- Duration: 35 min
- Platform: meet
- Source: Read.ai 01JD7RV0XHF9XC4DZ76CSKEVGM (https://app.read.ai/analytics/meetings/01JD7RV0XHF9XC4DZ76CSKEVGM)
Transcript
[Derek Bungard]: Okay, so let’s get into it. We got to figure this out. So those creator payouts, tell me a little more about those. I’m still trying to understand the cash in, what was done with the cash in versus the cash out. [Michael Houck]: Sure. So the way the megaphone arm of the business works is that it’s a platform where users can pay us a subscription and then deposit more money into their accounts. And they use the money in their accounts to pay creators on the platform to perform tasks in like partnership style. Right. So it could be various things. Uh, so the money that they’re, the money that they’re paying subscription that comes right to us. That is, if you look in the megaphone tab of the Google sheet, that is platform fees, row five. Um, the deposits then are rows eight and nine. We give a 10% bonus. Into their accounts for any recurring deposits. So that’s why row 11 exists. Um, and yeah, so they deposit the money into their account and then they spend it on the creators. And what we do is we take a 20% commission in most cases. Um, in some cases it’s a 10% commission, but we, we take a commission on the money at the time that it is spent before that it’s not, you know, accessible to us basically. Um, and so they, The creator gets paid out 80%, we get 20%. And we capture that as revenue in row 16, which is the commission revenue. [Derek Bungard]: So the only thing that you hit the bank is hit your bank is the 20% commission revenue? [Michael Houck]: Well, we don’t have like a like a formal escrow account somewhere set up. So it all goes into our Stripe account and our Mercury account. But we’re not doing anything with it. It’s just just sitting there. [Derek Bungard]: Yeah, that’s, that’s, I think that’s part of the problem, because we got to do, we have to do something with it. And what I’m trying to tell us where, because our revenue number is not off from what you have, right, the total. [Michael Houck]: Let me pull up the portal because I only have the, I only have the Google Sheet up right now. One second. [Derek Bungard]: And we’re through October for now because some of November is not necessarily categorized yet. [Michael Houck]: Yeah, November is still very much in progress. We actually think November is going to be our best month of the year if some things close. Okay, I’m loading the portal now. So if I’m in the portal, excuse me, I go to my dashboard, I see for October that we have 43k revenue and 55 K expense if I go into the Google Sheet I see we have we’re close we have 51 K in revenue I’m seeing and for expenses what am I seeing for October I’m seeing yeah yeah we’re So something’s still off there. [Derek Bungard]: It may be best to do a, like I told you, a month or a month comparison, which our team can kind of do. But I think that, because if I look at the, I think we were looking at year two, year October, right? [Michael Houck]: And you said it was off about 80K, I want to say. [Derek Bungard]: It sounds, that sounds right. Yeah, it sounds right. Yeah. So I still don’t know if that that’s being categorized correctly. And I’m not saying it’s your fault by any means, but I think that that money in technically should have been revenue. You’re not going to be taxed on that revenue. But basically what ends up happening is it’s 100% revenue, 80% payout, and then your revenue, which is expense, and then your revenue is the remaining 20%. And the reason it should be like that is because we have to keep track of the cash in and cash effectively. And that’s sort of the netting effect. [Michael Houck]: If I had, I captured that in the Google sheet differently, and it’s probably just because I don’t know what I’m doing. I captured that in the full business tab in row 12. I captured as GMV, rather than gross revenue, the gross revenue was less the creator payout, basically. [Derek Bungard]: So the GMV would be the total, is that right? [Michael Houck]: Is what you’re classifying here as revenue, which is the sum of subscription revenue and the sum of deposit revenue. [Derek Bungard]: That number seems, oh, I’m just looking at Megaphone, I’m sorry, I’m sorry. [Michael Houck]: Yeah, just Megaphone, just Megaphone, row 12 in the full business tab. [Derek Bungard]: But if I look at GMV total, right, the whole business. Yeah. Right at 800K, but we only searched show 720. Would it be helpful? [Michael Houck]: I mean, this would take me a bit. So I probably wouldn’t be able to get to this until, I don’t know, maybe actually good to do over the Thanksgiving holiday. If I just go through everything at like a transaction level in the dashboard that you guys have set up the portal and try to like help classify things there. Cause I don’t know. It would probably be pretty tedious to do that, but if that’ll help us sort of rectify the square of the circle, I’m happy to do it. [Derek Bungard]: Yeah, I’m not as concerned in terms of like October, November. I think that we can do some analysis and try and figure out, you know, what’s off the small variances, but the, the creator payouts from before I think are the main problem because I don’t, if, if, if your income is overstated by ADK, I don’t want that, like, I don’t want you to be taxed on that. You know what I mean? So I wanted to get straightened out. But I mean, it’s up to you. We can do the analysis or you can do the analysis either way. [Michael Houck]: I mean, if you guys want to take a first kind of pass at it, that’s fine. And then I can dig in deeper if there are still things that we don’t understand or that are different between the Google Sheet and the portal. [Derek Bungard]: So I think what I’ll have my team do is I’ll start with the strike tab. Is all revenue, right? [Michael Houck]: The Stripe tab is, yes, Stripe tab is all revenue. And, um, there’s also revenue in the Mercury tab. Mercury also has some expenses in it. That’s our bank account. Um, so there’s, there’s a mix in there, but some people who’ve like wired us directly, that’ll be in there as revenue. [Derek Bungard]: And the, the revenue from Stripe, I think it’s Mercury sometimes in like a It’s not like by transaction. [Michael Houck]: So yeah, so Stripe makes a daily, in most cases daily, some days it doesn’t do it when we have other settings change or something. But most days it makes a daily deposit into Mercury on weekdays. I think I can, yeah, I’m pretty sure that we removed those lump sum deposits from the Mercury tab just to avoid confusion when we were setting up this Google Sheet. So I don’t think I don’t think you’re gonna run into that issue of duplicates and having to adjust for that. [Derek Bungard]: Gotcha, okay, so if we, let me think about this, if we, because we’re gonna see the lump deposit on merger on our side, but what you’re saying is we should be able to account for it in the Stripe tab. [Michael Houck]: Yes, exactly, 100%. [Derek Bungard]: Yeah, okay. So what we’ll do is we’ll go kind of month by month we line up, not only from a revenue standpoint, but so all the expenses will either be in Mercury or Amex, right? Yes, 100% of the expenses will be in Mercury or Amex. [Michael Houck]: Correct. Yeah. Okay. [Derek Bungard]: So yeah, let us put together something in terms of, you know, comparing month by month. And I think once we get it straightened out, I think it’ll be better going forward. But we’ve got some time here by the end of the year. We just want to make sure that we get fixed and, you know, One other thing I want to talk about, Evan, I spoke with you about this. I think, is your goal to keep doing a spreadsheet or to stop doing a spreadsheet? [Michael Houck]: I would love to stop doing the spreadsheet. I think it will be a little challenging for me to kick the habit just because, I don’t know, it’s very, I guess the portal’s equally easily accessible. But I’m just a Google Sheets guy, you know, for my consulting days. I just love getting in there and playing around with the data. So I think it’ll be a little bit hard for me to kick the habit. My VA sort of updates it manually. I don’t need to do anything. So it’s basically automated for me. But I would love to stop having to go in there and do anything. [Evan Baldridge]: Yeah, I think our concern is just if we have a different methodology than you do, is this going to be a constant challenge where our numbers, where you’re going to be like, hey, our numbers don’t look the same and we’re like, well, so I mean, I want to make, I think we ultimately want to make sure that your income that we’re reporting is the right income, that the expenses like at a high, at 55,000 feet, we need apples to apples. And the challenge is just going to be how you, how you split the data. If there’s things we could do from a bookkeeping perspective to potentially help you see a little bit more of like what you’re looking for, like we can do that. But I think inherently if it’s revenue in, even if you’re paying it directly out to somebody else, we’re going to call it revenue in our system. And like, because just that’s how we need to do it. You’re only going to get taxed on that net, you know, the net amount. Um, so I just, I think that’s the, I’m assuming that’s the concern that Derek is coming up. And I think that’s my concern is we just don’t want to be chasing our tail. Yeah. [Michael Houck]: I don’t want to make this a big monthly hassle for you guys either. I want to make it as simple for all three of us as, as possible. So look, I think the, is there a way that I can, and I haven’t explored the portal as much as I should. Is there a way that I can like get a download of the data each month and then I can just port that into a Google sheet. So it’s not like coming from different sources and everything is, is the same. [Evan Baldridge]: Yeah. I mean, we actually, let me go back. We have, we we’ve had historically have had a Google sheet that’s automatically been produced from our UI. Um, So it’s like a transaction history. The challenge is that we have the debit and the credit. So it gets a little bit hard to express that in a flat file. So I’ll go see where we are with producing that, especially when it comes to journal entries. That’s our main issue. But you can always go in to any of the tabs and So if you go to, let me just show you my screen really quick. Cool. [Derek Bungard]: And a side note here, Michael, I think we will need a bank statement from you. Because if you look at the reports and balance sheet, we’re showing negative cash and that’s not right. I don’t think we have, and you see that warning up there, needs opening balance. So we need a recorded beginning cash balance to make numbers, right? We still have the transactions, it’s just we didn’t have the beginning. [Evan Baldridge]: Yeah, let me go look and see if we just if we just didn’t record the opening balance. So maybe we just need to go in and pull the initial balance. Let’s go see if we pull the initial balance from day one. If that gets rid of this, this error. Yeah, let me know whatever you guys need from me. [Michael Houck]: Happy to happy to send whatever. [Evan Baldridge]: So you know, our reports, you can always go in and create custom reports in here. If you hit customize reports, will let you build kind of whatever you want. Oh, that’s nice. My screen is cut off. It’s like, this is really weird looking. So you can, you know, download whatever you want here. This is going to come more in a PDF form. So it’s not as, you know, Google Sheet friendly. Yeah, sure. I recommend if you want to actually just download the data, you can in here to transactions and you can put in whatever history, excuse me. I wish I had my health screen open. I just got in here and you can put whatever date range you want. And then when you download these, select this page, you can write download selected and it’ll download a flat file for you. [Michael Houck]: Excuse me. Can I exclude merchants? Cause like I could find a way to exclude like my internal transfers from my one Mercury account to my other Mercury account just by excluding it at the merchant level. [Evan Baldridge]: Yeah. You could basically, we do something called match suspense. So that’s where you’re moving everything around. So you could, you could just get rid of suspense if you wanted to. Okay, cool. That’ll work. [Michael Houck]: It’d be much cleaner to do it this way rather than me piping in the data from all these sources and you guys piping in the data from these sources and then trying to rectify that. So that’s, this makes sense. [Evan Baldridge]: I’d love us to be the center of truth because if we’re then that means that we’re missing something. We want every single action to happen in our system. So if it’s not, then we need to figure out why. Cool. Yeah, no, I totally get that. [Michael Houck]: A single source of truth is super important. I will, it’ll take me some time to probably go through everything. As I mentioned, I’ll try to do it maybe over Thanksgiving weekend and we’ll see what the initial report from the team says too. [Evan Baldridge]: Yeah, let’s, let us give it a shot and maybe we can find some silver bullet of something we missed and then, or like something that you have classified one way, and that’s probably, that’s my guess as to what’s happening, but I could be wrong. [Michael Houck]: My one question, and this is why the Google Sheet has worked well for us so far, is that in the full business tab of the Google Sheet, we have everything, and also just the individual business line tabs. This is probably different than some other companies you guys work with, probably not all of them, probably something like this, but we’re essentially company without different entities set up yet. Right. So we have at this point, like five different business lines that all bleed into the same LLC. And so keeping having those separate lets me see, oh, OK, our media business had a down month or our ghost writing agency has had a huge profit this month that we can reinvest some in marketing. Those are the types of insights that help. [Evan Baldridge]: You know, how do you know what revenue and what expenses go to each of these then? [Michael Houck]: It’s the the product in Stripe. So it’s like and then for people who wire us in Mercury, I just have to manually sort of know or I train my VA to know who the merchant who the who the sender is. But yeah, in Stripe, we have like different products. And if you look in the Stripe tab, you can see that like description and description to those fields help us And then my VA goes through and fills out columns P and Q, which are the cost center and the product within that cost center. Okay. [Evan Baldridge]: How do you do the expense side? [Derek Bungard]: How do you split the expenses? [Michael Houck]: I mean, most things that we pay for only go to one business, like a, like a, you know, an engineering code bug monitoring tool that we pay for as a SaaS that is only relevant to our, our SaaS platform, right. To mega phone. So most of it’s pretty clear. For stuff that sort of bleeds over multiple, I’ve created an extra business line called Rye Valley, which is just the main company, but doesn’t actually bring in any revenue. And we have sort of like miscellaneous expenses categorized for that. [Evan Baldridge]: So one thing, I know Mercury lets you create sub-accounts, like within your account. So I’m wondering if that would be a worthwhile endeavor you know, just to break out and maybe even I don’t know how Stripe does it. I don’t think they’re as friendly with that, but we’re not. Yeah. [UNKNOWN_SPEAKER]: Yeah. [Evan Baldridge]: I mean, we could potentially. So we have the concept in our system of creating a projects like a projects dropdown, so you could have like a subcategory underneath a single underneath one LLC that lets you kind of select more things. OK. So, uh, would that be included in the data export that you were mentioning? [Michael Houck]: Could I get that at that in that CSV to then pipe back into the Google sheet? [Evan Baldridge]: Um, that’s one of the features I need to see if they’ve updated into our export because of projects function is a newer function. Um, it’s in the it’s in the transactions when you just go and do like a manual download, you could download that. The challenge is gonna be like, how do we, if you’re wanting to live that outside of our system, you know. [Michael Houck]: No, I think what sounds like the easiest way here would be if I give my assistant access to the portal, and then they know what expenses and what revenue goes to which project, we’ll call it, and they go in and tag that stuff, then we can export to the Google Sheet and do more data manipulation there as long as that project data is in that CSV. [Evan Baldridge]: Yeah. I’ll double check with the team. I’m pretty sure that when you download the transactions tab, the project data is included. It’s the automated database one that we have that we really haven’t given clients access to, but it’s something But yeah, we could potentially. We definitely can add that drop down. It’s just going to be a matter of whether or not we can actually get this information right so. Yeah, if. [Michael Houck]: If we can go in and categorize it, I can just have my assistant do it. She can take one transaction from here and do it historically for everything. That’s that’s no problem. And for new transactions, as long as we can see, like, I mean, she can even, we wouldn’t even need the Stripe product in the portal, because technically she could just log into Stripe and look at what product it was for. It’d be a little more tedious, but she could do that, no problem. [Evan Baldridge]: So what we could do is just go in and create projects for each of these things. [Derek Bungard]: I think one of the hurdles, though, is the way he puts the products in terms of revenue. When it comes through on Mercury, it could be like a $1 figure, let's say like $5,000. And I think that $5,000 could cross over some different. Correct. So we would have to, they would have to be manually split because we're discussing the one transaction. [Evan Baldridge]: Yeah, you'd have to like journal, you'd have to journal the breakout. [Michael Houck]: I mean, we could Should we look at it at the Stripe transaction level rather than the Mercury lump sum Stripe dump level? [Derek Bungard]: Do we get the Stripe data? Does that even come through? [Evan Baldridge]: Normally, we see when Stripe hits your bank. Yeah, just when it hits the bank. [Derek Bungard]: We don't see the detail behind that transaction. [Michael Houck]: Not necessarily. Directly to Stripe in the in the portal as well. [Evan Baldridge]: No, we have I mean, we have no you have to do it through. So here is your bank account. And here's the Stripe transfer that's happening. Now I wonder if there's anything interesting in these names. [Michael Houck]: There's not Yeah, it's just it's either Stripe transfer or dry valley LLC transfer or sometimes even uses my name Michael how but they're not there's no like rhyme or reason to that. [Evan Baldridge]: Okay. Yeah. I mean, so, but we should be able to see what these Stripe transfers, what I'm understanding from the other sheet is that each of these Stripe transfers potentially does have its own, is coming from its own business unit, or could you have things mixed in here? [Michael Houck]: Each and every one of these is mixed between them. Yeah. Oh, okay. We send everything into, in through one Stripe account, but we have products within it. And so when Stripe pushes that to the bank account, it's just taking all the revenue that came in that day. And sending it over no matter what product it came in from [Evan Baldridge]: Got it. OK. Yeah. That's going to make a lot, yeah, it's going to make it a lot more challenging to do it in here. I mean, ideally, even with, I'm just wondering if Stripe could do something where they could send it in different, you know. [Michael Houck]: I've tried. That would have made my life a lot easier setting up the Google Sheet too. [UNKNOWN_SPEAKER]: Yeah. [Michael Houck]: they don't let you do that, unfortunately. [UNKNOWN_SPEAKER]: Okay. Yeah. [Evan Baldridge]: So, I mean, I guess in that case, it just having a dump from our system to at least give you the data in one place. And then maybe you're helping to break it out into that other sheet. I mean, ideally, ideally, if you could have these as separate accounts or have these as separate things, that would be, we can, I mean, you can have separate accounts in our system without creating unique LLCs. If that, you know, but I know that adds a whole nother layer I mean, we'd be, we'd be fine to do that. [Michael Houck]: I think the issue is, is more so the, the Mercury and Stripe connection. I don't think there's a way to break it up. So even if we created different sub accounts within Mercury, Stripe would just deposit everything combined into one of those accounts. And then we, um, yeah, look, let's, let's treat the portal as source of truth and we'll, we'll have the team, you guys will have the team do what they're going to do. And then I'll go in and I'll. Sort of, you know, manually make any tweaks or changes and we can kind of reconvene after that. Let's treat that as source of truth because that'll make everyone's life easier. At least it'll make your guys' life easier. On my end, I can, in the meantime, I'm probably going to have to continue in the short term with the Google Sheet, but not as a source of truth. This is like a sanity check of like high or low. How are we doing each month? And then once we have the projects in the portal, I guess it'll be hard to classify things by project because of the Stripe. [Evan Baldridge]: That's what I'm concerned about. Is that like, going in and classifying it all by project. I mean, we have the ability to like break out transactions into like multiple things, but it's just, it's not a, yeah, it's not really, it's a pretty hard, it's like not hard, but it's tedious and it can take some time. So yeah. [Michael Houck]: And so some of these things like, you know, 5,584, $4.85, I bet that there’s like three different, maybe even four different projects in there. Yeah. [Evan Baldridge]: I understand how that, I mean, and like I said, we, I mean, you can go in and create multiple part transactions, like do it like it’s there. It’s a possibility. You can journal that, that thing into five different things, but your math has to math. And then that means you’re touching every single one of these transactions, which. Yeah. [Michael Houck]: It’s a full time job for my assistant. She wouldn’t be able to do anything else basically. [Evan Baldridge]: Yeah. Pain in the butt. So I would say if you can, is there a way for you to do it on the invoicing side of Stripe where you can see what you’ve invoiced out as opposed to seeing? [Michael Houck]: We only do a limited amount of invoices, most of it subscriptions. [Evan Baldridge]: Yeah, we, that’s how we do too. So we, we get to, we live the joys of Stripe as well. Like, and I feel like we’re married to them. Like I’ve told, I was talking to Michael and I’m like, we can’t divorce Stripe. Like they are, We’re stuck like Chuck, like we can’t get rid of them. [Michael Houck]: I mean, they, you know, they’re a great product. They do a lot of things really well. This is one particular annoyance for this specific type of business. Okay. Look, I like our plan. It’s not perfect on my end. It’s definitely going to create some headaches for me, but I think that it’ll make, it’ll make our process better. And I think that’s, what’s probably most important here. So let’s do that. [Evan Baldridge]: Maybe even if you’re using the stripe, maybe even the striper, to be able to pull out your different products and being able to pivot table off of what the products are in Stripe, maybe that’ll help you. Well, let me know. Let’s go with this and then we can continue to talk about it as time goes on. Yeah. [Michael Houck]: Again, I think that my guess is that we’ll continue sort of maintaining the Google Sheet, but we won’t treat it as source of truth. We’ll acknowledge that the numbers are probably a little bit off. And that the numbers are correct at the aggregate business level in the portal. And we’ll just use the Google Sheet as sort of a, I don’t know, just like a sanity check on how the business is doing and flagging certain areas within each line of the business. In the future, maybe we’ll split these up into different LLCs and have different Stripe accounts and Mercury accounts and the whole thing will be easier. But for now, that’s probably the easiest way to do it. Evan, one other thing I wanted to flag to you just before we hop. [Derek Bungard]: The S Corp, do we want to do that this year? Well, it’s going to depend on the net profit from the business. We’ve got to get this worked out first. We show you basically like five grand, well, let’s do through October. So October was $6,000, right? But if you think it's $86,000, like that ADK difference we were talking about, then S-Corp makes more sense. But if you’re not showing that much profit for this year, then I’m not really that concerned about it. Really, right around like $50,000 net profit is where we start talking about becoming an S-Corp, paying yourself a salary and doing, because then it’s worth it. [Michael Houck]: Yeah, I mean, we’re expecting a pretty significant profit in November, December, depending on when some things convert and close, I would expect full year profit to be somewhere between 100 and 150K. [Derek Bungard]: Yeah, if that’s the case, then we should definitely go to Escort Brown and get you set up on salary. And we can do a one-time payroll run in December to get you caught up on wages. But yeah, I think that we should definitely go to Escort Brown. [Evan Baldridge]: Have you started doing anything with Gusto? [Michael Houck]: No, we, we use, we use Thera. [Evan Baldridge]: Oh yeah. Okay. Use Thera. So Thera can just, we could give Thera an amount and you to, to pay you basically. [Michael Houck]: Yeah, exactly. [Evan Baldridge]: Exactly. Um, yeah, so we, we can, let’s get this figured out. I mean, we need to make sure that we’re showing the right amount of profit. So, um, and that that’s apples to apples. Because right now we’re just, yeah, if we only show six grand, it doesn’t hurt to take this election probably anyway, especially because you’re expecting to make even more money next year. So why don’t we just move down the route? Let’s just go down the thing and I’ll get them to submit a form to you, a 2553. Let’s just go ahead and get moving on it. And I don’t see any reason why it would be problematic to take that election. Derek, even if like, even if it’s 30 grand, I mean, it’s. [Michael Houck]: Well, it won’t be, it’s going to be 100 to 150. We have like, I feel, I’d say 99% confident in that. Yeah. Okay. [Evan Baldridge]: Well, let’s, we’ll go ahead and work on that with the team, get you the form so we can start doing that. And then like we can, like Derek said, we can just get you like a one time, um, before the end of the year payment that you would need to make yourself. And you could even like just, what we do when we do it, when we run it through some other payroll systems is we just pay the payroll tax and the federal, generally the withholdings. So you don’t have to go and write yourself a check for 30 grand or whatever. [Michael Houck]: And do I, do I need to be W2 or can I be 1099? [UNKNOWN_SPEAKER]: W2. [Michael Houck]: Okay. Got it. Cool. Okay. Thanks guys. Sorry so much for all these hassles getting started. I appreciate you working with me on this. I know it’s a pain. Well, we’ll get this right and things will be smoother. [Evan Baldridge]: Yeah, we just want to make sure we’re set you on the right path and that you’re comfortable with our technology. And then we all have the same starting point because that’s going to obviously, you know, make things more challenging. So cool. [Michael Houck]: Well, I’ll keep an eye out for stuff from the team and from you guys. And then once I get that, I’ll go through and do like a sanity check and we can rectify and go from there. [Evan Baldridge]: Perfect. Cool, good. All right, thanks. [Derek Bungard]: See ya. Thank you, bye.