Q & A with Accountant Jillian Plank

Happy Wednesday, Readers! What better way to cap off a month of office organization than an interview with an accountant? Jillian Plank, founder of Spring Accounting, sat down to answer some of my questions. I loved what she had to say, and I know you will too! Enjoy.

1. Tell me about your business, and what type of clients you serve.

My business is called Spring, and we provide accounting and finance services to small, growing businesses. Up to this point, I’ve been serving a variety of clients all across the country, but I’m really starting to hone in on creative small businesses (photographers, designers, makers, etc). I have many creative passions, and while I’d love to pursue them as a career (maybe someday?), I think I add more value as a numbers-minded resource for creative entrepreneurs who want to make sure their finances are in good hands.

2. What made you want to become an accountant? Was there a moment that gave you an aha feeling?

Oh, I think there were many factors that pushed me down the accounting path and I just went with it. I’m the oldest of 4 kids and always knew I needed to graduate with a degree with a fair amount of job security – my parents were not going to subsidize my lifestyle once I was out of school. I graduated during the recession, so landing a job at a public accounting firm seemed attainable and secure. I also thought the actual work felt a bit like solving a puzzle, so coming up with the correct accounting treatment for a complex transaction is always satisfying, even after 10+ years.

3. What inspired you to start your own business?

To be honest, I always considered myself to be more of the corporate employee type. There’s a set path to success, roles are more defined, paychecks are more steady. But when I started to think about having kids and the flexibility I might want at that point in my life, I began to notice how difficult it can be to maintain a successful career in corporate finance without making major personal sacrifices. So I started thinking about how I might be able to build up skillsets that could enable me to work more flexibly in the future. While I was still working full-time, I found a couple of wonderful small business clients who took a chance on me and gave me the opportunity to learn all things small business accounting: Quickbooks, taxes, reporting, analysis, modeling, and more.

4. What’s been the best and hardest thing about having your own business?

I think owning a business is so exciting and I love dreaming up the type of culture I want to create for future employees (flexible, rewarding) and the types of services I can provide for my clients that they can’t get elsewhere. I definitely think the hardest part is allowing myself the time to invest in growing my business. As an accountant, I’m used to my day being measured by billable hours and it’s easy to quantify a billable hour lost to finding new clients, working on the website, or creating helpful content for existing clients. I know that as my business grows I’ll be able to worry less about how many hours I’m working in a week, but taking that first step to invest is difficult.

5. How do you balance your work life with three kids?

It’s just chaos around here most of the time! Such is life with 3 kids aged 4 and under. But in a practical sense, my husband and I do our best to loosely plan out our week and keep each other informed of major meetings, events, or activities. We also have a wonderful nanny who watches our kids while we’re both working. I work from home most of the time, but I have a designated office space and my kids know to give me space while “at work.” Even with lots of flexibility in my job, these years with young kids are constantly busy. I try my best to take an hour each day to do something unrelated to work while my kids are with their nanny, but that doesn’t always happen.

6. If someone brought their paperwork to you to do their taxes for their small business, what would be the ideal organization for those documents?

All the travel receipts together, all the gas receipts together, etc?In a perfect world, I’d have access to photos of the receipts online (in a filing system like Dropbox or Google Drive) in folders organized by month. Bookkeepers or accountants typically reconcile business bank statements monthly to make sure all business-related transactions are accurately captured in the accounting system (such as Quickbooks). As I’m reviewing a monthly bank statement, it’s helpful to have all related receipts for that month in one place so I can quickly find a receipt if I need more detail about a specific transaction.

7. How much do you recommend setting aside from each invoice to pay taxes as a small business owner?

This is a tricky question because every business owner’s tax and income situation is different. I don’t necessarily think you need to assess each individual invoice that comes in for taxes, but try to look at your business holistically for the entire tax year. You’re only taxed on your net income (gross sales less all business expenses), so think about how much revenue you think you might be able to bring in and also consider what monthly and annual expenses you can deduct. If you think you’ll be investing heavily in your business in the current year, there may not be much net income left over to be taxed. But if you have a huge year, you don’t want to get stuck with a huge, unplanned tax bill in April. Consider looking at your tax return from last year to determine what tax rate you actually paid, use the worksheet on the IRS’s estimated tax form (https://www.irs.gov/pub/irs-pdf/f1040es.pdf), or consult a tax professional if DIY taxes aren’t your thing.

8. How can a small business owner set themselves up for success for their taxes right from the beginning?

These 2 things can make life so much easier for business owners and their accountants at tax time:

  • Use a designated business bank account for all business transactions and don’t mix personal and business charges. There are some really great, low or no fee business checking options from Chase or US Bank and I’m sure local banks have good products for small businesses as well. You don’t want to spend time sorting through which of your transactions are personal or business-related, and if you have to hire an accountant to clean up your books, this sorting can get expensive fast.
  • Use bookkeeping software to track income and expenses from the beginning. Quickbooks is a classic choice, but there are free options like Wave (https://www.waveapps.com/) that will likely have all the features you need for a new business. Keeping solid records right off the bat will give you better insight into how your business is doing and will allow you to create useful reports without having to go back and try to piece together historical information. As an example, friends of ours reached out to me while they were trying to close on a new house. Their mortgage approval process was stalled because the underwriter needed a balance sheet and profit and loss statement from the couple’s business to provide proof of the income they had reported on their mortgage application. I had to completely build their statements from scratch, which required days of work and tons of conversations with them. It was a stressful process that could have been avoided if their records had been up-to-date.

9. Are there any tax write offs that many people who work from home may not know about?

  • Keep track of mileage to and from client meetings if you drive to them. You can’t write off mileage commuting to your office, but if your office is at home, any business-related miles can be deducted at the IRS’s designated rate (58 cents/mile for 2019)
  • The home office deduction is a huge one! You can include items like utilities, rent, home insurance, home security system fees, or cleaning and repairs, though they all need to be multiplied by your home office’s square foot percentage rate (divide home office square footage by total home’s square footage to come up with the home office percentage)

10. Can you write off your home office if you also use it for other purposes besides work? If so, how?

Unfortunately, no. However, you don’t have to designate an entire room as a home office; the IRS just says it needs to be a “separately identifiable space.” You don’t have to separate the space with a permanent partition, so see if you can create a designated workspace within some identifiable square footage and keep it free from non-work-related furnishings

11. How do you organize your file system at home?

I keep one small file folder with important documents – for example, my business’s certificate of formation from the state – and I store copies of everything else online. There is no requirement to keep physical paper copies of most documents, so unless there are original signatures on something like an operating agreement (keep that in paper for sure!), consider reducing your paper piles and scan them into an online file system

12. When cleaning out files, how do you know what to keep and what’s ok to toss?

General rule of thumb is to keep tax documents (receipts, invoices) for 3 years from the date you filed your return, though there are some exceptions you can review here: https://www.irs.gov/businesses/small-businesses-self-employed/how-long-should-i-keep-records

The beauty of online file systems is that, if you’re ever in doubt about whether or not to keep something, snap a photo, file it away, and you’ll have it if you ever need it.

13. Which apps do you love that make both small business accounting and home filing easier?

Programs like Quickbooks allow you to take a photo of receipts and attach them directly to the related transaction within the software. It’s great because you can reduce clutter by throwing away your receipt, and if your tax accountant needs more detail around a transaction, he/she can open up the transaction and view the receipt without having to ask you for it.

Shoeboxed is another option – a cool feature is that you can mail in paper receipts in a “Magic Envelope” and they will scan them for you. Doesn’t get much easier than that! Pricing starts at $29/month.

14. What are the benefits of hiring an accountant vs. doing it yourself through a system like Turbo Tax?

I think there are many small business owners that are incredibly detail-oriented and they do an awesome job of keeping their books in tax-ready shape. That’s obviously the most economical option, but it can quickly become expensive to have an accountant fix errors made from significant periods of neglect. I think that if you keep falling behind on your books because you’re too busy or you just hate working on them, it might be time to consider hiring an accountant. There are some high-quality, affordable options for bookkeeping and tax services out there, so don’t get immediately turned off by the cost. A good accountant should also give you more insight into your business so you can make more informed decisions and become wildly successful! That’s my goal, at least J

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