The #1 MISTAKE small business owners make with money

#entrepreneurship #franchisebusiness #ledgers #podcast 

On the Built4Profit Podcast, the hosts interview Claude Campbell of Ledgers USA in Greensboro, a brand new to the U.S. after operating in Canada, about how Ledgers differs from traditional CPA firms by focusing on proactive planning, relationship-based service, and helping clients understand the story behind their numbers. 

Claude explains services including bookkeeping, payroll, tax compliance, and year-round tax planning offered via flexible packages and monthly subscriptions, plus one-off entity setup. He highlights common small-business mistakes such as waiting too long to make an S-corp election, often beneficial around $60K–$80K in net earnings to reduce self-employment taxes, and mentions the #AugustaRule as another overlooked strategy. 

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Get to know Ledgers: https://ledgersusa.com/Greensboro-nc/  

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Transcript

SPEAKER_00 0:00

You're gonna see my face in this episode of how many times I'm like Claude woman. I mean, he says verbatim on the things that we say. So I'm like, either Claude's been listening to the podcast, or you and I have been picking up on I don't know what we're reading these lines. I mean, it's like we're all drinking the same Kool-Aid. And honestly, I was just in such a shock that I was like, is Claude reading my mind? Was he so prepping for this interview that he watched every episode of ours? And now he's using our lines. I don't know. Talk about synergy. And I love their motto. Oh my gosh, how funny their motto is like, have a great life and have fun doing it. You're like, think that's the company I want.

SPEAKER_01 0:38

He was absolutely a pleasure to visit with, very intelligent. And we had Superman on a podcast. I mean, we didn't know that was happening.

SPEAKER_00 0:45

Welcome to Built for Profit Podcast, where entrepreneurs share real stories and strategies that actually work. We're here to inspire, challenge, and give you the playbook to profit with purpose. Let's get into it. Let's do it. On the podcast today, we have a brand that is new to the US. They've been in Canada for a while, and now they're here. And honestly, their slogan has nothing to do with what they do, but all about the type of life that they want someone to live is something that everybody can use. We're talking about numbers, CPA, all things that are exciting like that, that every small business owner needs. Seriously, if you run a business or you know someone who runs a business, you need to share this episode with them because we are getting into tech strategies, making it fun. Claude is sharing these and you're gonna really have some takeaways. So we have Claude Campbell with us today from Ledgers USA. He's in Greensboro. Claude, welcome to the Built for Profit Podcast. Welcome, Claude. Yeah, thank you for that intro. So the first thing that we want to hear you go into is tell us about what makes Ledgers different than just running a CPA firm.

SPEAKER_02 1:48

First of all, our mission for Ledgers really is having fun and improving lives. That's our overarching mission. Traditional CPA firms, which I'm guilty of, in fact, typically have a backward type of vision, right? Because of course, accounting work, tax compliance, it's all backward look. With ledgers, we are helping clients not only to cope with the compliance requirements, but also to have a more proactive mindset. So they are in essence enabling them to have the ability to influence their outcomes.

SPEAKER_00 2:20

This is what we are shouting that same message from the rooftops at the people that we talk to. So, how are you doing that, Chloe?

SPEAKER_02 2:27

One of the things I try to do with my clients is to build relationships. I try to impress upon them the fact that we don't have a cookie-cutter shop, we are a franchise, but we have entrepreneurs who are running these franchises. So there is a leeway for individuals to be themselves, to individualize their services. The idea is that we help our customers to get more insight into their numbers, to get them more acquainted with their numbers. Because you know, the numbers tell a story, and once you can understand that story, it helps you to make a lot easier.

SPEAKER_01 2:58

I am virtually hugging you right now, and we might be related. Have you been listening to the podcast? This is what we say, also. I love it. I always say that, you know, CPAs are usually trained very, very well to look at what happened. When you're an entrepreneur and you're running a business, you need someone to help you look out the windshield. Continue on, Claude.

SPEAKER_00 3:15

How else do you help do this? Because I know you said a number of ways.

SPEAKER_02 3:17

For entrepreneurs who are just starting off, it's usually very challenging in the early years. In fact, I was looking at some stats, and it appears that about 20% of these businesses will fail in the first year, and about 50% will fail in five years. A lot of times, it's not that they are not funded or they don't have a vision, but it's usually around the lack of clarity in their business. So, one of the things we try to do from the get-go is to make sure that they are set up appropriately, depending on the business you are doing. Should it be an LLC? Should you make an S-corp election? Should it be a C Corp? How should that look? And we try to optimize that from the get-go so that as they start the process of growing the business, the opportunities that those structures provide can easily fall in place.

SPEAKER_00 4:01

So I'm interested because you said you're guilty of being, if you want to say the traditional CPA, which we are not, we're not being negative about. We need CPAs and we respect that. But this is different, what you're talking about. So, how did you find yourself either drawn to this, finding out about it? Like, how did you land with ledgers?

SPEAKER_02 4:21

Historically, I've been nurturing this small CPA firm. Let me just give you a little bit more background. So, up until last year, I really had a full-time job. Components officer, internal auditor, you name it. But over the years, I've been nurturing the CPA firm where I provide primarily tax compliance services to my clients. Last year, I had the opportunity to step away from my 9 to 5 and to focus solely on the CPA firm. And I realized as I started to look and thinking about well, how can I scale this, a number of realizations started hitting me. I had no systems, I had no standard operating procedures, I had disparate applications, you know, that I was using to do many different things. And I realized also that even though I have clients who have been with me for 15, 20 years, I haven't really been doing as much as I could in terms of helping them to be successful in their business. So all of that kind of gave me pause. And I, you know, set out to pretty much change that, if you will. I actually started the process using AI of trying to develop some system like, whoa, I'm not gonna get there anytime soon. And then in discussion with a friend, she asked the question, Well, have you looked at franchising? I'm like, you know what? I haven't. Well, let me check that out. And so I started looking around to see what opportunities were out there. And you know, I had a few things that would need to be present for me to do that. First of all, the the idea of a franchise, you know, my initial reaction was, I don't think I have that kind of money put into a franchise. But then I started looking around and you know, I came across ledgers, and something about how they presented the franchise kind of attracted me from the get-go. I kind of went down my list of things and found that they were pretty much, you know, checking all the boxes. It's the values that I try to bring to my clients. I always try to make their interest first. So if it's helping them, you know, to put in systems, making sure they meet timelines, whatever the case may be, I'm putting that ahead of, hey, I need to charge a big fee or you know, however that may look like. And I find that, you know, over over the years that pans out because once I build that relationship and the clients realize that my goal is really to help them succeed, you know, the the the entire pay field kind of changes, right? Not only do they hold my services in high regard, but they're not keeping it to themselves. Up until maybe a month ago, I had not spent a dollar on advertising, and so all my clients came from around.

SPEAKER_01 6:45

That's a pretty strong statement, right there. I mean, absolutely. And I have to say, we learned so much about franchising, Claude, that there was a franchise for these kind of services. Yes, absolutely.

SPEAKER_00 6:56

And uh you, I'm sure, were guessing the same thing, right, Claude? I mean, were you surprised?

SPEAKER_02 7:00

Was surprised. I was surprised that this was there, but also as I kind of like broaden my view and looked around, I was surprised at the number of businesses that are in franchises. You know, it's a huge playing field out there. But you know, again, coming back to how we are positioning at ledgers, our singular objective is to help them succeed. We don't want them to be part of those statistics I mentioned earlier, but really to just help them to build those businesses that can be successful over the line.

SPEAKER_01 7:27

So, what if I was your client? I come in, I would assume I'm gonna give you my QuickBooks, you're gonna help me file my business tax or stuff, and you consult on what entity I have. But give me an example of some of the other solutions or services you bring to the table for your clients.

SPEAKER_02 7:40

Yes, we provide bookkeeping services, tax compliance, preparing, tax return, filing, etc. etc. Usually when I get a new client in the door, I try to do, you know, an assessment of their situation. If it's an individual, maybe just making sure that they are taking opportunities of all the potential tax breaks that comes with that. For small business clients, though, that expands in terms of the opportunities. So I usually like to start the process of looking at where they are at, look at their prior tax return, and start the process of identifying potential opportunities to say on taxes. And so, what I will tell them is look, you may hire me to do your tax return, but I really won't want to stop there. It would be remiss of me not to explore what opportunities you might have missed in the past and making sure that you can take this proactive approach throughout the year to make sure that when it comes to tax time, you pretty much have control around the results.

SPEAKER_00 8:34

So, on that note, Claude, what's something that for anyone listening who runs a small business, which is most of the listeners, what's like one of the biggest mistakes that you see them make that someone listening could do differently or be proactive on?

SPEAKER_02 8:46

One thing that comes to mind is waiting too long to say make an escort collection. A lot of small businesses will start out as an LLC or maybe a partnership or just a sole proprietor. I think once the business starts hitting net earnings of about 60 to 80,000 per year, then if you remain as a straight LLC or as a partnership or as a sole proprietor, you are missing out on significant potential tax savings.

SPEAKER_00 9:12

Can you clarify, Claude? Are you talking revenue or profit?

SPEAKER_02 9:16

Net earnings. After all, if you have$60,000 in profits that's now gonna flow to your 1040. This is about the time when you wanna take a look to say, hey, is my entity structured correct? And again, the the one big thing I see is that many early stage businesses wait too long to do that. Because what's happening is without the escort election, that entire 60,000 will be subject to self-employment taxes. However, with an escort election, once you pay yourself a reasonable salary, and you know, just to be clear, reasonable is not defined in the tax code, but there are ways to make sure that our clients get to what could be deemed by the IRS as reasonable. But once you do that, you pay yourself a reasonable salary, your remaining profits will avoid self-employment taxes, and that alone be a significant savings. You're talking 15.3%. Yeah, it's huge.

SPEAKER_00 10:03

And don't you find that it's like when we're talking with people, it's like they didn't know, you know? So they go in as an LLC or whatever type of entity, and it's usually someone else saying, Have you taken an S-corp election? or someone else is talking about how they're paying themselves, and they're like, Wait, what? Because people normally just start out LLC and they don't know that there's these other elections. So having someone just kind of look at it and say, Hey, these are some of your options, and then this is what the numbers look like, it helps it just make sense.

SPEAKER_02 10:30

It does, it does. In fact, I have a client who is in therapeutics, and it so happened that I had to generate their 1099s for you know contractors at the year end. And there was one person I saw in preparing it, she submitted her W9 and her information was LLC. And I'm like, wait a minute, I gotta I gotta you know talk to this person. So I reached out to her and said, Hey, have you considered you know an escort election? She was like, What's that? No, not really. So I put a plan together for her, and she's still singing the praises around how much she's saving from just you know making that escort collection and tweaking a few other things.

SPEAKER_01 11:04

If someone's listening to it right now and they're not sure or there's a question mark, they probably need to get the answer. You need to reach out to Claude right now from Ledgers in Greensboro.

SPEAKER_02 11:13

Um if I may, just one other thing I like to add to it because you know it's it's another much overlooked benefit or opportunity that I see small businesses don't take advantage of, and that is what's called the Augusta rule. And and really what it does is to allow businesses to pretty much rent their home to their business and you know get tax-free.

SPEAKER_00 11:31

Claude, you're using all of Shay's favorite lines and tax tracks.

SPEAKER_01 11:35

Well, Claude, and what it is is these are easy to implement and do. And I think a lot of times, I don't know about your clients, I can say historically, we talk about this a lot. Oh, they're like, I'm not good at numbers, I'm not good at taxes, or they have the fear, what they feel is real, but the reasons may not be. The fear is that they'll do it wrong and get somehow or another penalized, right?

SPEAKER_02 11:54

Yes, yes, exactly. And what I find is, you know, usually small business owners are so focused on trying to make their business successful that they don't spend the time to think about managing the outcomes, right? And from time to time I have clients who would be like, Oh, I can do my own bookkeeping. I'm like, no, you are the expert at building your business. Focus on that. Hire somebody to do the other stuff.

SPEAKER_00 12:24

Because it sounds different than just coming to a CPA and they file your tax returns. So walk us through your process or the ledger's process.

SPEAKER_02 12:31

So there are a number of different paths that a client can take coming into ledgers. If someone is looking simply for compliance services, we can do that. We can file your tax return, that kind of stuff. If we see things that might be opportunities for you, we will let you know from a tax planning perspective. For clients who engage us for bookkeeping services or payroll services, that becomes a monthly subscription. In my case, I can prepare a package for a client that may include its monthly subscription, the bookkeeping, the payroll services, and the tax compliance, as well as the tax planning component of it. Now, if the service is say to register an entity to get you off the ground, that's just a one-off type thing.

SPEAKER_01 13:13

So you really have a little bit of a menu option to meet people as the needs grow. Because if I'm just now started, I may not need payroll. I'm still just trying to get paid.

SPEAKER_02 13:22

You know, once a client comes on board and purchases a particular package, you're not locked into that forever. In three or so months, let's revisit this, let's see how it's working for you. And if you feel that, you know, you need less service, we can change it. If you feel you need more, you know, we can change it. So it's never set in stone.

SPEAKER_00 13:39

I love that. I want to do one more tactical question, Claude, because everyone listening is gonna be eating this up. But this is the lane that they're in, you are speaking their language. So for someone who doesn't feel great about the numbers or they don't feel like that's their strongest skill set, what's one thing that you would say, start this this week to get better?

SPEAKER_02 14:00

If somebody's feeling like that, I'm gonna guess that they do not have formal bookkeeping.

SPEAKER_00 14:04

Like they don't have that in their business, you're saying.

SPEAKER_02 14:07

Right, right. And I would say start that, you know, like right away. Because what I find is some of my customers will come to the table in January, February, and it's like, okay, do you have a PL? No, but I have my bank statements. That's not gonna cut it. You have no visibility into your, you need to have numbers you can rely on. And if you wait too long to get those numbers together, chances are you are missing out things that should be taken into account, you know, or vice versa. So I would say at the get-go, you start a business, formalize your bookkeeping process around it.

SPEAKER_00 14:42

So you feel like people think I'm not there yet, I don't need that yet, and then they get to a point where they're like, Oh, I should have been doing this eight months ago.

SPEAKER_02 14:50

It's interesting you say that because I just got a text from a client asking me for information around their business. And ironically, last year I sat down with them and proposed a formal bookkeeping for their businesses, and it never really got any traction. And now they need the numbers and they're not there. So I can't emphasize how important it is that business owners start that process. If you feel comfortable in at least doing it yourself at the get-go, that's fine. As your business scales, you would want to hand that off to an accountant or someone you hire.

SPEAKER_01 15:22

And what I see sometimes too, which is interesting, missed opportunity, because they're going, hey, listen, I got this. We don't have that many sales. This is in and this is out, even if they're doing QuickBooks, and they don't realize all the other opportunities in charts of accounts where you expense things, depreciating things. I mean, that is not definitely my lane. I'm not gonna say I speak to that, but I you see missed opportunity all the time. This is the whole point of these conversations, is so people aren't not going, man, I wish someone would have told me that sooner about that Gusta law.

SPEAKER_02 15:49

Exactly. Because, you know, to your point, once you have the numbers, it drives not so much what you do, but when you do it to get the maximum. E wisdom right there.

SPEAKER_01 15:58

Yeah, yeah.

SPEAKER_02 15:58

There you go. If you don't have that clarity and that line of sight, you're gonna end up in April tax times and oh my gosh.

SPEAKER_00 16:05

So we've talked a lot about the customers that you're serving, which you're obviously doing an amazing job of, Claude. What about you as a business owner? I don't want to say everything didn't go exactly as expected, but that's just not usually the ride of an entrepreneur. So, what's something that maybe you didn't see coming and you learned from that you could share?

SPEAKER_02 16:24

For my business, well, I should have seen it coming, but I didn't really focus on it. Is the fact that as a business owner, you need a totally different set of skills than being an employee. I'm a professional, I'm a CPA, you know, I'm trained well, I do what I do well. But as a WT employee, I go into work and I have my focus on a particular set of tasks. I have to do the marketing, I have to have the IT expertise, I have to deal with the onboarding, I have to deal with billing, I have to manage customer service, right? So trying to manage all of those, at least for me right now, is a bit of a challenge. I'm hoping that sooner rather than later, I'll get to the point where I can maybe start the process of onboarding employees and handing off some of those responsibilities to other individuals.

SPEAKER_01 17:10

Oh my goodness gracious. Uh it will be interesting to have a conversation like a year from now. I bet you deal with this a lot. We do. How do you share that up or collapse that curve of learning? Because we all do it. I've done it. I mean, Macho Elizabeth, she's done it. Where you're like, I can do it, I can figure it out. I will be a video editor.

SPEAKER_00 17:29

Well, it's part of being an entrepreneur, it's a blessing and a curse. You know, you're in that driver's seat because you have a bit of that personality, because you're like, I can do it, I can figure it out. But then there's a point where that doesn't serve your business that well.

SPEAKER_02 17:42

Yeah, exactly. And what I've found is that with ledgers, you don't have to go it alone. So you talk about that learning curve, right? You're not reinventing the wheel. You have the opportunity to really learn from all the other franchises. You can avoid some of the mistakes that they made, you know, if you will. And of course, it gives you a jump start in that there are proven systems and procedures that you can pretty much lift and load and run with.

SPEAKER_00 18:04

Yeah, and you're with a great brand. We've worked a lot with their umbrella company, if you will. And so when you start out saying basically the slogan, and I was like, I already know who you're working with because that's how they operate. Like that's the focus point of just improving lives and having a good time doing it.

SPEAKER_01 18:23

So, logistic question, because the nerd comes out at me every now and then, Claude. In this franchise, do you have a territory? Are you global, national, or how does that work?

SPEAKER_02 18:33

Yes, there are territories. So, in my case, in in Greensboro, there are six territories, one of which, you know, I operate, so there's opportunity for five more franchises in this area. Having said that, having a defined territory does not mean that you cannot have customers outside of the territory. I mentioned, you know, I've had the CPA firm for a while. I have clients in like maybe 30, 40 countries and across the United States. But the territory defines to some extent limitations on things like direct marketing, right? So of the six that are here now, I'm the only one that is active. So theoretically, I can actually market to anybody in in the other territories. But once one of the other territories were to be purchased or sold, I would be prevented from sending direct mail to individuals or businesses in that territory.

SPEAKER_01 19:19

Not getting a letter from Claude this week. That's correct. Like I said, you just spent the first dollar. Yeah, that's right. But you know, this is a such an interesting concept for me because I would think being in the industry, you see a lot of entrepreneurs, and I'm sure at some point in time that bug bit you. You had a day you're like, I can go out there and I can have whatever the things that entrepreneurs think. And boy, isn't it nice just to have, you know, what's the recipe over there? Give me the playbook and have the resources. And we hear it a lot, Claude. It's nice just to have someone to pick up the phone and go, hey, what do you got going on over there? Or this is the problem I'm having.

SPEAKER_02 19:50

Definitely. And like I mentioned before, you know, that ability to collaborate across, you know, the other franchises is is fantastic. In fact, before I joined the Ledgers in my original firm, from time to time I would get inquiries from clients and I'm like, I know anything about that. And I would, you know, respond, hey, sorry, I can't help you with this. I don't say that anymore because I have resources I can tap. If I don't know the answer to a question, I can tap my other franchises. And chances are they will come up with an appropriate answer.

SPEAKER_01 20:19

Gee, I am smarter now than as when we first sat down to talk. That's right. This fascinates me. And you're such an intelligent person to visit with. So, any last thoughts or anything you want to leave our audience with as we close out this program?

SPEAKER_02 20:33

The one thing I would encourage them to focus on is understanding their numbers. Um, right now I offer like a 20-minute complimentary session where I do a cash flow analysis for any business owner who's interested. Getting that clarity in your financial data is of utmost importance. Your numbers tell a story. And once you can understand that story, you can be off to the races.

SPEAKER_00 20:55

Great. And we'll make sure to get that link from you, Claude, so that we can put it in the show notes so that for anyone listening, if you're like, that's me, I would like to ask Claude a few questions. We'll put that in there so you can reach out directly to Claude and get that 20-minute consultation and get some answers. Thank you so much, Claude. This was fantastic. We're glad that you just shared knowledge that they're all going to be able to apply. So we're thankful for that. Remember, you can listen on YouTube, Spotify, and Apple. We are on all three platforms now.

SPEAKER_01 21:25

And if you know of a franchise you want to learn more about or a franchisee that has a story that needs to be shared, go to IQ for profit and submit their information.

SPEAKER_00 21:34

Thanks, Claude. Have a great rest of the day.

unknown 21:36

Thank you.

SPEAKER_02 21:37

I appreciate having me.

SPEAKER_00 21:38

We are proud that today's episode was brought to us by Imperial Design and Display.

SPEAKER_01 21:44

You know, Elizabeth, when you walk into a retail store and you see all the products, the merchandise, the racks, all that good stuff. Yes, everything that distracts me. There you go. That's what Imperial Design and Display does. They're a US manufacturing company, which for me. Right? Made in the USA. They do everything from design, installation to program management. They get it done.

SPEAKER_00 22:06

Yeah. And the caliber of brands that they work with is very impressive. Not trying to be a name dropper. Drop some names. Here we go. We're talking GameStop, William Sonoma, Best Buy, Home Depot, Caribou Coffee, and some high caliber brands. Right. And not only do they make it look good, it's functional and they're cost conscious, which we love. So we are proud to have them as one of our sponsors for the Belt for Profit podcast. That is Imperial Design and Display.

SPEAKER_01 22:32

And Elizabeth, I have to give a little shout out. I love a good tagline. They have a good tagline. I I let's move at the speed of retail together. So Imperialdesindisplay.com and click on the link to get more information about Imperial Design Display. We'll see you in the next episode.