receipts and payroll brought immense relief. Their services were both systematic and highly “sticky.” While System Six loves innovation and technology, “slow and steady wins the race” for Jeremy Allen. Stuart asks about the future of System Six, and Jeremy shares exciting opportunities for acquisition or acquiring another business. “It’s always nice to get asked to prom,” jokes Jeremy. Entertaining invitations for mergers is flattering, but the fit has to be more than financial. For Jeremy, the highest priority will always be if a suitor is right for the employees, families, vision, and mission of System Six.
If you’ve ever gone through the process of selling a house, you probably know about that in-between season that lies between living normally in your house and handing the keys over to the new owner. It’s a season of cleaning up and making necessary improvements so that when you eventually do put your house on the market, it’s being presented in its absolute best light.
The same is true when you’ve made the enormous decision to sell your business! Even if you are confident in its value, a season of catching up and cleaning up your financial operations is essential to getting the most value out of the sale of your company.
Of course, like haphazard cleaning and cheap improvements to your house before selling won’t add value to its sale, making last minute improvements in your business’ financial operations won’t pay out – in fact, the opposite may be true. Savvy buyers are on guard for unorganized, sloppy bookkeeping. If your books don’t add up, or there are expenses that can’t be categorized correctly, you’re going to lose value in the sale.
There’s also the matter of reputation to consider here. You’ve invested years into creating what your business is today. What do you want the sale of it to say about your company? What do you want it to say about you?
You could be seen by potential buyers as an “old-school” unprofessional, or you could be seen as someone whose confidence in the value of their business shows clearly in the way you pay attention to even the most minute detail in your business’ bookkeeping
The choices you make in this in-between season before selling will not only impact the value you get out of the sale, but will also affect your legacy.
We’ve honed in on three specific areas that should be top priorities as you get your business’ books cleaned up and ready for a sale.
Every dollar needs to be accounted for in as much detail as possible.
When you’re preparing to sell your company, there is a ton of information you will need to have ready to show potential buyers. These include your financial records, a minimum of three years worth of profit/loss statements, net income statements, tax returns…the list goes on.
It may seem obvious, perhaps, that all these numbers need to be properly balanced and accounted for. What may be less obvious is the value of breaking down these numbers in greater detail than you might assume necessary.
You may be used to using one Quickbooks entry for your company’s “expenses,” but breaking those expenses down into specific, detailed categories (such as regular salaries vs. overtime pay, differentiating travel and entertainment expenses from regular expenses, highlighting parts and labor, etc,) will give potential buyers a lot more confidence in the true profits and expenses of the business.
Identify and remove personal expenses you’ve been running through your business.
Sometimes business owners try to “add back” the value of the personal expenses that they’ve written off through the company, such as family health insurance or personal travel expenses. Problems arise, however, if you have insufficient data to prove to your buyer that these expenses were truly personal.
We recommend identifying and removing these personal expenses from your books, ideally 18 months to a couple of years before putting your business up for sale. This protects your reputation as being transparent and honest, and lessens unnecessary confusion when it’s time to show your statements to potential buyers.
Identify and stop occasional expenses that aren’t recurring.
In that same vein, identifying random, occasional expenses will go a long way in helping clean up your bookkeeping. Perhaps you paid a large, one time payment for a marketing campaign, or sank some money into updating your company’s website. These aren’t recurring expenses for your company, but it can be hard to prove that to potential buyers as they’re looking over your books. We recommend starting to identify and stop spending money in these one-off categories at least two years in advance of selling your business. This will increase your profitability, which will help you sell for a higher value!
Is the reward worth the extra effort?
It’s a simple yes. With clean books, you’ll be a more trusted and therefore desirable target for buyers.
But, don’t just spend time ahead of your sale simply cleaning up your books. The next buyer is likely going to come in and implement updated, efficient systems to the business’ financial operations when they take over. This saves them time and money and therefore increases the value of the business right from the start. They’ll make sure you’re using the latest accounting software, and leveraging good third party tools for efficient bill pay and payroll processing.
Why leave this work for the next buyer? While you are cleaning up your books, also take the time to modernize your financial operations, thereby saving you time and money and increasing the value of your business.
The value you gain will be more than worth the extra effort – and you don’t have to do it alone.
At System Six, we are here to help. Day in and day out, we are helping businesses manage their financial operations and bookkeeping efficiently and accurately. And we love helping organizations get to that point – nothing gives us more joy than sitting back with a client after a few years of hard work and seeing decreased stress and increased profitability as a result of improved bookkeeping.
Are you looking towards the future, and considering what you can be doing right now to get the most value out of your company when it comes time to sell? Consider letting us help you improve your bookkeeping and the overall efficiency of your financial operations.
The decision to sell your business is a massive one. It will not only require practical time and energy but an emotional and financial investment. You will need to pay lawyers and other advisors, and it will demand time from your chief operators and directors. As you collectively navigate this significant transition, anxiety will heighten, and questions will fly. Many owners start down the path towards a sale, only to get cold feet and determine that “the time just wasn’t right.” This can be detrimental to the stability of the business, the team, and future sales. So before you begin the process of preparing your business to sell, pause and ask yourself these questions to make sure you’re truly ready to say goodbye.
1. How much of your personal fulfillment do you derive from your business?
Perhaps you built this business from the ground up, tooth and nail. Or maybe you purchased it in a fledgling phase and nurtured it to success. Whatever the path, you put in years of focused, dedicated energy and care into building a structure, team, and business that you are proud of, and rightfully so! It has probably become more than just your job; it is part of who you are. So how much of your self-worth, identity, and happiness comes from it? How much joy do you get from walking into work on Monday morning, solving complex problems around your conference table, or coming up with a unique solution for your clients? Would you miss the travel, the pace, or the challenge? Who are you when you aren’t at the helm? It’s essential to recognize this business’s role in your personal life – not just the time it takes but the sense of worth it brings you. If it plays a massive role in your personal life, and really defines you, actually handing it off at the end of a sales process may be a lot harder than you anticipate.
2. What will you do with your time?
Elite athletes call this “visualization.” They imagine step by step, moment by moment, the perfect swing of the bat or spin of the dive. Being able to picture something clearly in your mind helps bring it to fruition. It allows your brain to rehearse what it will think and feel when the behavior comes to pass. Can you imagine retirement? What will you do? Where will you go? What does your family imagine? How will you fill your weekdays? What will you do with the money? If these images are vague and incomplete, it might be a sign that – when push comes to shove – you won’t follow through with a sale because you don’t know what is coming next. We are creatures of habit, innately designed to prefer routine to change. Knowing exactly what you’ll do that first Monday morning when you don’t have to set the alarm is an important step to preparing your mind for a shif
3. What problem are you solving?
Sometimes a complete sale is not the solution. But to know this, you have to articulate your problem. Do you want more time with your family? Is the leadership responsibility bringing you too much stress? Is your industry growing rapidly, and you recognize you don’t have the skills (or desire) to scale? These problems can be solved in many ways through partial sales, staffing changes, or operational restructuring to alleviate your actual pain point while retaining your involvement in the things that still bring you life. Selling your business doesn’t have to be an all-or-nothing decision. But you need to know what type of sale/transaction you are looking for before you go down the path.
As modern accountants and bookkeepers, we are here to ensure your accounts are for whatever “next step” you envision for your business. But we aren’t only your outsourced finance team – we are also trusted advisors and partners in your success. If you know you’re nearing the time to sell your business, reach out to us. Of course, we can help you prepare your financial records to ensure you get the most value from what you have worked so hard to build, but we also can help you think through some of the non-financial considerations at play when selling your business. We’ve seen it before, done it before, and are here to help.
Whether you are an international non-profit organization operating with a staff of hundreds or a small local church with under a hundred members – when your organization is running on the donations and good faith of others, good stewardship matters.
Transparency Builds Trust.
We believe good stewardship begins with trust. As a non-profit, your organization functions not just as a business but as a community venture. By trusting you with their financial gifts, resources, and time, your donors have a personal stake in your organization’s success. When they have questions about where funds and resources are being allocated, there should be clear and open transparency, just as there would be in any partnership.
This is where accurate bookkeeping comes in. Messy, unpredictable books mean that money could be unaccounted for. Even if it is unintentional, unorganized bookkeeping can and will lead to mistrust in leadership.
Successful non-profits know that when it comes to finances, they are operating as a partnership with their donors. Trust is essential for this relationship between organizational leadership and financial partners to stay healthy and grow.
Vision Requires Resources.
Every non-profit organization begins as a vision, but a vision needs resources to come to life. An organization must have practical tools such as money and manpower to operate. As a non-profit, you often must rely on monetary donations and volunteers with particular skill sets to execute your goals.
You’ll earn the trust of your financial partners and volunteers by wisely managing the resources at your disposal, ensuring they are not expended too slowly or quickly. This doesn’t just pertain to your budget – wisely managing your organization’s resources also means valuing your staff and volunteers’ time.
A vision isn’t a static thing – it stretches, shifts, and grows along with your organization’s resources. Accessibility to accurate books is imperative as your vision and goals evolve and adjust over time. This transparency not only builds trust, it also honors the givers by caring wisely for the resources they give you, allowing you to earn the right to ask them for more.
Information is Empowering.
Budgeting, like many other disciplines, sometimes gets a bad rap for its “restrictive” lens. We tend to think of budgeting as what we can’t do, rather than important, empowering information that frees us to do more of what we value most.
We believe that good stewardship and accounting of finances is the opposite of limiting – it’s actually freeing.
Wisely stewarding your resources through accurate bookkeeping allows you to celebrate and give more readily because you know exactly how much money you have and from where.
The same is true when it comes to your partnerships with donors and volunteers. Good stewardship shows that you honor their investment in your organization’s vision, whether with time or money or both and that you value a partnership built on transparency in trust. When your donors feel honored and like valued team members with a common mission, their commitment to your organization will grow.
What you need to know about managing the finances for your growing real estate investments.
Purchasing multiple properties can be an excellent investment path, allowing you to grow your assets while potentially making some extra income at the same time through leasing. However, owning and managing multiple properties can become a pain point for you and your CPA when it comes to bookkeeping, particularly when tax season rolls around each year.
It can become complex and confusing to track income and expenses for individual properties when they are all kept under one Quickbooks file, making filing taxes a nightmare.
At System Six, we believe you can achieve accounting success by understanding the proper tax structure for multiple properties, keeping your individual properties’ bookkeeping separately organized, and utilizing available up-to-date technology to keep your bookkeeping balanced and easy to track.
As an owner of multiple properties, one roadblock that may surprise you when tax season arrives is realizing too late the headache that filing all your properties on one tax file can bring you and your CPA. Whether or not multiple properties are LLC’s, filing each entity individually will make the accounting process much less confusing. Setting yourself up for success starts with making sure you are structuring your bookkeeping correctly.
How to Structure Your Property Accounts
Each of your properties should ideally have its own Quickbooks file and profit/loss/balance sheet. Trying to keep track of each property’s expenses and income streams under one personal bookkeeping file is potentially a costly discrepancy just waiting to happen. You can safeguard your assets and investments by organizing your properties’ bookkeeping individually (not to mention your CPA will thank you for making their job much more time-efficient)!
If you use your multiple properties as a source of income by leasing them out, it will serve you well to open individual banking accounts for your properties.Separate lines of credit and bill pay systems for your properties will make expected costs such as utility and cable bills easily trackable and accounted for.
Sometimes owning multiple properties becomes even more complicated – what about situations where you have multiple properties under individual entities that income from your properties has to be regularly allocated to?
Utilizing class and location tracking will give you another valuable layer of data to help you precisely track how much revenue from your properties needs to be allocated to an overhead entity. Class and location tracking is an opt-in feature on accounting software, like Quickbooks, allowing users to group expenses or invoices by location and department.
Even though structuring your accounts and bookkeeping individually will undoubtedly keep your accounts safer, more organized, and trackable, we understand that it can be overwhelming for property owners to tackle that front-end work of setting up individual bookkeeping, tax files and lines of credit for their multiple properties. This is especially true for property owners who have been keeping their properties’ accounts on one Quickbooks and tax file and want to restructure their bookkeeping to keep their properties’ individual bookkeeping and tax work separate from each other.
You don’t have to tackle this alone! Here at System Six, we are passionate about utilizing the latest technology and tools available to help our clients with multiple properties keep their bookkeeping organized and balanced. Let’s chat.
At Systems Six, we recognize that feelings of stress and being overwhelmed are commonplace for many small business owners during tax season, which is why we want to equip you with principles to simplify your tax prep. On a micro level, your taxes are impacted by daily transactions: running payroll, writing invoices, paying vendors — each of which look back upon actions previously done. Zooming out to a macro level, the same data needed to execute your taxes will also be needed in the future if your business gets audited, you need financing, or are looking to sell. When new seasons of business or big decisions come knocking, we want you to be prepared. Here are three tips our expert bookkeepers recommend to simplify your tax prep and serve your goals on micro and macro levels:
1. Use proper digital record keeping systems
The foundation of your tax prep is the same systems you use to accomplish tasks like payroll and paying bills; they must be organized and accessible. We recommend using online, cloud-based tools. Our team advocates for Quickbooks to be your central online hub through which all other platforms connect. Using other platforms like Bill.com for bills, Ally for receipts, and Sharefile for shared documents will complement Quickbooks and assist in managing an efficient and accurate paperless accounting system. Finally, Gusto, a time-tracking and payroll system, is recommended by our team. At the end of the year, Gusto will send W-2’s to each of your employees digitally. By using these systems, your books will be ready for a tax preparing CPA to effortlessly step in and carry out your taxes without needing to spend hours digging for correct information.
2. Maintain bookkeeping hygiene
Using a simplified, cloud-based system for the foundation of your tax prep is essential; however, it can be easy for your books to become messy without upkeeping these systems. We recommend performing weekly and monthly upkeep tasks to ensure that your files stay organized, your receipts are all accounted for, and your books remain clean. Staying on top of these day-to-day tasks will aid in preparing your business for tax season. Ignoring the stack of receipts throughout the year will only lead to panic when your CPA comes knocking.
3. Reconcile your Quickbooks account
Reconciling your books is an easy task, yet it makes a profound impact when it comes to having truthful and accurate books. Comparing your books with your bank statement brings accountability to your work. Quickbooks is a phenomenal online tool, but the IRS begins with your source documents and builds from the ground up to validate your books. Therefore, reconciliation is essential to the promotion of transparency and accuracy with your bookkeeping.
Tax prep doesn’t have to be overwhelming, but it requires organized, daily bookkeeping practices to ensure accurate data. By using digital platforms, maintaining the hygiene of those platforms, and reconciling those platforms with source documents, your company will have significantly simplified the preparation process.
It’s storytime on the blog this week! Do either of these tales sound familiar to you?
Flash Drives and Checkbooks
The advisors at Neighborhood Financial were losing their minds and perhaps more alarmingly, their valuable time.
It was the last Friday of the business month and, as was becoming far too common, financial advisors/business partners Jake and Lisa were scrambling to make sure their individual income accounts and their joint business account were correctly balanced.
As with most financial firms, bookkeeping needs at Neighborhood Financial were complicated. Along with individual income streams and expenses, the business partners’ joint venture account had to be regularly contributed to by both team members. They had hired an independent accountant to handle their books long ago – so why were they still not 100% sure of where their accounts stood and who owed how much to their joint account every month?
With the chime of the office doorbell, the answer to that question walked in the door with a flash drive in one hand and a stack of unsigned checks in the other.
Fred the accountant still kept Jake’s and Lisa’s individual books on a flash drive that Jake and Lisa only had up-to-date access to whenever Fred was able to stop by. Fred still handled expenses and payments with paper checks, reports and receipts. It was simply the way he had always done things.
It took up quite a lot of their valuable time for Fred to help Jake and Lisa figure out how much each of them needed to contribute to their joint account each month, and the sums varied so wildly month to month that neither of them were ever sure if they were over or under contributing.
“There’s got to be a simpler, more dependable way to do this,” sighed Jake, rubbing his forehead after Fred left with the stack of freshly signed checks.
“This is becoming too stressful for us individually, and for our partnership,” agreed Lisa. “I think we need to make a change.”
How much of a difference can expert help and up-to-date tools make for financial businesses?
It may surprise you that the answer is more than you might think.
Staying two steps ahead of the latest tools, systems and technologies for financial business bookkeeping is becoming a necessity for those who want to stay ahead in today’s quickly evolving world. More than ever, today’s financial businesses need expert help with a deep understanding of the most accurate and efficient bookkeeping tools on the market so that they can focus on what they value most: serving their customers.
Something we have noticed among our clients is that some businesses are leery of switching from old, manual ways of accounting because they are afraid they will lose the personal touch that comes with the long standing relationships that develop over years working with a single accountant. The learning curve of newer systems and technology seem overwhelming and businesses worry it will take too much of their time.
At System Six we work hard to stay ahead of the curve when it comes to the best, up to date systems and tools available for bookkeeping so you don’t have to. We are also just as committed to building long lasting relationships with our clients – relationships built on great communication and personal attention to the details that matter for your business.
21st Century Solutions to 21st Century Challenges
Jake and Lisa made the decision to change how they were handling their business’ bookkeeping.
By outsourcing their bookkeeping needs to a company that was up to date with today’s best technology, Jake and Lisa began to see immediate improvements in the areas that previously caused so much frustration and stress.
The new bookkeeping team used tools to analyze past years’ spending to project more accurately how much Jake and Lisa needed to be contributing to their joint account each month. Their payments became more consistent so there were no longer last minute surprises at the end of every month.
While trying to understand and manage the various streams of revenue and expenses at their firm had been a nightmare before, now Jake and Lisa received monthly, detailed reports broken down in a clear, concise way. Jake and Lisa finally had vital account information at their fingertips, up to date within ten days of the end of the month. No more waiting for and fussing with flash drives!
Moving their banking and bill pay systems online alleviated the need for paper checks and reports, which made Neighborhood Financial more organized and efficient than ever before.
All this led to surprisingly big benefits for Jake, Lisa and Neighborhood Financial: more peace of mind, better control of their account information, and best of all, more time to devote to their clients.
Does this story sound familiar to you? Have you been wondering how updating the way your business handles partnership accounting would improve your work? If so, we’d love to connect with you!
For churches, the calendar year closes with exciting and reflective celebrations of Advent and Christmas. Church staff focuses on providing reflective, engaging opportunities to connect with one of the most meaningful seasons in the liturgical calendar. In the wake of the tinsel and pageants, advent calendars and carols is another milestone in the annual calendar: donor giving statements. Rather than inciting enthusiasm and joy, most church administrators and accounting volunteers cringe at the thought. These staff members could share stories of fighting with printers, chasing down missing data, and mail merging statements through all hours of the night.
At System Six, we understand how complicated it can be to provide accurate, accessible donor information to your congregants. Every year you may find yourself thinking, “There has got to be a better way…” – there is! We have put together this comprehensive guide to help you streamline your giving throughout the year so that statements can be processed, sent, and reconciled in moments – rather than weeks.
Four components affect church donor giving statements:
1. How you collect donations
2. How you track your spending
3. How you store donor giving data
4. How you send donor statements
A crucial recommendation: the least number of tools needed to complete these steps, the better! Throughout this guide, we will highlight several of our favorite tools. Be sure to evaluate the tools you currently use to see if they can meet any of these needs throughout the year.
At System Six, we believe in the power of trustworthy, high-tech tools to build financial security, transparency, and control. We have been in the cloud since the beginning. Over the years, we have transitioned hundreds of businesses, families, non-profits, and firms to cloud-based tools and seen the impact of reliability and simplicity. Paper and pen systems are notoriously clunky, unreliable, and insecure.
We understand it can be overwhelming to sift through the myriad of available software and applications to help streamline your processes – even more so if you’re doing it for your personal finances. Accounts payable at your company probably do not pay the internet bill at your rental property or handle the landscaping company’s monthly fee. As your personal wealth, properties, and real estate grows, how do you handle the influx of papers and filing?
Our advice? Set yourself up with reliable, trustworthy cloud-based tools. Our team has helped countless families transition away from paper tools. If you’re looking to make the jump, here are four tools we recommend adding to your personal toolbox:
1. An accurate time tracker
If you have employees who work on behalf of your family or are working in your home, they must have the ability to track their time accurately. It’s easy for timecards to be lost or misreported when using paper and pencil. To increase accuracy, we recommend using online software to track your employees’ time. Companies like Gusto, Quickbooks Time, and Toggl have created systems that benefit households by eliminating errors with timecards. In addition, these systems will save you time by syncing to your household’s central accounting software. Several of these tools have mobile apps for quick and easy access and can differentiate between projects, so you know where your staff invests most of their time.
2. Bill pay software
Writing checks, creating invoices, and processing payments can be very time-consuming. A bill pay software helps streamline these practices through technology. Bill.com is the platform our Systems Six bookkeepers recommend. Not only will this software help make your accounts receivable and accounts payable more efficient, but it will also connect to Quickbooks, our suggested central office for your paperless accounting system. Bill pay software keeps your bank credentials safe by operating as a separate platform, increasing convenience and security. This way, your bills and cards can sync directly with your bank account without giving away your login credentials.
3. A shared space for files
When making the transition to paperless accounting, it can be challenging to resist the urge to keep all your paper bills, invoices, and receipts. We recommend using a shared space to upload pictures of your files to keep them digitally. Google Drive, Dropbox, and Sharefile are all platforms that provide the necessary storage you need to go paperless. These files can be shared and accessed from any device with a login, making it easy for your bookkeeper or accountant to find pertinent files without needing to dig through a filing cabinet.
4. A receipt management system
If you have employees working on behalf of your family who have the authority to use credit cards linked to your bank account, you must set clear boundaries. We recommend establishing spending limits for each employee and linking your bank account to Ally. This software organizes your receipts from multiple members of your staff without sacrificing your time and energy. These receipts can easily align with other management software like Quickbooks to provide checks and balances for those with authority to spend on your behalf
Chris joined System Six from a career in finance, where he served as an advisor to and investor in medium-large sized businesses. He’s worked for several fast growing companies, holds a business degree from Stanford, and is a great advisory resource for our clients.
Chris loves being with family, going for runs and working on his golf game.
