203: Looking After Your Finances with Vicky Clark
Brought to you by
Time to Pet. Go to timetopet.com/confessional for 50% off your first 3 months.
Pet Perennials. Go to https://petperennials.com/pages/gps. Enter ‘PSC’ at registration to get $2.00 off of any packages sent in your 1st 90 Days.
Summary:
Do you know your business finances? Vicky Clark, The Pet Accountant, is passionate about helping others understand why basic knowledge of accounting and finances is critical to a well functioning business. Based in the UK, Vicky talks through the fundamentals of operating a pet sitting business in the UK. We discuss what it means to be organized for tax season and why having a paperless tracking system makes your life so much easier when it comes time to file. Vicky also shares what kind of deductions you should be looking for and when it’s time to get help.
Topics on this episode:
Differences between US and UK taxes
Paperless systems for tracking
Tax season alone or with help?
Deductions as a pet business
Main take away: Tracking your finances and staying organized not only helps tax season go more smoothly, it also helps you make better decisions for your business.
About our guest:
My name is Vicky Clark and I am the owner and face behind The Pet Accountant. I work with people all over the UK (isn’t the cloud amazing?). My six years of experience as an accountant and ten years in finance mean that I know my way around a tax return. In recent years I have gravitated towards clients that are pet professionals, because quite frankly, if I wasn’t an accountant I’d probably be working with animals too. I work with a lot of Groomers and have helped them go from their back garden to having a number of salons and growing their profit massively.
Links:
Her Website: https://petaccountant.co.uk
Give us a call! (636) 364-8260
Follow us on: Instagram, Facebook, Twitter
Subscribe on iTunes, Spotify, Google, Stitcher, & TuneIn
Email us at: feedback@petsitterconfessional.com
A VERY ROUGH TRANSCRIPT OF THE EPISODE
Provided by otter.ai
SUMMARY KEYWORDS
people, business, expenses, pet, finances, year, accountant, register, clients, receipts, tax, money, tax bill, hmrc, tax return, question, quickbooks, bit, gift, claim
SPEAKERS
Collin, Vicky
00:17
Hi, I'm Meghan. I'm Collin. And this is petsitter confessional, and open and honest discussion about life as a pet sitter brought to you by time to pet and pet perennials.
Collin 00:30
Accounting and finances might not exactly be the most exciting topic that we can think of. But it is absolutely critical to running an operating your business so that you can be showing up for your clients day after day, and year after year. And so we're really excited to have Vicki Clark, the pet accountant on the show to talk all about the ins and outs of finances, accounting, how to have good record keeping, and really what it means to be organized so that our business can excel. Let's get started.
Vicky 00:59
Hey, Colin, yes, thank you for having me. And so just to give your listeners a bit of a background on myself, and what I do, and I started in finance for quite a young age, I was a bit of a geek at school when it came to numbers. And I went on to do a degree in business and finance, which again, wasn't the most thrilling of degree topics to to. And then from that point, I did various sort of Accountancy finance jobs, and then sort of went off, traveling into the usual and then came back and did a few sales jobs, which didn't really enlightened me more. And then my uncle actually owns his own accountancy firm. And around about six years ago, he contacted me and said, Look, you know, why don't you come on board. With me, we've taken over. And then fast forward six years, here we are. And he didn't really let me do much of where I wanted to go with the company, whilst he would sort of still time but now he's due to retire this year. He's basically give me full reins on the business. So that's where the pet count came from. So a lot of my clients have the last sort of five or six years have been sort of pet sitters, pet borders, groomers, doggy daycare, and all that sort of niche. And it just happened that one day, my one of my clients said to me, you know, Vicki, this is an industry that doesn't really talk about finances, and doesn't really have a grip on it. And maybe you should look into that. And it was weirdly, just one night, I thought, you know what, I'll put a post on Facebook and see what happens. And it's just that was in beginning of January sort of ended December, it's just gone absolutely mad. And the amount of people that I've spoken to it, it does highlight a lot that this is an industry that, you know, the finance side of it and bookkeeping and the tax returns are at the very bottom of everyone's to do list. And people don't tend to talk about it, they you know, some people don't do them. Some people haven't registered. And then obviously, because of COVID. Last year, a lot of emphasis for especially for self employed in the UK was, you know, the only going to get money based on your tax returns. Now, a lot of people hadn't even their ID attached and maybe done them wrong. And all of a sudden, there was a massive focus on on tax returns. And I think that's probably helped push it a bit more often the list for people than maybe it was before. So yeah, so now I dedicate my services purely to professionals, and trying to help people sort of get their finances in order Really?
Collin Funkhouser 04:00
Yeah, it really is an industry where people get in to take care of pets first and foremost. And then yeah, kind of they look up a little while later and they go oh, I actually am running a business. What does that mean? And we start trying to piece these things together of Okay, now what does it mean I have to operate as a business. What does that mean? So why is accounting and looking after our finances in a business so important?
Vicky 04:28
I mean, it's probably the most important part of the business in the 100%. Right? A lot of people who get into the pet industry are pet lovers, you know, then then focus is looking after the pets and doing everything right that aspect of it. But then like I said, they forget about the fact that they are running a business they do need to make money. You know, if you don't keep on track, if your finances, then there's just no way that you can understand where your business is going. You know, are you making a profit? Are you making a loss You know, are you running the business and actually not making any money, because you've completely ignored that side of it and are just loving the fact that you get to do what you love to do. But like you said, they forget about the actual business side of it. And, you know, if you don't get a grip properly, you end up in trouble with HMRC. I don't know what what you guys have all your equipment is over there. But the Hm, Revenue and Customs, you know, they're not very lenient. So if you don't take, if you don't do something that you're supposed to, it doesn't matter what excuse you give them, they don't care, they will find you there front and center. And the fines will just keep coming until you play it and sort yourself out. So, you know, there's a lot of people out there that got such good businesses, you know, dog groomers, pet sitters, but really, really good opportunities to make, you know, a profitable business. But if you're not looking at, you know what money you're taking in and what you're spending, then it's going to be impossible to sort of grow or make any money out of it, rather than it just being a hobby.
Collin Funkhouser 06:07
Yeah, there's the legal aspect. Like you said, were over here, we've got the IRS, and in the US, goes after our taxes, and record keeping and all that good stuff. And then we've got state, local and federal reviews that can take place. But then I I think that one of the really important things is that you mentioned a little bit about the importance of being able to make a sound decision in our business that if we don't know, which services are making us the most money if we don't know that we're making money, or where we're where we're, our our expenses, are, we we're making less informed decisions, and we can't respond and we can't adapt as we need to when things start changing.
Vicky 06:53
Now, exactly, now, you've got people that are spending money on things that they probably shouldn't, or, you know, there's, there's months where maybe they don't make as much money, but because they haven't analyzed their figures, you're never gonna see that trend to then think, right? No, if you looked at if I said, right, maybe July and August as a quiet month for me, what can I do in those months to make up the income and come up with new ideas, but if you don't track that, then how do you know when you are making money when you're not making money. And again, with us in the UK, once you hit a certain amount of turnover, you have to register for that. And again, if you don't keep track of how much money you're earning, and you go over that threshold, then again, you get into a world of trouble with HMRC and lender backdating everything and it just gets a bit of a mess. So yeah. Right.
Collin Funkhouser 07:52
Yeah. Now, that is the value added tax VAT. Yeah. And I think that's we've mentioned a couple distinctions here. You're based in the UK. And so I know nothing about the tax system in the UK, but we have many listeners in that neck of the world. So what are some some basics that you need to be aware of? If you are running an operating a pet sitting business or dog walking business in the UK?
Vicky 08:17
Okay, so going back to complete basics. If you start a business, and you start trading, whether that be you know, pet, or pet Walker, green or whatever, you have to register with HMRC within 90 days. If you don't, then you could get a fine. I honestly probably spoke to over 200 businesses over the last few months. And I would say 90% of them have not registered with HMRC yet, which is a scary high figure. Wow. And yeah, now, it was quite shocking for me, to be honest, I couldn't believe it, to be honest. But at the moment, because obviously I think because of COVID that people who have registered retrospectively have not been fined. But that's not to say that they could start doing it. I think that's purely because of COVID. And but yeah, so you have to register within 90 days. And a lot of people have said to me, Well, you know, I just started it, and I wanted to see how we would get on and then I'd registered, you can't do that at all, you know, I only made a couple of grand, so I didn't bother doing a tax return again. You can't do that either. Or my favorite. Someone on Facebook told me I didn't need to. Which is probably more often than not happens. You know, I'm a friend of Facebook or so and so on Facebook said I didn't I didn't need to do it. He must, must must register within 90 days of starting. If you have another job, and then you're doing your pet business on the side again. You have to do a tax return and put both jobs on the tax return and that's another One that people said, Well, you know, I didn't earn that much I didn't bother, whatever you earn has to go on the touch turn if you've got another job because that income is additive and complete with the job. So yeah, so tip number one, the register within 90 days. And that can be as a sole trader, or a partnership or limited company. And it's all the same, you must register within those 90 days. And the battle threshold currently stands at 85,000. So when businesses hit 85,000 turnover, they must register for that. And again, saying that too few people sort of scares people, because they don't want to have to charge fat on dog walks. And, you know, I've got a dog walker, who's got a very successful business. And she's, she's coming to the point where she's going to hit the button threshold, and we've had loads of conversations, because she, cuz she's like, well, I don't really want to have to add that to a dog war. It sounds ridiculous. You know, yes, I walk the dog, it's 15 pounds plus that. It sounds bizarre. But fortunately, there was no way around it, you either don't earn as much money and stay underneath threshold, which is madness, or just push through it and get someone to help you. And so that, that would be another another big tip is just don't be scared of the VAT threshold. A lot people in the UK see it as like a barrier because they don't want to have to add VAT to their prices. But unfortunately, it's just one of those things that you have to do. And if you've got a business that's making that sort of money to start with, then you know, you should be pleased with yourself. Not everyone can make 85 grand. So again, they should see it as a positive. And another tip with regards to HMRC is get your tax returns in on time. So the way it works over here, I don't know if you know, Colin, our tax year runs from the sixth of April to the following fifth of April, as our tax year. And then people have to then submit and pay their tax return by the following January, just to make it extra confusing. So the tax havens from April to I know, it's madness. I don't know why they do it like this, it just confuses everybody. For example, the tax I know. So for example, tax year that ran from April 2020, to April 2021, this year, which has just finished, you'd then have until January 2022 to pay and submit your tax return. So there's there's a good gap in between. And I think this probably lends itself to why it's on the bottom of people's to do this because people go Ah, you know, I've got till January, it's fine. And then they get to January and they say oh god, I have done my tax return. And I've got like three weeks to submit it. And then they realize they've got a massive tax bill and how they're going to pay it. So you know, I'd always advise people just get your tax returns done sooner rather than later, to avoid any nasty fines, because as soon as you're late submitting the tax return again, HMRC will slap you with 100 pound fine. And again, they don't care about your excuses, you know, you could say anything, and they'd still find you. So get it in on time, get it done well before the 31st of January. And then we should be should be all right. And obviously get your record keeping together, month by month rather than leaving it until January getting it done. But they're probably the main areas where people sort of fall down that I found from speaking to them is not registering on time and not getting attached to it and done on time.
Collin Funkhouser 13:57
Well, I see many similarities for running an operating business over here in the US like, it's obviously a little bit more dependent on county, state and more. And even at the federal level about where you live here in the US. Some cities require you to register, some don't some counties require you register your business, some don't. And depending on if you're selling goods and service, if you're selling products, sometimes you have to register for taxes, if you're just doing services times you don't. So it's a little bit more patchwork, which can make it really confusing. And so I always recommend people who are starting for business in the US to go and talk to local business network to go and get get connected with other professionals and to start with your city and go from there because they're going to have a little bit more guidelines and then you can kind of work your way out because you don't want to miss these things. You don't want to be operating in a way that means that you're operating outside of the rules or the regulations or things like that. Like it It helps everybody when we're working like that, and we're getting all of our eyes dotted and our T's crossed.
Vicky 15:07
Yeah, exactly. And you know, it just, it makes you know your life a lot easier. And you can focus on the business, and focus on doing what you enjoy doing the job, rather than worrying about, you know, whether you've got attached turned down, or whether you've registered or, you know, what you've registered as is another big thing. Here in the UK, there's a lot of people who don't really know what to register. So we have sole traders, partnerships and limited companies. And again, some people will register as a limited company when they don't need to be vice versa. From my perspective, from a purely financial perspective, whenever I speak to a new client, and they're just starting out in business, and you know, they're not very business savvy, I always say, look, start yourself off as a sole trader, because it's a lot easier. All you have to do is register with HMRC. And that's basically it, there's very few rules with regards to a sole trader and what you can and can't do. Whereas a limited company is a lot different, you've got two different elements, you've got separate bank accounts, payroll, corporation tax, and then personal tax. And it does get a bit messy. And again, a lot of people will go down the limited route, because they've seen other people do it, or because people are faced with the said, it's the best route. And, you know, there are a lot of benefits of a limited company, when you're earning sort of 30,000 40,000 pound profit, then 100%, you should definitely be limited company. So if there's anyone out there who's currently a sole trader who's making that sort of money, then I would definitely consider being a limited company, because you will get the tax benefits from being that. But when you're just starting out and your profits are lower, and you don't really know what you're doing, you know, if you hire an accountant here, for example, you'll pay something, anything from three to 500 pounds for sole trader accounts. And then for limited company accounts, anything from 1200 to 2000 pounds a year, which is a massive difference. So if your profits are minimal, the last thing you want to do is have to shell out two grand to an account to do your books, which will be minimal anyway,
Collin Funkhouser 17:26
because in the US, we have sole proprietor, we have limited liability corporation company. And then we've got S Corp. And some of those are business organizations. And some of those are tax tax organizations. And you're right, when you're just starting out, you want to try and go with the simplest possible because you can, the good thing is is you can change your classification as your company grows and expands. And I think too often we start thinking 10 years down the road, or, you know, five years down the road to Okay, what am I going to be like? Well, you're not there yet. You're you're here right now, to keep things simple. And then we'll add complexity as we need to.
Vicky 18:03
Yeah, exactly. Keep it simple, you know, don't add more things to your to do list that you don't really know what you're doing. And again, I always get the question, you know, can I do my own tax return? I don't know if how complicated your guys touchtone is. But you know, anyone in the UK can do that. You can do your tax return yourself. That's absolutely fine. But I always say, look, are you comfortable and knowing that you're getting the most out of that as you possibly can. Because there's a lot of people who do yourself that don't necessarily, you know, claim all the expenses that they can claim, or you know, the certain rules, that means you can carry stuff forward and an offset against various things. That which again, people don't know, which they're not going to know, because it's not, not their profession. And so I would always say look, if you're not confident, get someone to do it, whether it's a bookkeeper or an accountant, you know, even if you've got a friend who's an accountant, or with a bit of financial knowledge, because I saved one new client seven grand this year already, because she wasn't going to put through a certain expense on our books when she could have and if she didn't sell, she would have got a 7000 pound tax bill. But because she asked me to do it, she didn't even have a tax book. She just had a national insurance bill which was like 150 quid Wow. So there's a massive difference between doing it yourself and not really know what you're doing and just biting the bullet and getting some help because I said you know when you're just starting out you don't want to be having to worry about all the financing side when you can get someone to do it for you. And then you can build other elements.
19:52
Have you heard of tied to pet Susan the pet gal has this to say time to pet has helped us grow exponentially We believe the platform's features make us by far more professional than other companies who use conventional dashboards. They are the software gurus constantly developing and improving the platform based on user feedback, this decision was a good one,
Collin 20:13
if you are looking for new petsitting software, give time to pet a try, our listeners can get 50% off your first three months by visiting typepad.com slash confessional.
Collin Funkhouser 20:26
I think what's important with that, too, is that even if you do decide that you need to bring in somebody else to help you with those numbers, that you still need to at least understand what's going on and still understand the back work and the things going on behind the scenes. Because just because somebody else is doing it, you still need to know those numbers and figures to be making those decisions and to understand how the business is operating.
Vicky 20:50
Yeah, exactly. I always, you know, I always talk face to face with my clients. So I always make do their record keeping every month. And at the end of the year, when I do their accounts, and I give them their set of accounts, whether it be soldier in a company or partnership, I will sit down either face to face or resume, depending on where they are, and go through the accounts with because I want my clients know exactly where the money's going, how much money they're getting, you know, and then plan to write, you know, where do you want to be next year? You know, how are you going to get there? What are your goals? I think, again, a lot people don't necessarily like their goals, download, you know, have a have a plan should always have a business plan doesn't necessarily have to go anywhere, just for personal view, I would always have a business plan. So right, what my short term goals, what my long term goals, how am I going to achieve it? You know, what do my fingers need to look like, if I want to get to this point by year three. And again, if you don't do that, then you're never going to know. And you'll just take along sort of oblivious to what's going on, and whether you're actually making some money out of it.
Collin Funkhouser 22:06
Yeah, being intentional about our actions. And I think that we're all wrapping up the tax season, more still working on some documents, thinking ahead to next tax season, what are some things that we can be doing right now to be intentional, to start getting organized, to be better prepared next time around.
Vicky 22:28
So I would say the main bit and the main, the main part of the people fall down on is record keeping. And a lot of people just you know, I've had receipts given to me and freezer bags, been been bin bags, boxes, shoe boxes, all sorts, and you know, there's no organization there whatsoever. So my tip would be, you know, get organized now, and set aside an hour every month or a couple of hours every month, and get those receipts on the spreadsheet, have a look at what events that month and keep track every month do the same every month, how much you've spent, you know what your income is. And then by the time that you get to the end of the tax year, you've got a good overview of how you've done over the last over 12 months. And you can see, right, I've got a good record in there. If you do go on accountant or bookkeeper, you'll get charged less because you're organized. And that will be the main my main tip would be just get your record keeping down, get that sorted. And just make sure we carry on throughout the app because a lot of people sort of go right, I'm going to do it. And then the last two months ends up in a shoe box. And then they just have a mountain of paperwork and receipts everywhere they've got to go hunting for. So I would say get your record keeping sorted first. And that that's a good basis to get you on the right track. Because at least yourself you can keep track of where you are every month,
Collin Funkhouser 24:05
right? Do you have a recommended software or program that you you like to use or that you recommend people use to keep track of these kind of expenses?
Vicky 24:17
You've just pointed out I was just thinking that there was something else I wanted to say that could not for the life and remember what it was they've just prompted but yes, so I I personally use QuickBooks just because I find it easier to use. The others that are available in the old pretty much do the same thing. So free agency roll QuickBooks sage, and they all do the job is just down to personal preference and how it's laid out. Basically, I personally use QuickBooks, I think it's easier. And again, in the UK in 2023. Everything's going digital. So from that point everything has to To be on a software like QuickBooks, there's no more diaries, spreadsheets, paper everywhere. And it has to be all uploaded to QuickBooks, you have to have a receipt to backup every expense that you put on there. And yeah, it's gonna be a bit of a bit of a task. But for anyone who doesn't know about that, if you if you type into Google making tax digital, and you'll get a whole load of information on there, is expected to come into force in 20, April 2023. Obviously, it depends on what happens with the world with COVID. So who knows, but technically, it should be coming in 2023. And I can't see them pushing it back. Unless, you know, there's another massive disaster.
Collin Funkhouser 25:47
Well, so that's got me thinking of Okay, so, and I love that of record keeping going digital because I'm, I know, I love paper for write note taking. But for record keeping, I like to be all digital. What, how do we move from a paper based business to more of a paperless way of operating?
Vicky 26:10
With a lot of blood, sweat and tears? I'd imagine. A lot of a lot of my clients don't do technology. And and you know, everyone I say is used to, you know, just having everything that the old fashioned pen and paper. I mean, I have a Filofax, which is like a paper diary. That's how old school I am. I don't even use, like an online calendar. I just hate it. I just don't, I just prefer writing stuff down. So I'm complete opposite to you. I prefer writing stuff down on paper. But yeah, it's just gonna be you know, I've said to people, this year was going to be my year that I was going to get all my clients in QuickBooks and do tutorials to say, right, this is how you do it, this is what you need to do. But obviously, because of COVID, I didn't think this year was probably the right yes, to do it. So I've just said to add one Look, just carry on doing what you're doing. But come April next year, or maybe slightly before, I'm going to try and get everyone set up. And it's just be a case of you just going to have to be very strict with yourself. And you're going to have to set time to do it every month. And there's going to be like taking pictures of the receipts, uploading them to QuickBooks, and then you can pin the receipt, to the whole point of everything go digital. So you don't have to keep a mountain of paperwork in your house, or taking up room, lots of boxes everywhere full of receipts, you can take a picture of the receipt, and then just because everything will be on the client. And I think you know, it's just you just gonna have people's got to restrict themselves. You know what, I can't actually use my Excel spreadsheet or my paper diary to write in my income, I'm going to have to do it. So it's just going to be a lot of trial and error, I think with some people and but I would just say look, download QuickBooks, or whichever one you prefer now, and play around with it, and carry on doing how you'd normally record keep and play around with QuickBooks or zero, and then see if you get the same outcome at the end of the year.
Collin Funkhouser 28:10
Yeah, and just get used to that new system. And that idea of just as we are approaching our finances with setting aside one or two hours, a week or month to look at them. Same thing with this time, we're introducing a new system, a new way of operating, we give it time, and we grow into it. And we kind of understand the ins and outs and we don't burn the old way down completely and then dive in. Right, I guess you could certainly do that. But try, try. But it's just a way of going okay. I need to take little bites of this at a time. Because what you don't want to have to do is same thing with finances or taxes. It's the day before they're due, and you have to spend all day working on it. Well, if you spread those hours out throughout the rest of the year, it's a little more manageable. Same thing with this, anytime we're introducing a new system, do little by little and then you know, slowly, you'll work up
Vicky 29:04
exactly I will demonstrate, you know, been whatever you're doing straight away, but do both at the same time. And you know, compare what you've got at the end of the year. If what you've got on QuickBooks is the same as what you've got written down or on your Excel spreadsheet, then you know, you've done it right. If there's a massive difference, then you know, you've gone wrong somewhere. And then you've got time to look at it and see where you've gone wrong rather than waiting for April 2023. And then thinking Oh crap, but you know, I've got to I've got to go and QuickBooks and I've no idea how to even open it. Because then so yeah, my mission, whether it works or not cold, I don't know. But my mission is to get all my clients on QuickBooks next year, and we'll see how it goes. Maybe we could do another podcast and tell you how it's gone. Yeah, got
29:51
Godspeed on that because that'll be fun. I'm sure it's an accountants nightmare. Yeah. But but one Everything gets standardized for you on your end, then you at least have predictability, know how each person system is going to be because it's all the same.
Vicky 30:08
Well, yeah, exactly. And it gives us access that, you know, you can invite your accountant to your QuickBooks and the other packages as well. So I've got a few already that invite me to their platform, so that I can go and have a look at what they've done. And obviously, give them some pointers of how to classify certain expenses. And or maybe tell them which expenses that they've missed. Again, that that's another thing that there's a lot of expenses out there that people aren't claiming for. And, you know, the more that you do that, the more money you're given to the taxman, which no one wants to do. So it's about it's about learning as well. But what you can and can't claim for which is another benefit of having someone like an accountant or bookkeeper who can say, actually, you can play in pre mobile telephone, you can play in your petrol, you can claim for your penalties and your tax and all that sort of stuff, and new clothing. You know, there's a lot of dog walkers out there, who aren't playing for like their boots and their coats and stuff like that. Now, you know, for me, that's an obvious expense, but might not be someone else. So, again, I'd say, find out what you can and can't claim for, and nine times out of 10, if it's business related, it'll be yes. But there's your thing that you can't
Collin Funkhouser 31:30
write well, and that's, again, another reason of why it's good to have some some help, especially when you're first starting, it's kind of weird, like, when you first start, you need the most help. And then whenever you get more complicated in big business, you need more help. But to start tracking and understanding the ins and outs of what it means to operate a business again, this whole like what I can and can't deduct, like that is that is always a major topic, every year of Do I Do you know, here in the US, and one of the big ones is do I deduct gas? Or do I deduct mileage? Or do I deduct wear and tear on the car? Do I you know, I you sent here as well.
32:08
So, yeah, like that, making those kinds of decisions, you know, you have to think more big picture in how your business is actually operate.
Vicky 32:16
Yeah, it's the same here is that a lot of confusion around petrol, the mileage and, and not necessarily for pet sitters and dog walkers. But, you know, a few of my clients are groomers, and they, a lot of people have been saying that they can claim mileage to and from their salon, for example, which you can't HMRC don't allow it to use your commute as an expense, which is something that people don't know. And again, you know, if you use mileage, then that's incorporated everything. So that incorporates, obviously your miles and the wear and tear on the car. Whereas petrol and everything it doesn't, you can you can add that on. And again, that that, again, that's a complicated topic that I'm sure a lot of people are probably doing wrong. But again, it's just about having tried, for me, it's about putting that knowledge out there, I've got a Facebook group, that I try my best to put as much information on there as possible, so that people do it. Right. You know, for example, the mileage and petrol question always comes up. And we have a use of houses and office as well. Again, not many people are aware of that, and, you know, extra ease and extra electricity and water gas. And so I try and put the aim of me when to do these podcasts and stuff is to try and get that information out there so that people do it. Right.
Collin Funkhouser 33:44
I've got to mention the whole having a home office thing. That's something that I know we do. But again, there are limitations to that they do have rules about what you can use that space for what you can't use that space for and it like, you know, it can't just be the corner of your dining room table. Like it has to be a dedicated spot where that's where you do x percentage of the work. And even then it's okay, do you deduct the square footage of that space or deeds a duck just so yeah, all those particulars. And again, this is kind of why it's really important to have some help and to have somebody to reach out to to make sure that that when we're operating our business because we love pets so much. It is our passion. It is what we many of us feel like we were born to do. And we want to and we want. I know one of the things that Megan and I are very passionate about and I know you are too is we want the best pet care providers there year after year. We want them to be able to run a business and be able to operate successfully, day in and day out. We want the best people to be able to do that. So they need to be equipped with this kind of information so that they can do that.
Vicky 34:55
Yeah, exactly. And at the end of the day, if you're providing really good service and Looking after people's pets, and your clients rely on you to offer that service, and they feel comfortable and you build a master client base, if you then mess it up by not doing the finance bit properly, and not setting yourself up properly, then you end up, you know, God forbid, it goes bust or something happens. And then that client goes to another person who, you know, maybe doesn't have the same work ethic or qualifications, or hasn't really done it properly. And it's just decided one day, or is not going to be a pet sitter, or the dog room or a dog walker, because they can, you know, it leaves that person to then take your clients that you've worked pretty hard for. So yeah, it's about getting that balance of, you know, doing what you love doing that element of it properly. But also, let's get let's get all the other bits of all the basics done right, first, get that foundation, and then you can build on it, and take it wherever we want to take it.
36:01
I know a topic that Megan and I hear a lot is, is on record keeping, you know, how long do I need to actually be keeping my financial documents, my financial records.
Vicky 36:17
So in the UK, you have to legally keep all your invoices and receipts for six years. Which seems an awful long time. But you know, if anyone wants to get audited by HMRC, you know, and they say right back in 2017, use new claim this, where's the receipt, you have to be able to go and get that receipt and give it to them? Obviously, come 2023 that'll change because everything's going to be online. Bam. So you will be able to be new receipts. But up until that point, everything must be kept for a minimum of six years, put them in a shed put them in a loft, bury them do what you want with them. But you have to keep them.
Collin Funkhouser 36:58
Yeah, here in the US. I think it's around three years. To keep them why. Yeah. But even then it's, you know, it kind of hang on to them. And if you have the space, you have the abilities to hang on to them longer. You know, you're not going to hurt you to do that.
Vicky 37:16
No, and it's always worth I do think six years is too long. In my opinion. I think three years is probably about right. And but yeah, it's just one of those one of those crazy rules. Yeah, but you know, please don't please please don't bin any of your receipts or anything because it's unlikely really that any small business will get audited, but you never know. So yeah, I'd always just say somewhere.
Collin 37:44
Pet perennials makes it easy as 123 to send a heartfelt condolence gift directly to someone with a broken heart. They have this awesome direct client gifts service that takes the effort off of us as the business owners and ensures a thoughtful, personalized, simply gift, reach our client or employee. All gift packages include a handwritten card, colorful gift wrap and shipping fees across the US and Canada. They're releasing an array of milestone gifts and greeting cards throughout the rest of the year that can be sent to celebrate birthdays, extend well wishes, and welcome new or rescue pets. They also have a few gift options in case you need to send a sympathy gift in memory of a special human client. If you're interested register for a free account to receive discounted package pricing rather than pay consumer prices. Since the service is leveraged on an as needed basis, there are no monthly or annual or minimum purchase obligations, learn more and register using perennials comm slash pages slash GPS, enter the referral code of PSC at registration. And you'll get a unique coupon code to save $2 off any purchase and the first 90 days.
Collin Funkhouser 38:45
And we're talking about taxes here. I know there are a couple different strategies or reducing our our tax bill when that time comes. So I was curious how you approach that and what's your kind of philosophy is behind how businesses can lower their tap
Vicky 39:03
for me, in this industry. And I've said it before, a lot of people aren't recording things properly. And such a high percentage of people in attendance you're not doing it in that's probably what was making their tax bills quite high. So it's all about getting all of your expenses down. You know, if you just keep a shoe box of receipts or you don't keep them logically and you lose them, then that's money lost and that means a higher tax bill. Because obviously you get taxed on your profit. So you know, if you've earned 50 grand, and you've only got, you know two grand worth of expenses because you've lost half of them, then obviously you're going to get a massive tax bill. So for me, the main the main point is making sure you record everything because that is what's going to keep the tax bill down is recording all of your expenses, you know, because you know, if you make 80 grand, but you've only got 100 pounds worth of expenses, then you know, you've got to eat, there's no avoiding a big tax bill. You know, if you make the money, you're going to have to pay tax at the end of the day. But if you're not recording your stuff properly, then that's what's going to have hit. And like I said to you before, that lady who didn't, wasn't going to put that expense through, made the difference between 100 pound tax bill and a 7000 pound tax bill. And it's, it's all about, it's all about your expenses, and people aren't utilizing what they can plan for. And that's what I found just specific to this industry, is the worst is that people aren't clean, because they don't know. And that's fair enough. But it's about ask someone ask the question, you know, if you've got free advice at my facebook group, you know, it's all free. I follow the advice out there. Anyone can ask me any question. And I'll give this as everyone say, because everybody rushes in the same. But it's just ask the question, don't feel like you ask a silly question, because it's not, you know, at the end of the day, you guys aren't accountants, same as I'm not, you know, a dog walker, a dog when I wouldn't have a first clue where to start. So it's about asking the questions, and getting the help. And again, I think that in this industry is probably what will make the difference between 100 pound tax bill and 7000 pound tax bill is asking the questions, get help, don't be afraid to ask someone but ask a professional Don't ask. You may on Facebook, what they do, because how do you know they're doing it? Right? You know, if they give advice, they might not be doing it. Right. So ask a professional, I always ask a professional, don't ask me on Facebook, because it might not always get the right answer. But yeah, for me that that is that is probably that that is probably the main one is claiming for what you can claim for, which sounds really simple, but that's just what it is.
Collin Funkhouser 42:02
But sometimes, the simplest is, you know, and what I what I don't hear you saying and is is okay, well, if you've made 100,000 fan, you know, dollars, you need to spend a lot of that to lower your tax bill, right. It's not spend money to save money, it's
Collin 42:19
just to accurately Yeah, kept track your expenses and deductible the legitimate ones, to to lower it.
Vicky 42:29
Yeah. Cuz I'm like, just by myself, you know, five iPads. Because, you know, I haven't got money expensive, but then you're spending, you know, five grand on pointless equipment that you don't need, when you could use that five grand to pay a tax bill. That makes sense. So there's no point in spending money to try and lower your tax bill, because you're then still wasting five grand by buying stuff that you don't need. So yeah, you're 100%, right, just just make use of what you can claim for get help researcher, you know, 99 times out of 100, whatever you spend on the business will probably be an allowable expense. There's so many people out there not utilizing, you know, on my website, I've got a free list of expenses that people can download, which just gives a very basic generic list of things that people don't necessarily think about. And so that maybe will jog people's memory, but I guess it's the same in the US as well. And, you know, it's all about getting the right expenses, and don't fall into the trap of making stuff up.
Collin Funkhouser 43:40
No, it really, it really can become a murky system, especially because sometimes the what you can deduct one year, or changes the next year or the last are different. And so yeah, you know, getting advice, or just saying you looked it up one time, doesn't mean it's the exact same thing the next year, it's, you know, sometimes it's the safe bet. But you know, that things do change in the tax system and the tax code, and gotcha. Which
Vicky 44:13
textbooks every year, we get really thick textbooks every year of all the changes. And you know, we've we've got to keep on track of that as well. Because like I said, you know, what can be claimed this year might change next year, and it's not as if they openly publish it and say today, we've changed this, you know, you get the books, you get the literature and you have to read it and say, Oh, actually, okay, that percentages changed or that's changed. We can't do that anymore. And again, sometimes even we get caught out in the stuff that we need to look up just to double check, but yeah, it does change.
Collin 44:48
So many times throughout, you've said ask in talk to a professional and work with professional, what makes a good accountant in your mind
Vicky 44:59
and It's all but for me, it's all about communication. You know, if you speak to someone, a lot of people have had their accountants for years. And that's because they do a good job, the communications, they're, you know, they're not having to wait 10 weeks for reply to an email, or, you know, they can bring up and ask questions. They actually know what, how, by this, can I do that? Or can I claim this. And that's probably why most people leave is either because there's a lack of communication between the client and the accountant, or maybe the price. There's another one, otherwise, people will save the accountant for years. I mean, my uncle started 30 years ago, and he still got the same clients that you have 30 years ago. And that's because, you know, the communications there that they're not waiting for stuff, they feel that they can ring and ask a question. So for me, it's about getting the advice, being able to have that relationship with your accountant, that you can just pick up the phone or send them an email, and that you're not waiting, you know, weeks and weeks for reply, and that they are explaining stuff to you, there was no point if you go to probably more if you go to like a high street, accountancy firm, you know, mostly they'll just give you the accounts. And that's it, I'll speak to you in 12 months time. And there's no explanation around what the figures are, they just get sent them, they sign it, they submit it. And that's it speak to you in 12 months. So for me, for those people who want to understand you need to get someone who's going to take the time to explain all those figures that will happily, you know, talk to you on Saturday, and you know, professional industry people work weekends. So I don't say to my friends while on the open Monday, Friday, because that's not going to help an industry that works weekends. So I always say to people, look, if it's a weekend, you know, and you've got a burning question, you know, send me an email, I will reply to it. On the weekend. And again, it's just about those little extras, if you've got an accountant that you don't speak to, and he just throws figures at you, and doesn't explain anything, then how, again, yes, you've went and got the professional to do the figures. But do you actually understand them and that you said earlier, there's no point getting someone else to do it, if you then still don't understand the figures. Because you're not really, you're not going to get anywhere. So I think price again, is one, make sure you're not getting ripped off. And two is communication and making sure that you have that relationship and account really should be an extension of your business. You know, I always say to my clients, Look, I know I have two new accounts now. But please, please ring me if you need anything. Because a lot of people just think once you're done, you can say, I can't speak to you for 12 months, which is probably the experience they've had with someone else. But yeah, it's all about communication for me, if you don't have that, and you don't have that relationship, and then it's not going to work. And again, I always have sort of chat with potential clients before I say yes. Because if we don't get on, then there's no point. Me too and yes to do your accounts. Because if we don't have that relationship, then it just doesn't work.
Collin Funkhouser 48:19
viewing them as an asset to your company to your business. They're there to help you. Yes, you're paying them for their service, but they they want to see you succeed. And and if somebody just you know is like, okay, email me documents or drop them off, and I'll talk to you later or isn't willing to have conversations about because, again, as a business owner, you want to know what's going on behind the scenes and be open to being educated and learning. And if you're working with somebody who doesn't want to be teaching or who doesn't want to be helping you in that way. That's not a really good partnership that's going to help you thrive.
Vicky 48:52
No, no. And you know, some people might like that some people might not want to talk to their accountant every five minutes for them. Again, it's it's, it's what you what you want, and what you want that with the relationship just as much as you know what the account needs. You've got to be able to pick up that phone and have that conversation with people.
Collin Funkhouser 49:12
What are some of your favorite resources that you go to that you like to read or look up or listen to, to stay on top of these kinds of topics and stay fresh on what's what's changing?
Vicky 49:24
And so this is really tailored for everyone. But yeah, we I subscribe to certain literature which is aimed for accountants that we get to live with every year that I tend to read. And to be honest, I google quite a bit and watch. listen to podcasts and YouTube videos and what I don't do tend to do as much as go on the government. The Gov uk website because you know, it's not the easiest things to navigate and I can understand why People get frustrated when they want to say when they want to Google, you know, can I play in petrol, and it takes you to the Gov uk website. And it's not always straightforward. And it's easy for sort of professionals to read and understand. But it's not necessarily easy for everybody else. And I think the mixture that I look at and probably wouldn't be suitable for, you know, your average person business owner. But, you know, if you wanting to look up certain stuff, I mean, you could start with a government website, but you'd probably be able to pick a little bit, but it's all about just doing research. And using and using the internet to your advantage. Again, the probably the easiest way for people to get information is to ask a professional, because you can Google, you know, can I claim petrol as an expense as a sole trader? And you'll probably get 5 million different answers, and loads of different platforms. So my answer to that question, other than the boring niche, or the accountants read, and I'm in various different groups on Facebook, as well, and we talk to each other as accountants, you know, we bounce ideas off each other. And, you know, we have the odd argument about various different things. Because sometimes it can be a bit ambiguous. But I would say, for everyone else who just wants that information, the probably the easiest and quickest way is to ask someone and ask professionals ask them the question, because you probably get a very straightforward answer, rather than sort of read through the depths of the gov.uk. website. And you know, all the other pages on Google that will bring up probably contradictory answers. Yeah, it's probably the simplest way to ask someone who knows what they're talking about, and give you a very straightforward answer. As you go on Google on this just a minefield?
51:57
Oh, yeah. This this year, when we were filing our taxes, I was doing something a little bit different. And I was trying to make sure I was doing it properly. And it was totally, it's like, oh, go read this help document. And that help document was written by US government, IRS Tax officials? Like this is not helpful at all. Like what why would you send people to document this is awful.
Vicky 52:17
And it's probably the same here. It's really bad. You look at it. And even I give him some time to think. Like, it is really, really difficult integral from what I've had, if, if your system, I'm glad I'm not an account in the US, I think it'd be far too complicated for the different states and all that sort of stuff. But yeah, we have the same here, it'll take you to like a 500 page document about petrol. And you're like, I can't, can't read that. Just Just ring an accountant or ring, a bookkeeper? And just ask a lot, you know, a lot of people wouldn't charge for that. If, you know, a lot of people have messaged me on facebook with the odd question. And I'm more than happy to answer it, because it's a lot easier, a lot quicker for them just to ask someone than it is to trawl through, you know, a 500 page government document about expenses.
Collin Funkhouser 53:10
Yeah, it is, it is nice to reach out and get help and understand that while this can be scary, while it can be daunting, especially when we're just starting out, or again, when we start getting a little bit more complicated business structures. There is help out there, and there are ways to work through it. And so again, I really want to thank you for coming on and shining some light on this topic, and helping encourage us to start doing some better record keeping and tracking and getting organized as a foundation to that we can understand our numbers and know what's going on in our business to make those good decisions. But as with all things and especially taxes, I know there's a lot more questions that people are going to ask as the ever changing world around us. And so how can people get in touch with you get connected to your Facebook group and start learning more about how to have their their finances taken care of.
Vicky 54:10
So my facebook group is called accounting for pet professionals. And so if you just put that into Facebook, it should come up. It's like a orange and white banner. And I will accept people in there in that group and I say I put loads of free stuff on there. I do various Facebook Lives about various topics as well. If we don't use Facebook, then my website again, like I said, there's a free pdf of expenses on there, which is www dot pet accountant dot code at UK. And again, they can contact me via the website. Personally all by Facebook.
Collin Funkhouser 54:51
Perfect and I'll have links to your website and the Facebook group so people can click right to that page. This has been a very Helpful conversation. Thank you so much for coming on the show today.
Vicky 55:03
So no problem at all calm. Thank you for having me.
Collin Funkhouser 55:06
So do you know your business finances. My big takeaway from Vicki is that it is critical and mission critical to the survival of our businesses that we not only know our numbers, but we say on top of being organized with them, not just so that come tax time, it's easier to file taxes, but so that we can make more informed better decisions about our business. When we understand where our money is going and where it's coming from. When it comes time to shift or to move into a different market, or to hire or to raise prices, or when to stop and take a breath, we can make that in confidence. And we don't have to feel like we're guessing. We don't have to feel like we don't know what's going on. And that's the power of knowing our finances and knowing our numbers. We'd love to hear how you stay on top of your finances and what it means to you to know about them and to continue to learn. You can send that to feedback at Pitzer confessional comm or look us up anywhere on social media. We want to thank our sponsors time to pet and pet perennials for making today's show possible. And we really want to thank you for listening and for showing up today and for sharing in all that you do to engage with the episodes and to be part of this awesome community. We hope you have a wonderful rest of the week and we will be back again soon.
