103: Stop Guessing in QuickBooks: Money Clarity for Estheticians

We turn bookkeeping fear into calm by showing how QuickBooks can guide real decisions instead of just checking a tax box. Erika explains categories that serve CEOs, the power of reconciliation, and simple ways to plug cash leaks in subscriptions and marketing.

• using categories that inform decisions rather than only taxes
• separating advertising channels to track ROI
• auditing subscriptions and memberships for silent leaks
• building a monthly QuickBooks routine with reconciliation
• spotting red flags in reports and missing transactions
• knowing when to outsource vs DIY your books
• budgeting for education, back bar, and retail with a take‑home target
• where to find Erika’s podcast and free QuickBooks health check

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Transcript

Client Win: Business Transformation

Client 0:00

Hi, my name is Rachel. I am the founder slash CEO of Ultra Ray, a luxury spa. I have worked with Kari Jo in the beginning of this year, and she has transformed my business. Everything has increased. All of her tips, all of her tricks, all of her advice has been the most helpful, and my business has transformed exponentially. I want to thank her for her honesty. I want to thank her for her help. And if you're struggling with your aesthetics business or if you need help hiring or any of the sort, Kari Jo is the person that you should definitely work with.

Kari Jo 0:42

Guys, I wanted to start this episode off because we're gonna talk about QuickBooks. We're gonna talk about bookkeepings. And I want to tell you guys my favorite thing when I got into QuickBooks was I had so much fun categorizing. I was like, oh, this is fun. Yeah, I know. I did that and that. And I would categorize everything. But then it was like the end of the year, I would go to hand it off to like my tax accountant, and I'd like to be looking at it and I'd be like, I have no idea what this is even saying. I have no idea if this is even right. And then I was like, I think I'm categorizing wrong. I don't know. And I'm pretty sure if you use QuickBooks or anything like that, you probably feel the same way. And so I'm so excited about today's guest because I have on Erika. She is a bookkeeper, but more importantly, she helps business owners of like stop avoiding their numbers completely, which I feel like that's what we do if we're being totally honest. But she also doesn't teach bookkeeping in this scary technical way. She really just helps you clarify what is going on. And that is what I feel like I had a big issue with. So today we're not gonna like go into like a how-to tutorial, but we're gonna talk about like why bookkeeping feels confusing. And even when you're doing it right, are you doing what you're supposed to be doing? So, Erika, you are like, I am in love that you are here today. Help us out. How are you?

Erika Millard 2:10

Hi, well, thank you so much for having me. I hope to bring fun with bookkeeping. I know those words don't usually go together, um, but that is really my goal. So I'm excited to be here.

Education Gap And Avoidance Loop

Kari Jo 2:22

Yeah, I'm super excited. This is like, I feel like this is like the one subject that I feel like so many aestheticians get hung up on because it's just so confusing. None of us went to school to be bookkeepers, right? But why do you feel like so many business owners feel okay in QuickBooks? Like the situation I was just saying, like they we feel okay in QuickBooks when we're like categorizing it all year long. And then when we pull like reports, we're like, I don't know if that was right.

Erika Millard 2:54

Yeah, well, I think just like you said, no one really taught you bookkeeping when you set out to be a business owner. You didn't set out to be a bookkeeper. And so I think a lot of times we see a big education gap between what we're even talking about or what we think we're supposed to be doing. And I find a lot of people have just those nagging thoughts of like, I think I'm screwing it all up. You might be laying in bed at night thinking like the IRS is gonna come after me. I don't know anything. And so just all of those fears can really build it up and build it up and build it up and make it worse. And most of the time, it really just takes a little bit of education and knowing what to do. And then it's not actually that hard most of the time, but I think it's all of that fear that builds up that you're doing something wrong that can then really lead to avoiding it altogether. And then that does kind of create a mess in some situations. So it's like this vicious cycle of not knowing, thinking you know what you're doing, and then feeling like you wait, maybe I don't know what I'm doing, and then avoiding it, and it just kind of can go over and over and over in a negative way.

Kari Jo 4:07

Yeah, I feel like that is what happens because I'm like, yeah, I know what I'm doing. And then I'm like, no, I don't know what I'm doing. And I I like, and it is the fear base of like, am I gonna get screwed by the IRS? Like, I don't wanna how do you think that we could fix that so that we don't have that fear?

Categories That Help CEOs Decide

Erika Millard 4:26

Yeah, well, you know, when I was setting out in business, I started out as a full service bookkeeper kind of through a crazy set of circumstances, and I still do some of that today. But I as I was as I had my business for a few years, I felt like I feel like I have these other giftings that like aren't really being utilized. I really like to coach and educate people. So I had thought about scrapping bookkeeping all together and like going into some generic coaching. And then as I started marketing my business online, too, people came to me and said, Well, I can't afford a full service bookkeeper, but could you just teach me how to use QuickBooks? Or could you just help me not cry in front of my CPA? Or could you help me just like understand what these reports mean? And so I had a few of those types of calls, and I was like, This is so fun. I could do this all day. I actually like this more than actually doing the bookkeeping work. It's just like helping people work through their bookkeeping problems. And so I share all that to say that I think a lot of times in the marketplace in general, it's like either outsource it or you're on your own. And so I think how you overcome some of those fears is starting to get this small education and just feel as you get the little bit of confidence, it really does grow over time. So that fear that builds, once you get the small steps of confidence, really that can build over time too. And so I think it's just starting very practically, very simply with if you don't know how to categorize something, you can reach out and get some support, get some help, or kind of do just a little bit of research. Hey, is this should this be professional services or should this be continuing education? Like, and does it even matter? Like, um, so just kind of learning some of those things can help you build the confidence. Oh, I did that and I overcame that first thing that I didn't know. So, what's the next step of really understanding and just taking some small steps instead of avoiding it completely?

Kari Jo 6:38

Yeah. So, what when you talk about like like you know, the fear of like categorizing and stuff like that, what have you found that like business owners are actually doing wrong when it comes to categorizing?

Erika Millard 6:51

So I like to show categories for you as the business owner. You know, I think in the beginning we get so hung up on just like being compliant for tax purposes, and that is definitely necessary. But what I really want you to the next step that I want you to grow to is actually being able to use your numbers to make better decisions. So not just for tax purposes, but for being the CEO of your business and really running it like a CEO. And so I see a lot of business owners like nervous. Oh, I can't change these categories because it completely matches with like my tax form, or like I don't want to add anything or get rid of anything incorrectly. And so often they're very generic, especially if you just use something like QuickBooks that just gave you the generic categories, and it doesn't really tell you the story that you need to know. How much did you spend in these types of supplies, or how much you maybe you have just like a lump advertising and marketing, but how much did you spend on ads versus flyers versus you can't really see and get to knowing how much return you're getting on some of those expenses if you don't have them broken down properly. So I don't want you to have like a million categories, but I want you to really think through what would be really helpful for me to see and make decisions off of. And maybe this next year, that's what you do, just create a couple new ones or a couple different ones that will help you make better decisions on what you're spending. So that's usually what I see is like this paralyzing fear of like, I don't want to change anything. And really, it's not giving you the information that you need, and it there is a lot in your control. And when you can start to make that shift, it's really empowering.

Subscriptions, Leaks, And Simple Audits

Kari Jo 8:50

Yeah. So what you when you say like, because I get what you're saying, how like you could just be like, I'm going with what they tell me to go with. But if you were to say like there's something that would be so helpful for a business owner to do that isn't already inputted by QuickBooks, you know what I mean? A category that you're like, this category would be helpful for you to learn and to watch in business. What would you say that is?

Erika Millard 9:16

Yeah, I think a lot of times it is advertising related. So I that's why I mentioned that one is that we don't know, we have this large bucket of advertising and we don't know what we're spending on. Um, but in general, I also see subscriptions and memberships and education be another just like lump category that isn't is kind of where everything goes to die. And so if you're not paying attention, you can easily sign up for all of these things that you forget you signed up for, and so you're leaking money that's not really necessary or it's not bringing you a return on your investment. So one thing that helps with this is to, and I know I'm recommending a spreadsheet, but I like to have people break down what are all of my recurring expenses that are coming out and what day of the month are they coming out, and just do that for the past three months. Look at your bank statement or look at your QuickBooks if you've if you have QuickBooks and go kind of through and see these are all of my subscriptions, these are all the things that I'm paying for to run the business, and see if there's anything you come up with that is unnecessary. I had a client do this recently and she forgot she signed up for something that she's not using at all, and so it saved her a hundred dollars a month. And so some of those small things can really make a big impact. So that's not necessarily specific to the categories, but it's all where things kind of just get like thrown in and it's easy to forget about. And so I really want you to be smart and be intentional about what you're spending money on.

Kari Jo 11:05

Yeah, and I I love that you said specifically about like the marketing and breaking it down into difference because you know you can't fix what you're not tracking. So, like so many aestheticians they complain about marketing and stuff like that. Well, let's like look at the actual budget of the different things. And as far as like when you're talking about subscription, yes, I do like I give my coaching clients like a spreadsheet, you know, that I'm like, go and fill in these numbers. And it's so funny because there is a subscription, and it is so baffling to all my aestheticians to realize how big of a category those subscriptions are, like they kill you. Like I had one client that was like, Yeah, I'm paying, I forgot that I was like paying $250 for this thing and I don't even know what it's doing. Like it's supposed to be doing. I'm like, what does it do? And she's like, I have no idea. I'm like, why are you paying $250 for it?

QuickBooks Setup And Reconciling 101

Erika Millard 12:07

Exactly. And sometimes you need a testing period. So for some memberships, you're gonna pay for it for a little while and then decide, am I actually getting value out of this or the connections that I intended to make or things like that? So it's not like immediately cut it off, but those things that we forget about or that we sign up for, that's more education. It's just really good to ask yourself, am I actually using this? Am I actually getting value out of it? Or could I put that money towards something else that's more important? And so these are the kinds of things where that is way more empowering of a decision than just like, I'm spending all this money and I don't know where it's going. That is how you can be more intentional is looking at the numbers, looking at the things you're spending money on, and making a decision whether it's valuable or not. That's how you really start to grow in these small little confidence steps.

Kari Jo 13:06

Yeah, yeah. It's I'm so about this. Like, I didn't even, I'm so glad that you did a deep dive on the subscription because you know, have you seen that little one that I comes on my Instagram all the time? It's like rocket or something for your personal expenses, and it's like download this and see how many subscriptions you're actually like and like we need that for business, don't you think? Yeah, totally. Somebody go develop that for your business because I I bet that's like so crazy.

Erika Millard 13:38

But while you're on subscriptions, this is my other little hack is that people forget. Try to find a coupon code if you're signing up for something new. Almost all there was a time in business where almost every single thing I had somebody else's like promo code or discount code that I got a discount for, and people forget, like, oh, we can do that in business too. Um, and so, anyways, while we're on that subject, when you find the valuable things, try to use a friend's affiliate code or something, and that can actually save you a good chunk of money.

Kari Jo 14:13

Yeah, for sure. And guys, we have that we have esthetician group chats. Like, before you go sign up, you might as well help another esthetician up and be like, I'm signing up for Vegaro, somebody give me your thing and I'll get you some money for like spread the wealth. Totally. Yeah, so I love that. So if like let's say an esthetician is listening to this podcast and they're like, or this episode, and they're like, I don't have QuickBooks, but I'm going to do it. What is one thing that they need to know before touching it?

Erika Millard 14:52

Yeah, great question. So when you're going to set up your QuickBooks, get a very simple routine. So I actually have a checklist. Do these five things every single month, and you'll be in really good shape for your bookkeeping. So if you're doing it yourself, which is totally fine for a season in your business, you want to get your bank account linked in and credit card linked into your QuickBooks and then set up your categories. Um, you're gonna want to categorize, you're gonna want to reconcile. That is a big piece that I see people miss. So I would say once when you're newer, most people don't know that reconciling is even a step that they're supposed to do. And that is where you can really catch errors. So if you have duplicates or if you have missing transactions, because sometimes the software is quirky and it just like doesn't pull something in for a day. Um, and this is where we can figure out if our bank and our QuickBooks are working properly together, and we can catch some of those errors. So if you are newer and you don't know about that step, definitely learn about how to reconcile your accounts.

Kari Jo 16:10

Yes, because that was me. Good job. You just described me early on this because I was doing this and then someone's like, Are you reconciled? I was like, Reconcile? What the heck? So reconcile.

When To Outsource Bookkeeping

Erika Millard 16:25

Yeah. So you're basically going to take your bank statement and you're gonna compare it to your QuickBooks because we really it's not helpful or accurate information if they're not syncing properly. And so every once in a while, there's a handful of times where it makes sense that QuickBooks in your bank would be different. But for like if you write checks and somebody, if you write a physical check and you mailed it to the person and the person hasn't cashed that check yet, well, it makes sense to show that as an expense in your books, but it in the bank, it's that money is not gone yet because that person hasn't deposited the check. So there's a handful of times where they're not like a hundred percent the exact same amount, and that's but for the most part, most of us don't write checks anymore. So we those two things should be aligned, and so reconciling is just the accounting term for making sure that they are linking and syncing properly to each other, um, and that everything in your bank is in your QuickBooks, and you want that for all the tax deductions because if something's missing, you're not gonna get that tax deduction, which stinks. But also, if you have duplicates, like I've seen where your income is doubled, that's not good for tax purposes either. So you want to be able to catch some of your own errors, and that's how we do it is through reconciling. And so should they be doing it like monthly or yes, whenever you whenever you get a new bank statement, that is the time to reconcile. I recommend that people try to do their bookkeeping every month. Some of my clients, it works better every week, and they just do like 15 minutes of categorizing and looking for their receipts or looking for mileage if that's applicable for like events or networking or retreats or anything like that. But then you'll just need to reconcile once a month. And when you get in that habit, it really should go pretty smooth. QuickBooks helps it be as automated as possible. So it should be smooth. If it's not, that's the time to reach out for help. And we can usually get you straightened out and then you can potentially take it back over yourself.

Kari Jo 18:44

And what would you say, just like for someone doing a bookkeeping? Because, like you were saying, for a season, it's do your bookkeeping yourself. When is the time where it's like maybe you should start looking into somebody because it's getting a little, you know, too much?

Listener Pop Quiz: Tax Vs. Categories

Erika Millard 18:59

Yeah, I like to say it's time to graduate when it's taking you hours and hours manually yourself. One, you might just need to reach out for support if when you get to that point, because maybe you're just not using all of the automations and features properly. And so maybe it's just a sense of like, this is we could we could make it faster if you actually use some of the features that QuickBooks has for you. Um, but if it's taking you hours and hours to manually do, at some point, this is where it's like, well, you never intended to be a bookkeeper, maybe you hate it, and so you would rather just be doing the thing that you're good at. That's when it's time. So, really, it depends. It's kind of that breaking point of like when it's very manual and taking you lots of hours, and you hate it, that's the time. Some of my clients are a little bit more control freakish, and so they are gonna always. Want to do it themselves just because they like that sense of control over their numbers. They just need a little bit of support and review and guidance. But some people know from the beginning I don't want to do this. And as soon as I can outsource it, I'm going to. And that's great too. So sometimes it's sooner for some people than others. Usually it's probably when you have like 50 to 100 transactions, meaning income coming in or expenses going out that you're like categorizing every month. Like that's usually the point that people get frustrated or annoyed by it, and they're ready to look for someone else to do it for them.

Kari Jo 20:41

Yeah, no, that that makes a lot of sense. So before we got on this phone call, I went to my Instagram and I posted a poll and I was like, Do you guys use QuickBooks? And what's like your biggest question? And so I had a few people that responded. And so I was wondering, can we do a pop quiz really quick? Yeah, that sounds great. So when it comes to categories, what actually matters for tax time?

Erika Millard 21:14

Yeah. So the tax person is going to take all of your categories in QuickBooks and kind of lump them together to put them on your tax boxes. So that's why I say make your categories work for you. Give the information that is best for you to make decisions. Because then the tax person will just come back through and lump some of those together to be able to fill out your tax form. Every once in a while they'll ask you, hey, can you split this out a little bit differently so it's easier for me? But I've hardly ever had tax people ask that. Tax people, if you're listening, please do. We like feedback. But otherwise, just do what makes sense for you and don't worry as much about what the tax person's gonna do with it.

Kari Jo 22:04

Yeah. And that was kind of my next question, which was what are we stressing out about? That doesn't matter so much. But it sounds like yeah, that is like setting up the categories.

Budgeting For Education And Back Bar

Erika Millard 22:15

It doesn't matter. Yeah, you know, as long as like an expense is set up as an expense in QuickBooks and you haven't just created something creative, the categories are something people really stress about getting exactly right. And most of the time it really doesn't matter.

Kari Jo 22:33

All right. So how should aestheticians think about things like education, back bar products, and retail so they're not complicating the categories?

Erika Millard 22:45

Yeah, well, this is where again, kind of what we said make it make sense for you, but be intentional about knowing how much you can really afford to expend in all of those areas. So I have a tool that helps you break down. It's called Take Home Target, and it helps you break down here's all of the expenses that I need to run the business, here's all of the things that I hope to invest in over the next year. We list all of those out, and then here's what I hope to pay myself because a lot of times I find business owners we think, oh, my sales goal is what I want to pay myself, and that is not true. Um, and so we want to calculate the tax, we want to save for some taxes based on that. We want to have some room for your investments, and so I'm bringing all this up to say we want to have room also for those supplies or for some of those marketing adventure, like marketing things that we're trialing. And so, anyway, so we want to be able to list those out and see is can I even spend all of this right now, or are do I need to kind of spread this out over time? And so that tool will help you work through some of that.

Kari Jo 24:04

Yeah, we all need that for sure in our life. So if someone changes something in QuickBooks and suddenly past transactions disappear, did they break something or what happened?

Fixing Disappearing Transactions

Erika Millard 24:18

This sounds very specific to this user. Um, but if you have something from the past that disappears, yeah, something funky happened because things shouldn't just like delete or disappear. Maybe the the couple things that come to mind, see if you accidentally excluded it. There's a type when you're going to categorize where you can exclude, and so that won't show on any of your reports. So that could have happened. You should also catch this if you're reconciling. It should give you a pop-up that says, Hey, this thing changed since the last time. And so you can kind of follow the steps that it gives there to go correct it. And worst case, reach out to a bookkeeper because they we can always like manually go and fix it on the back end. That's not really worth doing yourself or training people how to do, but we can fix it on the back end and get you squared away. But you do want to fix that if it is truly gone, because then all of your prior year numbers that you filed taxes on would be different. Um, and so that is the probably the concerning piece, is just if you were ever audited, then it would look funky. So those are a few things to check, but then you may want to reach out to someone and kind of see what cleanup might be needed.

Kari Jo 25:40

Yeah. So basically reach out to or can't get on the phone with so what is the biggest sign that someone is clicking through QuickBooks and they don't like really know what's going on?

Red Flags In Your Reports

Erika Millard 25:53

Yeah, so usually I can tell when I look at reports. So if you run a balance sheet report and then a profit and loss report, I like to run profit and loss by month specifically because it will show you every month right next to each other. And even if you're just using a spreadsheet, you're essentially creating that yourself. But QuickBooks specifically, you can start to see you're not consistently using the same category. Maybe it's like bank fees and then also stripe fees or something like that, where it's like these clearly are the same thing. You're just like all over the place. So that those are the types of red flags, or you have the same recurring expense every single month, and then all of a sudden for a month, it's just gone. So I like to run the reports so that you can start to see oh, maybe these things are just like not lining up or not consistent. So that's one thing. And then I know I harked on this, but reconciling, I can usually tell that you're gonna have issues if you haven't reconciled or if you have tons of things left over in your reconciliation that isn't matching up. Those are two signs that you're probably just going way too fast and you don't really understand and need a little bit more education on what you're doing.

Kari Jo 27:16

I love it. Well, okay, Erika, before we wrap up, tell all my listeners where they can find you and they can get help.

Erika Millard 27:23

Yeah, well, the best place to start is through my podcast. It's called Get Comfy with Numbers, and we talk all things bookkeeping, QuickBooks. I we even try to go over some of the terminology and just give you that little boost of education. So go over to the podcast. I also have a free QuickBooks health check, and it will walk you through just a couple things you might not be thinking about or missing when it comes to your numbers. So be sure to download that resource as well. Um, I'm also on Instagram and Facebook, and I'm on Instagram, I'm usually just making silly things about bookkeeping. Um, so I would love to hang out with you and chat over there too.

Kari Jo 28:06

Awesome. Well, thank you, Erika, so much for coming on. I know that this episode was super helpful for me. I'm sure it was, I know it's helpful for my guests too. So, or my listeners, not my guests, my listeners. But thank you so much for coming on. Thanks for having me. This was great. Yes. If this episode made you feel any calmer about bookkeeping or your numbers, that is not an accident. Clarity always comes before your growth. And if you're listening and thinking, oh, that's what I was confused about, that doesn't mean that you're behind. It just means that nobody ever explained the system to you. So make sure that you are subscribed to this podcast. Please like it. Please go leave me a review. I love them so much. And I'll see you next week on another Esthetician podcast.

Resources, Podcast, And Final CTA

Announcer 28:59

Thank you for listening to the Esthetician Podcast with Kari Jo Patterson. Each week, Kari brings you real-world lessons on how to grow your empire. To learn more about Kari's Fearless Prosperity Mastermind Group, one on one VIP coaching opportunities, and more, visit karijo patterson.com. That's www.kari jopatterson.com. See you next week for more insights and strategies on the Esthetician Podcast.