Interview with Virtual Bookkeeper, Sophia Whiteman
I'm Tiffany Nadolny, your host of the Spa Business Building Podcast. I'm a licensed esthetician, massage therapist, and solopreneur in My Day Spa. With nearly two decades of experience in the beauty and wellness industry, I've learned a few things about building a career and maintaining longevity.
Join me while I share my experiences and insight on attracting clients, maintaining and building a thriving business while achieving work-life balance. So whether you are a new solo spa boss or seasoned, this podcast is for you. Welcome back to the Spa Business Building Podcast.
I'm Tiffany, your host. Thank you so much for joining me. In today's episode, I have a guest expert, Sophia with viasophia.co over on Instagram, and she is going to provide us her expert knowledge and insight on all things bookkeeping.
I am so excited for you to listen to this episode. I think you're going to find a wealth of knowledge and information. So without further ado, let's get started.
Welcome Sophia. It's so nice to have you on the Spa Business Building Podcast.
Thank you for having me. I'm so excited.
I've been wanting to have you on the podcast for quite some time. I follow your Instagram account and I love all the information that you provide. So I really wanted to have you on and pick your brain.
So Sophia is a virtual bookkeeper, is that right?
Correct.
Awesome. So can you tell us a little bit about yourself and your unique approach to bookkeeping?
Yeah, of course. So I was born and raised in Tulsa, Oklahoma. Been here my whole life.
I graduated with a bachelor's in psychology. So I've always loved the human brain. I've loved learning about behaviors, personalities, all of that stuff.
And my family was very, I was very pressured to go into the medical field. And I was like, okay, why not? Like I'll just get a bachelor's in psychology because you need a bachelor's to get into medical school, right?
And graduated and I was just like, you know, medical school is not for me. I don't want to be going to school until I'm 30, having to pay off all those loans, all of that stuff. And I was working at corporations at that time and decided to just move up the ladder.
And I became a manager, a assistant manager at a grocery store. Few years ago, I actually onboarded with my family and started doing like administrative work. So like office, payroll, admin, bookkeeping, all of that stuff.
And I decided, okay, like, why not open up a virtual assistant business, right? So a year and a half ago, I started my own business as a VA. And the demand in Oklahoma just wasn't there.
And so throughout my time networking, I was visiting with small business owners and I realized that like a lot of them didn't understand their numbers. It was just like, we have this passion as business owners to go in full force, right? And oftentimes, I read about the statistic that 20 percent of businesses fail within their first year.
And so I was just like, oh my goodness, like bookkeeping is a need. And so throughout my time networking with local businesses, I stumbled upon a tax professional who is now my mentor. And she just taught me like all the ins and outs of bookkeeping.
And I kind of twisted it with my background in psychology. And so now I utilize my background in psychology to help business owners not only understand their numbers, but also understand their spending habits. Because a lot of business owners are like, oh, let's just spend all of this for a tax write off.
But it's like, no, do you really need this item? Or are you just doing it to reduce your tax liability? So yeah, that is my unique approach to bookkeeping.
That is a great story. I love that. And I love that, yeah, I love that you go deeper into like the money habits.
And it's not just like, you know, the numbers that you see, there is more about, you know, money habits and your spending. I love that.
Thank you. And I've realized like with a lot of bookkeepers, it's more of like, here's your numbers, go about your day, right? It's not like they don't talk to you about your profit and loss report.
They don't tell you like how your loans can affect your balance sheet, all of those things. And I love telling my clients like, hey, this is what's going on with your numbers. This is how you can grow your business or stuff like that.
So you're really adding a lot of guidance into helping your clients.
Yes, yes.
I love that. Can you maybe give the definition of exactly what a bookkeeper is and what the benefits for a small business would be?
Yeah. So think of a bookkeeper as your behind-the-scenes financial partner. So we take care of all your transactions.
So any income coming in, any expenses you're spending, we keep them categorized up to per IRS standards, and we show you where your money is going. So we generate the profit and loss report that we deliver to you monthly, and you get to see like, okay, I spent this much in marketing, I spent this much in supplies, and it shows you obviously your income. So for small businesses, small business owners tend to have a lot of expenses when they're navigating their industry.
So for startups, it's literally trial and error. You try one supply, maybe that doesn't work, or that product doesn't work for you. So you phase that out of your business and you try a different one.
So it's all trial and error, and you just have to know how to categorize those expenses. And people tend to think that only corporations need bookkeepers, but that's not the case. These corporations have huge amount of funding.
And small business owners, obviously it's on a different scale. They have limited funds, and you need to make sure that you're utilizing your money to the best of its ability.
Absolutely, 100%. I totally agree with that. So how would you, how do you go about keeping those organized?
Like what programs do you typically use to help the small businesses?
Yeah, so I am a QuickBooks pro advisor. So my go-to software is QuickBooks. I love QuickBooks.
If I were to recommend a software to like a DIY book, or DIY bookkeeper or business owner, I say QuickBooks just don't get the self-employed version. So go with QuickBooks online. Simple start is I believe $35 a month now.
They recently increased their prices. But you can track your expenses. You can track your mileage, upload receipts.
It's literally the best bookkeeping software in my opinion. Definitely better than manual spreadsheets.
Yes. I used to use manual and now I use QuickBooks as well. It does a lot.
It offers a lot for sure. So what should somebody, like what qualities should somebody look for when they are looking to hire a bookkeeper for their small business?
Yeah. So I definitely recommend communication, especially if you're a virtual bookkeeper like me. You want to make sure that you are responding to your clients in a timely manner, you're not leaving them in the dark.
A lot of small businesses tend to go for that local bookkeeper because they want that professional, or not professional, but like that closer relationship, like showing up at their office. But we can still establish that relationship with a virtual bookkeeper. We just have to make sure that there are boundaries set in place.
We have specific time constraints as far as how long we have to get back to their question. Second off would be punctuality. You always want to make sure that the bookkeeper you're working with will deliver your reports on time.
I've noticed that a lot with other bookkeepers, per se. I try my best to always, I give my clients a deadline like, hey, your books will be done on the 15th of every month. If anything happens, I will let you know as soon as possible.
Like say you're going on vacation or something, you'll let them know, obviously, ahead of time that your books won't be done by the 15th. But if you find that your books are constantly late or you're having to reach out to your bookkeeper for your reports, huge red flag. Go run the other way.
And lastly, I recommend finding someone that you vibe with because your bookkeeper is honestly going to be like your most intimate hire. They're seeing your numbers, they're seeing your finances. If you don't get along with them, then that's not good, right?
Right, absolutely.
Absolutely.
Just like any professional that you're going to hire to help you, like you have to have that vibe that connects as well, for sure. It just makes things run more smoothly. So kind of, this isn't part of the questions that I had sent you.
So I do have a question. When it comes to like the reports, like how do you, anybody, they would be sending those reports to their accountant, right? So this is helping them for tax purposes?
Yeah, so with my bookkeeping packages, again, every bookkeeper is different. For my bookkeeping, I customize the proposal and the package based on the client's needs. So I offer monthly reports or quarterly reports.
I would highly recommend monthly reports just because, again, small business owner, I feel like you do need that monthly interaction with me just to see like, okay, where's my money actually going, right? And these reports, again, we go over it. I also offer monthly reviews or quarterly reviews.
So we go over those reports and with me, I also do goal setting. So each quarter or each month, I basically hold my clients accountable of something that they give me, like my esthetician client, she had not paid sales tax in a couple of months. And I'm like, girl, we need to get that paid, right?
So I had her, that was her goal to pay sales tax by our next meeting. So her next meeting, she's like, I paid it all, I'm up to date. And I'm like, yes, finally.
But as far as like reports, we do generate profit and loss reports and balance sheets. So at the end of the year, I do collaborate with your tax professional and I send over those reports to them so that my clients aren't left scattering around like, oh my gosh, what else do I need to do? So I have that like, hey, I can talk to your tax pro for you.
Would you mind explaining what a profit and loss statement and balance sheets are for anybody who is kind of new to all of this?
Yeah, so your profit and loss statement has your income for the month or whatever quarter or whatever time period that you generate. So it has your income, it has your cost of goods sold. So for estheticians, for all of the beauty industry, it's like your supplies, job meals, contract labor, and then you have your expenses for the business.
So any marketing, office supplies, auto expenses, stuff like that. And then at the bottom, what it does is you will have your income minus your cost of goods sold, minus your expenses. So you come up with a net income.
So your net income, if it's positive, then that means that you made a profit for the month. If it's negative, then you lost for the month. And this is where you need to figure out like, okay, where did I spend too much money?
What should I cut back on? Do I have overstock in products that aren't selling? Do I need to phase those out?
So that's where you need to take a look at your monthly reports and figure out, okay, how can I profit this? Do I need to increase my service pricing? Stuff like that.
Awesome.
Yeah. And then, oh, and then on your balance sheet, you're fine. On your balance sheet, that will show you the amount in your bank account, along with if you have any assets and liabilities.
So any item that you have over 2,500 would be a asset, and your tax professional will be the one that either writes off your whole asset or depreciates it over time. And it'll also show you your owner's draw slash distribution, depending on the tax entity that you have. Great.
Awesome. Thank you for explaining that. Like that was awesome.
So perfect. I love that.
Let me know if I'm like not speaking in. I've learned that with social media, you have to speak in like a fifth grader language. Yeah, I'm like, I'm too big of words.
Right.
Well, when you're in the industry so much and even just as like a beauty professional and like you're speaking with other, you can't you have to speak to someone who isn't in your industry. So you have to like they don't know the jargon and the words, you know, that you would speak day to day to other bookkeepers. So yeah, for sure.
It's good to, you know, try to think of it in how to explain it in a different way.
Yes. Well, thank you.
For sure. So my next question is, so let's say that someone wants to DIY their bookkeeping, which I don't always recommend. I did this in the beginning because I didn't have as many expenses and I would put it in a spreadsheet.
But I will say the best thing that I ever did was hand my all of that over to a bookkeeper. But let's say that someone is DIY-ing their bookkeeping. What mistakes do you typically see, small businesses or the solo beauty and wellness industry?
What mistakes do you see them making when they are DIY-ing their bookkeeping?
Yeah. So I notice a lot of mistakes. The number one would be commingling their business and personal expenses.
This is a huge no-no because if you are an LLC, and if you ever get sued, if you're commingling your business and personal expenses, your personal assets can be used to settle the business debts. And at this point, you're essentially piercing the corporate veil. So essentially, your LLC is like null and void.
So that's why I'm like, please, please keep your business income and personal expenses separate. Like we should not be adding that all together. Secondly, would be not reporting all of your income.
I know everyone doesn't like Uncle Sam, but and there are a lot of cash industries out there, but they don't, I think people don't realize how bad it will hurt them in the long run, because this can prevent you from getting a business loan. It can prevent you from purchasing a house, because obviously when you file your taxes, you might have, it might show that it's lower income, right? So you want to make sure that you're reporting all of your income.
So in the end, you want to purchase that house or get a business loan for growing your business. Lastly, I think a huge mistake a lot of beauty solopreneurs do would be waiting until the end of the year. I don't know about you, but my memory is horrible.
Like I, if you ask me what happened last year, I'm like, I don't know. So a lot of entrepreneurs, they tend to throw their receipts in a shoebox and wait until tax time. And they're like, okay, what was this?
Was this actually business? Was this actually personal? So I do recommend if you do DIY your books, make sure that you have a spreadsheet or have a folder that does you categorize like this is what this expense is, this is what this is and not wait until the end of the year, because that's a lot of time for you and probably for your tax professional to handle.
Right. Yeah, that's great advice for sure. All mistakes I made in the beginning.
Me too.
You don't know what you don't know. So this is really, really great advice.
Thank you.
So my next question is if someone is wanting to DIY again, what advice do you have besides, I guess this goes into the mistakes.
What kind of tips would you give for keeping their bookkeeping organized?
The number one thing that I recommend for DIY bookkeepers is to get QuickBooks online. Automations, those are amazing. Best thing that ever happened.
I do not recommend manual spreadsheets. I mean, I understand that if you just start starting your business and you can't afford that monthly expense, start with your spreadsheets, but at some point, once you start growing your business, it's going to get out of hand and you're going to keep, you're going to put your bookkeeping on the back burner, which is something that you don't want to do because of not understanding your numbers, right? And yeah, biggest thing I recommend is getting QuickBooks online, not self-employed.
Again, it's $35 a month. You can sync your business bank account on there. It'll literally sync your transactions over to QuickBooks.
You categorize it, upload receipts, track mileage. You can even invoice on there. But yeah, that's what I recommend for DIY bookkeepers.
Also, if you could afford getting your chart of accounts, pretty much up to date to your industry, I recommend that just so that'll help you with categorizing transactions in QuickBooks.
Okay. So what exactly is a chart of accounts and how would you update them?
Yeah. So QuickBooks has, so a chart of accounts is essentially categories for your write-offs. So whenever you go and file your tax return, there are specific categories that is on your paper.
You want to make sure that your chart of accounts reflects what the tax return shows. So QuickBooks has like their chart of accounts is, it's so broad, like you don't need all of the items on there. And so what some bookkeepers do, I also offer QuickBooks account setups.
So what I would do is I would go into your chart of accounts and I would update your chart of accounts based on your industry. So for estheticians, I would have a category for skincare supplies because there's only a category for office supplies. So you want to make sure that you could differentiate both of those because if you offer products in your business, then you want to make sure like, okay, how much am I spending in skincare supplies, right?
Or lashes, stuff like that, like actual day-to-day supplies that you use in your business. And so yeah, I just update your chart of accounts, make sure that I take away any categories that you don't need. Like if you don't have any loans, we're going to exclude the loan category.
If you don't have any, I don't know, a car, any assets, because it does show assets in QuickBooks too. But I'm basically making it easier for you to categorize your expenses.
Perfect. That's great. I love that.
So this is all really good, really amazing like advice that you're offering. And I guess this question is pretty, I mean, you've pretty much answered everything. So this one is, do you have any other advice specifically for the beauty and wellness industry?
Yeah, I do have a few advice. Number one, quit taking payments on all third party softwares. I've noticed this in the beauty industry, like you will take money anywhere that you can, right?
Cash app, Venmo, Apple Pay, like all the things. And it makes it harder to track your income. I'm also, because like say your cash app is linked to your personal account, you're probably just depositing that into your personal account and not really transferring that to your business.
So again, making sure that you're not commingling. I recommend getting a POS system like Square. I know payment processing fees are horrible and upsetting to look at, but that is actually an expense to reduce your tax liability.
Another tip or advice I would recommend would be outsource to a bookkeeper. I know a lot of solopreneurs are just starting fresh out of beauty school, right? And as your clientele grows and your business becomes more successful, the benefits of outsourcing your bookkeeping is going to far outweigh the cost.
You'll have time freedom, hopefully financial freedom, and you get to do what you wanted to do when you started your business, because who wants to do bookkeeping? I do, but yeah, who wants to do bookkeeping? And last tip I would recommend would be track your inventory.
Do it every month, track your stock levels, make sure that you figure out what products are slow moving, and see if you can phase that out, add in a new product, maybe get feedback from other estheticians out there, other beauty solo bosses. What I've noticed with starting my business is, it's all about collaboration, not competition. Like just because there's another bookkeeper in my area, that doesn't mean that we're competing.
Our clientele are different. So like you might have different processes in place than the other esthetician, right? So just finding a good network to collaborate with is also a good tip.
I love that. I do want to go back to the inventory because I think a lot of solo spa bosses would want to kind of elaborate on that. And I know that's a question that's asked a lot is, how do I keep track of my inventory?
Like, what's the best way to do that so I can pass that information on or just if they're doing it themselves? Like, what would you recommend?
Yeah, so I personally do not handle in any inventory as a bookkeeper, and that's just my preference. But when I do have clients that have inventory, I just tell them square. You can also add inventory into square, and that helps with like your sales, tracking your sales and stuff.
So I recommend getting a POS system for tracking inventory, making sure that everything is added on there. And if you can't do that, then just going through every month, like the first of the month, making sure that you're counting everything. And obviously, pay your sales tax.
Stay compliant and pay your sales tax.
Absolutely. Great advice. Thank you so much, Sophia.
This has been amazing. Like so much useful, helpful information. And I really think that my listeners are going to just take so much away from this.
So thank you so much for having me.
Yeah. So you had mentioned earlier, maybe you had some sort of offer for listeners.
Is that true? I did. So I would love to provide your listeners a discount.
It would be 15 percent off any of my services. So this includes a QuickBooks account set up fee or not fee, QuickBooks account set up cleanups to prepare for 2024 tax season or first three months of your monthly bookkeeping with me. We are heading into tax season, so I highly recommend taking advantage of that cleanup fee or cleanup discount.
Having a clean and accurate set of books will make your life so much easier during tax season and being proactive now and starting that process now is just going to relieve your stress. If they could just mention Spa Boss whenever they have a discovery call with me, then I will apply that discount.
That's so great. That's such a generous offer. Thank you so much.
Of course.
So where can listeners find you?
They can find me mainly on Instagram. My Instagram handle is viasophia.co. I also have a website, viasophia.co.
I'm not on Facebook that often, but yeah, mainly on Instagram.
Perfect. Love it. Thank you so much, Sophia.
It's been such a pleasure speaking with you. I highly recommend that if anybody is looking for a bookkeeper to go do a virtual consultation with Sophia, you're not going to regret it. Bookkeeping is one of the things that should definitely be passed off if you can't afford it.
I highly recommend it. So go set up that consultation with Sophia and make sure that you are following her on Instagram. That's it for today's episode.
Thank you so much for joining us. I hope that you found as much value in this episode as I did. Make sure that you are following Sophia on Instagram.
Until next time, stay inspired, stay fabulous and happy business building.
More ways to listen:
Let’s stay connected!
Join my email list, follow along on Instagram, & keep the conversation going inside my free Facebook Community
