Financial Management Tips for Small Businesses with Isa Lindao

Welcome to an interview with Isa Lindao, CEO of Pro Bookkeeping Solutions! Isa shares her journey of founding and leading a successful bookkeeping service.

Discover valuable insights on tailoring bookkeeping services to various business types, common financial pitfalls to avoid, and the crucial role of technology in modern bookkeeping practices.

Whether you’re a budding entrepreneur seeking financial wisdom or a seasoned business owner aiming to optimize your financial strategies, this interview promises to offer actionable advice and inspiration for all.

Origins and Approach to Bookkeeping    

SBS – How did you start Pro Bookkeeping Solutions?

Isa – It was originally Isa’s Bookkeeping. I was a receptionist at a pharmaceutical company, and the CPA at that time asked me if I could work with him for accounts payable. I was with them for five years, but they had to close the business last year. I decided to place an ad on Craigslist, and I was going to give myself six months to find a client. Within a month, I was lucky to get hired by my first client. They only kept coming after that.

If I hadn’t lost my job, maybe I wouldn’t have started a business. When you have that little cushion, you don’t commit full-time and give it your all. Here, it was either I had to make it, or I had to break.

Customized Services for Clients

SBS – How do you tailor your services to clients’ needs?

Isa – Although clients may have different needs, the concept is the same — money coming in, money coming out. The accounting reconciliation is the same. In general, you have to have the concept of accounting. If our client is an attorney, we must focus on the trust account. If they’re doing real estate, we have to be very careful with the assets because the money comes in and out in large amounts. If they have employees, it’s about payroll, billing, etc.

Common Bookkeeping Errors in Businesses

SBS – What are some common mistakes that businesses make when it comes to bookkeeping? 

Isa – Understanding accounting is important. One of the things that happens is that business owners might, for the sake of saving money, have the receptionist do all the accounting (that’s how I started). Receptionists may assist the owners and do the data entry, but they don’t know how to code it. Or maybe the clients themselves are entering the information, but they’re not familiar with the accounting principles. Sometimes, I’ve seen that they might make a loan; if the receptionist doesn’t know, they might transfer $5,000 or $10,000. That’s not income. You have to know where it appears on the balance sheet.

Some may think accounting is just data entry and anyone could do it, but in the long run, if you don’t know how to do it or don’t hire a professional, it will cost you more money. Also, with employees, it’s very simple to set them up in QuickBooks, but if you don’t pay your taxes on time, you’re going to end up paying more for that employee and penalties. Penalties add up, and not only are there penalties per day, but there’s also interest. Again, hiring a professional is going to save you time and money in the long run. I know a particular case where a business owner is paying double the penalties than what they are paying the actual employee. 

Evolution of Accounting Practices

SBS – How much has accounting changed in bookkeeping since the first day you started?

Isa – It has evolved. The most common system we use, QuickBooks, has become so user-friendly that it’s very easy to use if you want to start a bookkeeping company. When it comes to taxes, if you’re able to maintain the books, you don’t have to file for an extension because if you do it on a monthly basis, it’s already done.

Starting a company has been a challenge for me, obviously, but now there’s software available for bookkeepers, accountants, and even clients themselves. It’s pretty simple and systematized, and those programs assist us while we provide the service.

However, this business is not for everybody. If you’re a numbers person, you’re detail-oriented, and you like finance or anything to do with numbers, this is a great industry. But let’s take IT as an example. Some people may be great at it, but I cannot even do anything with the computer when it comes to IT. Similarly, I find that some people find the data entry, bookkeeping, or statements annoying.

Financial Management Guidance for New Business Owners

SBS – How should new business owners manage their finances? What should they pay attention to, and who should they hire?

Isa – Depending on the industry, you need certain professionals, one of which is an accountant or a bookkeeper. I personally do the bookkeeping, but I do have relationships with accountants to whom I give the information.

If you don’t want to start with a bookkeeper, having a knowledgeable person is a must because that person has an idea of business structures (LLC, S corporation, etc.), how to open each, and their benefits, and they could guide you in that direction.

Let’s say you’re a creative person who wants to focus on your business and cater to your clients, but accounting is not your thing, and the last thing you want to deal with is numbers. However, that’s important because that’s either going to make or break your company. You need to know your breakeven point, whether you are making money, whether it’s worth hiring someone, and who to hire. We give you the roadmap, a blueprint you’re able to analyze. Maybe you won’t be able to enter the information, but you’ll be able to, one, see what you’re going to do with your business, where you’re going to move funds, whether it’s making you money, and, two, stay in compliance and won’t pay any penalties for sales tax. That’s just one example, but having that professional is key.

You also need an attorney, obviously. Of course, all of this depends on the business itself, but one thing is for sure: You need someone to help you manage your finances. That’s a must.

I’ve had people contact me and be very honest with me, saying that they can’t afford to hire me because they just started, but they ask to hire me for just an hour to show them what they need to look for. Here’s my advice: Don’t be afraid to ask because, most likely, people are going to say “Yes” to whatever question you may have.

Keeping Abreast of Tax and Bookkeeping Regulations

SBS – How do you stay updated with the latest tax and bookkeeping regulations?

Isa – The software we use is Intuit, and whenever there’s a new update, they inform you. I have an accountant subscription, so they know what I specialize in with finances. They see all the clients, so they’ll send me any information.

Since I don’t do the taxes, I don’t have to stay on top of it as far as an accountant may have. If there are some changes, the accountants will tell me. For example, if a new regulation for meal write-off comes out, they’ll ask me to make changes. In bookkeeping, everything’s done through QuickBooks. There are the entries, and we basically pay bills and collect money.

Technological Impact on Bookkeeping

SBS – How much has technology influenced the bookkeeping business? Is AI affecting your services, and do you believe it will in the future?

Isa – In the future, I think technology is going to take a load of work. Technology is advancing tremendously now, and I could see the industry going that way. Even when I started QuickBooks, there was a Desktop version. After COVID, I had all my clients remove QuickBooks Desktop because everything was remote, and we needed access regardless of where we were at any given moment.

I have bookkeepers, data entry people, and managers, and I just had a meeting with one of the managers about the AI. He told me there’s a system where we will be able to upload the financials, and it will automatically email the client about what’s missing. Programming this system will take a year. and it’ll all be automated. Right now, there’s still some labor involved.

Essential Financial Metrics for Business Owners

SBS – What key financial metrics do you believe every business owner should monitor regularly?

Isa – I’ve seen this in other businesses and my business — sometimes, it’s hard to stay on top of your accounts receivables. We become (and this is true for any business owner) too focused on providing a good service. Then, a month may pass, and you realize someone hasn’t paid you. You need to go back and have a system to monitor what’s coming in, not just the output. Sometimes, and even when clients have a lot of money coming in, if they don’t focus on who’s paying, there’s even double the amount just sitting out there because they’re not billing properly. That’s one of the things that I would advise any business owner to monitor every month, no matter if the cash flow is high or not as high. You need to constantly look (or have somebody do it) at the money that should have come in, is coming in, or the processes to get it in.

I know January is busy because we’re working with W2, and there are a lot of deadlines. I focused so much on the deadlines that when February and March came, I realized someone hadn’t paid me. I didn’t feel it because I have the monthly cash flow, but it’s not the same collecting right there within that month and collecting two or three months afterward. It looks bad for the company, and the client is probably not going to pay if it’s taking so long. It could also be bad for the person receiving the bill. Maybe they had the money when they agreed to your terms, but then they forgot, and now they have other expenses when you ask them to pay you.

Future Business Goals and Expansion Plans

SBS – What are your future goals, and how do you plan to expand your business in the next few years?

Isa – I’m working on expanding my business. I haven’t advertised since 2019, and my goal in the next six months is to hire a marketing agent and start advertising. Right now, what’s helping me are good Google reviews and the fact that I am being found online organically, without any paid ads.

That said, my goal isn’t to grow too much and not be able to handle all clients that come to me. If I can’t handle it, I won’t take it. I am very clear with clients that not everybody is a good fit. If their demand is something that I’m able or willing to do, and if they want my type of services, I can always be on their call. I want to be able to pick and choose and advertise to the right people and take care of my people so that they’re happy.

Advice for Aspiring Bookkeepers with Limited Resources

SBS – What advice would you give someone starting a bookkeeping business who may not have much money?

Isa – I would advise them to go online and find free resources, like YouTube, and understand the concept. Most of the time, people believe bookkeeping is just data entry, but they don’t realize that every field has slight differences. Like I said, an attorney has a trust account, a property manager has money that doesn’t belong to him, etc. Future bookkeepers must get familiar with bookkeeping and the different types of businesses. Even if they don’t have money, everything can be Googled.

Also, they shouldn’t be afraid to ask for help. I say that because I do have people randomly calling me asking for advice. I admire when people actually have it in them to go out and ask. I try to help them, but I know it’s hard, and not everybody would ask for help and guidance.

It’s crucial to get the knowledge first. Right now, everybody wants to charge high prices and start their own thing, but you should first ask yourself whether you’re capable and have the knowledge. If you’re not good enough, it’s not just bad for the client; it’s bad for you, and, in reality, it’s not sustainable.

You must also know your limits. Know which accounts to take on until you learn and actually feel comfortable. You can tell when somebody’s good just based on the answers they give you. If they’re trying to figure it out and they’re not very direct, that’s not your bookkeeper because one plus one equals two. If you have to think about whether one plus one equals two, then that’s not a person for you.