Erin Armstrong is empowering small business owners by arming them with the knowledge and skills necessary to be financially accountable. After running her own small businesses and many years of offering full-service accounting, Erin is now an Enrolled Agent and a Small Business Tax & Money Coach for Entrepreneurs. Let’s meet her….
Tell us what was the most intimidating obstacle you encountered when running your own small businesses before transitioning into what you do now?
Figuring everything out as it related to business taxes and accounting! In 3 years I cycled through 3 different accountants, only to receive conflicting responses to my questions. Those interactions left me feeling confused, defeated and less-than. So I started consuming all the small business tax and accounting information I could find. Back then, most of the financial books, blogs and programs that existed were created for people working in the accounting profession (not small business owners)—so the learning curve was steep.
Why weren’t those businesses your passion and how long did it take you to figure that out?
Through the process of trying to figure out all the accounting and tax information for my small businesses, I started earning a lot of financial certifications simply with the intent of getting clarity for myself. I found that clarity and with it came strong feelings of peace of mind, confidence and empowerment. I started sharing what I knew that with other small business owners so it was an organic, unexpected yet very fulfilling transition.
Do you offer accounting as a service in any capacity now and if not why do you feel entrepreneurs benefit more from the knowledge and potential to do for themselves (eliminating the need to spread those small business budgets) versus someone with the skill set whom everyone wants to handle their finances.
My business helps entrepreneurs get clear on tax & accounting essentials, save money on taxes, and develop their unique financial game-plan so that they feel confident growing their business and in alignment with the powerful creative they are. Practically speaking, this means I’m educating and coaching entrepreneurs so that they’re able to make informed and powerful decisions. I have a few services like a payroll package that combine some accounting work along with training, but, by far, I am focused on education!
What I learned from my earlier 3 accountant experience is that no knew my small businesses like I did—that’s true for all my clients too. What your business actually does, what decisions you’re facing, and what your personal end-goal is—all these will affect your accounting and tax strategy much more than you may expect. When you bring reports to an accountant for tax-filing they can’t change what’s already been done so they’re limited on how they can help. Similarly, if you ask your once-a-year-accountant if it’d be smarter to incorporate or how you can deduct auto expenses, you’ll likely get some advice that is not the best for you because there’s more than one right answer and they’re giving you generic information not taking in all the specifics of you and your business.
I think it’s really important that you take the financial lead of your business—just like you lead in every other aspect of your business. That doesn’t mean you have to file the taxes or do the bookkeeping yourself (though you can). It means you have a certain level of tax literacy and a certain understanding of accounting principles, which allows you to make great financial decisions and work from a place of financial power.
For 5 years I owned and operated a full-service accounting firm in Los Angeles. In that time, I quickly realized that even though I conscientiously gathered important information from clients, I was often kept in the dark on decisions that had major financial repercussions for them. For instance, a client’s car dies so they buy a new car. They don’t think twice about it. But depending on how they operate their business, the legal structure, when they drive, etc., the way they purchased that new car could affect their business’ tax bill by at least five thousand for the following five years. That’s one of the reasons I’m so interested in bringing this information to entrepreneurs. Because entrepreneurs who take the time to develop financial ownership not only make better decisions, they feel at peace, and they save thousands of dollars a year.
By the time a client reaches out to you what is one mistake you see repeatedly being made as it pertains to their business accounting? What usually has them overwhelmed?
Most people reach out to me feeling overwhelmed by the all their business financial stuff. The reasons as to why they feel this way differ—maybe they’re just tired of having a financial mess, maybe they’ve gotten in trouble during an audit, maybe they don’t know where to start, maybe they want clarity on why so little money was left after taxes despite making quite a lot, or maybe they’re just ready to step into a healthier, confident, and more powerful relationship with money. Whatever the reason that’s pushing the feeling of overwhelm, most all have been working from a place of reactiveness instead of proactiveness. Being in a proactive place (one where you have needed information and a plan) makes all the difference in how you feel about your finances, and in what you save come tax-time!
What is one financial “money move” you recommend every potential owner do BEFORE starting a business?
My number one recommendation is to open a separate bank account for business income and expenses BEFORE starting your business. The account can be opened under the business’ name. But, if you’re not that official yet, you could open a separate checking account wherever you bank and keep that for business only. Separation of business and personal money is crucial for clarity (it’s easy to see what’s come in and what’s going out that pertains to business). It also relieves many tax liability issues. Anecdotally, it seems to help people energetically start-off with a more positive and growth-oriented mindset.
What ways have you already instilled a positive money mindset in your daughter?
Since the beginning, I’ve been careful to never express the idea that “money is dirty.” I let her play with it and hold it (even though I may give her an antibacterial wipe when she’s done lol). When we’re at the market, I let her hand money and credit cards to the cashier. We also talk about giving to people who don’t have a lot. She’s still in preschool so I’m limited by age-appropriateness, but I think the number one thing I’ll be conscientious about as she grows older is developing an open dialogue about money and finances. I grew up in a household that had a lot of financial secrets, and the feelings of incongruence of what I could see going on in our lives versus what my parents said was extremely disconcerting as a child. I think age-appropriate honesty is best because while it may cause disappointment, it avoids creating potentially life-long feelings of shame, blame, guilt and insecurity in relation to money.
When you’re not crunching numbers what are your hobbies?
I really enjoy being outside. I love flowers and gardening. I like to play the djembe, and I love to spend time with my husband and daughter.
Thinking back to a client success story, what are you most proud of?
The thing that makes me proudest is when a client tells me they breathe easier and are feeling confident about their business finances and financial future. Usually, after a few months of implementing their newly learned strategies and practices, these same clients circle back to tell me how much their business has grown. There’s something about financial fear and neglect that keeps people playing small. When the financial fears and confusion dissipates, I’ve seen over and over where it energetically frees entrepreneurs to play bigger and bolder than they ever have before.
Interested in learning more about Erin and her services? Please visit erinarmstrong.com.
