 First question is, basically, this guy's asking, hey, Alan, I say we do pretty well in e-com, we do around eight figures annually. When should I hire a CFO or a fractional CFO? I think if you're doing eight figures, I would say immediately. Yeah, eight figures is a, I would say, I'll say even when you're doing like seven figures, it'll be a great time for you to hire a CFO, right? Because you have enough, I would say, a metrics that you should be looking at. You have enough revenue, you have enough tax savings, and there's just a lot of financial and operational issues you should be looking at, business strategies you should be planning for, and you have, you're going to have, you're having tons of tax issues at this point, you know? If you're, especially if you're selling the U.S., you're going to have, you probably trigger sales tax everywhere. If you're selling in Europe, you probably have a lot of bad tax to worry about. So yeah, I would say immediately, look into it, if you're having eight figures and having to, having to hire a, you know, a fractional or full-time CFO. Okay. By the way, Ellen, I think your clubhouse audio is mute. Yeah, I muted my mic. Can we unmute it? Yeah, I think so. Yeah, okay. Okay. So, I'll mute it now. Sure. Okay. Next question, is there an automated way to do bank reconciliation for my Shopify e-commerce business? And is there any software that does this automatically as well? I don't know anyone that's like any, a software is like super intuitive as far as doing it automatically. I think they all involve some forms of, I would say, you know, human interaction, you know, some, some human interaction to get the reconciliation to a perfect form. If there are software that's going to help you get there, I would say. I know there's one, there's a startup right now called Flowcast, right? And that's a California base that's supposed to make it a lot easier to do bank reconciliation because they use a hashtag system of making sure that your reconciliation always matches GL using a hashtag. So it does, it does makes it a lot simplifier, but I mean, it's still, it's still for accountants, you know, it just makes accountants jobs easier. It's not for like the everyday business owner to, for their purpose, I would say. So, yeah, I mean, if you really just, if you're just really like looking for your accounting team for something to make their job easier, Flowcast might be something that you can look into. Okay, so technically bank recon is still done very manually, right? Yeah, very manually. I mean, I don't think there's any software that like automate automate the process. It's still involved some human interaction. Okay, okay. Next question is, Hi, Alan, how do I use depreciation and accelerated deductions to basically reduce my taxes for the year? Yeah, yeah, I mean, just because you're able to ask this question just shows me that, you know, you already done some, I'll say research into the world of accounting and tax and know about one, one of the, like, I would say secrets, right? Of why tax deduction or you don't want real estate is so lucrative because of this thing called depreciation, right? Depreciation is kind of really misunderstood, but basically is a tax deduction that you take underwear and tear on an asset due to the passenger time. They allow you to do this, right? So it represents how much of the assets value that you're using up because of the pastures of time. So usually it's done by straight line. So to be an example, if you have a piece of machinery that's worth $100,000 and you, and it's deemed to have a 10 year useful life. So usually that means you can take $10,000, a depreciation tax deduction on your tax return every year, right? Which is okay, right? $10,000 better than nothing, but that means $90,000 of that you can't take until the other nine years. But due to recent changes with the IRS and Congress, they have made it extremely beneficial for small business owners to invest in their business and invest in capital assets. What this means is there are certain tax laws right now that let you accelerate the depreciation you're taking. So instead of $10,000, you can possibly take all $100,000 or $80,000 with some amount of that where you get a benefit immediately, immediate tax right off 100% of the value of the asset that you're buying. So if the $100,000 asset, you can take it year one, which is crazily powerful if you think about it, right? To be able to take a whole 100% tax deduction right away for such a big asset. So something you should really take advantage of and look into. Especially if your business owner is investing in the US and really grown big enough where you have a machinery equipment. Yeah. So I would say people at Econ, for example, I would say if you're really doing custom stuff, right, there'll be manufacturing, but you probably won't be having that sort of deduction come through, right? So I'm guessing there'll be more inventory. That's exactly right. If you're just dropshipping, this probably won't apply to you, but if you're starting to be a branded business, we have a custom manufactured good, you should really evaluate how much tax saving you're getting, what really none, right? If you're doing it from China versus if you did this manufactured good in the US, right? If you neither do neither the assembly part of the goods or the actual creation of it in the US, there's a lot of benefits now that can actually really help business owners with the tax saving portion of it. Yeah. Next question is what's the difference between a bookkeeper and accountant, a CPA and a CFO? Yeah. So these are all, I would say, terms that are commonly thrown around in the world of accounting, right? So let me break it down for you, right? A bookkeeper, I would say is, I don't want to use the word lowest, but it is, I guess, the most untrained version of an accountant because they're really just, anyone can become a bookkeeper, right? You don't have to be licensed. You can probably just do like six weeks of training on Quickbook Online. They offer certifications and then you become a bookkeeper. So same with kind of accountants, right? Accountants kind of like attach a lot of people. A lot of them can't claim they're an accountant. Places like H&R Block, Liberty Tax, these like tax preparation places, they hire a lot of what they pay accountants, but really they just go through like a six to eight week training to use their software and they become an accountant that they can do like basic taxes for you, right? So I would say they are good if you're just looking for someone that does like very basic simple versions of your tax and bookkeeping. But if you're really looking for someone that's more, I would say certified as that needed, gone due to the hours and well, really years of certified training, licensing, and work experience behind it, you probably want to look for like a CPA to do your tax and bookkeeping, right? The license to perform a certain special accounting and finance functions, that would say your typical account wouldn't be able to do, right? One of them is of course auditing and reviewing financial statements and being able to file a report with the SEC, the Securities and Exchange Commission. They can also represent clients in front of the IRS, right? If you get an audit in the situation, so, you know, if you're just a bookkeeper and accountant, you won't be able to do that, right? So there's certain rights that only a CPA will be able to do. So I would say the difference is just about the expertise that you're looking into. If you're looking for somebody that's very simple, basic, you don't need a lot of strategy and tax planning behind it, bookkeeper and accountant is fine. But if you look some to be more advanced, obviously you look for someone who's a CPA or even a CFO, but I guess the CFO, a lot of people can claim their CFO also. You really need to know what licensing they have done to it, right? Do they have an MBA? Do they have a CPA, a CFA? Like what do they have, right? Okay. Next question. I think this will interest Strahanian as well. So like, I make a lot of money in the income business, for example, how do I actually pay myself out of my business and my tax on the company level and the tax again on the personal income level? And what is the best way to structure to pay myself to basically minimize my taxes at the same time? Yeah. So this question is very involved because I'm sure it's someone who has heard a lot of accounting terms or just seen a lot of things on forms, right? But really, you got to take it to a simpler form. If you're going to be asking this question, it's about what business structure your entity set up as, right? If you're set up as a C Corp, it seems like it will be that question where am I tax on the company level and then tax again on the personal level? The correct answer is yes. If you're a C Corp, your first tax on the company level, right? Because it's a wholly separate entity than you. And then once you want to take it out because you're a shareholder of the company as neither salary or dividend, then that salary or dividend is also taxed on your personal income tax. So it's double taxation on that level. But if you're set up as an LLC, LLC is just what they call a flow-through entity, which means all the income from the LLC flows directly to your personal income. So there's no double taxation that way. And it's very simple. It is whatever income that makes, minus deductions, minus tax, tax things you're able to take for it. Then that's the profit. That's what you end up at being taxed by the government. And then the last part is what is the best structure to pay myself to minimize tax? That again is really dependent on the business entity that you have formed, right? If you have formed yourself as an LLC, there really isn't, I would say, a brilliant or like a light bulb way of taking money out other than you can take a salary or you can just take a owner's straw, but really it's going to be taxed the same way where a C Corp, I guess they are options because you can either take a salary or you can take a dividend out of the company. And at the current state right now, dividend, because they're considered capital gain, a form of capital asset, you can actually get a reduced tax rate on any kind of capital gain assets right now. So I would say if you're a C Corp, you might be considering doing more dividend right now versus salary as a way of saving money on taxes. Okay, so why wouldn't anybody just take like a very minimal salary and then for the dividends, I just take the maximum on that? Yeah, you can definitely set it up to do that if you want to. It's more about what other situations that you may be in where you want to claim some, some salary, right? Because IRS is always going to look like what is your role in that company, right? If you're a CEO, is it reasonable that you only take $10,000 salary a year? No, they want to look at what reasonable amount of salary for the amount of work that you put in for the company is. So you can't actually just claim a very, very small amount and try to get away with it. They're going to measure you against the market of what a reasonable person in your role for a company of this size should be earning as a salary, right? So there's a range you can get away with for sure, Jonathan, but I wouldn't try to claim like $1,000 a year. Okay, got it, got it. And you say dividends are tax lower than the personal income tax rate, am I correct? What's the difference? The personal size is around 10 to 38% right now, but I think the highest you can be taxed on dividend I believe is 20% max. Okay, got it. Yeah, so it's just a pretty good difference, right? If you're one of the higher earners, you can get 38%, but dividend only be at 20%, that's an 18% difference. Okay, yeah, that's more the next question. Okay, so from your clients and from what you see, right, which Ecom businesses are the most profitable? I think the ones who are most profitable have found ways to not just get a client and only have them flow through once, right? I guess I just explained that better. So basically, once you have a customer that's on your customer list, right, you got to find other ways of withdrawing even more money out of that customer, right, getting that lifetime value out of that customer. So if you're running pay ads, you get the customer wants, they buy from you once, that's great. But then can you retarget that customer again and again, do maybe email marketing, right, do organic traffic ways or just doing retargeting ads, right? You get them back to your site again and again, right? You got to find other ways of increasing that customer's lifetime value and Ecom businesses that are very successful in doing that are the ones that are able to grow the fastest, right? I mean, it's really two main factors for Ecom. If neither can you keep pay ads under control, that's one. And two, can you keep good margin on your part of your selling, right? If it's cost you too much money, if your gross profit margin is not good, you're probably not going to be doing too well because you're just not going to grow that fast, you know, your break even is too hard to reach. So that's going to be that's one side that you got control. The other support is how well your pay ad is. But hey, if you can just break even that front, you can also just, you know, just retarget that customer over again with more, I would say cheaper way of getting that customer back again, upsell them, cost sell them, you know, use other apps and stuff too. I'm not sure whether this is confidential, but like what's a healthy net margin that the Ecom guys should aim to have for their business? For example, like the business is stable, cash flow is, you know, healthy and stuff. What's a healthy net margin that they should be looking at? Yeah, if you're talking about like profit margin, they have a stable of 10%. If they can't stay above 10%, it's usually the signs that are, you know, they're just not running the business efficiently enough near due because their ads are too costly or their inventory cost is too high from their supplier. They have to fix something to get above 10% each month. So we really look at that. Like we make sure that if they're not 10%, we want our clients immediately that something's wrong and we should fix it right now. Okay. What's the next question? This guy asked, so I'm dropping from a USA warehouse. Does it give me tax nexus in that state? Or only if I'm holding bulk inventory? Question mark. It's kind of a great area. Usually if you're just trash shipping, the answer is no. And if you're ware, and you have your warehousing inventory in the US, then 100%, you have some kind of tax nexus and you have to pay sales tax to that state. But the real answer is the IRS is considered what they're going to call physical nexus, affiliation, which means any kind of connection you have to a state. So if they see that inventory is coming out of us, all your inventory is coming out of a state, they might consider that that you have physical nexus there. So I would say you, I don't want to answer this too specifically because it really depends, it's really situation based. But I can tell you a situation where this wouldn't apply if of all your inventory is being dropship saved from China to the US and you have no physical presence in the US other than that right there. Like just dropshipping things from China to US customers and there'll be no taxable nexus at all that you created. So just for international e-commerce out there, maybe curious about that. Okay. Ken, what's the next question? This guy is very very specific. Hi, Ellen. Can I use the form 709 to bypass the gift tax if I give over $14,000? I'm not sure what that is, but please do explain. Yeah. So actually the annual gift exclusion for 2020, 2021 is $15,000 now. Basically what the form 709 is, is if you want to give someone money, that's greater than $15,000, you have to fill this form. And what this form does is it's just a reportable, it's just a reporting form. You can think of it like that. It's just a compliance form. And what it's saying is, hey, this year I want to give someone, I don't know, my good friend, Jonathan, $40,000, right? He's not a good friend. And you're just basically filling out this form to say I'm doing that, which is fine because every person in the US has a lifetime gift exclusion, right? And that number is around $11.5 million. So really, as long as you don't give more than $11.5 million, you're always okay giving more than $15,000, but you have to report it. You have to tell the government you're doing that. This is really more for rich people who have really big estates to not be able to escape paying taxes because a lot of time they can just pass it down generation, generation, generation, right? And avoid taxes. But that's why the set number is so high, $11.5. So really, if they have under $11.5, it's all fine. Giving it to your family, for example, right? Passing it down to your grandchildren, all that. Okay. Next question. Can I put my net profit from my business into a 401k in order to avoid paying a higher income tax bracket? Oh, yeah, 100%, Jonathan. This is actually one of the smartest things you can do as an e-com owners to not only lower your tax liability for the year, but also to really set yourself up for a great retirement, right? And just go a little bit further on that. If you're just a solo owner in the e-com business, which I think a lot of dropshipping businesses are just one member, a single member LLCs, you can set up what they call a solo 401k. And solo 401k is especially powerful. I think I touched over this in part one a little bit, but basically instead of like $19,000, $5 contribution limit that most people have, they work a nine to five job, you have a $58,000 contribution limit in a solo 401k. So basically you can think of it as being able to shelter $58,000 of income you made this year away into a just this retirement fund. And that's $58,000 you don't have to pay for, which doubles to $116,000 if you're working with a spouse, which I think we had an e-com client kind of message just about that too. He's working with his wife in the business and because that's his spouse, it still counts as a single member LLC, which means he qualifies for this $116,000 that you can shelter every year. Next question, I think it's a bit loaded question. So I think you can take a bit of time to think about it. But this guy asks, what are some ways that I can reduce my personal income tax when I own the business and pay myself through the business? So I think it's a bit related to the question before, but I think the answer this one's going to be a bit long. So yeah. Yeah, I mean, it's a very general question, right? But there's this really plenty of ways where you can reduce your personal income tax. One of the way we kind of already talked about was just having a solo 401k plan, right? Being able to really shelter a really large portion of your income, $58,000, possibly $116,000 of your taxable income away. And then of course, there's just a lot of year-end planning things you can do, right? Where you can achieve dramatic savings by taking action in the year. Some of them you can do because you're a cash basis tax player, which a lot of income will start out as, which includes, of course, just prepaying for expenses ahead of time, such as buying any kind of apps, right? Any kind of Shopify apps, any kind of software that you rely on. Also, buying prepaying for inventory is another great way. If you know you're going to be spending this inventory, you just prepare it during year-end for next year. You can also delay your billing if you're an agency, right? And then of course, there are certain deductions and credits that have limitations that prevent you from using them fully in the current year. But they permit you to carry it over the future year, right? So don't make sure you don't forget about those things. There's also charitable contributions, right? Another way to reduce it. If you know you're going to be a charitable person, you're going to be giving away some of the money. That's another great way to reduce your tax. There's, of course, a lot of these tax credits and tax deductions you should be looking into. Home office deduction is one that we often talk about. A lot of our business owners will work from home. And there's just two ways of calculating that. A simple way, which you can take while having any accounting knowledge. And a more complicated way, the actual expense deduction. But it's very beneficial for you to know about it because the difference could be, you know, tens of thousands of dollars, you can take a more tax deduction. So definitely look into that. And then, of course, when we kind of talk about this too, right? You can also look into other ways of extracting money out of your businesses that's just not straight salary. You can also try doing kind of a dividend plan where you pay yourself a dividend out of your company. You can also try doing what they call family income splitting, which is also very, very powerful, by the way, Jonathan. It's basically, if you involve more of your family members in your business, you can pay them some sort of salary, right, for doing something for your business. For example, you have a son and a daughter who's of age, of college age, right? You can treat them as, hey, one person, you run my inventory. You're my inventory manager now. Hey, my daughter, you're my social media manager now, right? And you pay them $50,000 each. Well, that's $100,000 that salary you're paying to them, which reduces your overall taxable income burden that you have. So you treat them as employee basically? Yeah, you treat them as employee to lower, but then they're not at your employer because they're part of your family. Okay, but you need to pay healthcare, right? You need to pay healthcare. That's totally allowed, right? Well, yeah, but I think as you're the head of the family, you're going to cover the healthcare anyway, right? So, yeah, you might as well, right? But yeah, there's a lot of credits and benefits. I mean, this question is really endless, right? There's also like health savings account you can look into. Yeah, it does a lot of things you can do. That's really the power and essence of tax planning, right? By not doing all these things, you're way overpaying your taxes every time. Okay, got it. Okay, so that's the end of basically general e-commerce related questions and stuff. We'll move on to something a bit more specific to Amazon FBA, so fulfillment by Amazon type of businesses. So the first question the audience has for you is number one, what is the sales tax certificate or license? Do I need to apply for it? And when do I actually need to apply for this? Yeah, it's a great question. So a sales tax certificate basically just gives you the legal right to collect sales tax from your customer for a certain state and you apply for it only when you trigger certain nexus rules in those states, right? And one of the baseline numbers we look for is near $100,000 in a certain state or about 200 transactions. And I'm saying this very generally because a lot of states have followed this rule, but a lot of states don't. They may have higher limits, but basically you wouldn't apply for it unless you know you're going to be triggering sales tax nexus in those states, right? Doing it beforehand doesn't really benefit you and really just flag you as someone that may need to pay for it, may pay for sales tax in those states, but so I would do some sales tax planning, look at your customer concentration and see which states you're about to trigger sales tax nexus and plan around that, right? Neither make sure you don't go over that for the year or if you know you have to go over it, over that threshold in that year, then know that this is the time when you need to apply for it and start really remating your sales tax for that state. Okay, next question is, hi, Alan. How do I calculate COGS or COGS on my Amazon FBA business? So COGS stands for cost of goods sold basically, yeah. Yeah, cost of goods sold, you know, it's the direct cost associated with your sales, right? You sell an item, that's kind of your COGS, right? And most of the time, the main factor is the amount you pay to the factory or supplier for your goods, right? Most of the time it's just that, but other times there may be some other costs associated with it, which includes like freight costs, you can actually put towards your cost cost. So if you wanted to, you know, terrorists or duties, you know, import duties costs, those are the things you can include in it. And you know, if you're making a good yourself, maybe cost associated with like fabricating the good yourself, and other miscellaneous fulfillment expenses you can also add to if you wanted to. So that's what makes up cost of good sales. And once you add up all these costs, that's kind of your COGS number. And really, if you're cash basis, you know, doing accounting, COGS is pretty simple, right? You pay a vendor $10,000 for 1,000 units, then you just divide your 10,000 by 1,000 units and there's your COGS. Most of the time that's all you need to know. Unless you want, unless you know that you have other costs associated with bringing that item over to you, you may want to add that to it, right? Like if, for example, if you're buying a large bulk inventory order, right, maybe the actual item is $10,000, but shipping the item from China, maybe add another $5,000 to that. So freely you should be saying $15,000 is your total cost divide by 1,000 units. And that's the number that you should be recording every time you sell an item. Okay. I'm going on to the next question. So even I'm curious about this. So, Alan, how do I forecast cash flow in my Amazon FBA business? So we're selling units now and it's growing fast, but I do need to plan for cash flow to buy more inventory in the future. So how do you guys forecast cash flow normally? And how do you advise your clients to do so? Yeah, I think I understand. I think I think forecasting cash flow is not anything that's like too complicated, but it does, it does take, it does take some historical data, I would say, right? You kind of need to be aware of, you know, how well you're doing bookkeeping for your business to forecast correctly into the future, right? A lot of time, you know, forecasting is a lot based on a lot of historical context of how your business has been running and how much cash you have outstanding after each month, how much free cash for you have, right? That you have each month. And that really sets up a way for you to basically do your forecast for the next six to 12 months. And, you know, some larger businesses even forecast weekly because that's how much cash moves in and out all the time, you know? And no matter how far you choose to forecast, you had to factor in a lot of other things, right? Like, how is the market moving? What's the demand on my goods in the future? What's the availability of new inventory that's going to be coming in? You know, like, what are these one-time expenses that can tie up a lot of my cash? Now, what are other factors that I need to know about, you know, that's going to use up my cash, right? So, if you have, if you don't consider all these factors, your cash forecast becomes very, say, not useful because in our day forecast, it's super useless, right? You don't, you want to make sure that your forecast is always up to date and always factor in all these things we just talked about. So, when you're thinking about your forecast, you got to think about a lot of time, the simplest thing is just operations, right? What is, what, you got to predict your sales, your expenses, your profit for each month. You need to find out how much inventory is left. You need to find out how much cash actually needs to be tied up into inventory. And then also, if you have any kind of debt in your business, you need to find out the financing side of it. How much, how much of that loan I need to pay back each month? How much interest is associated with that loan that payback, right? So, there's a lot of factors into forecasting. You may also also look like that's the only plan on taking money out in any time to six to 12 months, right? Is that going to cripple my operational cash flow is, right? So, there's a lot of factors and there's a lot of what they call timing. That's what doesn't make this so difficult in that the timing of when you take money out, when you need to pay for inventory, when something's going to tie up your cash is all these factors you got to consider and build as what they call a model, a cash flow model to get you the most up-to-date forecast and let you know this is the amount of money I can, I can safely take out next six to 12 months to do other things with. And what they usually do with this, Jonathan, is they do say, I need to know this because I'm trying to invest into my business by hiring a lot of employees, to grow the business or I'm trying to build a different brand, a different entity. I need to know how much cash do I have or I'm saying I'm trying to diversify my cash flow because I'm trying to invest in real estate with stock or bonds. And that's why I need this cash flow. Or some people are just doing it because they're trying to see how long they can last. They're trying to actually just see the burn rate of how much cash they need to keep the business going before they run out. That's another reason why you do a forecast. Well, knowing that six months down the line, you'd be like, oh shoot, I'm out of money and you're not knowing that it's terrifying for business owners, I would say. Okay. So actually, that sounds really painful. You just have to be on an ongoing basis, watch the numbers really closely. Yeah, basically. Yeah, yeah, you have, you have to be constantly watching numbers. I mean, as you get to the seven to eight figure mark, it's become more and more important, right? The bigger your business, the really the more risks you have of everything just kind of like falling apart because you always have so much to cash tied up into your business, right? You're buying like large, like six figure of inventory every time, right? For example, if you have a warehouse somewhere, right? And you're paying out so much cash, like at the business, the client, the account clients we've seen, it's just like, you know, six, seven figure going in, six, seven figure going out every month. And then remainder is your, you know, your net profit, for example, right? And just so much cash movement that, you know, not controlling that can make it all this, all this, all this fall apart for your business. Okay. Okay, move on to the next question. How do I value my e-commerce inventory? So I'm guessing the value of the inventory decreases over time, right? But yeah. Yeah, I kind of understand the question, but basically it, there's a lot of factors into value inventory, right? Not just for e-con, but for any type of business that uses e-con. A lot of time you have to look at what they call inventory turnover, right? It was just how fast your inventory is going in and out the door, right? Anytime that you have inventory, that's what they call stale, which is not a non-moving inventory. That usually is a factor that where your inventory value lower, because that's like inventory that's just not in demand anymore, right? So you got, you got kind of kind of considered as it still hold the same value as it did when you first purchased it. And of course, other factors as your inventory for some reason is through related, obviously as expiration date, right? And as it gets closer to expiration date, of course, that value of that inventory also gets lower. So you really need a good, if you want to get to like a seven, eight bigger mark, you really need to have a good inventory system where you know that the inventory you're getting in is when you're getting the inventory in, first of all, and how fast, how much is moving in and out, right? The two most common way of looking at it is FIFO or LIFO, which FIFO stands for first in, first out and LIFO is last in, first out. So usually businesses depend on what type they are, choose one of the two systems because they didn't want the inventory that comes in right away to go out right away, what they want, you know, they want it to be the last thing to go out because they want the older inventory to go out first, right? Because if they're older, they possibly have lower value. So I mean, inventory management is quite complicated because of that. And actually bigger businesses, what they should do is what they call us doing a cycle count, which means every once in a while, so every quarter or a month for every annually, they should have someone go and count their inventory and make sure it still matches what's on their bookkeeping, right? What's on the inventory report. Because a lot of the time mismanagement of inventory happens quite often, where you think you have 20,000 units of something, but you go count it and you found out you have 17,000 of it, right? So where did that 3,000 unit go? You know, this could be spoilage, it could be mishandled by the fulfillment center, but that's $3,000 times whatever cost you had for that inventory. That's misvalued, that's misappropriation now, right? And you have to write down that inventory now on your books because you don't have that, right? Because usually inventory is what they call an asset, right? It's something that values your company higher, but not if someone can't trust that this is the actual amount of inventory you're having in your books. So having, doing a cycle count gives that, I would say, the trust factor that you actually have this inventory value that you claim. Okay. Yeah. Hi, Ellen. What if I detect, what should I do if I detect a large difference between my FBA inventory count, as well as the balance sheet? Oh, yeah, perfect. Yeah, this is exactly what I'm talking about. So if you go and do an inventory count and you have a large difference, then unfortunately you have to go with what you have actually on hand, right? So if you're, it doesn't matter what your books claim, your books can claim you have 50,000 units, you go count it and you have 40,000 units. I'm sorry, you only have 40,000 units. So you're going to have to write down your GL to match the 40,000 inventory you actually have on hand. Next question. This guy wants to sell one of his companies basically. I'm pretty sure he has multiple Amazon FBA brands. He says, hi, Ellen. I like to sell one brand out of my portfolio of companies, but all of my businesses are commingled into one account. So I'm guessing one business. What should I do? And what do you advise? Yeah, I think immediately you should find a good account to separate out your business. It'd be worth the time, right? If you have three to four businesses in one, that makes it very, very hard for someone to tell how much your brand is worth, right? And it also doesn't speak very highly of your financial management skills, having it all in one entity or one account or having all flow. It is extremely confusing for anyone to look at, honestly. So you want to immediately be able to separate that out and maybe even break it out on a legal entity level. So you have different LLCs managing each of your brand. So it's a very clean cut way of once someone does decide on a price with you, you can just move that LLC over to them cleanly while involving any of your other of your brand. So yeah, I would say immediate separation of all your brands finances right away. If that's what that's your plan the next next, you know, six, 12 months to sell one of your brands. Okay, okay. Next question. Why is there a discrepancy between my QuickBooks online account and Amazon seller central account? A specific question. Yeah, it is very specific question. I mean, there's a lot of there's a lot of factors that may play into it. I will have to look out to dig into your account to really see. But most of the time you don't actually want to trust your Amazon seller account side. You kind of want to look at what you're actually collecting from your payment processor. Right. So your payment processor will send you what they call like any or a I think name the name escape me right now, but basically I'll send you a form that tells you exactly how much you earn for the year. And that is the form that gets submitted to the IRS, right? That's how you that's how to take kind of know that you at least have to report this much of your income to the IRS. So I would actually use that as a way to reconcile your books to make sure that it matches this number, this sales number on here and not just rely on what your Amazon seller central is telling you that you're earning to put it here. Okay. Next question. Hi, Alan. I've been selling through FBA since the May of this year. I felt an LLC in April of this year and I'm not felt Texas yet. I have assumed it'll be something I would have to deal with next April. But now I'm not sure. Do I need to file my taxes quarterly? How do I know if I do and how do I know when these taxes are due? Super specific as well. Yeah, yeah, it is very specific. I mean, if you're if you just I'd be able to selling through FBA since May of this year, right? And you found LLC in April of this year. Then yes, I would say you have to file your taxes for this year. Next. So what was saying 2021, right? So by April 15, 2022, you will need to file taxes for that for this 2021 tax year. Yes, it doesn't matter what one month you started. And when they're when they're talking about you need to file quarterly, that's dependent on your revenue level. If you're starting, if you start making mid six figures in your business, I would say yes. You will start triggering the need to for quarterly filings. If you're just starting out, you know, like seemed like this person just started out selling, then maybe it's not needed yet, right? You can probably just get away with filing annually at this point. I would need to know how big this company has grown at this point. Okay. Okay. Yeah. Next question. How can I find a buyer for my Amazon FBA business? So this guy wants to sell his FBA business, right? Going to M&A and stuff and sell his company, get a big payday. How does he find interested and prospective buyers for his company? There's a number of options find to find it. There's a lot of marketplace out there right now that helps with this. I think Empire Flipper is one of those that's really well known right now. Yeah, I intend that Ecom World, they were giving a talk about that. But I mean, I think that's that's one great way. Of course, you can always ask your network of other Amazon sellers to foot their foot, but they know anyone that that looking for businesses. And I think it also is also some really specific venture capitalists that only buys online businesses, right? They only target these type of businesses. And to make yourself look good, I would definitely say you should have your bookkeeping in a good spot, very clean and very percentable for people at those level who really want to look at the metrics of your business. You really want that to make sure you have an accurate valuation of your FBA business. So they don't loathe all you, for example, right? So you want to put together a good, I would say, financial presentation with deck of your company and really understand the value of your company. Where is the value of your company, right? A lot of time, it's really, I would say, part of it is your model that you're running. If you're running Amazon FBA business, I'm assuming you're importing inventory from somewhere. But one factor is going to be about how much of that inventory is going to be, you know, how unique is that inventory? Can anyone else go and buy the same inventory? Or is it just something that you were able to white label a brand so that only your brand can get that specific item, right? That's something they're going to factor into. Second is just possibly your refund rate is how often does customer refund that? Refund your item or is it going to be a factor that I'm looking at? And there is, can be just, they could just buy your customer list, right? How valuable is your customer list? What is the lifetime value of it? What's your AOV for those customers, right? So it's, there's a lot of different factors you got to look into, but you can also protect yourself by making sure you're, you know how valuable each part of your business is before approaching a seller and be like, Hey, I think my business is worth X, offer me X when I'm not selling, you know? Okay. But like people, normal people don't know VCs, right? So I mean, besides Empire flippers, is there anything else that they can potentially explore? Just sell their business. I mean, I think, I think, I think just go into, go into any kind of those online marketplace is probably the best way to start unless you get approached by a venture capitalist, right? That, that, that is usually when you have really grown to a size where they really recognize you on the marketplace with where they approach you. I would say if you haven't made eight figures, you probably won't get approached by BC at Empire flippers by your best bet. If you're just someone who haven't made that level of income. Okay. Next question. This guy sells much by Amazon. So he asked, do I have to pay much by Amazon tax? I'm sorry. What's the word you're using? Do I have to pay much by Amazon tax? So merchandise by Amazon tax. Merchandise Amazon tax? Merch by Amazon. So I think Amazon has this merchandising program. And so he's asking whether he has to pay tax for that. Actually, I don't know. I don't know. I'm not aware of this merch Amazon tax. No, we'll move on. Okay. Next question. Hi, Alan. I don't have enough cash flow to buy new inventory. When should I consider taking out a loan? And how should I manage that cash flow? Can you please advise me? Yeah. I think this is a very common issue we see e-commerce run into as they scale is that they're not very aware of that. And they haven't done say a cash flow forecast, right? What they haven't looked at their burn rate. So then they get to a point where they run out of operating cash to keep their business running. And they're like, oh shoot, how do I keep it going? How do I buy new inventory? Right? And I think it's more of a problem for anyone that buys inventory than just drop shipping. Just drop shipping. Obviously, you don't have as much upfront costs associated with it. I would actually just take a step back and really look carefully at your margins and see what you're able to handle as far as the loans. Do you have very strong margins for whatever you're buying? Are you very profitable? If you buy this inventory, can you quickly turn it over? How much time does it take to turn over a unit of inventory that you buy? How much time does it take to turn over 5,000 units, 10,000 units? That really gives you that risk assessment that you really want to do before you go take out a loan. And of course, as you take out that loan, you also want to look at what kind of loan it is. It's just a straightforward loan where, and what's the interest rate attached to it, right? And it's a collateral loan where if I don't pay back this loan, they can just take my inventory, take my business for me, right? So there's a lot of, I would say comprehensive risk assessment you want to do before you go take a loan, see if it's worth the risk of taking on that loan in your business. So yeah, you want to do that financial assessment situation before taking on any kind of loan. Okay. Ken, what are the quality, sorry, what are the quarterly estimated taxes? And when do I actually pay them? Yeah, so quarterly estimated taxes, very common question on what you have to pay when you're not making enough tax withholdings. So just, I know that's, I'm using a lot of words and people may not know. So let me take a step back. So you have a work like say a nine to five job, right? Where an employer just pays you a paycheck say every two weeks, right? So what actually happens when they give you that paycheck is, if you look at the pay stub carefully, the employer is already taking out a portion of your tax withholding for you, right? That's why I want you to have, I've always complained, you know, when they get to pay stuff, oh my god, why is it only this much, this little money, my paycheck so small, right? But that's because they are already taking out the tax for you. And what happens is, depending on what you select for them to take, different different options, right? At the end of the year, when you do your fire taxes, you could possibly be getting a refund for it because they may have will hold too much tax for you. Well, as a entrepreneur, you're basically a business owner. There is no one responsible for doing your tax withholding for you, which means, you know, if you don't report it, you actually withholding zero, right? You're actually not giving the government any money because you're not an employee anymore, right? Someone else is not doing that for you. So because of that factor, the government says, no, we don't trust you enough, you're going to do it all at your end, right? So they expect you to do these quarterly estimated taxes because they want you to pay them as you earn the money. And if you don't, you basically get faced with penalties and interests and on your tax bill at the end of the year, which you try to avoid as much as possible. It starts just giving free money away. It could be as much as 6%, right? Of your bail. So what happens is you want to make these quarterly tax payment, they usually occur these during these times, April 15, you should be the first one, then June 15, October 15, and January 15 of the following year. Basically, you usually you just break it out into your what you owe last year on your tax bill, and you divide that number, and you pay those in for your installment. That's good enough. That's one way of doing it. Another way is basically if you're able to more forecast how much revenue expense you have this year, you can also base it on that. It's an estimate, but the IRS basically rather you pay something to them than nothing. If you pay nothing, you can get penalized for it. That's basically the end of the story. Okay. So we're just wrapping up the Amazon FBA section. Now we move on to kind of like influences and content creators who kind of have questions as well. Okay. So the first question is, Hi, Alan. I am an influencer slash YouTuber. He basically make money. He makes money from YouTube AdSense affiliate marketing, sponsorship, much sort of thing. Are there any specific taxes that I need to know that I need to file? Yeah. Yeah. It's great for you to submit a question, but and I'll say, you know, you're really subject to the same type of taxes that an ecom owner would be subject to. Basically your normal federal and state taxes, depending on where you're located for all of your income. But don't worry. There's also a lot of deductions available that you can take for the income you're making because, you know, you have a lot of things that you use for your business as a YouTube creator, such as, you know, your, your video production equipment, right? Those are your camera, your video recorder, any kind of cables that you're buying close, right? If you're a type of YouTuber that that's where a certain close to be on camera, software that you use for your channel, any kind of video editing software and things like that. So yeah. So those are the two I would say you're subject to unless you own a some sort of like merge business also attached to YouTube or have like a merge store. Then you may be subject to sales tax with that. Okay. Okay. Yeah. Next question. When YouTube pays me Google AdSense, does YouTube take out taxes for me? Yeah, actually, we have done some research for this for our clients, but basically actually beginning last month, because we're in July right now, June 2021. Google will actually start with holding US taxes on your earnings you generate from viewers in the US. So you will start asking you to start entering your tax info. If not, if you don't enter your tax info, what they're going to do is automatic take an automatic at 25, 4% of your total earnings worldwide is that yeah, that's right. You don't want that because that's worldwide. But if you submit it, then they're only going to withhold the US viewers. So if you have a lot of international viewers, they won't take that part just the US viewer side. So you'll get a much higher earning payout if you just submit information instead of letting them do the calculation themselves. Okay. Ken, I'll skip the next question because I think you answered this just now. So how much do you need to earn to pay or to start paying YouTube taxes? Legally, $400. You will need to start declaring that income to the IRS. Google is required to give you a what they call a 1099 form when you have made $600 one more. So when you have hit that mark, the IRS will have a record of your earnings basically. So if you don't submit, they'll know. But then if you just earn like $200 of fun, then yeah, you can get away with not reporting at all. Okay. Ken, next one. Do I need to set a site money for YouTube taxes? Besides YouTube taxes, sorry. Oh, besides user taxes. Okay. Yeah, 100%. You probably want to have some kind of emergency fund. You probably want to have seven months of operating expense to keep your business running. If anything goes wrong, right? If you get sick or anything like that, you probably want to equipment budget, right? If you're equipment, if you're, I think, for a part of a YouTuber, having the whole webcam or video recorder or camera is very important, right? You wouldn't have a budget for that. And any money for repair and maintenance of these, having a broken camera or computer, like your laptop is like one of your biggest asset, right? For your business. So that's, that's, that's like, that's a definitely right off for your business, by the way, if you need a new laptop for your YouTube business. So I would say those are some of the things you just need to make sure you can keep your business running, right? You want to have enough operational cash for to pay for any kind of subscription that could be part of your YouTube channel. Those are things I would say besides taxes. Okay. Ken, last question for YouTubers. Alan, what are the top tax deductions that I can take as a YouTuber? Yeah, it really, that does the question really depend on how, how, how big of a YouTuber you are. And there's different levels of expenses, but in general terms, you can definitely take a business deduction for, say, your cell phone, right? Any kind of business email and data that you use for your phone, that's the part you can use. Your internet, right? Your internet is a big part of being a YouTuber. While internet, you can't be a YouTuber. Your business meals, any kind of meals you conduct while doing YouTubing can be considered a business meal. Any kind of travel you do for your channel, right? If you, if you just have a travel channel or travel blog, that's part of you, that's part of constructing your YouTube business. Transaction fees that Google may take out for part of your YouTube business. Any kind of props you use in your, in your videos, right? Any kind of props to help, help for your videos. You can also look for retirement savings plans for your, for your YouTube channel, health saving plans, health insurance. And then another thing is if you just happen to have a very large equipment for your, for your YouTubers, like I know some, some YouTubers are like stunt, like stunt people, right? They have like this huge machinery or equipment they have it. Then you can also take a lot of accelerated depreciation on these large write-off. Basically you get a near a hundred, a near a hundred percent write-off for these equipment. The year that you bought it and put it to use for anything you buy for that. So it really depends on what type of YouTuber you are that just certain classes of expense that just, it's just for you. Okay. We'll move on. So the last one we're coming to the end is for SaaS or software as a service, entrepreneurs, right? So these guys are the software guys. They know the code and make product and basically they made a ton of money with the recurring revenue model. And so some of them have some questions as well. Okay. So first question is, hi, Alan. How do I calculate my MRR and think about revenue growth? Yeah. MRR by itself is a very easy calculation, right? It's only involving two factors. It's just your average revenue per account times the total account that month equals your MRR, right? And at your average value, revenue per account is a very crucial measure, especially for SaaS businesses, right? And you kind of arrive that figure by taking the average of how much all your customers are paying and dividing it by the total number of customers that month. That's it. So determine your MRR, you multiply that figure by your total number of customers. So if you have 100 customers paying an average of $50 per month, your MRR is $5,000. Just that. So that number, you kind of want to see grow, right? Because that's one of the primary factor with SaaS business is MRR, is how high you can raise that. And that's going to turn a lot of your valuation. You know, as you look at a SaaS business ready to exit, ready to sell. Okay. Next question. How should I structure my financial statements or accounts for my SaaS company? And what financial statements should I prepare beforehand? Yeah. So the first thing you want to do when you set up any type of financial statement is you want to set up your chart of accounts, right? Basically, you want to give every one of your expenses a place to be a home, if you may, basically a specific category that they should belong in. You want to get a good accounting system that can track based on cost centers for these tracking categories. And, you know, it's depending on what software you use. And Quickbook is called class tracking and zero is called categories. And usually the one that you want to track is like cost of sales, sales marketing, research development and general and admin costs, right? And then whenever you have a transaction, you'll tag it with a GL number and a tracking category, one of those four above. And basically what this enable you do is later generate a very accurate looking income statement showing the expenses associated with just that class, that cost center, right? Just sales and marketing or just R&D, right? And then that will let you have all your metrics covered on the cost side. And then of course, as a SaaS business, your MMR is very, very important, right? You want to know these kind of metrics also in your financials, your total MMR, your booking, your churn rate, how many people leave after a couple of months of your SaaS business. And so you usually want a accounting system to also be supplemented by some kind of like subscription billing system that can track all these kind of metrics. And that's also a huge consideration for SaaS business to add in your repertoire. And then some key metrics that you want to look at right as SaaS business. I'm sure SaaS when you probably know all this is customer acquisition costs, right? Your monthly recurring revenue, of course, MMR, your customer retention rate, your churn rate, and your lead to customer conversion rate. So a lot of metrics you want to keep in mind to make sure that you understand how much your business is, first of all, if it's growing in the right direction. And if not, why is it not? Why do you have high turnover? Why do you have high churn? And secondly, when you're ready to exit the business, how much can I value my business? Next question. I'm looking to exit and sell my software company, my SaaS company. What financial statements do I have to prepare for my SaaS company and what should I look out for? Yeah. If you're looking to exit your business, you definitely need these four really gap financial statements, right? These are generally accepted accounting principle financial statements. You need a balance sheet, you need an income statement, you need a statement of cash flow, and you need a statement of shareholders' equity, right? A balance sheet basically just provides very detailed information about companies' assets, liabilities, and shareholders' equity. And then an income statement is a report that shows how much revenue a company earn over a specific time period, usually for a year or some portion of a year if you started mid-year. And it also shows all the costs and expenses associated with earning that revenue. And of course, it shows your profit, your net profit at the end of the day. Your income statement also shows your earning per share if you're having to be a C-corp company. And then your shareholders' equity or sometimes called your net worth report is basically, it's the money that will be left if a company basically sold all of its assets and paid off all its liabilities. That's the level of money belongs to the shareholder or the owner of the company, so that's what a shareholder equity statement says. And your cash flow statement basically shows your company's inflow and outflow of cash. And this is important because a company's livelihood usually is cash. The more cash you have usually shows the more health inside your company. You actually owe a lot of this cash to other people, and maybe not, but that's what a cash flow statement does. It shows you at the end of the day how much free cash flow you have available. And that shows how well run your company has been through the year or many years of your company. So having these four financial statements is just really the basic essential that anyone's going to ask to look at before they consider buying your company. Okay. Okay, next one. How do you advise me to do revenue recognition for subscription-based software SaaS companies? So I probably want to explain revenue recognition to the audience. Yeah, revenue recognition is basically, it's a term by say saying like, at what point in time can you recognize revenue, right? And I think a lot of people out there think that, you know, as soon as they make the cash money, they can recognize revenue, right? So basically, if you think about it, if you're a SaaS business, $10,000 hit your bank, right? And you as a business owner probably think, yep, I can recognize all $10,000 revenue. That is actually not the case. Okay. Most SaaS businesses should be run on an accrual basis because that's what's expected. And what the accrual basis basically says is, yeah, you got $10,000 cash, but you actually can't recognize all $10,000 because this customer, he actually is on an annual plan. He prepaid for that, you know? So that $10,000, you actually can only recognize 12 of that money. Basically, you only can recognize the revenue that you earn for the month that the customer actually use your service, right? So you can only recognize like $833 of it. And the rest is what they call defer revenue, which means revenue you haven't earned the right to say that you earned that revenue yet. So, I mean, there's a lot of other factors you got to kind of consider as part of your SaaS revenue recognition plan is, you know, if the customer canceled a subscription midway, what do you do about your revenue recognition? If they upgrade from a monthly pandemic annual plan in the middle of the year, what's your revenue recognition number? If they downgrade from a higher plan to a lower plan, if the customer is unable to pay for the service that they render. And then of course, it gets even more complicated. If your SaaS business is, you bundle things with it, right? If you bundle set of fees with it, support fees, consultation services, customization, what happens to your revenue recognition? So it really, it's really not as simple as people think when they talk about revenue recognition, thinking that, you know, whatever cash hits my bank account is what I can recognize. That's not, that's not true. You know, the customer, until the customer actually uses or uses the service, you can't recognize that money as revenue. Okay. Next question. Hi, Alan, do you have any software that you recommend for SaaS startups to do their accounting slash bookkeeping? Yeah, I mean, the one we always recommend to most business, online business starting out, it's definitely QuickBooks online, just because of how well known it is and how often it's updated, right? The scalability is there. You know, most SaaS investments are growth based, so you want some kind of accounting software that keeps up with your business. And QuickBooks online can definitely do that. It has a good amount of automation. SaaS is a fast paced business, but and to it has a lot of different kind of, I'll say connections with apps, different kind of apps that you can do, like one to one. And of course, you want multi-business support. So, you know, SaaS can involve a lot of different kind of business types, right? And you kind of want your online accounting software to be able to keep up with that, right? You know, zero is another great option here, but whatever accounting software you choose, I kind of mentioned the other question. You also want some kind of subscription billing system set up alongside with to help you keep track of those really important factors, right? Like your churn rate, your MMR, your booking rate and things like that, is you want kind of want to complement your accounting software with those kind of metric accounting system. Okay, understood. Next question, deferred revenue versus accrued revenue for SaaS. How do I deal with this and what they choose, I guess? Yeah, I mean deferred revenue is very much one of the basic principle of accrued accounting, right? For revenue recognition. Kind of mentioned the other question too, but basically, you know, when you get a one-year subscription for something, right? You have not earned that revenue yet. You earn it over the term of that subscription. So, it was a 12-month subscription and this is the first month, you only earn one 12 of that, right? One month of it. So, deferred revenue is basically advanced payment from a customer for future goods and services that they have not rendered yet, they have not used yet. And it's basically also called un-earned revenue, deferred revenue is, and it's basically something that's going to be going to deliver, perform in the future. So, I mean, I would say that that's something you just need to really realize that that's what deferred revenue is. Well, on the other hand, accrued revenue is kind of like the opposite of that, right? Accrued revenue refers to expenses that are recognized on the book before they have actually been paid. So, this actually doesn't happen that often now in the days of automatic payments, right? In credit card days, but you can think of above a time of, you know, where a customer may be, you have to invoice them, right? And then they're like a customer that you invoice instead of they paying you automatically by credit card. So, that means that they may have already used up a month of the service of your company, right? But then after you have actually been charged of that. But that, but you're allowed, you're allowed to recognize that revenue already for that one month because they would use one month of that of your service. So, it's kind of like a little opposite. And it's really about recognizing when that service is rendered versus cash, right? Versus cash input. So, basically, when you're running a SaaS business, don't look at cash. Look at when you actually perform that service for the customer as the main factor when you can recognize revenue. Complicated. Yeah, complicated. I gotta say, yeah. Okay. Hi, Alan. How do I manage deferred revenue for subscriptions? Is there anything I need to do on the journal entry site or the balance sheet to recognize it? Yeah. So, when you when you have a deferred revenue, basically, you can think of it and hopefully it does a simplest term is that, you know, if normally you're thinking you have $10,000 cash, right? As I know I shouldn't talk general entries, but basically what you what happens was you have to do double entry, general entry usually for businesses. And when you have $10,000 cash, that's cash that you had to book a number to cash for sure because you have that cash coming in and you're supposed to book a number to revenue, right? But as a subscription business, you can't take all $10,000, right? If you basically you only earn $1,000 of it, what you have to do is basically you move $9,000 of revenue from your revenue account and put it towards an account called defer revenue. So really on your income statement, if you're showing to someone, hey, yo, I made $10,000 in my business. No, that's not true. You actually only made $1,000 of revenue in your business for that month. $9,000 of that is defer. Yeah. So a lot of time companies inflate their business thinking they made $10,000 of revenue and can recognize that, but that's absolutely false actually. And that gives them a false sense of security thinking they have $10,000 of revenue when really they need to spend the next, you know, nine or 11 months earning the rest of their revenue for that customer. Okay. Yeah. I'll come to the second last question. Hi, Ellen. Why is it essential for my company to do a cruel accounting? Can't I just do, I guess, cash accounting? Yeah. So I mean, I mean, technically you, you can do cash. It just, it just doesn't match your business model really well, right? Because you're, you're always making, because like, if you think about it and contrast to an e-com business, right? Where like, if you think about e-com business, right? By Jonathan, you, a customer comes to your store, buys that item, right? You ship that item to the customer and you're, you're done. You fulfill exactly your, your service been fulfilled. You've been, you delivered the item. You, you recognize the full revenue, right? That $49.95 item, right? Where indifference between a SaaS business is a lot of time you may be paying for an annual plan, six month plan, a multi-month service, right? Where you, you're, you're, you're making cash that doesn't correlate this at the same rate as your revenue. So that makes a very, very inaccurate when you're, when you're looking at cash basis, which is why most SaaS business, if they think they're going to go anywhere, they switched to SaaS, a cool accounting immediately, which is a lot more complicated to do as, as I've been trying to explain here, but just a lot more complicated accounting to do. And usually when you do a cool accounting, you, you do want to hire a professional to kind of handle that for you. But essentially that's, that's the main reason, right? Of a SaaS business, unless you offer some reason only offer monthly plans to your customers, then it's very hard to match up your, your, your revenue and your, your expenses and your cash at the same and the rate you're supposed to. And that's one reason why most SaaS businesses go accrue method immediately to make sure they have that. And also complicated things say like, you know, like the other day I bought, I think like an antivirus or something, right? And this antivirus comes with like one year maintenance or something, right? Like if I have any problems with my antivirus, they'll give me support, right? But for that, for that company, they can't, they can't even recognize that one year maintenance fee. Like they didn't earn it at all. They have to split that over the 12 months that I use their service. They can only earn one 12 of that maintenance fee even. So there's not even a software portion, right? This is the maintenance portion of their revenue recognition. They can't even do that. They have to split that out of 12 months. So there's lots of, there's so many factors of it. And you know, and there's so much free movement usually on the customer side where they can upgrade, downgrade, mid, mid, midway through that really messes up how much revenue recognition you can have on your income statement that, you know, you really want to have someone that are very familiar with your business to work that out for you and model that for you. Okay. Okay. Last question. Okay. When do you need to hire a CFO for my SaaS startup? So I'll say SaaS companies, they start very slow, but then they grow fast after they get product market fit, right? So when is it advisable to get a CFO? Yeah. So I think, I think, I don't, I think a CFO, it's usually when you want to hire a CFO, which is just going to be going to be not anything as cheap, right? And based especially on in-house CFO, it really depends on the complexity of your revenue model. It's kind of what we kind of touch on is like how complicated is it to do revenue recognition in your company, right? If it's not straightforward, if you have a lot of embedded things in your SaaS product that you're selling, if it's, you know, maybe some SaaS is multi-year and multi-year contracts attached to it, right? It's very hard to separate out and know how much revenue you can recognize. That's one reason why you might want to have CFO. If you just have a lot of metrics you need to measure, you know, tons of things to track to ensure the success of your business. And you're not a person that's very good at math, we're very good at finance. That can be a reason why you want to hire a CFO to figure it all out for you. So they can actually tell you to accurately to help your business, right? So you're not just blinded by how much cash you're taking in, but really your turn rate is super high, right? Maybe you are getting 100 customers a month, but you're losing 80 of them, you know? But you think, oh, I'm doing great, but actually you're not. You're doing actually doing terribly. If you're actually planning to do any kind of fundraising, right? Or you plan to exit a company, that's probably a great time to have a CFO who can help you network where venture capitalists or other people who present your company in the most favorable light to these people to help you get the biggest exit for your company. That usually, like if you're going to IPO, if you're going to do anything like that, you want a CFO to understand your business and can really kind of almost be a marketer for your business, be a salesperson for your business to market it to these guys. And beyond these points, if you're going to hire a CFO, you probably need a full team beneath that to handle all the tasks that CFOs probably not going to do, right? CFOs probably only can look at the big picture for your company, right? But you're going to need someone that's managing your account payable, receivable, your bookkeeping, your payroll and expense reimbursement, reconciliations, monthly closing of the books, financial reporting and analysis, board meeting prep, because the CFO might not be the one that's doing the actual deck, right? Cash flow and forecasting, taxes. So there's a lot of these things that just hiring a CFO is not going to cover. So I want to jump right to a CFO. I would need to start out by hiring an outsource team or an in-house team that can do all these tasks for your company. Well, because the CFO, if you're going to just hire straight up a CFO and he's going to step into this and he's like, yo, you have one accountant, you have anyone that's been doing your bookkeeping, anyone doing your taxes and you say, no, that CFO is going to run for the hills. You know, he's not going to be a CFO for your company. No, no, no. You expect to pay a CFO like 300K plus to do your bookkeeping? Yeah. Right? Yeah, that's not happening. Okay. Okay, okay. Got it. Okay. So I don't know, we'll come to the end. I'd like to thank you very much for your time. I know you answered a lot of questions from the audience. So I'd like to thank you. Okay. So guys, if you want to get the tax-free e-commerce course, we've got a 50% discount for you guys as well. So you can go to freecashflow.io-cost and basically in the discount code, you can put OXG-50. That's OXG-50 to get 50% of Allen's cost basically. So it's going to teach you everything from accounting, bookkeeping, also like international sellers outside the US. This is helpful for you if you want to incorporate inside the US and basically everything you need to know about tax and accounting for e-commerce specifically. Okay. And if you want to talk to Allen specifically as well, you can go to freecashflow.io-book. Allen, is that correct? Yeah, that's right. So freecashflow.io-book to talk to Allen and a freecashflow.io-cost to actually get the cost for yourself. Okay. So Allen, thank you so much for your time. And yes, thank you so much for your time. Yeah. Thank you so much, John. For having me on again. It's a pleasure. And does anyone have any other additional questions for me? Feel free to drop me a Jonathan note and happy to jump on to answering again next time. Okay. Ken, thank you guys. Yeah, sounds good. Thanks, everyone.