Beyond Tax Season: How Smart Accounting and Bookkeeping Sets Small Businesses Up to Win with Manuel Aragon

0:01John Lee Dumas:Light that spark fire nation, JLD here and welcome to Entrepreneurs on Fire brought to you by High Level, the all-in-one sales and marketing platform. Today we'll be breaking down going beyond tax season, how smart accounting and bookkeeping sets small businesses up to win. To drop these value bombs, I brought to Manuel Aragon and EO Fire Studios. Manuel helps individuals and small businesses build financial clarity through expert accounting, bookkeeping and tax preparation, delivering clean books, confident decisions, and a stronger foundation for growth. And today we talk about why clean books matter, silent profit killers, bookkeeping versus accounting versus taxes, clarity equals growth, and oh, so much more.

0:41John Lee Dumas:And a big thank you for sponsoring today's episode goes to Manuel and our sponsors. Today's show is sponsored by strawberry.me. If you're feeling stuck or like you're ready to get to the next level in your career, then finding the right coach can help. Go to strawberry.me slash fire and get 50 % off your first coaching session. If you are building a real business, you need real infrastructure. High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments, and course hosting all on one platform, plus award-winning 24-7 support. Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com.

1:24Highlevelfire.com.

1:26John Lee Dumas:Manuel, say what's up to Fire Nation and share something about becoming successful that most people disagree with. hi fire nation i am manuel aragon i think something about success is that most people disagree with is i think you have to find a level of selfishness to find success at some point i think is hurtful to people close to you sometimes they may take it personal to the point where i mean i'm dealing with it now as i kind of elevate the last couple years where you have to separate yourself from rooms you may have been in for a long time but you're never gonna of really reaches the pinnacle where you're trying to go as an individual if you don't separate yourself from certain environments and certain people, certain friend groups.

2:09And it's disruptive. I think it's uncomfortable to an extent, but it's a huge requirement for growth. And I think, you know, not a lot of people will agree with that, but I think that's where I found my personal success is, you know, trying to focus on what's important to me, what's in my heart and, you know, what God tells me to do.

2:24John Lee Dumas:Fire Nation, that's why we end every episode by saying you're the average of the five people you spend the most time with. So curate those five carefully. Now we're talking about beyond tax season, how smart accounting and bookkeeping sets small businesses up to win with a capital W. Why? Why, Manuel? Why do clean books matter? I mean, why are clean books the foundation of every successful small business? And what happens when they're ignored? I use the analogy of you can't build a dream house on a crack foundation. You can't build anything on sand, it's going to fall eventually. And you can't really run your business if you're not knowing your numbers, your margins, all of the stuff that goes into that.

3:06I think any successful business owner knows their numbers front and back. And most entry-level entrepreneurs, they never really get the proper guidance and it pops up down the road to hurt them.

3:18John Lee Dumas:I want to talk about those silent profit killers because you and I both know that It's just, it's out there. It's happening to everybody's business all day, every day. And we just don't know about it. I mean, what do you find are the most common bookkeeping mistakes that entrepreneurs make that quietly drain profits over time? Co-mingling personal funds with business funds. I see a lot of that pop up. There's the tax perspective versus the accounting perspective and the bookkeeping perspective. From a tax perspective, you want to utilize all them loopholes, you know, so that you take full advantage and save money on what you're paying in taxes.

3:57But from a bookkeeping and accounting perspective, it can hurt your visibility into how the business is really doing. If you're, you know, running a bunch of stuff through the business that isn't a necessity, I think it impacts your financial positioning. And it also doesn't give you a clear picture on where you're truly profitable at. You know, using a business debit card for groceries. I see it all the time. It just creates a blurred accounting environment. We have a lot of questions with some of the clients. We run down stuff or backing out, you know, expenses, trying to categorize them correctly.

4:30I think the next one would be maybe utilizing software in the wrong fashion. I know QuickBooks is a huge platform. We use it for a lot of clients. But, you know, everything's just so generalized anymore where there's, you know, other different stuff we can do, create dashboards, whether it's utilizing Excel. each business owner looks at things differently. I have clients who look at things, you know, they want to know how many paper clips are on the desk or, you know, analogy, one of my mentors told me is, you know, some business owners want to know what time it is. Some business owners want to know how the watch is made.

5:02So we have to accommodate both.

5:04John Lee Dumas:We love specific examples. So give us an example of maybe when you found one of these silent profit killers in a company or a person that you worked with. We don't need names. We don't need specifics. We don't want to give anything away on that side of things, personal content wise. But what was one of those silent profit killers where you're just like, wow, I really found this great drain of this business. And of course, the client was thrilled too. I think one would be ignoring AR. I had a client who was doing really well, billing a ton of receivables monthly, you know, and they're mind they're saying okay i'm billing out you know x amount a week there's money in the bank and there's no follow-up the collection gap is completely gone bookkeeper is not really doing the day-to-day functions follow-up calls sending notices you get stuff 60 90 days old and you know they had the tendency of just writing stuff off and um you look up at the end of the year and it's like oh we wrote off 100 grand or you know business is closed because you're not collecting up front.

6:09I think that's a good example.

6:12John Lee Dumas:Let's talk about bookkeeping versus accounting versus taxes. I mean, a lot of business owners, they actually lump these together like, oh yeah, bookkeeping, accounting and taxes is like all big one blob. What's the difference between bookkeeping, accounting and tax prep? And why do all three matter? The way to look at it is you got to look at your financial team like your medical team. You wouldn't ask your brain doctor to look at your heart. You wouldn't ask your heart doctor to look at your foot. So, you know, the bookkeeper, I always look at it as they're the daily data processing. They build a foundation by logging into systems, matching receipts, daily transactions, keeping the letter perfectly clean.

6:50They make sure the car is running on a daily basis, whereas the accountant, they translate that historical data from the bookkeeper into active looking maps. That's where your dashboards come from, your KPIs, which are key performance indicators. Study trends, construct the cash flow forecast, calculate burn rates, understand what's upcoming and build that forward-looking forecast is what I think the difference between an accountant and a bookkeeper is. And I think you can find someone who wears both hats. I tend to wear all three, whereas the tax preparer, this is a one-and-done year. I think all of us get our taxes one and done.

7:30This is where my professional roots lie. That's kind of what I've done for a decade before we kind of expanded. But this tends to be we take the clean ledger from the bookkeeper or the accountant and flow it into the IRS forms and make sure everything's compliant and that you're capturing all of your savings that are available to you and make sure that we are looking at all the risks of audit exposure. You know, if the bookkeeper sloppy your account makes mistakes if the accountant isn't forward looking then your taxes are probably going to be off is the way I always look at it

8:00John Lee Dumas:Fire nation we're talking financial clarity. We're talking getting organized hiring the right financial partner and more when we get back from taking our sponsors Today's show is sponsored by strawberry.me I've interviewed over 5 000 successful entrepreneurs and one thing they all have in common they've enlisted mentors, coaches, and people along the way to help guide them. But where do you find the right coach or mentor? Great question. And that's where our strawberry.me career coaching comes in. I speak from personal experience when I say that coaching and mentorship has helped me get to where I am today.

8:35John Lee Dumas:In fact, you might not even be listening to Entrepreneurs on Fire if it weren't for my first coach and mentor, Jamie Masters. I knew that in order to produced the best podcast. I needed to find someone who was where I wanted to be. Here we are nearly 14 years later, and I'd say I made a fantastic investment. So if you're feeling stuck, facing an important career decision, or ready to make your next big move, the right coach can help. Go to strawberry.me slash fire and get 50 % off your first coaching session. That's strawberry.me slash fire. Fire Nation, if you are building a real business, you need real infrastructure.

9:15John Lee Dumas:That is why High Level is Entrepreneur on Fire's featured partner. High Level gives you a website builder and hosting, funnels and landing pages, email marketing, appointment scheduling, payment processing, course and membership hosting, and so much more. Everything you need to succeed, all under one roof. No duct tape, no juggling five platforms, just one clean system for your business and their award-winning 24-7 support has your back when you need it most. When you sign up at highlevelfire.com, you also get my exclusive bonus stack, a 30-day free trial, a private 15-minute call with me, JLD, access to my weekly live office hours, a digital copy of my book, The Common Path to Uncommon Success, my 50 Days to Something Execution Roadmap, and more.

9:58John Lee Dumas:Visit highlevelfire.com and start building your something today. Manuel, we're back and I want to talk how financial clarity equals growth. I mean, how do accurate financial records lead to better decisions, easier funding opportunities, and of course, stronger business growth? Banks, investors, private investors specifically, don't necessarily invest in your passion. They want the math, they want the numbers, and they want to know why is this a good investment for me. You know, I've been trying to grow my business strategically the last two years, and I'm kind of running into the same situation where it's that entrepreneur mindset where I'm doing all of this bookkeeping for others.

10:40We're preparing their financials, but I'm not specifically doing it for myself. I think, you know, we as entrepreneurs tend to run into that habit where, okay, you're painting all day. You don't want to necessarily go home and paint your own house, but it's a necessity as I continue to scale. So I'm going through the same process of, you know, forward looking, building out my forecast so that we can continue to grow. So, but I think the power of the P &L, most people, you know, they just look at what's in the bank. The profit and loss tells you exactly where the money is going. It takes the guesswork out of what you're doing and you understand what them key drivers are if it's set up correctly.

11:12Clean financial statements reveal what eats up all of your cashflow. And cashflow runs the business or it's the reason why you go bankrupt.

11:19John Lee Dumas:I want to talk about getting organized. I mean, I think this is something that so many entrepreneurs and business owners just delay, delay, delay. So what would you say are some practical steps that small business owners can take today to finally get their finances organized? And let's be honest, keep them that way. I got a note on my desk. It's you don't need to climb the whole mountain today. You just need to take one step at a time. You know, step one is, you know, drawing a rigid boundary line. Open a completely dedicated business checking and credit account immediately. Route 100 % of the revenue and expenses through that account.

11:54Keep it clean so that you know, is this thing functional? Can it stand on its own? And that's the thing that we talked about earlier. Never cross-contaminate personal and professional banking again because you want to know if your systems are working and if you have a truly profitable business. I think two would be a 15-minute Friday date. Treat your financial tracking like your spouse. Don't put it off. Take that time to review your numbers, even if it's on your way out the door. It could be a first thing Monday. You know, you could have your bookkeeper accountant provide you your KPIs. It's not something you need to specifically do yourself.

12:33But I think that's something that's important is you want to keep a handle on that. We have up weeks, down weeks in business, and it's important to have current data. I have quite a few clients in the past where we would do quarterly bookkeeping, and I don't think it's relevant when you're looking at data from 90 days ago. You know, if you're working, I have a lot of experience in the food industry. If we're looking at prices of tomatoes 90 days ago, it doesn't really matter today because the market's always shifting.

12:59John Lee Dumas:So that's one. I think step three would be get rid of manual spreadsheets with technology today. There's a lot of different stuff you can implement. I still use Excel a lot, but we build a lot of different, I guess, tools just so that the KPIs spit out. You know, we copy and paste into stuff and everything updates through the spreadsheet. So I like doing stuff that way. And just make sure that, you know, you're reviewing bookkeepers. Human errors is probably the biggest thing that is good. And then transition to cloud-based accounting, I think. You can work from anywhere on the road nowadays. I think coming out of COVID is important.

13:36And I've seen my company scale using the cloud versus trying to use some of the older technology.

13:42John Lee Dumas:I love that quote you shared at the beginning. I actually have one that I use a lot from MLK, Martin Luther King. He says, you don't have to see the whole staircase to take the first step because so many people are like, I need every light on the street to be green before I start going forward. It's like, no, it's like, take the first step. The next step will be revealed. The clouds will part. The fog will dissipate as you're moving forward. So let's talk about hiring the right financial partner. Now, what should entrepreneurs look for when hiring an accountant or bookkeeper? And how can the right relationship actually transform a business?

14:17People love to work with people they relate to. We all have different skill sets that we're great at. So I say, don't just hire a human calculator. Hire somebody who actively does the stuff that you've done or someone that's actively managed the businesses that you're trying to build. Whether you're starting a business today and trying to lay the foundation for something, or if you're a business that's been in for 15 years and you're just trying to keep up with the speed of technology. I think everything, there's always room for improvement and the accountant and bookkeeper control the money. And I think, like I said, cashflow is going to dictate how fast you scale, how fast you grow and how fast you can implement and add more people to your team.

14:58One of my mentors told me too, like, you know, you have to find somebody that does something better than you of what you're trying to do and learn from them. So I've always kind of operated from that mode. Like, you know, I'm doing a lot of speaking engagements over the last year and I've kind of broken that shell where I said, okay, I've never done this, never been on stages. I'm gonna go hire a coach. So, you know, to kind of lead by example, I would say when interviewing your bookkeepers and accountants, always ask what's your direct experience in my specific industry model? You know, what have you done?

15:30Are you managing construction financials? Are we looking at inventories? Is this cost accounting? There's so many different metrics that goes into what accountants and bookkeepers look like. At the end of the day, yes, it's a P &L and a balance sheet, but you have to understand the business model that builds those, and you want your accountant and bookkeeper to understand what business you're in. And if your current financial provider only talks to you once a year, I say that's probably not a good thing. You're paying a bill, you want a service, and you want to be interactive with them. It's not a fast food order.

16:01this is something that dictates your business and it's important to be aligned with the person controlling the numbers. And the last I would say is your most scarce and valuable assets are your time and your focus and partnering with the right firm or person as you're hiring. It's going to dictate where you go and how long you're going to stand.

16:23John Lee Dumas:Now, I know there's a lot of habits that we should be implementing, but what would you say is just one? If you could leave us with just one, Manuel. One financial habit that Fire Nation should implement today to build a healthier, happier, more profitable business. Look at the numbers once a week. I think it's important for anybody who's building a business. You could be great at what you do, but you want to take that 15 minutes and say, okay, I need to sit with my bookkeeper, sit with my accountant, review my P &L and review my cashflow. A great bookkeeper accountant shouldn't feel like an expense.

16:58they should feel like an investment that pays for itself over and over again. And at that point, I think, you know, we become family for our clients. So I'll leave you with that.

17:07John Lee Dumas:If Fire Nation likes what they're hearing and they want to connect with you, learn more about you and your company, what is your call to action for our listeners today? You can find me at my website, www.aragontaxreturnservices.com. You can find me on Instagram, manualaragon underscorearagontaxservices. funny story there is I've always been a tax prep guy but we do full service bookkeeping outsourced accounting solutions, payroll sales tax so we're not just a tax firm. Fire Nation you're the average of the five people you spend the most time with. You've been hanging out with MA and JLD today so keep up that heat and for links to everything we talked about visit eofire.com just type Manuel in the search bar and the show notes page will pop right up and Manuel thank you for sharing your truth, your knowledge, your value with Fire Nation today.

17:56John Lee Dumas:For that, brother, we salute you and we'll catch you on the flip side. Thank you, man. Hey, Fire Nation, a huge thank you to our sponsors and Manuel for sponsoring today's episode. And Fire Nation, are you an entrepreneur on fire who's looking to share your amazing message with the world? If yes, we're now accepting applications for EO Fire. So to learn more about becoming a guest, visit eofire.com slash guest, and I'll catch you there or on the flip side. Today's show is sponsored by strawberry.me. If you're feeling stuck or like you're ready to get to the next level in your career, then finding the right coach can help.

18:30John Lee Dumas:Go to strawberry.me slash fire and get 50 % off your first coaching session. If you are building a real business, you need real infrastructure. High Level gives you website hosting, funnels, email marketing, automation, calendar booking, payments, and course hosting all on one platform, plus award-winning 24-7 support. Get a 30-day free trial and my full bonus stack that includes a 15-minute private call with me and much more at highlevelfire.com, highlevelfire.com.