How to Not Mix Business and Personal Expenses and How to Not Work 20 Hours Per Day | Ask Clay Anything

Show Notes

Business coach Clay answers questions from two listeners about how to avoid mixing personal and business funds, how to determine what name/trademark you can use for your business, how to not work 20 hours per week and how to keep your payroll costs down.

FUN FACT:  “Statistics show that somewhere between 36%-53% of small businesses are involved in at least one litigation in any given year and 90% of all businesses are engaged in litigation at any given time.” – 

Helpful Resources:

Business Coach: Julea`

Homeopathic Treatment

Details: What is best practice when to recover when you’ve mixed personal and business funds. 

Second Question: When checking on a trademark for a podcast, for example, “The Thrivetime Show”, must this go through a lawyer. Or is there another way such as a consulting firm like The Thrivetime Show or a do-it-yourself method.

Business Coach: Amelia 

Industry: Home Decor 

Details: She is pulling all-nighters and working at least 20 hours per day to keep her payroll cost down. She has started to fall asleep at stop lights and make accounting mistakes. She is wondering how much she can afford to spend on a payroll that will allow her more time to work as an owner vs. an employee while also still making a profit. 

Business Coach | Ask Clay & Z Anything

Audio Transcription

How To Not Mix Business And Personal Expenses And How To Not Work 20 Hours Per Day Ask Clay Anything Compressor (1)

You have questions. America’s number one business coach has answers. It’s your brought up from Minnesota. Here’s another edition of ask clay, anything on the thrive time business coach radio show


Good morning thrive nation. And welcome to another edition of the thrive time show on your radio and podcast download. It is the morning of a conference

and this edition of the thrive time show answer a question from a listener who asks. It’s the following

question. Uh, what is the best practice when to recover when you’ve mixed personal and business funds? And the second question is when checking on a trademark for a podcast, for example, the thrive time show, most of you go through a lawyer or is there another method such as a consultant firm like the thrive time show for a do it yourself method? Right. Let’s start with the first question and I’m recording the show at four 27 on the morning of our October conference. So therefore if you hear some loud background noise that’s a sprinkler systems or maybe randos walking around, it is because I’m behind the building here outside recording today’s show. Because inside everybody at four 27 in the morning is finishing setting up for the conference. We’ve actually had a person arrive in our parking lot already and it is very conferencey in there.

It’s the energy and the excitement of the conference, uh, can be felt in there. So I’m outside here to answer your question. So what you want to do is you want to get one credit card just for the business. Just get one credit card just for the business, get like American express or discover a master visa something and make sure it’s just for the business use. Then get another card. It’s just for the personal use. That’s what you’d want to do. And then every time that you buy something, you put it on the business card. It’s for business. And if it’s for personally, you put it on the personal card and that’s how you want to keep them separate. However, in a startup, a lot of times I understand people are all in, they put in their personal funds to help them, uh, make up for their lack of business funds cause it’s really hard for the business to pay for something if the business has no money.

So, um, and again, you’d want to work with your accountant on this, but the big idea would be if you’re out of money in the business account, you’d want to write money from your personal account into the business account and then the business would want to pay for things and that’s how you do it. So you want to write a personal check from your account into the business account and then you would want to buy things out of the business account. Now if you have mixed funds at this point, you’re going to need to sit down with a CPA to help you sort it out. And over the years, um, you know, through the conference, through the radio show, through life, I’ve met a lot of different accountants and I can tell, um, hood CPAs is a show sponsor. Um, also CCK is the legal is the accounting for my, I’ve used personally for years.

And I found that unless you have a professional team to sit down and advise you as to the proper way to do this, you may get yourself into some trouble. And when I say may, you definitely will get yourself in some trouble at some point if you did not hire a professional accountant, but the concept is you would write a check out of your personal account, into your business account and then your business account would buy things. Um, you do not want to commingle funds due to legal exposure essentially when you get sued. Um, and you will at some point if you own a business and you do more than a million dollars a year of gross revenue, and if you look up the statistics out there today, um, it’s not encouraging, but the average small business owner will be sued or involved in some sort of litigation, um, at least once every three to four years.

And that’s just the statistics. Uh, that’s just what you’re gonna find. If you look it up today, there’s articles out there, um, by four and you can find Forbes, there’s articles you can find in fast company and and they all say roughly the same thing is that if you are in business you are going, you’re going to get involved in some kind of litigation at some point because we’re in a very Sue happy culture where if I’m not, if I’m not happy with my life that I’m not happy with my job or I’m not making enough money or I’m not, uh, you know, things aren’t going well then a lot of people in our culture today love to Sue somebody and they like to Sue businesses businesses because they perceived that a business owner may have more money than the average American and therefore they will file a lawsuit against you as a business.

And if you go to court and it has shown that you are commingling funds as in you are using your business for personal things and vice versa, you may lose the benefit of having the limited liability corporation and then you can be personally liable for things that happen personally liable for things that happen as opposed to being liable just as a business. Um, so again, if you’ve already commingled, you’re ready to sit down with an accountant with a CPA of some kind, a certified public accountant. I personally have worked with um, hood CPAs and, and CCK. CCK is who I use for all my accounting needs. I’ve used them for a long time, well before meeting Paul Hood and his team at hood CPAs. However, many of our clients have used hood CPAs and I would just say you need to have a accountant that you can trust.

Also, here’s a wonderful CPA who happens to be a member of the thrive nation as well by the name of Amy Baltimore. And if you do a search for Amy Baltimore CPAs, I have great things to say about her as well. Now, the next question is when you’re checking on a trademark for a podcast, for example, the thrive time show, um, most of you go through a lawyer. Yes, I recommend winter’s winters King, that comments who I’ve used for years, that’s my personal attorney. That law firm has represented everybody from uh, Joel Osteen’s books to, to TD Jakes, to pastor Craig Rochelle to Joyce Meyer. And that’s who I’ve used for a long, long time. And I would definitely use a lawyer to check on the name before you start using it. It is so important that you do that because at some point somebody is going to say that you don’t have the permission or ability to use that name.

So again, I would encourage you to go through an attorney such as winter’s to get permission to use said name. And that process usually costs around $1,500. So the way you do it is you make a list of all the names that you wouldn’t mind going by. Make a list of all the names that you would like to go by. You know, make a list of all the names that you think you’d like to name your business, your product, your show, whatever. Make a list of all of the names that you think you might want to go buy. All of them. Just make a big old list. Then take that list and meet with somebody like winters and King, a quality attorney. You can trust them and say, tell me which of these names I can use and don’t get emotionally attached to. It was just one name.

Just make a list of the names that you think you’d be okay with going with and then they’ll tell you which name you can use and then whatever name they say you can use. Then use that name. That’s how I’d want to do. I would not, that’s how you want to do it. I would not go about this on your own without using some type of professional legal advice. I guess seeking legal advice for this. You just want to make sure that an attorney has that all the possible searches to make sure that this name is not being used by somebody else who’s already staking claim to the rights of the name and the our next question. Thus it is four 30 in the morning and I am behind the building right now a recording today’s podcast because I want to, I’ll be able to answer your question while not disrupting.

The team has to get all set up there and so we have a listener who wants to know how do you, I figured out how much money you should budget for payroll. I guess she’s pulling all nighters and working at least 20 hours per day to keep her payroll costs down, but it started to fall asleep at stoplights and is making accounting mistakes. She’s wondering how she can afford to see how much she can afford to spend on payroll that will allow her more time to work as an owner versus an employee while also making a profit. Well, the best practice ms Jennifer, is you’d like to have your payroll, but somewhere between 25 and 30% to 25 and 30% of your total operating budget. That’s, that’s the goal. I mean, that’s, that’s the best practice. If you were to buy like an Oxy fresh or an elephant in the room, or we, you know, we, we would sit there and tell you, Hey, you should probably work, uh, work out a pro forma workout, a projection workout, a formula that allows you to only spend 30% of your revenue on labor.

However, that’s not always possible. It depends what kind of business you’re in. Because I know people who spend 90% of their budget on labor because they have a product or service that no one’s buying, and therefore they are not doing very well. And they’re only doing a very small amount of sales. And so they work all the time in exchange for very little profits. And it’s because the amount of time you work doesn’t, um, it doesn’t, it’s not guaranteed to produce a profit. So in particular, uh, years ago we had one gentleman that I met at a conference who was not a client and never became a client, but he’s a good guy and he made wooden things. I’ll just leave it at that. He made wooden things and he claimed, and I have no reason to believe he was being dishonest. He claimed to be working somewhere between 80 and 90 hours a week, every week. And he made an annual profit. He said about $30,000 a year.


and he made wooden things that no buddy wanted except for the few people that occasionally wanted it. And so he just kept making these wooden things. And he did this for years, year after year after year, he’s making these wooden things and he’s making these things because every once in a while, usually once a week or twice a week, someone would come into his little shop and we’d buy these little wood things. And so he had this little business based near the bottom of a mountainous region. And, uh, you know, kind of a touristy place. And people would drive through and they would say, Oh, I wonder what this place is. And they’d pull in and a, he’s located next to one of those places that makes like, you know, homemade fudge and homemade candles and homemade soap, that kind of thing. Uh, not an Amish store, but one kind of like, you know, with a lot of help, there’s a lot of handmade organic goods.

And then people would see his business next door and it’s in this, in this kind of touristy town. And they would think, well, I should go into this store and see what he has. And he made some stuff that, uh, I don’t know, you know, it’d be like a no, a nice wood stump that he found and he somehow polished it and made it look sharp or he’d put some varnish on it or he’d live edge, uh, on a live edge desks, live edge, uh, do live edge woodwork and the live edge. What some of his work was beautiful. But the problem is, is that he was in a touristy town located near the base of this mountain. And I just thought to myself, man, some of this stuff is cool, but if I’m on vacation, the last thing I’m going to buy his desk.

And there’s very few people who live in this town. It’s very touristy. So the only people who actually come to this town or a two touristy people. And so I can’t imagine there’s a whole lot of people coming into the store who are wanting to buy a live edge desk or a live edge, something or a great, a nice carved hand carved decorative picnic bench, that kind of thing. I have to imagine there’s very few people that would want to buy his stuff and then have it shipped home or cause you’re on vacation. And so when you want to figure out is is where are we at? Where are you at with your business? Are we in a place where, um, a lot of people all over this planet want to buy your stuff? And is it a marketing problem or is it a product problem?

Because if it is a marketing problem, if it is something where people sincerely and legitimately say, wow, this is awesome and all we have to do is get it in front of more people. But that’s just a marketing problem. But if it, but if it is a product problem, and I’m not suggesting it is, I’m just asking rhetorically if it is a product problem, then no matter how much time we spend marketing it, people still are not going to want it. And then that creates a problem with payroll because now we are exchanging all of our hours for very little gross revenue. So in that scenario, it’d be very hard to hire anybody to do anything because we’re not selling anything. So I would just ask yourself, do we have a product problem or a marketing problem? Step one, do we have a product problem here or a marketing problem? Start there. Ask yourself this. Have a good hard objective. Look at that.

Number two,

you do hire somebody. Conduct a group interview every week as we talk about on this podcast. Never stop conducting the group interview. Did the group interview every week and just last night, um, and our group interview, I found somebody who said they were only looking to work 20 hours a week and they wanted to know if we had any positions where we were just going to hire for 20 hours a week. I don’t have any positions currently for any of my businesses where I would hire someone to work 20 hours a week. But if you’re in a situation where maybe you can’t afford to pay someone 40 hours a week, but you can’t afford to pay somebody 20 hours a week, maybe finding some part time help is the best solution at this point. If that’s, that’s the new, but we have to do today is you’re going to have to get out of your calendar. So step one, figure out, do we have a marketing problem or do we have a product problem?

Step two, step two,

you’re going to have to get out today a calendar, get out of calendar and block off your schedule. The hours that you’re going to work and the hours that you’re not going to work and you’re going to have to make sure that you are not working to the point of exhaustion. You’re going to have to block out time in your schedule for life. And so you might say, I’m willing to work from 4:00 AM to 4:00 PM but that’s it. Or from 5:00 AM to 5:00 PM that’s it. You gotta block out some time there where you say, I’m done working at this time. You guys are going to have to have some kind of boundaries of this is what I’m going to be done working. I’ve got to block out time here. This is, this is when I’m going to be done working. There’s gotta be some kind of boundary set up in your schedule that has to happen,

okay? The third thing you want to do

when I enter in all of your income for the past 90 all of your income for the past 90 days and put that into a spreadsheet and enter in all your income for the past 90 days into a spreadsheet and all of your expenses for the past 90 days and put it into a spreadsheet if that’s too daunting or not possible, do the last 60 days. So put all those things into this spreadsheet and then some total them and that way a coach or advisor or somebody could look at it with you and figuring out where is your money going and only then can we really start to, um, find, um, where we’re maybe spending too much money and where we’re not being effective. That’s where, that’s how you’re going to look at that. You, you, you can’t do it any other way than doing it very on a very granular, detailed basis.

You would enter in all of your income for the past 60 days into a spreadsheet and all your expenses with that 60 days, he’s going to sit down and look at it. On a very granular level and ask yourself, um, you know, where could we cut back? Where are we not seeing fruit here? But again, ask yourself this big question today. Do we have a marketing problem or a product problem? Because if we have a product problem, um, you could work theoretically thousands of hours and never make money if it is a product problem. So I would encourage all the listeners to ask themselves that question. And then the final tip that I would give you, um, as we’re trying to help you get out of the woods financially, is you always want to stick with it. If you can, 25 to 30% of your budget being spent on labor, you in everyone, spend more than 25 to 30% of your total revenue on labor if possible. Now, I’m not saying that you, uh, can’t ever spend more than 30% of your total gross revenue on labor. I’m just saying that is the best practice and that is as much of your gross revenues you’d want to spend on your labor in a perfect world. But again, enter in all of your income and expenses for the past 60 to 90 days into a spreadsheet. So a coach or advisor could sit down with you and analyze where we could make some tough cuts. And now, without any further ado, three boom.



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