Your Expertise Doesn't Run a Business - 2 Things I Wish I Knew Before Starting a Business

Here's why I (naively) thought I had the perfect background to run a business:

• I spoke the "language of business" - I even have an accounting degree.

• I'm a certified accounting expert - I have my CPA license.

• I'm a financial reporting expert - I worked in public accounting as a financial statement auditor. My clients reported their financial statements to the Securities and Exchange Commission. My job was to check the financial statements and say they were good.

When I started Basis 365 Accounting, I thought these would help me master my business. These things helped, but I realized they're only a small part of running a business.

My expertise—in accounting—doesn't help run a business. Whatever it is, your expertise won't help you run a business.

I wished I knew my expertise is a different skill set than running a business

When I say "run" a business, I'm talking about everything else that I'm not an expert in. The thing that I'm an expert in is my craft (my deliverable). Running a business involves understanding and knowing a little about:

• Compliance matters (tax, human resources, legal)

• Operational matters (systems, process, procedures, technology)

• Sales and Marketing (sales funnels, negotiation, getting eyes on your product/service)

• Psychology (dealing with clients, vendors, employees).

If you're an operations expert, great! Cross that off the list and put accounting and financial reporting on the list. I left it off the list above because this is my list.

My expertise is the present inside the box. I still need to know how to construct the box. Thinking that I was the present and the box was a mistake.

I wish I knew that I don't have to be an expert in everything

My business partner and I struggled to do everything when we started. Part of it was out of necessity—we didn't have money to hire experts— and part of it was ego (I'll speak for myself here.)

"I'm smart enough to figure this out."

That's probably true with a few things, but not with everything, and not at a depth of knowledge or practical experience that I should be attempting it myself.

Takeaways

I need to keep this in mind:

• My expertise in (fill in the blank) does not make me an expert in running *every aspect* of a business.

• My expertise is better when it's focused.

• For everything else, I need to have basic knowledge about it: "a mile wide and an inch deep."

3 questions to ask to hire the right bookkeeper so your business doesn’t implode when they leave

I’ve operated an accounting firm for over a decade, and during that time, business owners come to us with the same story: “My bookkeeper just quit, and I have two weeks to find a new bookkeeper.” What's even worse is there has to be a knowledge transfer between the bookkeepers within those two weeks!

When hiring a bookkeeper, ask these 3 interview questions to minimize the risk of this happening to you.

Question #1: “Is this your side hustle?”

You want a bookkeeper whose bookkeeping work is their bread and butter.

I have nothing against side hustles, but wouldn’t want to entrust a critical business function to someone dabbling in bookkeeping. Having your books up-to-date and orderly is crucial for making good business decisions. You can’t leave this to chance if bookkeeping doesn’t work out for your bookkeeper.

Hire someone who does bookkeeping for a living full-time. They have skin in the game. If they quit the business, they’ll likely sell their clients, which benefits you because you get a new bookkeeper without starting over.

Question #2: “Do you have the capacity to take me on as a client?”

What's worse than having no bookkeeper?

Having a bookkeeper who doesn’t have time for you and can’t close your books timely. Getting financial statements months late makes them less relevant for making business decisions. It’s like having no bookkeeper at all!

If the bookkeeper has the capacity, get them to commit to a date when they close your books each month. For example, by the 15th day after the end of the month.

Question #3: “Are you the only bookkeeper in your firm?”

A lot of bookkeepers are solopreneurs.

If they get sick or take a vacation, your bookkeeping isn’t done timely. Firms with multiple bookkeepers can substitute for a temporary bookkeeper if your assigned one is unavailable. Not all firms are set up to do this, so ask.

Takeaways

Your books are critical to your business. Hiring someone committed to being a bookkeeper (not just a side hustle) who can do the work and has a plan to get the work done if they’re sick or on vacation will reduce your risk of being left without books for your business.

3 things to do now to make issue 1099s easier in January

In just a few months, by the end of January, business owners will have to issue 1099s to the vendors they paid during the year.

Waiting until January to start is a big mistake. You’ll scramble to get W-9s from our vendors and run up against the deadline. At my accounting firm, we’ve been helping clients collect W-9s throughout the year.

To make issuing 1099s stress-free, you must focus on collecting W-9s now.

What are W-9s?

Form W-9 has your vendor’s tax information. You’ll need this to report the amounts you’ve paid them to the Internal Revenue Service. Your vendor should give you their W-9.

Here’s what you should do now to make your life a lot easier later.

#1 - Figure out who you’ve paid this year

Start by figuring out who you’ve paid this year.

Most accounting systems will let you a report that shows this information. Take the list of vendors you’ve paid and determine if you have a W-9 for them. If you do, great! One less W-9 to track down.

#2 - Collect W-9s now

For vendors without W-9, contact the vendor and request it.

A better strategy is to not pay the vendor until they provide you with a W-9. They shouldn’t complain because they are required to provide this to you. Here’s proof straight from the W-9 instructions. 

From Instructions to Form 1099

From Form W-9

#3 - Enter the W-9 into your accounting system

Take all the W-9s you’ve collected and enter them into your accounting system.

Quickbooks Online and Xero let you check a box to indicate that a vendor should receive a 1099. Using this information. The accounting system will calculate the amount to report on the 1099 for vendors who qualify for 1099s.

## How do you determine if a vendor should get a 1099?

Here’s a simple rule to follow, and you’ll be right most of the time. If the vendor checks one of the following boxes, they should get 1099 if you’ve paid them $600 or more during the year:

1. Individual/sole proprietor 

2. Partnership

3. LLC treated as a partnership

4. Corporations (S and C corps) are exempt from receiving a 1099. Of course, there are exceptions, but this rule will cover most situations.

Takeaways

- Start collecting W-9s so you have an earlier and stress-free time to issue 1099s in January.

- W-9s will let you know which vendors should receive a 1099. 

- Your accounting system will report for you if you do leg work now.

Working Notes on Bitcoin

When you start investigating Bitcoin, you will hear “orange-pilling.” This term can mean different things to different people. To me, it simply means to convince someone to take a hard look at Bitcoin and understand why it is important.

I have never really tried to “orange-pilled” anyone because I don’t have the time or energy to convince someone of anything. However, suppose someone is already investigating Bitcoin for themselves, and I am the tipping point for them by answering some questions. In that case, that’s worth the expenditure of energy. Alternatively, if someone wants to learn about bitcoin and they’re just starting, I can also answer some questions. The only person I am interested in convincing, though, is myself.

While I’ve consumed a lot of Bitcoin information and essentially convinced myself, I’ve never put these thoughts in writing. The evidence of why Bitcoin is worth my time and effort floats around in my head in bits and pieces. Sometimes I can assemble them into a convincing argument, and other times, I draw a blank.

I believe that “writing is thinking.” To clarify why I think Bitcoin is a good thing, I need to write about it. There are things I can confidently write about because I’ve spent dozens of years becoming a subject matter expert, like my occasional writings at Basis 365 Accounting. Because I’m relatively new to Bitcoin, writing anything with a sense of “authority” makes me feel as if I’ve draped myself with imposter syndrome. To combat this feeling, I will call these writings my “Working Notes on Bitcoin.” They are not “articles” that may convey some sense of authority. Instead, these are working notes that are mutable as new information or insight comes into view, so it seems to be a perfect way to frame my nascent knowledge about Bitcoin.

If I am insecure about my authority on Bitcoin, why put these working notes out? Well, you don’t get very far by clarifying your thoughts by yourself. Clear thinking doesn’t happen in an echo chamber; most people benefit from feedback and discussion. Most people would benefit from someone holding a contrarian view posing a challenge to your argument. I must embrace the idea that I could be wrong about Bitcoin (I hope not). I probably won’t convince myself I’m wrong, but others might.

So this page is the start of my Working Notes on Bitcoin.

“To be radically open-minded, you need to be so open to the possibility that you could be wrong that you encourage others to tell you so.”

— Ray Dalio, "Principles"

How to quickly link to your MOC notes

At the end of my map of content note file name, I type a space followed by a "+". Doing this allows me to quickly filter through MOC notes when I'm trying to link them to another note. Here's what it looks like:

The + also becomes a visual identifier of MOC notes when browsing the files. Although I group my MOC notes in one folder, sometimes, there is a misplaced note in the general population of notes, and the + makes it stand out.

You may have noticed that my "home" note uses a + in front of the filename, so it gets pulled up in the search results and is sorted to the top of the list.

Bullets

They looks nice, but they’re hard to type.

Before switching over the +, I used special bullet characters. The fisheye bullet, for example, was placed at the end of each MOC file name. It had the benefit of the visual marker of MOC notes in my file system, but it was impossible to type, which slowed down the file naming process (I had to find the bullet and paste it into the file name), and I couldn't filter by the bullet.

Using a character that I can type speeds up my ability to link to other notes, which is important. I optimize for speed when using my PKM because I want to think and link at the speed of thought. Thoughts are fleeting, and so are connections between ideas (and notes), so link them fast before all is lost.

Make better decisions with scenario planning

Too often, you limit yourself to too small a set of outcomes. The worse is that you can only imagine one. Mostly you think of two because you tend to think in binary terms: A or B, yes or no, this or that.

The reality is that there are multitudes of outcomes, more than you can imagine, because you live in a complex, multivariate world, and the answer is rarely a set of binary results.

In Thinking in Bets, Annie Duke says strategic thinkers consider a broader set of possible outcomes:

"the best strategists are considering a fuller range of possible scenarios, anticipating and considering the strategic responses to each”

You don't have to consider every outcome, but you should consider more than two.

Duke calls this scenario planning (a.k.a, reconnaissance mapping, future mapping). It's when you take a belief, place your bet, and consider the probability of each outcome occurring. The concept can be summarized as follows:

1. You have a belief.

2. You place a bet on the belief.

3. There will be a set of outcomes.

4. The outcomes will have different probabilities of occurring.

You have to assign a probability of each outcome occurring. Giving a number makes you realize how strenuous this exercise can be. Back in your binary thinking, it's 0% or 100%; not very taxing, mentally. If you give yourself three potential outcomes, you may default to 33% each. Increasing the number of possibilities to five, it becomes harder to convince yourself that the probability of each occurring is equal, or 20%. You probably wouldn't place that bet.

Considering every possibility can be overwhelming, but you don't have to worry about doing that because it is an impossible task. Five possible outcomes for any scenario seem like a good place to start. If you can't think of five different results, then maybe you're not thinking hard enough because you'll already have at least two when you start: yes or no, 0%, or 100%. You only have to come up with 3 more somewhere in between.

“One is the loneliest number that you’ll ever do / Two can be as bad as one / It’s the loneliest number since the number one”

— "One" by Three Dog Night

What will you trash, transfer, or trim today?

Whether you're running a business or chasing after a better version of yourself, there are things you should do and things that you should let others or systems do so that you can focus on tasks that require your unique talent.

You must seek opportunities to rid yourself of things you shouldn't do. In Mike Michalowicz's book, Clockwork: Design Your Business to Run Itself, he advises that you should either Trash, Transfer or Trim your task list.

Trash the task if it doesn't support your objectives. Transfer the task to "other people or systems that will free you and your expert people to take on bigger, more challenging tasks." Trim tasks you must keep, but figure out how to do them faster or more effectively. Michalowicz's method is very similar to David Allen's method for "deleting, delegating and deferring" tasks.

It seems the easiest decision is to trash tasks because it's somewhat binary: "does this task support my objective, yes or no?" If "no," then trash them. It's the most fun, and you'll sigh as the stress of that task exits your body.

Transferring a task is challenging. You often fall into the trap of thinking that you, and only you, can do the task right: "If you want something done right, do it yourself." More often than not, you think a task done differently is done right incorrectly. Rethink that: done differently is still done. If the result approximates the result that you would have achieved done "your way," then you need to consider "done differently" done.

Trimming tasks is problematic because it seems to be a wasted effort. You tend to think: "If it ain't broke, don't fix it." Many things aren't broken, but they can be made better. Trimming gets pushed into the background because it's the least of your problems, but realize this: accumulating inefficiencies over the long run makes a huge dent in your productivity or effectiveness.

In his book Atomic Habits, James Clear talks about getting 1% better each day, which can have an enormous impact, but getting 1% worse is devastating:

But when we repeat 1 percent errors, day after day, by replicating poor decisions, duplicating tiny mistakes, and rationalizing little excuses, our small choices compound into toxic results. It's the accumulation of many missteps—a 1 percent decline here and there that eventually leads to a problem.

While you may not be getting 1% worse, which is arguable because staying constant in a changing world may be getting "worse", you're definitely not getting 1% better each day.

To get these "unbroken" things to the forefront, set aside time monthly or quarterly to review the process, and ask yourself, "how can this be better?" "Better" can be faster, cheaper or not at all. You can eliminate unnecessary steps or add one step that eliminates multiple steps in a process. Better yet, you could deploy Gary Keller and Jay Papsan's Focusing Question, from their book The ONE Thing to make trimming more like trashing:

What’s the ONE Thing I can do / such that by doing it / everything else will be easier or unnecessary?

What will you trash, transfer, or trim today?

Common Info note

Filling out an application is a right of passage into adulthood. As a kid, you never had to fill out an application; your parents did that for you. All the significant events in life require an application: college application, loan application for your car, mortgage application, job application, and the list goes on and on.

To fill out an application, you need to dig around for information. Some information is easy to get (e.g., a driver's license number), and some information requires serious digging (e.g., old home or work address—who keeps that stuff handy?) Keeping this stuff straight for yourself is challenging, but adding a spouse or kids to the mix increases the challenge—you need to know their information too!

One year I got fed up with digging around for information every time I needed to fill out a form, so I created a straightforward solution. I made a note called "Common Info" in my iOS Notes app and started noticing the type of information requested on different applications. When I was completing an application with the bit of requested information, I would also copy it into my Common Info note. The next time I had to complete an application, I pulled up the note and used it for reference. If the application asked for information that was not in my Common Info note, I would find the info, add it to the application, and add it to the note. Over the years, I compiled a note full of answers to commonly asked questions on applications.

Now, when I fill out an application, I open the note and can be assured that I can complete nearly 99% of an application using the Common Info note for reference. I no longer have to dig around for information.

My Common Info note started life in an iOS Note app, and recently, I transferred the information to a note file in 1Password because it contains sensitive information. If you create a common info note in the Notes app (or any other notes app), make sure you password-protect the note.

To get you started, here's my template in Markdown, so if you paste it into a Markdown-enabled notes app, it will be formatted nicely. I've also bulleted information you can include and italicized tips.

---

# MEDICAL

## Medical Insurance

*List all your medical, dental, and vision insurance. This could be provided by one health insurance company or multiple.*

## Medical Groups

*List the medical group you belong to (e.g. your primary care doctor)*

## Birth dates and times

*List the birth dates and times for your children*

# EMERGENCY CONTACTS

*List at least emergency contacts: one related, and one note related to you*

## Emergency Contact Name

- Address

- Phone numbers

- Relationship to you

# ADDRESSES

## Work Addresses

*List your current work address and prior work addresses for yourself and your spouse.*

## Home Addresses

*List your current home address and prior address*

# GOVERNMENT-ISSUED IDENTIFICATION

## Driver's Licenses

*List your driver's license. Add your spouse and kids too!*

## Social Security Numbers

*List the social security numbers for yourself, spouse, and kids*

# VEHICLE

*List all your vehicles, including spouse and children*

## Model (e.g. Honda Accord 2022)

- License plate:

- VIN:

- Color:

# MEMBERSHIP

*List relevant membership information. For example, I list my AAA membership in case I need the information for travel discounts or need quick access to roadside assistance numbers*

# SCHOOL INFO

*List the school info your kids. This section isn't really for yourself. I find it rare that I have to list my high school or college information for myself on an application.*

## Child's Name

- School ID number

Make Your Bed

The most straightforward lessons are sometimes the hardest to execute consistently.

Nothing in Make Your Bed, by retired Admiral William H. McRaven, is groundbreaking, but they are backed by McRaven’s stories from his military career, mainly from when he was with the SEALs. They are simple lessons you need to often hear so you can one day apply them when the situation presents itself.

Here are some of my favorite lessons:

Start your day with a task completed. McRaven suggests that you make your bed because this gives you a win for the day early in the day. One task accomplished has a domino effect, and soon another task will be knocked down. Long before I read this book, I saw McRaven’s University of Texas at Austin 2014 Commencement Address and implemented the daily bed-making routine.

“Who Dares Wins“ is the British Special Air Service’s motto and is a good reminder that accomplishments come from struggle and discomfort. McRaven writes:

“Life is a struggle, and the potential for failure is ever present, but those who live in fear of failure, or hardship, or embarrassment will never achieve their potential.”

Never, ever quit. During Hell Week, Navy SEAL candidates are put through a training program that is designed to make them quit. To end the pain and misery, all they have to do is to ring a bell three times, and they’re out of the program. McRaven tells you, “don’t ever, ever ring the bell”:

“Life is full of difficult times. But someone out there always has it worse than you do. If you fill your days with pity, sorrowful for the way you have been treated, bemoaning your lot in life, blaming your circumstances on someone or something else, then life will be long and hard. If, on the other hand, you refuse to give up on your dreams, stand tall and strong against the odds—then lie will be what you make of it—and you can make it great. Never, ever, ring the bell!”

Don’t ever quit reading this book. It’s a book you can get through in one or two readings (only 125 pages). It’s the type of book you read at the beginning of the year to ground yourself and realign your mindset. I plan to add it to my regular rotation.

Make atomic notes

Have you ever tried to review your meeting or project notes for a helpful bit of knowledge and given up because the wall of text and irrelevant information seemed insurmountable? Your eyes hop around from point to point, but you can't seem to find what you need or even focus.

Your notes are not helpful because they have too much information. There's only one little bit of knowledge you need for your current project, but you have to weed through irrelevant information (the previous project's due dates, objectives, attendees, etc.)

For knowledge to be helpful, it needs to be distilled to be actionable. Benjamin Franklin was a master at doing this: "Speak little do much." With four words, he could execute a process for self-governance. Here's another example in three words: "Haste makes waste."

The solution to this problem is to create an atomic note which is a note that contains one idea in one note. It is the building block of knowledge. It is "a discrete unit of information interpreted through your unique perspective and stored outside your head...[that] stands on its own and has intrinsic value, but knowledge building blocks can also be combined into something much greater—a report, an argument, a proposal, a story."(1)

How do you write an atomic note? In short, you need to break the note down (again, one idea, one note).

For example, you could write a note about fruits, but that would be a considerable note because there are 1,600 varieties of bananas alone! Breaking fruits into smaller categories makes the knowledge easier to digest. Tropical fruits is a subset of fruits, but it would still be a large category. You need to break it down further to arrive at an atomic size note. An atomic note would be a note about Fuji apples (a manageable entry in Wikipedia). Notice that it is not a note about apples (a very long entry in Wikipedia), which would still be too large of a category. Instead, it's a note about a specific variety of apples.

Building a knowledge base of atomic notes would be a treasure trove for the knowledge worker. Imagine going into your knowledge base and extracting the exact note that moves your project forward or provides valuable insight for your client—without the fluff! Imagine the time you would save not re-reading or re-interpreting a note.

In the spirit of Benjamin Franklin: "Make atomic notes."

---

(1) Building a Second Brain, Tiago Forte, p. 24.

The calendar is an inventory of time.

Your calendar lists your most scarce, non-renewable inventory of time. Your most important tasks, appointments, and relationships should use that inventory first. Everyone and everything else is secondary, and this inventory is smaller than you think.

Assume that you will live 83 years. You'll lose about 22 years during your formative years, from being an infant to graduating college. Those 22 years don't belong to you because what you needed to do was dictated to you.

After graduating from college, you are "free" to do what you please, so you have 61 years to accomplish your goals if you don't sleep. Let's assume you sleep 8 hours daily; that's another 20 years of sleep.

That's it! You have only 41 years to achieve all you want to achieve. Forty-one years sounds like a long time, but it isn't. You need to convert the years into some other unit of measurement like 41 summers, birthdays, vacations, Christmas, and New Year's Eve.

Fifty

If my life had gone according to plan, I wouldn't have had to work a single day. My dad didn't really work, even into his twenties. Born into a wealthy family, my course was set, but routes split and meander.

Five years later, on a small boat in the middle of the South China Sea, my dad worked hard for his family's survival escaping from Vietnam. Maybe it was the Gulf of Thailand? It's hard to know when life veers off course.

In Malaysia, the refugee camp was home, and our house in Saigon was just a structure, a framework of how something used to be. Soon enough, Malaysia was another reminder of "how something used to be," and the United States of America was home.

In the years to come, there would be struggles and moments of feeling "less than." There would be moments of hope, that feeling you get when you say the words, "when I." "When I finish college, I'm going to..." "When I get this job, I'm going to..." "When I do this..." "When I do that..."

Hope realized becomes happiness.

I've had my share of happy realizations, and I've had my share of struggles, and I'm delighted to let them all live together in me. I can make more happiness, but I can't make more good luck, and the best kind of good luck is the kind you accept as good luck, even though they don't appear to be luck.

I'm lucky my dad had the funds to hire a boat and captain to plan an escape from Vietnam. I'm fortunate the boat "ride" to Malaysia was short, and we didn't get lost at sea, starved, drowned, or captured by pirates. I won the lottery when we ended up in the United States, the best country to put hope to work.

Yes, it is unlucky to lose your country, to escape in the middle of the night on a small boat with no assurance of ever getting to your destination (wherever that was), and to arrive in a foreign country to start life over with no money. All these unlucky things turned into excellent luck.

Today I turn 50, and I can't imagine being luckier.

Personal knowledge management, a brief history

Evernote was my first personal knowledge management (PKM) system. 

It was my commonplace notebook; I added quotes, reading notes, articles from the web, and emails. There were bits of knowledge scattered across multiple notebooks, and I tagged these notes with many tags. 

Eventually, it became my document management system. Instead of filing away PDFs of bank statements and bills into a folder on my computer, I uploaded them to Evernote. After years and years of constantly adding to Evernote, I had a lot of notes, and it was a depository of transactional records.

The knowledge (quotes, ideas, reading notes) that I collected was buried by the transaction record notes. The ratio of records to *knowledge notes* must have been 5-to-1. Ultimately, it was challenging to extract knowledge from Evernote.

Looking for a fresh start, I moved to Notion. I vowed that Notion would be my PKM, so it was never allowed to moonlight as a document management system. I used Notion for about a year and built out pages and databases. The PKM looked good, but I had a nagging feeling about using Notion.

I was spending a lot of time building my PKM on a proprietary system that I would have to pay to retain access. If I wanted to move my notes to another app, extracting them to import them into another app. This was the problem, and I didn't want to be locked into Notion or Evernote.

One day I stumbled across Obsidian, a text-based note app. The solution to my problem was promised on their website:

"In our age when cloud services can shut down, get bought, or change privacy policy any day, the last thing you want is proprietary format and data lock-in.

With Obsidian, your data sits in a local folder. Never leave your life's work held hostage in the cloud again."

I'm still delighted with my switch to Obsidian a little over a year in. I came for the text files, but I'm staying for the Markdown, backlinks, and plugins.