Marketing Podcast for Shopify Merchants: The Ecommerce Coffee Break

How To Say Goodbye To Your Bookkeeping Hassles | #195 Nathan Hirsch

June 06, 2023 Claus Lauter Season 5 Episode 4
Marketing Podcast for Shopify Merchants: The Ecommerce Coffee Break
How To Say Goodbye To Your Bookkeeping Hassles | #195 Nathan Hirsch
Show Notes Transcript

In this episode, founder and CEO of, Nathan Hirsch, shares his insights on how to say goodbye to your bookkeeping hassles.

On the Show Today You’ll Learn:

  • The importance of a bookkeeper for your company
  • The most common mistakes when hiring a bookkeeper
  • How to handle receipt collection for merchants
  • The benefits of using business bank accounts and credit cards
  • How to manage global sales taxes effectively

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Claus Lauter: Hello and welcome to another episode of the E-Commerce Coffee Break podcast. Today we want to talk about a crucial factor in every business. Some people like it, some don't. It's bookkeeping and accounting. So bookkeeping obviously a very important factor cause you not need to know your numbers, not only for tax reasons, but also to maintain a good business.

That's one we wanna dive into today a little bit deeper, and guest on the show today is somebody who is in the e-commerce space for a very long time. He knows his way around. It's Nathan Hirsch. He is a lifelong entrepreneur who started selling textbook on Amazon in college. He has built a team of virtual assistants that helped him sell over 25 million in baby products, and eventually he found it to free up a successful freelance virtual assistant marketplace .

After being acquired by the Hoot, he launched e-commerce Balance and accounts That's what we are talking about today, and we wanna dive right into it. Hi Nathan, how are you today? I am great. How are you? I'm good, Nathan. Bookkeeping. Not everyone likes it. I mentioned that. But it's important.

So let's talk about why merchants need to be really focused on having the right bookkeeper. What brought you to the topic of offering a service for merchants? Yeah, so 

Nathan Hirsch: I tend , to focus on the unsexy parts of business, so hiring and bookkeeping. funny with my first Amazon business that I started in 2008, I went through every bookkeeping mistake imaginable.

At first. I tried doing it myself, and I was sucking up all my time doing bookkeeping every month. And then I had to pay someone else to redo all my work because I didn't know what I was doing, and they had to redo it correctly. Then I tried to just dump it on my account at the end of every year, and it led to every tax season being really stressful and me not being able , to make decisions every month.

Then I tried hiring a quarterly bookkeeper and same issue. I just couldn't make decisions in real time. And then finally I realized that I needed a bookkeeper every single month. Now with my next company, free up. I hired a bookkeeper, from day one, and that was one of the best decisions I ever made because even before we were profitable, every month we'd look at the numbers.

We'd have a monthly finance meeting, and we'd make decisions based on what the numbers were telling us. Now, there were other benefits to monthly books, like tax season was less stressful. And other businesses, although we never did this. You could get investing or funding if you have clean books.

But really that monthly decision making was key. Now, four years later, when we sold Free Up, we had four years of Immaculate books going back from day one, and that helped us pass due diligence. Now, a lot of people, again, won't sell their company, but the main reason to do bookkeeping every month is for decision making.

You wanna be able to make. Good decisions every single month, not by gassing or your gut, not by the money deposit in your bank account, but what the actual numbers in your books tell you. And the good news is you don't need to learn bookkeeping. You don't need to take a course on bookkeeping. You shouldn't be spending time doing your own books.

It's a bad use of your time. But you do need to have a good monthly bookkeeping process that every, that gets you your books on time, every single month that helps you make decisions. 

Claus Lauter: A hundred percent agree, I like that you mentioned you made every mistake in the beginning. , I can totally rely that I did my first startup in 2001 and we went to a couple of bookkeepers.

Biggest problem there, they didn't know what we do. E-commerce is a very specific business. If you're going to your mom and papa, brick and mortar bookkeeper, you probably will not understand what you do. If you go to a huge company, you're probably as a small business or also not very well suited there.

So what do you see from your side? What are the biggest mistakes merchants do when picking a bookkeeper in the first place? 

Nathan Hirsch: if you're an e-commerce seller, you need to use a bookkeeper that knows e-commerce. That means they have to understand the marketplaces, returns, refund fees, stuff like that.

And they have to be able to use the connecting tools like a, we use a two X. There's a few other ones like Link my books. You can't just know QuickBooks. You have to actually understand the marketplaces and their fees. in addition to that, there's inventory, there's cost of good sold. Usually you need a bookkeeper that understands not just cash base ac not just cash base accounting, but accrual base where the inventory you buy and the sales all occur in the month that they actually happen, not just when they hit your credit card and your bank account.

So if you're out there and you're looking for an e a bookkeeper, and you're an e-commerce business, make sure you look for an e-commerce bookkeeper that understands accrual, bookkeeping. And that has a lot of experiences with the different marketplaces. Hundred percent 

Claus Lauter: agree. As a merchants, obviously you wanna get not only a sleepless or a nice sleep when it comes to the text season knowing that everything is done the right way.

You also want to have your monthly reports. What numbers as merchants do I need to look into, or what do I need to request for my bookkeeper to make good decisions? 

Nathan Hirsch: So you should be getting three reports every single month, income statement, balance sheet, and cash flow statements. So the income statement shows you how much you actually make profit or income minus expenses equals profit.

The balance sheet shows you how healthy your business is. So assets versus it is liabilities. You could see your inventory, your overhead, any loans or debt that you have there. And then cash flow is how much cash you actually have. And especially if you're a seasonal business or you make most of your sales in that fourth quarter, like a lot of e-commerce sellers do.

You wanna make sure that you're not running out of cash during your slow times and you can afford your people , and all of that. So those are the three statements. That you should be looking at every single month. And if you go to e-com,, you can actually grab our monthly finance meeting where every single month we go through these reports together, and that's where we make decisions.

Should we hire more people? Should we cut back on this software? Should we launch in another marketplace? Tho, the decisions should be made during your monthly finance meeting and during the monthly finance meeting. You should be going through those three reports. 

Claus Lauter: Okay. Now, if you don't have a C f o, a financial officer in your business, you're a small startup or a, medium enterprise, and you as a business owner do these numbers on your own, you have to look at it.

Do I get any support from your side to really understand the numbers and, what I need to decide on. 

Nathan Hirsch: We make the reports really easy to read. We use a tool called Fathom that makes 'em nice and neat. we also make the chart of accounts very easily broken down so you know what the fees are, you know how your expenses are broken down.

And we'll, we were happy to do a call once we catch up your books to go through, through it with you as well. There's lots of great resources on reading those three reports, but the best way to really understand the numbers of your business and get good at reading these reports, To just go through them every single month, ask questions, get to know your numbers.

When we sold free up in that original phone call, they asked us if we like, what different things about our numbers, and we knew those numbers inside and out because we had gone through them every single month. And later on when they actually got into our books then they built a lot of trust because the numbers in the books matched exactly what we were talking about on the phone call.

So make sure you understand your numbers and those reports, but the best way to do it. Is by just going through it every month, and it's gonna help you in other stuff as well if you invest in the stock market income statement, balance sheet cashflow. If you're gonna invest in other businesses, same thing.

So the sooner you learn how to read those reports, the better. 

Claus Lauter: But more on the practical side of things. collecting receipts, having everything prepared for the bookkeeping service. how should merchants deal with that? I'm particularly bad when it comes to collecting receipts. What's your best advice there?

Nathan Hirsch: This is what I do, and it's very makeshift, but it works really well. So first of all, your bookkeepers don't need your receipts. You need your receipts. This depends on where you live. I can only speak for the us, but in the US, bookkeepers don't need your receipts. They do need view only access to your bank, your credit cards, stuff like that.

And they can pull all the information from there. You need to keep all of your receipts in case you ever got audited by the Rs. Hopefully you never do, but if you do, you need to have those receipts. So the best thing to do, Is set up an accounting Gmail, and call it whatever you want, accounting at whatever your company is.

And every time you get a receipt, take a picture of it and just email it to that inbox. I'm going to a coffee shop after this to meet with my team. I'm buying the whole team coffee. Once I get the invoice, I take a picture of it, just text it, email it right to that inbox. If you use one of those things that automatically send receipts, you just put in the accounting at your business.

Boom. All your receipts are there. They're already dated of the dates of the email. And that's all you need. If you get audited, your bookkeeper should not need those receipts. They should just be going by your credit cards and bank accounts. 

Claus Lauter: One thing you mentioned is having access to bank accounts, to statements, reports from that side to financial reports.

What kind of access do you need as a service provider to the merchants structure to. Be able to provide the right bookkeeping service. 

Nathan Hirsch: Yeah, so you wanna use business bank accounts and business credit cards. Don't use personal ones. Even if you're using personal just for business, while legally, that's okay.

Personal accounts don't have the functionality that your bookkeepers need, so they have to be business accounts. And then you also wanna make sure there are business accounts that allow view-only access. Because if you don't do that, you're gonna have to download the statements every single month and send them your bookkeeper.

That's just one more thing you have to do. It's more work for your bookkeeper, they're probably gonna have to charge you more for the extra work. just make sure you're using a business bank account, a business checking account that allows you only access if you don't have that switch over to one that do.

There are plenty that do. But that's my advice. 

Claus Lauter: One question I have, a lot of sellers not are selling only in the US but they're also selling internationally and there's a lot of different sales taxes involved. Even within the US there's a lot of different sales taxes, which can be very confusing.

Is that something you help with? 

Nathan Hirsch: We don't do sales tax. We'll record it from a bookkeeping standpoint. My advice is keep people in their zone of genius. So have a C P A that does your end of the year taxes and tax strategy. Have a bookkeeper that understands e-commerce, that does your monthly bookkeeping, and then use a sales tax service like tax jar.

There's a few of them out there to do your sales tax. That's what they specialize in. That's what they do really well and they have a lot of software that automates that. It's like different levels. And there's even another level, A C F O, if you get to a size that needs it, a part-time fractional, whatever it is, and they can do more.

Business decisions, business planning. Based on what the numbers tell you, so that you definitely want to divid and conquer. I think a lot of people get into trouble when they try to have, like their CPA do bookkeeping or their bookkeeper due sales tax or their cfo F o do their end of the year taxes, keep everyone in their lane.

And then you have a really strong finance team helping with your business. You also are paying people the right amount. If you pay your c p A to do bookkeeping, that usually costs way more than just having a bookkeeping specialist and you're not necessarily getting a higher quality. 

Claus Lauter: No, a hundred percent agree.

Makes total sense. Now with e-com, You're working with e-commerce sellers obviously. What are the steps involved before they can start working with you? 

Nathan Hirsch: Yeah, so we keep this pretty straightforward. You create an account on our website, you fill out a pricing form, so we have some information and you give us access to your current books.

And if you don't have books right now, two months of bank and credit card statement works too. From there we'll get you a quote. Those quotes are two parts. It's a fixed price for any kind of setup, ketchup cleanup, a fixed price for your monthly, and normally we give a month free, but if you mention this podcast, you get two months free.

And. From there, if you accept the pricing, you add a payment method and we start integration where we get access to everything we need kickoff call with our team and we hit the ground running, catching up your books. 

Claus Lauter: Excellent. Sounds great. Not a lot of sellers are selling on different platforms, not only at Shop, Shopify, eBay, Amazon, and all of them need different reporting to certain degrees.

That's something you can provide or something you can help 

Nathan Hirsch: with. From our side, we just provide income statement, balance sheet, cash flow, and we use a two X to connect to the marketplaces and pull in data. There are other tools that might get you certain information from Amazon and all of that, to me that's separate from bookkeeping.

Bookkeeping is income statement, balance sheet, cash flow, and we can customize those reports depending on what you need. But our service is strictly the monthly bookkeeping. 

Claus Lauter: Okay. Makes perfect sense. Give me an idea about the pricing. What can people expect to pay for your 

Nathan Hirsch: service? So we custom price each client.

It depends on transaction size, number of marketplaces that you sell on, and just overall complexity of the business. Our pricing starts at 3 99 a month. That's for e-commerce. For e-commerce sellers. have some e-commerce sellers that are $2,000 a month that are selling on lots of marketplaces that are really big.

But it's custom pricing depending on your setup. Okay. 

Claus Lauter: Who's your perfect customer? Is there a specific industries or niche within the e-commerce that you work more with than others? 

Nathan Hirsch: Most private label sellers and stuff like that, we work well with. If you're doing like wholesale or online arbitrage, we do work with them.

You have to be a little bit bigger just cuz it's more expensive, cuz there's more products, there's more moving parts, stuff like that. But we're work with all size e-commerce sellers. We've got longtime entrepreneurs that are opening up a brand new business that wanna do their bookkeeping right from day one.

Start with us. We got other people that have been business for 10 years and we definitely work with a variety of businesses. And if you're non eCommerce, we have accounts balance that starts at 2, 9 9 a month. That works with like agencies, software, stuff like that. Okay. 

Claus Lauter: Where can people find out more about you 

Nathan Hirsch: guys?

Yeah, connect with me on LinkedIn, Nathan Hirsch. I post a lot of tips daily on, on the boring parts of business hiring and bookkeeping. Go to e-com,, get a quote. You get two months free if you mention this podcast. 

Claus Lauter: Excellent. Nathan. I don't think bookkeeping after this chat is as boring as I thought it is.

Still, I wanna have an expert on my side doing that stuff for me because I'm not a perfect bookkeeper at all. So I would al also recommend our listeners to give it a try, the website out. There's a lot of information on there and maybe think about outsourcing it to you guys.

Thanks so much for your time. Thank you.