011: Entrepreneurs and Money: Steps and Missteps with Dan Franks

Dan Franks calls himself a lifetime serial entrepreneur (not necessarily out of the womb). He started building websites for clients while in middle school, he started two podcasts, and together with three partners, he launched Podcast Movement, the largest conference in the world specifically for podcasting, and from there they branched out into single-day regional events, and even a six-day cruise dedicated to podcasting.

Dan is also a Certified Public Accountant (CPA), and I wanted the accountant’s perspective on what entrepreneurs should and should not do when starting their businesses and managing their money. Dan discusses some of the worst and best things entrepreneurs can do as far as money is concerned.

Please see Disclosure* (below) concerning affiliate links on this page.

Key Segments

• [00:10] Get Laser Focused. I advocate for people, if they’re passionate about what they’re doing and want to succeed, to get laser focused. Go through the valley of immersion, and dedicate yourself. There have been times when I let other things get in my way. The serial entrepreneur started grabbing for more shiny objects when I should have been staying laser focused on what it was I was working on or what my goal was. Stay laser focused and dedicated.
• [02:45] Dan is a lifetime serial entrepreneur. Dan refers to himself as a lifetime serial entrepreneur on his webpage. What does this mean to him? From a business perspective, Dan’s brain is always turning and coming up with things that might be worth trying. Early on, Dan was able to turn his interests and passions into businesses. Some made money and some didn’t.
• [03:30] Dan was building websites at 13. When he was about 13, Dan was a fan of professional wrestling and wanted to keep up with stories and who had won matches, but he found that a lot of the smaller federations had no websites. He became the web guy for some of the smaller federations and then branched out to some of the wrestlers directly. From there, he began to build websites for other (usually sports-related) businesses.
• [05:30] Dan cofounded Podcast Movement. Dan is one of four co-founders of Podcast Movement, the largest conference in the world specifically for podcasters. Podcast Movement was started in 2014 and doubled in size in 2015. Small regional meetings have grown organically to serve additional segments of the podcasting community. These smaller events capture the essence of Podcast Movement on a small scale. The next thing is a six-day cruise for business podcasters.
• [10:05] Dan has started two podcasts. Dan’s two podcasts are Entrepreneur Showdown and Men Seeking Tomahawks. Entrepreneur Showdown was his first podcast (now dormant). He and his co-host were trying to get away from generic podcasts about entrepreneurs in an attempt to get different information out of their guests. They did this by picking a topic the guest had recently covered and using that as the topic for the interview. Men Seeking Tomahawks is nothing about business and best described as guy-talk; surprisingly, they found that many women listen too.
• [13:10] Dan is a Certified Public Account (CPA). Dan previously worked at one of the big four international accounting firms but now works for a mid-sized, tax-only accounting firm in Dallas. He scaled down to work with entrepreneurs and small business owners. He works with clients on tax, payroll filings, payroll maintenance, and bookkeeping.
• [16:50] What is an entrepreneur’s formula for accounting disaster? What are some of the stupidest things entrepreneurs do as far as accounting is concerned, and what is the best formula for creating a disaster?
• [17:05] The number one mistake is combining business and personal finances. From the beginning, open a business account or at least a separate personal account (or even a credit card) that is only for business. This will keep you out of a lot of trouble. The last thing you want is to have everything mingled together. Keep a clean paper trail.
• [18:45] Consult with an attorney and a CPA. At least at the beginning stages, consult with both a CPA and an attorney. Get started in the right direction.
• [19:55] What’s the best way to find a good accountant? Word of mouth is the best way to find an accountant. Talk to people. Do your due diligence to make sure you get along with them. Currently, there is nothing on a large scale available to help you find professionals.
• [21:25] What are the considerations for virtual versus local CPAs? What are the advantages and disadvantages of working with local versus virtual CPAs? It is now so easy to work with someone virtually that the question now is not so much “can I” as “should I.” It comes down to personal preference. There are so many collaboration tools now that it’s easy. Just make sure that whoever you work with is familiar with the local restrictions and rules for your location. Make sure you understand your filing obligations.
• [26:15] Lawyers and accountants see entities differently. A lawyer is going to advise concerning entity types and the corresponding legal protections. The CPA will tell you the tax ramifications of each type of entity. What works from a legal perspective may not work from a tax perspective. An attorney’s role is to help you put together and file the legal documents to form an entity. A CPA will work with you to get the taxes in order and maintain things going forward. Make sure you know the difference between your state’s entity types versus the IRS’s entity types. You might not get this conversation if you only talk to an attorney. From the IRS’s perspective, you can be one of four things: (1) a sole proprietor, (2) a partnership, (3) a C-corporation, (4) or an S-corporation. An LLC can be treated as any one of these four.
• [33:00] An S-corporation is sometimes the best of both worlds. The S-corporation is sort of a combination of the C-corporation and the partnership. The big distinction with an S-corporation, and where many people get in trouble, is also the greatest benefit. As an owner in an S-corporation, you are treated as both an employee of the business and an owner and are paid by the company in two different ways. You are paid wages as an employee and dividends or distributions as an owner. Wages are subject to self-employment taxes, Social Security and Medicare, dividends are not subject to these. The tax benefit can be significant, but there is also additional complexity (cost) required to maintain an S-corporation. A competent CPA will be able to help you keep the books, do payroll administration filings, and file taxes. If you can accept the additional fees, then the burden is not much more than a sole proprietorship.
• [38:50] How can we be Zen-like in our path to accounting bliss? If the money makes sense, have a CPA or bookkeeper take care of things. As a business owner, don’t do your own books. Your time is better invested in building your business. Focus on what’s actually making you the money. If you can afford it, have a power team around you.
• [42:00] What are Dan’s recommendations for success? Jump in with both feet. Fail fast if necessary. Learn hands-on. Immerse yourself. Consume all the information you can get your hands on.

Resources Mentioned

• DanFranks.me - Dan Franks’ personal website.
• Entrepreneur Showdown - podcast by Dan Franks and Joe Cassandra. Dan and Joe pick a topic that a guest has recently covered and focus on that topic for their interview with the guest.
• Men Seeking Tomahawks - podcast by Dan Franks and Jack Drastic. Dan describes it as guy-talk but, as it turns out, a lot of ladies like it too.
• Podcast Movement - conference for podcasters. Dan Franks is one of the founders. It is the largest conference of its kind.

*Disclosure: Some of the links on this page may be affiliate links. I may earn a commission if you purchase through these links. These commissions help to cover the cost of producing the podcast. I am affiliated only with companies I know and trust to deliver what you need. In most cases, affiliate links are to products and services I currently use or have used in the past. I would not recommend these resources if I did not sincerely believe that they would help you. I value you as a visitor/customer far more than any small commission I might earn from recommending a product or service. I recommend many more resources with which I am not affiliated than affiliated. In most cases where there is an affiliation, I will note it, but affiliations come and go, and the notes may not keep up.