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The second component of managing your service gross margin is what sits inside your cost of goods sold. Your margin is simply the difference between […]

Now that you have gone through the work of calculating an accurate service gross margin, structured your chart of accounts, and included a fully absorbed […]

The coffee station, the breakroom drinks, the team lunch you “DoorDashed” on deadline day. Starting January 1, 2026, none of that is deductible anymore.  This […]

Every year, business owners hand the IRS more money than they need to. Not because the law requires it, but because they have not made […]

How to align hardware revenue and COGS so your quarterly financials tell the real story.    You sold a $40,000 server in Q3. The client signed the agreement; […]

Your Accounting Records Are Probably Wrong. Here’s How to Know for Sure.  There is a conversation that happens every April in accountants’ offices across the […]

You’re optimizing profitability like a pro and paying taxes like you’re blindfolded.  Your margins look great.  You’re tracking net income, hitting targets, and growing fast. […]

Deferred revenue for MSPs isn’t just an accounting concept, it’s one of the most important financial practices for managed service providers who want accurate reporting, […]

Many MSP owners find themselves in a hybrid mindset managing their accounting records on the accrual basis while filing on the cash basis. It’s a […]

  The Superhero Mindset: Strengths and Limits  If you’re running an MSP, chances are you’ve played the superhero more than a few times. You jump […]

Running an MSP means managing the revenue and expenses of multiple service lines, from projects to managed or application services to software, hardware, and even commissions. […]

Many business owners struggle to understand the difference between a budgets vs. cash flow forecasts, but knowing how each works is essential to financial success. […]

One of the most common financial mistakes business owners of S-corporations make is paying themselves too much in salary. While it may seem like a […]

Congratulations on Taking the First Step Starting a budget marks a significant milestone in your business journey. By embracing budgeting for MSPs, you are shifting […]

How to Match Inventory in Your PSA with Your Accounting File Spending hours reconciling inventory in your accounting file to your professional service automation (PSA) […]

Should I Use Automated Sales Tax in QuickBooks Online or ConnectWise? Setting up your sales tax right the first time will save you hours of […]

Feel the Flow: The Circular Process of Invoicing, Payments, and Credit Memos with ConnectWise, Wise-Sync and QuickBooks Online So, you’ve taken the plunge into the […]

Best in class. A benchmarking success story for DLC Technology Solutions.   We talked to owners Darren Crane and Rob Walsh from DLC Technology about […]

Read time: 9 mins   What are successful MSPs doing differently? See how we helped IT company ITSCO find out and stay competitive. We talked […]

How Do I Calculate My Employees’ Total Cost? As you’re growing your company, it becomes important to understand the cost of an employee. Figuring out […]

7 Reasons MSPs Choose QuickBooks Online Managed Service Providers know the impact of the right tech stack.  In the dynamic realm of business operations, where […]

When is the Best Time to Start a New QuickBooks Online File?  Knowing when to start a new QBO file is critical to ensuring your […]

4 Reasons Entrepreneurs Should Consider a Retirement Plan Being an entrepreneur is a lot like being a superhero - you work hard, take risks, and [...]

5 Reasons Separating Your Business Money and Personal Money is a Must Stop me if your accountant has said this before… oh, really, they have?  […]

Why Does Red Earth CPA Service the MSP Industry? I am often asked why Red Earth CPA focuses on providing cloud-based accounting to the Managed [...]

Should I Convert My Existing QuickBooks File to QuickBooks Online or Start a New Accounting File?  Are you a Managed Service Provider (MSP) who is [...]

11 Reasons You May Love QuickBooks Online Are you looking to make the jump to QuickBooks Online but you keep hearing the ‘haters’ talk about […]

Why Are You Lending Your Client Money? Businesses that fail to monitor their key performance indicator (KPI) of Days Sales Outstanding (DSO) can face catastrophic […]

Nine Takeaways from IT Nation 2022 Despite a hurricane, IT Nation 2022 pressed on and was a success in Orlando. I was fortunate to be […]

Avoid the Hassle of Estimated Tax Payments by Paying Them Through Gusto Payroll Another quarter has come and gone and you likely forgot to send […]

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How Do I Best Rent My Property to My Business? Your business is growing and you need more space.  The commercial lease prices are insane […]

How Do I Best Use Classes in QBO? The chart of accounts (CoA) for MSPs can get unruly quickly.  Consider a leader in the industry […]

Twelve Reasons You May Hate QuickBooks Online You’re looking to make the jump to cloud accounting and are considering QuickBooks Online (QBO).  You just went […]

What Do I Do With My Old QuickBooks File After Converting to QBO? Congratulations, you’ve completed the software conversion; you’ve moved from QuickBooks Desktop (QBD) […]

Should I Hire Contractors Instead of Employees? Your business is growing and your team needs to do the same, but hiring new employees is a […]

How Do I Hire an Employee in Another State?  As the pandemic goes into its third year, we’re experiencing a work-from-home revolution. Remote positions have […]

How Do I Reimburse My Employees? Let’s talk about the giant black hole of productivity in your company that causes pain for everyone involved: employee […]

Track Service Line Profitability by Syncing Your Payroll in Gusto The payroll pain needs to stop.  So many MSPs are spending an absurd amount of […]

How Detailed Does My Chart of Accounts Need to Be? The chart of accounts (CoA) is one of those phrases that makes eyes glaze over.  […]

How Do I Convert My MSP’s QuickBooks Desktop File to QuickBooks Online? 2020 was just the push your organization needed to take the jump.   Maybe […]

30 Reasons to Invest in Your Accounting Let’s start with some common ground in this conversation; you don’t need to do everything people say you […]

How Do I Keep My Employees? We are experiencing a startling job market.  2020 was the most bizarre year in anyone’s memory and many businesses […]

The newest stimulus package was signed December 27th and includes the next round of Paycheck Protection Program (PPP 2.0). Similar to the PPP 1.0, this […]

What Is the Best Way to Sync ConnectWise to QuickBooks Online? You want to upgrade to cloud accounting but your PSA syncs to your QuickBooks […]

Why 2020 Might Be Good For Your Business On August 15, 2007, I was in a Toyota Hilux navigating a dried red clay “road” at […]

How to Create A Cash Flow Forecast – Part 2 Of all the metrics, ratios and reports you need to manage your business, watching cash […]

When Will My Bank Forgive My PPP Loan? You did what you thought was best in April and took out a Paycheck Protection Program (PPP) […]

The PPP loan program was the government response to pending massive unemployment. The Paycheck Protection Program (PPP) was signed into law March 27th, 2020, by […]

How to Create A Cash Flow Forecast – Part 1 The financial statements alone do not tell you what you need to know to run […]

Now That I Have a PPP Loan, What Should I Do? The mad dash for bank financing following the CARES Act passage of the Paycheck […]

Swallow the Bitter Pill – Ask for Help You know the news and have seen the headlines.  Not since 9/11 have I seen our nation […]

The Government Will Pay You to Keep Your Employees Employed As expected, the Senate passed an economic stimulus bill Wednesday evening which includes a provision […]

Why Does My Cash Not Match My Income Statement? In the prior post on forecasting cash flow, we addressed the inherent challenges with budgeting, namely […]

Owning a business is the quintessential American Dream.  Pulling up your bootstraps and making the dream a reality is one of the highest cultural goals […]

New year, new you. The changing of the calendar from 2019 to 2020 brings amazing changes, right? The gyms are full of people who have […]

That’s right, we’re not for everyone.  Unlike most accounting practices, Red Earth is for a specific type of client.   Accounting is a profession that every […]

If you are serious about investing your efforts into activities that deliver tremendous value to your company, you need to learn about KPIs.   One of […]

You survived another Thanksgiving meal.  With any luck you avoided the awkward sharing that is typical of many Thanksgiving dinners.  You know the one.  It’s […]

  Red Earth CPA exists to create more freedom for business owners so that they can focus on the high-value work that leads to growth.  […]

Is it possible to be a CPA and start a small practice without being the quintessential “tax guy”? (I’m not sure the term ‘tax gal’ […]

As the WeWork saga continues, there are hundreds of commentators offering analysis in the wake of the massive IPO debacle.  Since my last blog post, […]

How many times have you said or heard that phrase? Dumb question, because in 2019 this refrain is so commonplace. Productivity despair is a reality […]

What Do I Do With My Current Staff If I Outsource My Accounting? Why does the thought of outsourcing your accounting cause you heartburn?  Likely […]

Every once in a while, a great business story captures the attention of millions.  A game-changing iPhone made Apple the talk of the nation. Netflix […]

The annual roundup of financial documents is a ritual of hunting and gathering.  Some people just love to gather documents and carefully assemble them into […]

If you’re relying on your bank statement to know if your company is profitable you will be sorely disappointed. Profitability has a strange relationship with […]

The major change in small business accounting is the movement to the cloud.  The promises the cloud offers of convenience and stability have piqued your […]

  Updating your accounting processes and converting to cloud accounting can make a dramatic impact on your business.  It is not uncommon to achieve a […]

The “cloud” is bringing about massive upheaval in small business accounting. You have heard the rumbling and upheaval, the carnage and disruption.  You have seen […]

The very word, depreciation, causes a certain glaze to fall on the faces of business owners.  The mention of the word can invoke beaches and […]

You are probably already making $1,000 per hour and just don’t realize it.   This astounding claim is the most interesting point of Perry Marshall’s book […]

80/20 Sales and Marketing by Perry Marshall contains enough perspective-altering analysis to easily justify spending a year to digest it all.  Perry Marshall, an engineer […]

The Red Earth logo reflects aspects of the four years my wife and I lived in Peru. Before Red Earth, I dreamed of running an […]

Red Earth Beginnings While accounting may sound as dry as the white paint in your living room wall, what people can achieve through the goals […]

Managing a practice is hard work.  Between the patients, records, billing, payroll, appointments and communication, employees need to be managed.  Because of their perceived costs, […]

Your business is growing quickly and you are approaching the next step on the growth stairway. This step includes the risk of taking on more debt […]

I’ve got brand envy. Is there such a thing? If you’ve never been in an Eddie Bauer store they use their slogan, “Live Your Adventure” […]

If you’re going to stay in business you’re going to hear many quotes about cash.  Two of the most popular quotes are: “Revenue is vanity, […]

Pricing in professional services leaves no shortage to the imagination. Like the Wizard of Oz making decisions behind the curtain, it often seems each accounting […]

The financial media are in a tizzy. The latest predictors are showing the US economy may be headed for a recession.  After ten long years of economic expansion it looks like the party is coming to an end. As a business owner, this impacts you in a very real way.  As a leader whose job it is to care for those who work for you, the thought of a reduction in work and the potential of layoffs is miserable. Considering you know the names of the family members rely […]

Your LLC is up and running. You’ve figured out the benefits to being taxed as an S-corporation and have placed yourself on the payroll. Not to be unreasonable, you took steps to make sure your salary would be acceptable to the IRS should they choose to review it. Now that your company is profitable, how do you get that profit into your pocket without creating tax headaches?Here are four facts you need to know about distributions from an S-corporation. 1. &nb […]

The shift in recent years in software has been from a product to a service; one-time license to a monthly subscription.  Software companies learned that if you sell software as a product to a client, they will use it until they absolutely cannot use it anymore thereby limiting the revenue of that license. With the advent of the “cloud”, the subscription model of accounting has given software companies the ability to host, allow and limit access to the software and da […]

Learning about taxes your business needs to pay is exhausting.  From the employer’s portion of FICA, federal unemployment, state unemployment, sales tax as well as the other requirements parallel to taxes like annual filing fees, licenses and workman’s compensation, owners’ eyes glaze over as they weigh the complexities and time requirements of tax compliance.​When you look at these taxes in the aggregate, they act like opportunistic mosquitos slowly pricking […]

It’s a beautiful day.  The birds are chirping, the sun is shining and you are meeting a client at a restaurant. Not just any restaurant, mind you, but a nice one. This one has high ratings, exceptional service and four “$”s next to it on Yelp.Yes, its good to be in business so you can live like a king.  Getting the business to pay for your meal is genius. But then you vaguely remember the talking heads on cable television discussing a tax law cha […]

No one ever likes it whether on the playground or in the mafia movie. Nothing good happens to these people. In the movies, as soon as you see it, you know the character is doomed. They get a reputation as someone who can’t be trusted at best and “swim with the fishes” at worst.Rat. Nark. Snitch. Tattletale.​Regardless of the context the terms are never positive.  These shifty eyed people are always watching their backs and covering the […]

Congratulations! Your company is established and thriving.  ​After the long years of studying, working and building your business, in addition to your salary, your business is now providing distributions and income as a fruit of your investment.  Because you have set a reasonable compensation plan as well, your business is creating ROI on your labor, meaning the owner (you) is profiting on the employees’ labor.Chances are good, now you will need to pay quarterly esti […]

It has taken you years to progress through the rewards channel.  When you remember the flights before preferred seating, being the last passenger to be called onto the packed airplane you shutter in horror of returning to that level of incivility.  The overhead storage was packed leaving no option but to gate check your bag or worse, have it thrown in with all the other luggage to be lost upon arriving at your final destination.  (And you know what its like to go without a […]

Every profession has them.  Names, words, jargon or acronyms that only people in the profession use.  The words are designed for insiders to communicate with insiders.  The mere mention of the words keeps outsiders at bay.Tax accounting has more than a few.  Amortization, bonus deprecation, MACRS, any phrase containing the word “section” and of course, the word “basis”. ​The insider jargon makes accounting all but impossible to unders […]

Measuring value is an extremely challenging topic for anyone to undertake. The most popular value is to measure by hour. Whether professional services or employees, each comes with a cost for every hour of time. The algebra for this method is straight forward and, (dare I say) fun. The 2018 federal minimum wage worker ($7.25 per hour) can work for an entire eight-hour day and earn $58. At approximately $4 each, that will purchase 14 ½ Big Mac sandwiches.&nb […]

Calories. Blood sugar level.Cholesterol.Money. Weight.If we care about it, we track it.So when someone questions the profitability of a segment of your business, that answer should be readily available. For example, is that office making you money?Simple question. ​Is the investment you have allocated undertaken in time, energy and capital producing a return adequate to compensate for the risk taken? ​ It should be a simple question of pulling a f […]

With the tax cuts passed in December of 2017 and most of them taking place in tax year 2018, many professional practices are asking if they received a cut. While the cuts were broad and impacted most industries, there are some who will see no business tax cut. The Tax Cuts and Jobs Act (TCJA) gave the individual taxpayer a reduction in rates, reduced the number of brackets, almost doubled the standard deduction and made all sorts of problems for individuals in high tax states, b […]

The question of owner’s compensation is a hot issue for small businesses paying taxes as either an S-corporation or a C-corporation.  When the business files taxes as a corporation, the owner must also be paid as an employee.  Not only is the owner the investor, s/he is also an employee.  For the purposes of this post, let’s assume the business is filing as an S-corporation.Creating a compensation plan for your employees is hard enough, what should you consider when d […]

​WARNING: This is an extremely dry topic. Reading this post may result in drowsiness, restlessness and/or irritable behavior. Do not consume alcohol in excess and never operate motor vehicles or heavy machinery while reading this post.  McCann Advisors makes no warranties of any kind, either express or implied, including but not limited to warranties of merchantability, vague interest by the reader, fitness for a particular purpose, of title, or of noninfringemen […]

The hours of paperwork and bills in running Family Optometry business were taking their toll on Dr. Eric Dale. He loved taking care of his patients and leading his team, and he led the organization of 18 staff and three offices, including three other optometrists working with him. But he was exhausted, and he didn’t have any time to spend with his family. When an optometrist from a neighboring community approached him about Family Optometry purchasing his practice, Dr. […]

​If you could dedicate yourself to one cause what would it be?  Where would you go and who would you serve if you had the opportunity?  When we were in our early twenties my wife and I talked about this often.  Through a series of events over multiple years, we moved in September 2006 to Peru South America to spend the next four years there with a Christian development organization. We lived in the Amazon city of Pucallpa, Peru for most of that time.  Throug […]

Only one? What could be so important that every single business needs to do this one…thing?Let’s narrow this down a bit.This includes not only all for-profit enterprises but also all non-profits too (but not governments, they’re exempt). Sole-proprietors, Fortune 500 companies, mom and pop businesses and everyone in between.Well meaning, great non-profits that provide wonderful services to people all over the world as well as the ones in your community. Religio […]

Is this the most wonderful time of the year? October is here bringing with it cool weather, changing leaves and the baseball playoffs. To make it even better, the Cubs are in the postseason again! If their streak continues, I’ll have another sleep deprived month cheering them on to a repeat World Series. All this baseball has me thinking about great baseball movies. There is no shortage of quality movies about this American pastime but certainly one of my fa […]

The cooler weather, the start of football, it can only mean one thing: budget season! Yes, it is very near the time of year when the accountants prepare their crystal balls about the expected sales and expenses for the next calendar year. As you have heard a thousand times, “Cash is King”. The absence of cash is blamed for the premature death of many great business ideas. However, many budgets simply compare expected revenue for the year by a line item near […]

If you’re an investor, a small business owner or a finance executive you’ve probably heard the phrase, “Cash is Trash.”  Since the Federal Reserve went on its stimulus rampage after the beginning of the great recession almost eight years ago leading to QE1, QE2 and other variations of monetary stimulus it has encouraged the interest rates to lower to zero and negative in some cases. The savers of the world are bemoaning this policy as their cash […]