The Importance of Bookkeeping: An Interview with Owners and Operators
Oct 24, 2022
Hello, friends. This week, I was interviewed by Erin Andrews from Owners and Operations, and I got the chance to share a bit about my journey out of corporate life. I also got to answer some questions about building my bookkeeping business and the importance of bookkeeping, and while I’ve shared a bit about these things previously, I think it will be helpful for you to hear some more in-depth answers.
Without further ado, let’s jump straight in!
Leaving Corporate
Erin: So, Katie, tell us a little about yourself!
Katie: Hi everyone! I’m Katie Ferro. I am a licensed CPA, though I haven’t done taxes in quite a while. I am a mom of three little ones who are getting bigger every minute. They’re the reason my business owner journey even began—when I was pregnant with my youngest, who's now about to be three, I came to the realization that things needed to change. But before I jump into that, let me talk about what really started all this…my choice to leave corporate.
I left corporate in a very strange, fateful twist of events where I got in a car accident while pregnant with my first son. I’d been trying to suppress all these worries and thoughts about handling both my corporate career and motherhood, but all of that came surging forward the moment I got in that accident during my very first pregnancy. Immediately, I was bombarded with fears over how I was going to handle commuting, juggling my corporate career, and raising a family all at once. I had just worked my way up to manager at my company. I’d just completed the CPA exam about a year and a half before that. I couldn’t see how having a successful career and being a mom could ever align.
The day after that accident, my company announced a package where they would buy you out of being an employee. I didn’t know it at the time, but they were gearing up for a sale; they were offering a package where I could get a bonus, a twelve-week severance, and stay on their time for a bit longer. I did that, and the timing aligned absolutely perfectly; I was out of corporate a month before my son was born.
It was a hard decision; I’d been working up the corporate ladder and checking all the educational boxes and stuff like that for a very long time. But I couldn't ignore those signs: between the car accident and the payout, I was meant to leave.
After that, I did motherhood only for a couple of years. I had a few clients who came to me because they knew me from corporate, but I didn't want to grow beyond that at the time. Then, while I was pregnant with my third child in a four-year span, I started to feel the itch to do more. I wanted to continue building something on my own, and I wanted to make sure I could stay out of corporate for good.
While brainstorming that, I realized that my small bookkeeping business—if it could even be called a business at that point—could be scalable if I just got some help. So that summer, I got intentional about growing my bookkeeping business, and I went from five clients to eighteen over a three-month period! So I got the bookkeeping business going, then I started mentoring accountants, and the rest is history.
These days, I’m still a stay-at-home mom. I’m so grateful for that; I purposefully built my business in order to sustain it, in fact. That was always what the growth of my bookkeeping business was about.
The Changes
Erin: So what has changed for you personally and professionally since you left corporate to build your own business?
Katie: Honestly, I can't think of much that stayed the same. It was such a time of transition to go from corporate to not, and I had that time between, so it wasn't just trying to take one and replace it with the other. I had time to see what life could be like, and honestly? I’d never had that time. I started working when I was fifteen years old. I was applying and getting rejected for jobs earlier than that. I always wanted to work and I always wanted to earn. I was the kind of high schooler that had two jobs, and a college student that worked full-time. My biggest gap in employment before leaving corporate might have been a month.
Because of that, I didn't do a lot of living. And this gave me a chance to see how things could be different, how I could make it different, and I did. Nothing much has stayed the same at all.
The Importance of Bookkeeping
Erin: Speaking of how you built this bookkeeping business, how did you know how to set it up? What did you do?
Katie: For the most part, I just got started. At that point, I didn't have a lot to lose, so I was able to focus entirely on that process.
I like efficiency, I’m very systems-driven, so I don’t mind researching and putting pieces together to figure out whatever I have to. In fact, my process of bookkeeping was definitely not taught to me in the firm; they didn’t believe in the importance of bookkeeping there. I used QuickBooks Desktop at the firm, and the way that we did bookkeeping was very quick and dirty for the purposes of a tax return at the end of the year. We would show the clients the tax return, but we would almost never show them their books.
Now, I do books only. I don't do any tax. In my opinion, bookkeeping is way more valuable than tax. The importance of bookkeeping cannot be overstated.
Tax needs to be done, of course. But tax can be messed up. Tax is important, and it's complicated. People who understand tax should do tax, and bookkeepers should defer tax decisions to tax preparers. That's my huge thing. This is not disparaging against tax, but I believe you can’t dismiss the importance of bookkeeping in favor of tax preparation. When you have books available to you, you get to see what's happening as the year goes on, which is of huge value to the business owner. It also ultimately helps the tax preparers.
I saw that lack of knowledge about the importance of bookkeeping fueling that gap at the firm, though I didn’t understand the importance of bookkeeping myself then. I definitely didn't think that it could be a business, and certainly not a business that would allow me to surpass my corporate salary.
Because I saw that gap and realized the importance of bookkeeping, I started to build that bookkeeping business. However, I was trying to do things a different way. Like I said, I wanted it to be efficient, so that meant learning new systems. and I just ruled up my sleeves and learned how to navigate them. You have to be willing to put the work in to build it the way you want.
Making Mistakes
Erin: What mistakes did you make when you started out that you want people to avoid?
Katie: I definitely made mistakes–underestimating the importance of bookkeeping, for instance! But honestly, one of the best things that I did was make mistakes. They taught me all the lessons I needed to learn better than anyone else could have taught me.
The biggest mistake I made was being really cheap about how I got paid. I didn’t want to invest in the right systems, because it was an extra expense I didn’t want. However, that resulted in an administrative nightmare. I get paid through Stripe now, which thankfully allows for autopay. another thing about like monthly billing is you can do that auto pay. My clients all pay me through Stripe, I pay the 3% fee happily, and I just factor it into my cost. Being cheap on my was absolutely the worst thing that I ever did. Just invest in it!
That’s My Story—And My Advice!
There you have it: my story of leaving corporate, building my business, learning the importance of bookkeeping, and the mistakes I recommend you avoid. Erin was a wonderful hostess, and if you want to listen to the full interview, you can find it at https://open.spotify.com/show/4dB0ZE8JaxqrkImm3Ifxrb
If you're looking for more tips for bookkeeping, insight on how to become a bookkeeper, and how to say hello to a more confident business model, enroll in Become A Bookkeeper (BABs).
Or to learn more about growing your bookkeeping business and hiring a team, enroll in Life By The Books™ (Libby).
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CONNECT WITH KATIE:
Website: https://www.katieferro.com/
Instagram: http://www.instagram.com/orderlyaccountingbykatie
