A Simple Bank Account System for Business Sustainability

This is an oldie but goodie from the archives. This conversation was recorded in 2024, but its principles and teachings are timeless. Susanne Mariga is an expert in finance and she's been doing taxes for clients since she was a 14-year old in her dad's accounting office. 

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If your business is busy but your bank balance never reflects it, something is broken and it’s not your work ethic. Suzanne Mariga, CPA, fractional CFO, and CEO of the award-winning Mariga Group joins me in a conversation about the money mistake she sees again and again: founders pushing for years, sometimes decades, and still having nothing to show for it.

Suzanne explains the Profit First method in plain language, including the five-bank-account setup that creates instant clarity around cash flow management: income, profit, owner’s pay, tax, and operating expenses. She explains why focusing on building net worth is a better strategy than “saving tax” through spending. She says, pay yourself properly so that your business stops quietly relying on your unpaid labour. 

Other topics we discuss include: 

• Preparing for a leap from corporate life
• The art of remaining flexible and open to change 
• How fractional C-suite fiance support helps build stronger accounting systems
• A quick chat about AI Tools for Small Business. 

If you want healthier margins, better cash flow, and a business you could one day sell, press play. 

Subscribe, share this with a friend who needs a reset, and leave a review with your biggest takeaway.

LOST IN TRANSLATION

Roth IRA - The American retirement fund - similar to the RA contribution for South Africans and private pension funds of the EU region. 

Transcript

orking Hard With Nothing To Show

Susanne Mariga 0:02

I think one of the biggest mistakes that happens in Gen 1, as well as not Gen 1, because the bad habits get passed down, frankly, is that they go 10 years, they go 20 years, and have nothing to show for their hard work.

Kutloano Skosana Ricci 0:15

Hello and welcome to Shades and Layers. I'm your host, Kutloano Skosana Ricci. Today we're talking finances. If you're planning to launch a business or you just want to get your cash flow in order, then this is the episode for you. My guest is Susanne Mariga, who is on a mission to empower minority business owners with her profit-first methodology, which centers sustainable scaling. Susanne is a CPA by qualification and fractional CFO in practice, and she explains what all of that means and how she works with clients during our conversation. She is the CEO of her own award-winning company, the Mariga Group, which received the 2021 Profit First Professional Firm of the Year. She is also the host of the Profit Talk podcast. So, what is Profit First Method and how can it help you achieve your business goals as the owner of a small business or an aspiring entrepreneur? Well, we will find out all about it from Susanne Mariga.

Susanne Mariga 1:23

My name is Susanne Mariga. I am actually an owner of a CPA firm here in Houston, Texas. I provide fractional CFO services using the profit first spend. So, like when most people go to their accountants, you know, and they ask, how do I save money on taxes? You know, and the accountant tells them to go out and buy bookshelves or cabinets or buy a car so they can get a $25,000 write-off. We don't tell them that. Instead, we use what something called the profit first strategy. So it really is about building your net worth, making your company profitable versus trying to save tax dollars by hurting yourself to hurt the IRS. And so we'll look at strategies like, you know, how do you build that net worth without increasing taxes? So maybe if you're a closely held company, sole proprietorship, husband and wife type of business, we might have you maybe max out some of those retirement accounts, right? You can put $66,000 each in those. So that's like, you know, uh $120,000 going towards your retirement account. And at the same time, you know, you didn't necessarily go out and buy a car. You didn't waste money, you just passed it from the right hand to the left. And so those are the type of strategies that we incorporate. And uh, how did you get into this business? So it's interesting because I actually grew up in the world of public accounting. Um, my my father was a CPA. Yes. Um, he was a CPA um for over 40 years. And he actually hired me when I was 14 to do the bookkeeping and some of the easy taxes for some of his clients. Um, it was a way of um getting his daughter from like not running around, right?

Kutloano Skosana Ricci 3:01

Yeah, that's getting rid of good strategy, yes. Exactly. Keep them busy.

Susanne Mariga 3:06

Um yeah, yeah. And so, you know, I learned from an early age, you know, how to do accounting, how to balance books, how to do some tax returns, how to interact with clients. And he got a great tax write-off. So it ended up being a win-win situation for both of us.

aying Your Child To Invest

Kutloano Skosana Ricci 3:21

Okay. So this is uh now becoming a popular strategy. I'm seeing quite a few posts on social media about how Beyoncé has blue ivy on her on her payroll. And, you know, that's uh that's a way of building generational wealth. Can you just, you know, briefly outline how that works?

Susanne Mariga 3:41

So, you know, it's interesting because if you if you pay someone less than a standard deduction, so if I'm earning less than a standard deduction, it's about $13,000 a share. Um, what happens is I don't have to pay federal taxes. And so what happens is, you know, you if you're hiring your child and they're making less than the standard deduction, it's a deduction for the business, right? Because it's payroll expense. But for the child, you know, it's there's no taxable income because they're literally in the 0% tax bracket because they don't make enough. And and it's interesting because depending on how your entity is set up, so like let's say you're a sole proprietor, right? You're a schedule C, we've all gone into those restaurants and the child is like running in the credit card, right? Um to take your order, right? And and so if if you're in a sole proprietor situation, you don't actually have to pay Social Security and Medicare either. So it becomes tax-free earnings, is what happens. And it's great because you know, then that child can take those taxable earnings, which happens to be a 0% tax rate, right? And they can invest into a Roth IRA account. And so that Roth IRA account is an after-tax vehicle. And so now you've created, just like you said, Colano, you you've created this generational wealth, right? You your child is now making earned income, you're getting a tax write-off, plus they're investing it in their Roth IR so they can use that money to pay for college, they can use it to buy their first home. And if they just have it all together, you know, and they're like, I don't need this money, now they have money in their retirement, right? So which is really good. And you can also say, hey, you know what? My child's gonna take me to Disney World because you know, uh I want to go to Disney World as much as they do.

he Shoebox Client Warning Sign

Kutloano Skosana Ricci 5:29

Right. So you have this uh income that is not taxable. Great. So that's one way to build generational wealth. You also speak of stumbling blocks in first generational wealth. So, what are some of the things you advise your clients to avoid, or how do you advise them to get over that for those first stumbling blocks?

Susanne Mariga 5:51

So, you know, I am a fractional CFO, so I get the opportunity to work with a lot of businesses. And I'm also an author. I'm an offer book called Profit First to Minority Business Enterprises that I wrote in collaboration under the Profit First Brand with Mike McAllowitz. And one of the things that always kind of hit me strange is when I first started my business, um, I remember like one of my first clients, they came, he came to my office and he was carrying a shoebox. And and I remember like starting my business. I had come from big four public accounting. So like your big companies like Anderson and KPMG. And here was my first client bringing me a crusty shoebox that he'd probably use year after year. And and I remember he like plopped down at the chair across from me and he goes, you know, whatever you do, I don't want to pay any taxes. And I remember rummaging through this shoebox, and I get to the bottom, there's this piece of paper that looks like, you know, I don't know where he pulled that out of, but you know, it was a profit and a loss. And this income statement literally said he made no money. It was like negative, like literally the expenses were more than the the revenue. And I remember looking at him, I'm like, sir, don't worry, you know, you're not gonna pay any taxes. And and I remember he like is excited. He comes back a couple of days later to get his tax return. And he's excited because he's getting in this refund. It's called earn income credit, you know, that that you know, that step above welfare. You went to work even though you weren't successful, type of thing. And and he was thinking, I did a good job. And I thought, you know, as this tax accountant, I must have done a good job too, because he was getting a refund. And what happened was the next year he comes back to me, and and it's the same thing. He goes, Whatever magic you did last year, do it again this year, because I still don't want to pay any taxes. Right. And again, I reach in that to that shoe box, I get to the bottom of that PL, and I'm like, Don't worry, sir, you're not gonna pay taxes again because you didn't make any money. And then the third year he comes back to me, same shoebox, right? I'm telling you, I might as well like like literally do graffiti on the shoebox. And and he tells me, he goes, you know, he still manages to say the same joke about not paying taxes, but this time it's different because now I know him better, right? He calls me in the middle of night because he doesn't have time to call me during the day because he's so busy. His employees get paid more than he does. Um, he's still on a car payment, he doesn't own his own house, he rents. And frankly, he has nothing to show for all his hard work. And that's what I think one of the biggest things that, you know, entrepreneurs make in terms of mistakes is they have nothing to show for their work. Literally, I could tell you, you know, many times I would say one out of two, if I look at an entrepreneur, I'm like, most of them will be better off getting a J-O B because they're not producing a profit or even salary to make it worth it at the end of the day. They'll be better off getting a job in their respective careers. And I think one of the biggest mistakes that happens in Gen 1, as well as not gen one, because the bad habits get passed down, frankly, is that we don't create businesses that supply our life that that or have businesses that are in line with the values of why we even created this business. And that's really the biggest mistake that I have is that they go 10 years, they go 20 years and have nothing to show for their hard work.

Kutloano Skosana Ricci 9:06

Can you then uh get into uh the profit first method?

Susanne Mariga 9:10

Sure. So profit first, you know, it's it's very um, I call it kind of like the small plates uh methodology. It's kind of like Dave Ramsey's envelope system. You know, first thing they tell you when you go on a diet is use smaller plates. And and they tell you to use smaller plates because you're gonna eat less food, right? The smaller the plate, the less you're gonna consume. And so what happens in profit first is we create this illusion of scarcity through bank accounts. And I'm gonna create basically five bank accounts. I'm gonna have one account where all my money's gonna come into. Um, I'm gonna have a bank account specifically for my profit. I'm gonna have a bank account for my owner's pay. I'm gonna have a bank account for tax, I'm gonna have a bank account for my operating expenses. And what's gonna happen is twice a month, I'm going to literally fund these bank accounts based upon predetermined percentages. So I'm gonna fund my profit account, I'm gonna fund my owner's pay account because you know, I'll often ask owners, I'm like, who's your most value employee? If if who would leave you today and you're gonna be in a world of herd. And they always say Becky, Sue, and all these wonderful names like John. And I'm like, you know what? Your most valued player is actually you. The day you walk out of this business, nobody gets paid anymore. This business shuts down. And so you need to get paid because if you didn't pay Becky Sue, she wouldn't be coming to work tomorrow. And you shouldn't come to work tomorrow if you're not getting paid. So we create that bank account for you, the owner. The next thing is we're gonna create an account for taxes because reality is if you are making profit, you are making owners pay, you are driving the Bugatti, you're gonna have taxes, right? And so we're not gonna be figuring out how are we gonna pay for last year's taxes with this year's money. We're gonna fund the tax bank account as we go. And if we're gonna use great tax strategy, but and so if there's money left over, we can have another profit distribution, but we're gonna at least reserve for taxes. And that last account that we're gonna create is our operating expense account. This is where we're gonna pay our bills from. And literally, most business owners they tell me every day, I just let me check my bank account before I make that purchase, right? And and so we're gonna work with that. Let me check your bank account before you make that purchase. And so whatever's left in that bank account, that's what you can use for your operating expenses.

Kutloano Skosana Ricci 11:28

Wonderful. Oh, that's uh actually a very sensible method of um of running your your back end, so to speak. Exactly.

Susanne Mariga 11:38

Exactly. It's physics, right? It's the movement of money. It's you move money and it'll be there.

Kutloano Skosana Ricci 11:43

Yeah, absolutely. Absolutely. And, you know, have you always used this method uh for your clients, or it's something that you came to later on in your career?

Susanne Mariga 11:53

So I think when I started my business way back in 2007, I don't think Mike McAllis had written his book yet. So I don't think that profit first really existed. Um, I actually found profit first for um, you know, for my own self. You know, I was needing that cash management system. I was running a very unintentional business. And and I said, you know what, I'll be better off becoming a tax manager at a big four farm. And literally this system really pivoted how I ran my business. And and it was so great because it allowed me to build a really profitable accounting business that I was able to sell at the age of 46 years old and and retire and just do what I love, which is the fractional CFO work and my profit first consulting. Um, because when your business sells, right, it goes for a multiple of EBITDA, which is profit practically, and and also like, are you paying yourself? And so, you know, it's not just about the revenue, it's about the profit, right? Because your business is an asset and you do want to sell it.

regnancy Pivot Into Entrepreneurship

Kutloano Skosana Ricci 12:53

Absolutely. This is Shades and Layers. My guest today is Susanne Mariga, founder and CEO of the award-winning Mariga Group. Now that you know about the profit first method, let's find out about Susanne's entrepreneurial journey, how she prepared to transition from corporate, and how everything is going so far. So, how did you prepare for your transition into entrepreneurship?

Susanne Mariga 13:25

So, in terms of preparing my my journey into entrepreneurship, you know, I was actually, I remember I was like flying to Toronto. I had a job that I was responsible for all the Canadian operations. And I was literally flying there every single week. And and the plane from Houston to Toronto, it was, I would call it almost like a jet plane. Like it was one of those ones that had one seat aisle on one side, two seat aisle on the other. And I always like try to get that one seat, you know, that was all by itself. And I remember I was like six months pregnant, and I was like, are they gonna notice that I'm six months pregnant because you're not supposed to be lying on an airplane, right? Third trimester. And nobody asked me how pregnant I was. And so I got on the plane, and I remember like trying to put the seat down and like my belly, I was like not like pointy pregnant, I was like wide pregnant. I couldn't get this, the, the, the handbar down. And and it hit me. I said, you know what? My life is about to change. I'm not gonna be able to maintain this career where I'm traveling every single week. And things like Zoom hadn't really come out then. And um and it hit me. I was like, you know, I'm gonna have to find another option. Otherwise, I'm never gonna see my little girl because I'm always gonna be in Toronto. And um, and so that was kind of the pivot of my entrepreneurship career. I went on maternity leave, I visited multiple daycares and and I I practiced leaving her and and I just couldn't do it. I just could not do it. And so literally I started my business right after maternity leave. Oh, they will change your life, all right.

usiness Plans And Staying Flexible

Kutloano Skosana Ricci 15:00

And then in terms of the practicalities of, you know, coming up with a business plan, a business idea, and all of that, how did that work for you? How did that process uh happen for you?

Susanne Mariga 15:12

So it was interesting because um when I did my first business plan, I remember when I started my business, my husband goes, I want a business plan for how this is gonna work. Now that you're leaving your W-2 job and you're asking for money for startup costs, I need a business plan. And I remember like trucking away at like my like five-year-old Daryl Aspariana thing, like the keyboard. So the keys were about to pop off that thing. And and I had this idea that I was gonna do a mobile tax service. And I was gonna like go to people's houses and do taxes like right on the spot. They wouldn't have to go to HR block. And I remember I went to the SBA office because you know I wanted to like take in all their their knowledge about how do you get sales and how do you like do this mobile tax service. And the first thing the guy told me was, you're gonna end up dead. You're gonna be on the news, you're gonna be on channel nine news, literally doing this mobile tax service. And literally everything that went into this one business plan, nothing ever came true of it. And so, you know, my advice is just be flexible, you know, and and go with the flow. See what you see what the market wants from you, see what the world is recognizing as your gift, and then go with it.

Kutloano Skosana Ricci 16:21

How did you land on uh fractional C-suite offers?

ractional CFO Work And Team Design

Susanne Mariga 16:25

So, you know, it it was really the profit-first journey. Um, I saw that a lot of business owners were really good at what they did. They were, you know, probably the best in their craft. But when it came to understanding the numbers, when it came to really strategically analyzing it or building up their in-house accounting team, because usually when we work as a fractional CFO, most of my clients are seven, eight figure entrepreneurs at this point. And, you know, they they grew up with their trade, but they're not necessarily strategic about how do I create an accounting function? How do I start to hire in-house AP people or accounts receivable persons? And so what this role does, it literally works with the CEO from a strategic standpoint on the finance side, but we also recruit and train their internal accounting staff.

Kutloano Skosana Ricci 17:12

Okay, I see. And uh who do you work with? Like how are you structured and your team, et cetera? Who's giving you that support?

Susanne Mariga 17:20

Um, so you know, I have a um very strong support team, you know, and again, it's hiring people for what their genius, their brilliance is. So we have marketing support in our team, we have admin support. Um, really what I do is I try to hire people that compliment me and things that I'm not very good at. You know, I'm not very good at graphics. Um, I can do data entry, but they can probably do it better for longer periods of time. Um, so I hire people for that. And so that's that's really what our team structure is like.

Kutloano Skosana Ricci 17:50

Okay. You were talking about uh helping companies with strategic planning. So who's who helped you? Like, you know, did you have a business coach when you know taking on this journey?

Susanne Mariga 18:01

So I think a lot of it is life experience, right? I did have that privilege of working with like the number one accounting firm in the world, Arthur Anderson at the time, before our friendly folks in Houston got in trouble. You know, I was in their Chicago office, which is their flagship office. Um, I later worked at KPMG. You know, my clients were Goldman Sachs, my clients were Komatsu, my clients were Chase Bank, which was Bank One back in the day. You know, my clients were, you know, the city of Indianapolis. So I was used to working with very large companies. So it made a very strategic decision because of that level of expertise of, you know, you're you're literally working with these accounts where you're looking at their financial statements, where you're analyzing, where you're talking to their CEOs and CFOs and seeing how they think. So I think that was a very critical experience for me getting that. I think working with, you know, even the small accounting firm with my father, you know, getting that tax exposure was completely valuable. I think for myself, running a seven-figure firm, you know, that was extremely valuable. I got to see what it was like hiring that first employee, hiring a second employee, hiring that third employee, hiring managers and going through that. And so that that was also very valuable. So I think it was taking the accumulation of experience, and that really helped. I think another thing that helped too was hiring people for their specialties. Sometimes we did bring in consultants, you know, HR consultants as we were growing, as we wanted to implement, you know, feedback loops, as we wanted to have critical conversations. What's the best way to have those critical conversations? So we did hire consultants as we grew too that kind of helped us in places that were a blind spot that we didn't have that support yet in our business. So that that's kind of a combination of what took took me to that level and allowed me to do that.

hree Rules For New Founders

Kutloano Skosana Ricci 19:47

Yeah, perfect. And somebody who wants to go into entrepreneurship, what are the top three things that you would advise them to do to get it right? Because it's a very tough journey, right? What should they have in place in order to succeed eventually?

Susanne Mariga 20:02

Be flexible. So always listen to the market. You know, the market's always gonna tell you something from a feedback standpoint. And what you start out with will probably not be where you end up. Um, I don't have the mobile truck that does tax returns. Um, so that that would be the key. The next thing would be, you know, fall forward, fail forward, right? Fail forward. Um, you're going to try things. Sometimes it's gonna work, sometimes you're gonna, you're just gonna learn, right? And be okay with just trying things. And then the last thing is, you know, and I think this is probably so important that we don't realize this, especially when we're starting off our careers or starting off our businesses, is those relationships that you make along the way are everything. They're so valuable because maybe you meet someone and right now there's just no opportunity to work together. There's no real connection, but stay in touch, Facebook friend them, right? You know, you might find that you're working with them or asking them to be on a collaboration in five years from now, or maybe they're a referral for you or a source of referrals, or maybe someone you're going to be referring to later on for their expertise. But collect people, collect people and and and maintain those relationships. I would say it is a are the top three things that I would recommend for entrepreneurship.

indset: Your No Matters More

Kutloano Skosana Ricci 21:19

Wonderful. Yeah. It's Shades and Layers, and my guest is Susanne Mariga, founder and CEO of the Mariga Group. Next, we talk about the entrepreneurial mindset. We get into artificial intelligence, how it has impacted Susanne's own work so far, and you will get a chance to see how it may impact yours going forward. And finally, we have the Shades and Layers Rapid Fire. I've also heard you talk about mindset. So, what should your mindset be when you're embarking on this journey?

Susanne Mariga 21:56

So, the mindset, and and I think what happens in entrepreneurship. Is there are tons of distractions. There are tons of things that you can say yes to. There are going to be people that are going to ask you to do things that are completely left field, but maybe closely related to what you do. Your no's are more important than your yeses. And at the end of the day, you have to understand why are you doing this? What is the things that are really important for you? You know, one of my things was I started my business to be able to spend time with my daughter. And I'm constantly being given offers of, hey, can you can you take this client where you're going to be doing a ton of travel? And I have to fight that. I'm like, wait a minute. My the reason why I started this business to be with my daughter. And I wanted to really be there for her high school years. And I had grown this amazing seven-figure accounting firm. And I said, but you know what? It's starting to take me away from my daughter. And and so going back to the why is always really important.

I Tools Reshaping Small Business

Kutloano Skosana Ricci 22:53

Okay. All right, fantastic. And then um, right now there's uh all this buzz about how AI can help you to scale your business, etc. How are you seeing small businesses particularly implement these tools, AI tools, in order to achieve what couldn't be achieved as quickly in previous years?

Susanne Mariga 23:13

So AI is gonna be a rapidly changing world. I think when I first saw Chat GPT, I was like, maybe I'll clock out and I'll just never clock back in, is what I thought to myself. And you know, my assistant, you know, she calls me today and she's working on some copy and she's like, okay, I hope you don't mind, but I kind of ran this through Chat GPT and I was like, ooh, I love this. But it, you know, so so the world of AI is constantly changing. It's gonna change from the thought of you know being able to write copy to it's gonna take the place of some of your traditional accounting too, like that data entry, right? It's gonna get more and more automated. And and so knowing how to either master that AI and stay in the forefront so that you're more efficient is gonna be extremely important. You know, one of the things that we've been playing with is creating pricing calculators, optimal pricing calculators.

Kutloano Skosana Ricci 24:03

Right.

Susanne Mariga 24:04

Um, and so how can you harness that is really important.

Kutloano Skosana Ricci 24:09

So, what's um what's your vision for the Mariga group going forward?

uilding Gen-One Millionaires

Susanne Mariga 24:13

So the vision for Marega Group is to help as many entrepreneurs as possible implement profit first. If we can change generational lives, if we can create generations of people that are first-time millionaires, first time to build successful businesses, businesses that create jobs for their community. I feel like we've had the impact in the world that I'm most proud of. So our goal is to create what we call Gen 1, Gen 1s, Gen 1 millionaires, Gen 1 entrepreneurs that are changing the face of what the world looks like is our goal.

apid Fire Plus Where To Start

Kutloano Skosana Ricci 24:48

Wonderful. Yeah, that's great. And now we move to the Shades and Layers Rapid Fire. If you had to write a memoir today, what would it be called and why? Ooh, I think my memoir would be called Just Do It.

Susanne Mariga 25:03

Oh. You know, and and the reason why is, and I know that's like Nike, right? But you know, I I think that one of the biggest things that I have always, you know, and it's not me, it's and it's just part of life, right? Whenever you're venturing into something new, right, there's that getting started, right? There's that mind trash that goes in your mind of, you know, can I do this? You know, um, I still need to learn more, right? But the reality is, you know, you spend 10 hours thinking about every reason why you shouldn't or why it's going to be so hard, and one hour actually doing the thing. And so we'll we'll accomplish more things if we just do it. So that'll be the name of my memoir, just do it. Fab.

Kutloano Skosana Ricci 25:43

And if you had to turn it into a movie, who would you pick for the lead actress? Oh wow, that's a hard question. That's a hard one. Oh, wow. I'll have to take a rain check on that one. Okay, okay, okay. We'll we'll let that pass. That's great. But if you had to host a dinner tonight and you were inviting a famous black woman, living or dead, who would it be?

Susanne Mariga 26:07

It would definitely be Michelle Obama. I want the scoop. Oh I want the scoop.

Kutloano Skosana Ricci 26:11

Yeah, yeah, yeah.

unknown 26:12

Yeah.

Kutloano Skosana Ricci 26:13

Okay. I felt that deep in my bones. Fantastic, fantastic. So is there anything else that you'd like to share about Mariga Group or Profit First?

Susanne Mariga 26:24

You know, it's been a life-changing journey. Profit first and the Mariga Group. And I I would recommend if you're teetering on entrepreneurship, if you're teetering on changing your business, right? To increase profitability, to have a business that works for you, just do it. Just do it. Just just do profit first.

Kutloano Skosana Ricci 26:42

Perfect. And where can people find you if they want to be your client or just learn more about your work?

inal Thanks And Share Request

Susanne Mariga 26:48

So the best way to reach me, there's a couple ways. One is the book, Profit First for Minority Business Enterprises. Great book. Um, Kirkus Review, Publishers Weeklies, Editors Pick. The other way is if you if you want to know what percentages a healthy company looks like so you can start your profit first journey, just go to profitmac.co.

Kutloano Skosana Ricci 27:05

Perfect. And that is all from me today. Thank you, Susanne, for sharing your story and your wisdom. If you liked this episode, please share it with a friend and let me know what you think. My contact details are in the show notes. Thanks again for all your support. I am Kurbanus Kosana Ricci, and until next time, please do take good care.