Teaching Kavon Accounting: Attempt #1

Just finished my first accounting lesson. That doesn’t sound like a huge deal (okay it sounds fucking lame, don’t brag about that Justin) but I gotta say I feel pretty damn good. A) I’m an artist who is teaching himself accounting. I must be only of like 3 artists that have ever wanted to do that in their spare time. B) I think I’d be a good teacher. 

So for the last few weeks I’ve been reading thrilling books such as “Cost Accounting for Non-Accountants” and “Bookkeeping for Dummies.” On the plane. On the subway. On the train. In my room. Kinda everywhere. Probably not because they’re page turners. But I have this goal of teaching business to art students and accountanting is just one hurdle I need to clear. I may get smacked in the nuts a few times trying but I’m guns make it over dammit. I’ve discovered how deep my weirdness pervades though, because I’ve actually been looking forward to it. Granted I LOVE education. I literally have an education addiction. It’s where I spend all my money as an adult. I’ve bought real estate classes, martial arts lessons, mentorships, graphics tutorials and guitar lessons in just the last year. Thousands of dollars. Spent but totally justified in my head because its making me better. I’m like a valley girl at a shoe store but in my head I’m pushing myself to the brink of unprecedented mental perfection. Regardless, it works out because I’m getting through accounting eager for more, not ready to shove a paintbrush between my ear drums. 

I met up with my friend Kavon Johnson at a Barnes and Noble on 5th ave in Manhattan (555 5th ave for the creepers) and caught up, made small talk and warned him his hair was doing that black people thing again “(woofing) and that he should probably see a gardener about it. His girlfriend recently went to Italy for study abroad program so I was a little worried he might unravel from the heartbreak but he seemed like he was more focused than ever. So, confident he was mental prepared, I got into the subject. I opened up with my little presentation (which you cannot download because it is mostly content that is plagiarized to hell and back at this point.) and went through the subject from big picture to execution. What is the difference between financial account and managerial accounting? Accrual and cash accounting? Debits and credits? All these riveting mysteries and more were solved. While I threw concepts at him, I expected him to suddenly and violently fall asleep or jump over the railing but he seemed to not only follow and comprehend but his interest remained piqued. In the cab ride to our meeting point, I was racking my brain about what I was going to say. and whether I knew what the hell I was talking about. But doing the presentation, I realized how much I had adsorbed from all the sources I’d been marinating in the last few weeks. Confident in my latent teaching powers, I started delving into the execution of identifying a transaction, classifying it into accounts, then asset or liability, then debit or credit. Forced to explain it, I cleared up the process in my own head a thousand fold. I’ve heard that teaching had this effect on you, but it was awesome to finally experience it. I had to distill it into a very logical, very sequential series of events so that there was no way to get lost or confused without knowing what to do. While it may not be crystal clear to Kavon now (an hour isn’t enough time to fully grasp something like that) it is to me, which is a new feeling. We did example problems together, then I made him do it because I realized as an education junkie that unless you try it yourself you have no idea whether you learned anything or not. (Plus my mom’s a teacher and she taught me the formula: I do. We do. You do.) 

At the end we tried to apply what we learned by doing a real life example using facts from his business so far like T-shirts order, legal fees charged, and more. The results made us both realize we didn’t know exactly what we were doing but the process was super clear which was a big victory. I got a shit ton of useful ideas on how to make this useful and appealing to creative types based on our own B&N date.  At the end I told him that no matter how confused he was it, it was okay because in real life the process is the only part you need to know. The rest is done by QuickBooks, which I gave him a quick tour of. At that point both of our patience for accounting was just about done but all in all it was an awesomely successful first tutoring attempt. Waayy better than I thought it would go in my head. I still have a lot to learn, polish and present but I have more confidence than ever now that this business tutor thing is one I can pull off given I put the work in. Thanks Kavon!. Hope you use this shit!

-

In the Trenches: Accounting

I know nothing about accounting. I have never personally filed so much as a tax return. That’s why when I committed to research and learn bookkeeping for my friend Kavon I was a little daunted. What if I can’t count that high? What does “signed in triplicate” mean? How will I stay awake? These questions raced through my mind the entire way home from the library with my fat stack of literature on the subject in tow. 

Before you teach people how to do something its a good idea to be sure you’re doing it right so I had a lot of research ahead of me. At this point, step 1 of my game plan for a DIY accounting degree is to just read as many books on the subject as possible. Like this THIS one, and THIS one. Web stuff too.

          

So far I’m about halfway through Bookkeeping for Dummies. Overall, I’m finding it surprisingly interesting. It’s like a biologist looking through a microscope for the first time. Now when I pass the small cornerstones and halal carts in town, I’m like “So that’sss how that works.” 

There’s this STIGMA that artists loathe any and all entanglements in numbers/ the real world. This process is helping me debunk that myth because frankly I find this stuff super interesting. Its something I don’t do everyday. ALL throughout art school any class outside your major is ostracized, rejected and occasionally ridiculed by the intense cynicism that only exists in liberal arts majors. Learning the tools that empower you to make money is criminally ignored for this very reason. Business majors feel their acumen is lost on a bunch of jaded hippies and the teachers preach “do the work and the money will follow.” This may be true but its not sound financially advice. 

Anyway, so far let me pull back the curtain and break down what I’ve learned. First up, the difference between accrual accounting and cash accounting. Basically, accountants can keep notes in two different ways. Accrual accounting is when you record transactions as they are agreed upon. Think of a credit card where you buy something before you actually have to pay for it. Cash accounting is when you record the transaction when the money actually changes hands. There’s pros and cons to each but accrual accounting is the one probably being used at any company with more than 10 employees. It lets you accurately track revenue and expenses in the big picture. So for accrual accounting think of the metaphor of a credit card, while cash accounting works like a debit card.

The real arch nemesis of accounting is double-entry bookkeeping. If accounting were an episode of Power Rangers, he’d be the jumbo-villain near the 20 minute mark that is the plot twist of literally every episode. (It’s not a plot twist if the same ending happens every episode guys) Specifically your enemy’s names are CREDITS and DEBITS. This duo is a pair of shape-shifters who continually redefine themselves seemingly to make an accountants life as frustrating as possible. I’m sure many an accounting major has received a failing grade confusing a credit for a debit.

Let me explain. So in the logical, sensible world in which we generally live in, a credit is more money in your account and a debit means there’s less money in your account. Not SO in accounting. In accounting, it varies depending on the account we’re talking about. An account is a category for the transactions you’ll be recording as an accountant. Similar expenses go in the same account.The accounts (categories) you’ll be recording in all the time get their own journal. Art students know journals as the diary in which they doodle uncontrollably and sometimes write lyrics for songs that will never be recorded. In old-school pen and paper accounting (which you’ll never probably do) a journal is a separate book for one category of items to keep organized the large number of entries for that one category. (example journal categories would be Sales, Purchases or Cash Receipts) These journals make up the tributaries to the great river that is the general ledger. They are the various Walls whose posts make up your Facebook News Feed. It’s where the whole accounting situation of your company exists all in one place.

Kay. So back up. How do I post these entries into wherever the fuck they belong? Back to our nemesis, double entry bookkeeping. When you’re doing double-entry bookkeeping, you’re always going to post at least two transactions. See where the name comes from? This is because you need to make sure both sides of this equation stay balanced.

(WARNING: SUPER IMPORTANT)

Assets = liabilities - equity 

So you need at least one account on either side of the equation to make an entry in double-entry bookkeeping. If you have one account on each side they both need to have the same value. If there’s more than one account on each side that’s fine too as long as the sum on the left (assets) and the right (liabilities-equity) end up totaling the same. 

So if you have bought $500 in Furniture you add $500 to the Furniture account in the Assets column. Then you Add 500$ to Purchases in the Liability column because you just purchased $500 worth of stuff. Now both sides have $500 so they’re equal. Our first double-entry bookkeeping! So I’ll be delving into this sort of thing more in the future as its really the backbone of modern accounting. 

But for you out there with glazed-over eyes already, no need to panic. Any software you use today (and by god, use the software!) will ensure you really don’t need to know more than the basics. When you input your costs it will do the debits and credits in their proper place and you get books that won’t land you in hot water with the IRS! But knowing what’s going on before you rely on the software will make your business run a lot easier and let you communicate in a world that doesn’t have any sympathy that you didn’t go to school for this stuff. 

Meet my First Client!

Business is booming. I just got my first consulting gig! My friend Kavon Johnson from Pratt Institute is trying to launch his own apparel company called The Distance and I have asked him if I could help him set up his business as long as I could blog about it. I want to walk everyone through the process of starting a company as its happening. I think that the journey is shrouded in mystery for everyone who hasn't done it and it can seem scary when what stands between you and your dream is a checklist of goals and no idea of where to start. So I thought that by taking on a client I'd not only have a partner to keep me accountable, but we'd have tangible real-world results by the end. I could start an actual company myself (and I intend to) but I thought that by doing case studies on other people's companies as well I could get a handle much quicker on what everybody needs and I don't need to rush coming up with a product for the sake of it.

    The Distance is a T-shirt company all about helping kids learn about science. For each shirt you buy a kid gets one too! The shirts are all about taking science concepts and interpreting them into sweet designs. My friend Kavon says it best: "People combine this idea of being smart and cool, there’s no need to separate the two, you can be both." 

So what does Kavon actually need help with? Well so far, he's got pretty much all the creative work done, leaving only the business aspects, which makes him the perfect case study. He's got his site pretty much up and running thanks to Squarespace and his design school background. What do we have left to do?  Throughout the next few weeks we will be tackling these issues and more:

1) Legally setting up your company and how not to get in trouble with the government
2) Understanding WTH goes on in a company (Bookkeeping/Accounting)

3) Manufacturing/ shipping a product

4) Setting up shop
5) Managing it all (running a live business) 

Some we've already figured out but I'd like to take you step by step what his options are and why he chose the action he did. For instance, he's already got his legal setup done thanks to a collaboration with a seasoned business vet he's good friends with. 
This is a huge learning experience for both of us, and it can be for you too if you're following along. Watch The Distance grow from an idea into a profitable business! I decided to start with accounting because I feel that is the one subject on that list I know ABSOLUTELY nothing about. It always seemed like a good idea to me to start with the hardest stuff first. 

Hey There

As a motion graphics designer, I love what I do. It's a dynamic job where every project is a  chance to try and make something that gives you a little flare of pride. Everyday, you believe you’re capable of more than the crap you made yesterday…

I like what I do for a living, but we all have other creative urges. If you're anything like me, you hold on to whatever talent you have and just follow them wherever they go. Usually these aren’t completely rational desires to an outsider. They rarely fit the job descriptions on Monster.com and they never seem to make total sense to anyone but you. But they’re there and they keep you hungry for a day when reality will back off and let you finally devote yourself to the important work. The creative work. 

To earn that freedom though, artists need to fend off villains like greasy landlords, nuclear force school loans and the shit-for-brains IRS. We need to make $$$. Unfortunately, like many designers I find myself needing business skills while having none. I've attempted to start companies to be a rich person instead, but I tried to start these businesses when I didn't know shit about business. I realized I would never get off the ground if I don’t learn how to fly the plane.

Over my years at Pratt Institute and beyond, I’ve met some of incredibly impressive people, and a lot of them happen to be designers. These are people who work their asses off, some literally losing their mind and body for their work. They do it out of love at first but that runs out around 2 in the morning. Most are doing it to be the best. Even after the anvil of schoolwork is lifted, some art students have side projects, where they take their talents and skills and use them to finally create things they personally think are important, whether its an app, a website, a clothing line or an entirely new invention altogether.

The idea of working on a project for “the fun of it” is a totally foreign concept to most people. For most, the work they do is something they never want to touch once they leave their office building. But designers aren’t like that. It’s the amazing side projects I’ve encountered amongst designers I’ve met that inspired me to really make this blog. I know they all have the talent they need to succeed, but often not the skill set to turn their ideas into products. The only thing stopping them from turning their side project into a side business is that they don’t know how. 

I don’t think that’s right. I’ve been in their shoes. That was me. So now I’m backtracking and making it my mission to not only learn wicked business skills but to teach anyone who wants to know. I'm aware that there’s a bit of a stigma among artists about doing commerce. To designers, business is often considered the opposite of everything they hold dear. It's what people do who have no passion, no creativity, no idea what they really want to do. It's for the corporate Shop-Vacs who suction up all the profits off the hard work and love of people like them. I get where the revulsion is coming from. But it’s really just a skill that can turn your designs into freedom if you learn some simple rules. 

I’m starting at absolute ground zero so I figured I'd be a good case study to prove that anybody can do it. Moreover, I think that by being a designer myself I can take what I learn, and translate the nightmarish depths of formal hoopla into universal truths that anyone should be able to understand. At its core, business is simply the language of money and power. If you can speak business you can make as much money as you want. And that is what is going to give you and me the freedom that is the promised land. Not working harder, not climbing the corporate ladder. The only tool that will truly set you as free as you choose is to enter the orient of business for yourselves and stop being scared of something that pulls the puppet strings of your life. 

This blog is a place for me to share what I learn as I embark on this journey. I want to start a conversation, not a monologue. Any questions or feedback you have, I'd love to hear it as ultimately this is all for you. Stay tuned for a breakdown of what’s coming up.