Today's Guest

Matt Remuzzi is the founder and CEO of CapForge, a virtual bookkeeping firm headquartered in California. With over 20 years of expertise in general bookkeeping, CapForge started with a single employee—himself—which has now grown to over 40 bookkeepers and advisors for small businesses. Matt shares some common questions they help businesses solve around their bookkeeping and accounting practices.

Episode Transcript

(Please excuse grammatical errors due to transcription)

Gordon Henry: Hey, hey, this is Gordon Henry at Winning on Main Street and this week we're fortunate to meet Matt Remuzzi. Welcome to the show Matt.

Matt Remuzzi: Thanks for having me.

Gordon Henry: Good to have you on the show, Matt. Quick intro on Matt Remuzzi. Matt is the owner of CapForge, Inc., a San Diego bookkeeping and tax company Matt founded way back in 2000. He has a BA and an MBA as well as various bookkeeping certifications, and he's the QuickBooks Pro Advisor and has been for many years. He's written a book called QuickBooks Bookkeeping: the 10 most Common Mistakes Everyone Makes on How to Fix Them. You can find it on Amazon and probably wherever you look for books. What should listeners get out of this episode? Maybe this show will help you find a better way to do your bookkeeping that will help you get your finances in order and free you up to run your business better. Matt, let's get started. Thanks again for joining us on Winning on Main Street. Briefly share with us the story of your career before you launched CapForge and what led you to start CapForge way back in 2000.

Matt Remuzzi: Yeah. I mean the story of my career is pretty short. I've been an entrepreneur most of my life, but I did work in restaurants in college and after college starting in the front of the house and then working my way up to general manager at some restaurants, which was good experience managing a small business. Even though I wasn't the owner, I still had P and L responsibility, and I was still managing people, hiring people, firing people, et cetera. Although I hated it at the time, it was great practical experience. Then I went and got my MBA and got a real lesson in how businesses should run and learned about accounting and economics and finance and marketing and things like that that I hadn't been exposed to before. Then I got out of the MBA program in May 2000, and I got hired right at that time as a consultant at a company that worked with businesses that were looking to raise capital, so venture capital, debt financing, et cetera. I got a good exposure there and that job lasted all of five months.

Then I was laid off because if you recall back then, that's when the .com bust happened. It had been booming. Everybody was excited, raising money, the internet was going to change everything. Business was new. It wasn't the same as old business. Turns out it was the same as old business. You still needed to have cash flow and profits to have a business work. I got laid off in October and that's when I thought there's still all these people out there that need the kind of help I can provide, so let me just do some freelance consulting until I can go and find another real job. I'd always wanted to have my own business and I wasn't sure this was it, but I thought I had enough savings, I'd try it for a few months, see how it went. Here we are 22 years later and still going, still haven't taken a paycheck from anyone else in all that time.

Over the years, CapForge has evolved. I started out doing consulting, helping people with business plans and financial projections and things. Over the years we've morphed into doing accounting services, bookkeeping, tax filing, things like that, payroll services. That was a real need. Consulting as the economy ebbs and flows is something that when times are good people are more open to paying for consulting. When times get tight, that's one of the first things to go, but accounting is always a constant need and it still has an advisory component. That's how CapForge evolved over the last 22 years.

Gordon Henry: Yeah, great. You rattled off a few things you do there. You said bookkeeping, accounting, tax. Do most companies use the same person for their bookkeeping and for their taxes?

Matt Remuzzi: Most companies would prefer to. Not all tax firms do bookkeeping or do it in an affordable way. A lot of times you can find your CPA firm will do your books, but they do it at CPA rates. Then there's a lot of freelance bookkeepers floating around out there who will do your bookkeeping but don't have anything to do with the tax side. Most clients though would rather have it all under one roof. It's easier to solve problems. If both people are working at the same firm, the communication tends to go a lot easier. Most of our clients work with us for both.

Gordon Henry: Okay. You act, if I understand it right, like my in-house bookkeeper. It essentially replaces a head I would have on my staff and you do the bookkeeping. Then in addition, I would normally work with a tax and accounting firm to file my taxes. You do that as well.

Matt Remuzzi: Right. There's a couple of advantages. One is that because we don't actually touch any funds, when we do the books, we're reconciling the accounts, but there's no opportunity for shenanigans, let's say. Right? If you have an in-house bookkeeper who's cutting checks to vendors, but also reconciling the accounts, that's when, every time you hear about fraud, the bookkeeper made off with over half a million dollars over the last 10 years. Nobody knew until she went on vacation, then we finally figured it out. That's what happens. You've got the same person guarding the hen house as is in the hen house. With an independent firm like ours, we're reconciling and saying, hey, these checks went out. This doesn't make sense, or there's some missing information here, or something, and it's a good checks and balances on the in-house people who may still be part of the process.

The other benefit is when it comes to August, September, October, we can have a conversation with the client. Hey, this year's been a good year for you. You made more than last year. Let's talk about how that's going to impact your taxes. Maybe there's equipment you needed to buy. You were going to add payroll. You wanted to set up a 401k, things like that. We can do that ahead of time. Whereas if you just show up at your CPA's office in March and go, here's what we did last year. They go, oh, it's too bad. You could have done these things but now it's too late. There's a couple of advantages of having everything under one roof, aside from just easier communication.

Gordon Henry: Right. If the bookkeeper, which is you, is not writing the checks and you don't have your hand in the cookie jar, how does the process of writing the checks or making the payments work?

Matt Remuzzi: These days, a lot of times with online banking and services like bill.com, it becomes very easy for the owner of the business or their delegated person to quickly run through, see what's due, decide what to pay and make those payments, and that all syncs up with the accounting that then we do. We can see exactly which checks were written to which vendors on which dates, and reconcile that with the bank balance. It's all easy to do online. Things were headed in that direction anyway. Then when COVID came along, it really just put the final nail in the coffin. The old school days of the bookkeeper who shows up at the office and sits down with a big ledger book, that's all in the past. It's much easier now for owners to either do it themselves, set things up on auto pay, or just log into their online banking and go check, check, check. That's what I want to pay this week, done, or to delegate that to somebody in the office. The old days of having a big accounting office in a business, you just don't need that kind of support anymore. It can all be done much more easily than it used to be.

Gordon Henry: Okay, great. Who are your typical clients? What size of business is a typical client, and also what kinds of industries?

Matt Remuzzi: I mean, I like to say we have one of everybody. We do a lot of traditional Main Street businesses and services. We have dentists. We have lawyers. We have chiropractors. We have retail boutiques and restaurants. One of the big categories that we've really gotten heavily into in the last five years or so are online businesses. A lot of folks that sell products by buying something from China or overseas and selling it on Amazon or eBay, we have a lot of folks doing that kind of business these days, or digital marketing, website design shops, things like that. Those are great because we can work with anybody wherever they're located. We have clients in all 50 states and clients who are overseas, both American expats who've decided they want to live in Costa Rica or Bali and still run their businesses, or foreign owners who've set up a shop in the US but they may be Romanian, or whatever, and they want to run a US business, but they're not your citizens.

We've gotten a lot into that sort of virtual world of small business. Some of those shops, you can be literally a one person firm doing 10 million dollars a year of sales on Amazon, which in the old days trying to run a 10 million a year business by yourself would've been a tall order. It's interesting that we have people all the way from startups to eight and even a couple of nine figure sales clients, but the headcount and the size of the business, it can be deceptive. Revenue is not the only metric anymore that tells you how big a business is from headcount or operational complexity.

Gordon Henry: Yeah, that sounds pretty good. Run your own business, 10 million dollars on Amazon, you're the only employee. Not bad. Good work if you can get it. Right?

Matt Remuzzi: Exactly. Amazon, as a platform, they have literally hundreds of millions of customers. You could think of it as the world's biggest flea market. Right? The cost to set up shop there is trivial. Right? For 39 bucks a month you can essentially have your own little booth at Amazon's flea market. Of course the trick is so do 4 million other people, so you have to have something that you're selling that people want and want more than the 17 other options that are nearly identical to what you've got. It's just like everything else. The grass isn't really greener. Every business that people get into, you have to be intentional. You have to put thought and effort into it. There's no get rich quick schemes out there, but that model does do a lot of the heavy lifting for you. You can find products overseas, have them ship directly to Amazon. Amazon stores them, ships them, does the fulfillment, collects the payment, brings you the customers. If you get it right, which is not easy, but if you do, you can scale that business up much, much faster than most other businesses.

Gordon Henry: Yeah, good thought there and well put. Working with you, let's just take a more typical local business. I run a service business in my town and I have this idea that you are going to be my bookkeeper and my tax accountant remotely. We have a remote relationship here. What are your rates? What do you charge by the hour? Just how does it work if I'm a local customer?

Matt Remuzzi: Sure. One of the things that makes us different is we actually don't charge by the hour. I mean, my experience as a business owner of other businesses over the years as well, I always hated the idea that man the clock is running. I know how much I'm paying by hour, but I don't know how many hours it's going to be. Is it going to be five, hopefully maybe eight? What do you mean it's 15 hours? Right? You get that surprise bill and oh, how did that happen? What we do, and we've done from the beginning, is we'll look at a particular customer and we'll give them a fixed flat rate quote. Based on your business, let's say you've got a local hair salon. You've got some employees. You've got a bank account, a couple of credit cards, pretty straightforward business. I would look at that and say, based on your specific business and needs, you're going to be $275 a month for us to do everything you need.

If that price sounds good to you, great, and that's what it is. Whether some months you're busier, some months you're slower, whatever goes on, you know exactly what you're paying. There's no surprises. If all those services we provide for that price sounds like a good deal, then it's an easy decision and you're in complete control. It's a month-to-month agreement. Our goal is every month you're happy with what you got and it automatically renews, but if you're not, you're not locked in. You didn't pay a big upfront retainer. You're not on some long term contract or anything. I want it to be very easy to do business with us, transparent and clear. If that works for you, great, and if it doesn't, no problem.

I think that approach, along with a few of the other things that make us unique is why we've got so many five-star reviews and why we've grown so quickly over the years. That's what people want is they want it to be easy to do business. They want to know what they're going to get. They know what they're going to pay and there's no mystery in it.

Gordon Henry: Does the business get some reporting from you? In other words, I get it that they pay their bills through you and if they select they can also have you handle the taxes and file the taxes and so forth. What else do they get from you in terms of business management, financial management, reporting, stuff like that?

Matt Remuzzi: Sure. Every month we will send them a profit and loss statement and a balance sheet so they can see exactly for that month what came in, what went out, and what categories, insurance, rent, payroll, et cetera, how much went out and what their bottom line was. Did they make money? If so, how much? Not just that month, but we send them one that shows them all the whole year to date so they can see are trends going up, sales going up? Are costs also going up? Are they going up higher than sales are going up, or slower than sales are going up? How's their profitability? How much have they made over the course of the year, not just in the last month. Then we also always provide unlimited support. Whether that's somebody calling and saying, hey, the payroll number looks a little off. Can we go through that and just make sure that's right, or somebody saying, I'm thinking about opening a second location. How much should I set aside? Would that be a good idea? Should I be an LLC, or maybe it's time to switch to an S corp? All those kinds of questions, we're happy to field them as just part of our service.

If we can help you make good long-term decisions for your business, we figure you'll be around longer as a client. If you make poor decisions, that may not be the case. We want to be a resource. Again, it's included, so it's not like, oh, I'd like to ask this question, but I know if I call, they're going to charge me an extra 75 bucks or whatever. Nope, it's included. I'd rather have you ask, get the help, get the answers, and then go on with your day rather than stress about, well I don't know if it's worth the call or the price or whatever.

Gordon Henry: Sounds like a great value for a small business that is comfortable managing their business remotely, not having somebody sitting there in the chair next to them and having an expert like you and your firm take care of their bookkeeping as well as their tax filing. I guess, as you said, since everything is virtual these days, the fact that you're sitting in San Diego, who cares. Right?

Matt Remuzzi: It really doesn't make much difference. From state to state, there's a few differences in say sales tax laws or obviously the tax amounts. Sometimes the strategy might be a little different in California. It's easier to be an S corp in other states. It's less of a big deal if you're an LLC or an S corp. As I said, we've got clients in every state and we can give you specific advice to your locale, but yeah, at the end of the day, for the most part, business is business. The questions that we get from clients tend to be similar in that most people, it's the first business they've owned and they didn't necessarily go to school for business. They're just doing the best they can. They're a dentist, or an attorney, or a hair salon owner, and they have just basic questions to help make sure they don't make any big mistakes, and that's what we're happy to help with.

Gordon Henry: Turning to your book, Matt. You wrote a book about QuickBooks bookkeeping called QuickBooks Bookkeeping: The 10 Most Common Mistakes Everyone Makes and How to Fix Them. When we come back from the break, I want to ask you, what are the key things that small business owners should know about QuickBooks? We'll be right back with more from Matt Remuzzi, but first a message from our friends at Build Scale Grow.

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We're back with Matt Remuzzi. A fascinating conversation, I mean how you can do your bookkeeping and tax accounting remotely basically from wherever you run your business. Matt will handle it all for you at a very affordable price. I wanted to get into this book you wrote about QuickBooks bookkeeping. What was the point of the book, first of all, and what should a business owner take away from a book like that?

Matt Remuzzi: Yeah, so I mean honestly I put it together because we would get a lot of questions from clients or potential clients about what we could do to help them and why it was important. This was a way to answer the question at scale rather than in one-off conversations. Honestly too, it's been a great lead generation tool. A lot of people pick up the book and go, yeah, gosh, I am making these mistakes. It looks like, although yes, I see how I could fix them, I don't think I have the time or the expertise to really dive in and do that, so let me just call this guy. Obviously he knows how to fix it because he wrote the book. It's been a great lead generation tool for us as well, which obviously was intentional.

I think it goes a way too towards building authority and just saying there's a lot of accountants out there, bookkeepers out there who I could potentially do business with, but this guy maybe is a step above. He took the time to put together the knowledge and write a book and offer that as a resource so maybe I'll pick him over some of my other choices. All around it's been a great tool for us from a marketing standpoint and from an educating our clients' and potential clients' standpoint.

Gordon Henry: Have you found that there are certain things small business owners should know about their businesses that they don't usually know when it comes to either operating or financial?

Matt Remuzzi: Yeah. I mean it's an area that most people would claim as a weakness. In fact, there was a survey a few years ago, the number one most hated task for small business owners is bookkeeping. That tells you how much most people like it and how much time they want to spend on it. It's not something that most people look forward to. To me, it doesn't make a lot of sense in that, we're in this for the profits. Right? Yes, accounting is boring and bookkeeping is not fun, but profits are sexy. That's fun. That's what we're doing all this hard work for. Keeping track of that and knowing what they are I think is really critical. Hopefully you can use those financials, the books, to make good data driven decisions rather than going with your gut. What do you think your most profitable activity is? A, B, or C? Well, I like B. I'm going to do more of that. It turns out A actually delivers double the profits of B or C, so really maybe you want to rethink that decision.

I think it's something that's beneficial for a lot of business owners to really know their numbers better. Some of them for sure are very on top of that and dialed in, but a lot of them, it's an afterthought for them. As long as there's money in the bank account, they're not feeling too pressured to be able to cover their bills, they don't give it a lot more thought. To their detriment, they could be doing better. They could be retiring sooner or selling the business for more if they were more careful with this process. It's one of those things that you have to come to that realization on your own, or hear about it on a podcast, or read a book about it first, and then it sinks in. I think most people's first inclination is, ah, I'm not going to worry about that now. I'd rather spend more time redesigning the website, or coming up with a new logo, or adding some more products. That's the more fun part of business to most business owners.

Gordon Henry: What do you say to the business owner who says, man, I'm not a numbers person. I just check the bank account at the end of the month to see how much cash I have. What do you say to that guy?

Matt Remuzzi: Yeah, I mean, so the first misconception about accounting that I think most people think is I didn't really love math in school. I got to calculus or trig or even algebra, wherever I stopped, I stopped because I didn't love it. Well, it turns out accounting is nothing more than second grade math. We do addition and subtraction and occasionally some multiplication and division. That's as far as the math goes. I think a lot of people in their heads have made it out to be, oh, it's like math that I remember from school algebra. It's hard to solve for X and all that. I don't want to do any of that. It's really not. It's mostly adding up columns and then saying which is bigger, A or B? Oh A is bigger, so I should do more of A and less of B. We try to break down that myth that this is scary math. It's really not scary math.

Then the other thing, the analogies I try to share with people is, look, if you're shooting for a goal, what do you think your chances of hitting that goal are better, if you're tracking your results, measuring your performance, and seeing incremental improvement and figuring out how to improve, or if you're just winging it. Right? If you're trying to run a half marathon in a certain amount of time, or you're trying to lose a certain amount of weight, you think you're more likely to do it if you're keeping track of what you're eating and measuring your calories and really monitoring, or if you're just saying, oh, this chocolate bar, it's probably not that bad. I'll just have that. Right?

Accounting and bookkeeping is the same thing for your business. You want your business to perform better, to grow, to be more profitable, the best way to do that is to keep track of it, to see what's going on. Where's the money coming in, where's the money going out? Each month see where are we improving, where are we holding steady, and where are we not doing as well as we wanted? How do we fix that? If you do that, I guarantee you will see better results than if you don't do that.

Gordon Henry: Right. We just have a couple minutes left, but I wanted to get your thinking on an area that's critical for businesses which is selling their business. I always advocate on this show, small business people should be in business thinking about their eventual exit for the business and building the business so that actually can be sold. Do you have any top line thoughts about selling businesses that small business owners should know?

Matt Remuzzi: Absolutely. I mean, in fact, I've been involved in over 400 business exits for clients, and in fact, for a long time worked as a business broker. The number one thing you can do to maximize the value of your business when you sell it, as well as make the sale process as smooth as possible is get all your bookkeeping and financials cleaned up well ahead of the sale. Not, hey, I have a buyer asking for it. Can you get this done tomorrow? Right? No. Start early, start six months at least before you plan to sell the business and get everything clean. Here's what a buyer's going to do. They're going to take all your information and they're going to start trying to poke holes in it. You said this amount is what you had for January sales. I can't find that and your bank deposits, or I can't justify that, or this is what you said your payroll cost was. I'm seeing more. How do you explain that? They're going to look to beat you up, and that's either going to bring the price of the business down or kill the deal altogether sometimes.

What you want to have is you want to have your client financials done and rock solid so they point to any number, how did you get this? Oh, here's all the backup for that. How did you get that? Here's all the backup for that. I made exactly what I'm telling you I made in terms of revenue and in terms of profit, and I have all the backup to prove it to the penny. That is music to buyer's ears, and not only is it going to make the process of selling smoother, but you're going to be able to charge a premium because a lot of other sellers cannot do that. They can't justify what they said they made, or it's a lot of, well, trust me. Well, I ran a lot of personal stuff through the business, but don't worry about that. That hurts the value of your business a hundred percent.

To prepare to sell and get maximum value, the number one thing you could do for yourself to get there is to have clean, solid, supported financial statements to present to a buyer that you know are accurate and will have no problem demonstrating to the buyer that they're accurate. That, a hundred percent of the time is going to enhance the value that you get for your business.

Gordon Henry: Yeah, fantastic advice. Well, Matt, we're just about out of time. Where can listeners learn more about what you do and how to get in touch with you?

Matt Remuzzi: Sure. The best place to find out more about us is the website, capforge.com. On there we have our pricing, we have our list of services, a great blog, lots of other things that I've done, other podcasts and things like that. You can learn more in general about how to run your business better. If any of that sounds good and you want to get in touch, we've got our contact form on there, our email, or just give us a call. We're here five days a week, Monday through Friday, business hours. Give us a call, we're happy to chat.

Gordon Henry: Awesome. Well, Matt, I really want to thank you for coming on the show. It's been great and it sounds like you provide a fantastic service to small businesses.

Matt Remuzzi: Thank you for having me. I appreciate it.

Gordon Henry: I also want to thank our producer, Tim Alleman and coordinators Diette Barnett and Daniel Huddleston. If you enjoyed this podcast, please tell your colleagues, friends and family to subscribe and please leave us a five-star review. We'd really appreciate it. It helps us in the rankings. Until next time, make it a great week.

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