Episode 79
The Accounting Show
March 10, 2017 · Mike Murphy
EP79: THE ACCOUNTING SHOW Behind the scenes of Mike Murphy LLC: Episode Summary: How do you file taxes as an LLC? How much does it cost? What tools do I use for accounting & financials?
Episode Summary: A behind-the-scenes look at Mike Murphy LLC’s finances — what an LLC actually is, how taxes work, what filing costs, and the simple 3-tool system used to track it all.
What You’ll Learn
- What an LLC actually is, and why it protects personal assets differently than a sole proprietorship
- How LLC taxes work with the IRS, and the real cost of filing
- The 3-tool accounting system: FreshBooks, Mint, and a simple Google Sheet
- A monthly reconciliation habit that makes tax time painless
Legal Entities
Mike Murphy LLC is a limited liability company. Per Wikipedia: “A limited liability company is a hybrid type of legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership. The ‘owners’ of an LLC are referred to as ‘members.’”
An LLC isn’t a corporation, and functions similarly to a sole proprietorship — with one major exception: business debt only puts business assets at risk, not personal ones, as long as funds stay properly separated. A sole proprietor going into business debt puts every personal asset (home, savings, everything) on the line — riskier, but far cheaper and simpler to set up.
Cost to start the LLC: $350 to an attorney, $150 to an accountant.
Taxes
Per Wikipedia: the IRS treats single-member LLCs as sole proprietorships for tax purposes — the LLC itself doesn’t file or pay taxes; all profit or loss gets reported on Schedule C with the personal 1040.
- Tip 1: Florida business taxes are due March 15, not April 15.
- Tip 2: as a sole proprietor or LLC, stash away 20-30% of everything earned — unlike a paycheck, taxes aren’t withheld upfront, so the payment happens on the back end.
- Tip 3: track every dollar spent and earned. Easier said than done, but genuinely the goal.
- Tip 4: open a dedicated business bank account plus debit and credit cards, kept fully separate from personal finances. (Using a personal card for a business purchase is still technically fine and still claimable as an expense.)
Cost to file as an LLC: roughly $300, paid to an accountant to file as an S-Corp.
The Tools
Foundation: a business credit card for all bills, and business accounts (Stripe, PayPal) for income.
Tool 1 — FreshBooks. Sends invoices, tracks expenses, tracks time, and generates reports (expense reports, P&L statements). Snapping a photo of a receipt and entering the total is the entire expense-logging process.
Tool 2 — Mint. Intuit’s budgeting tool — connects unlimited accounts (checking, savings, money market, investments, credit cards) and auto-categorizes every transaction. Bills and reminders can also live here. The best part: categories can be trained to match exactly what an accountant needs.
Tool 3 — a simple Google Sheet. One column of expense categories, one row per month of the year — nothing fancier than that.
How Taxes Actually Got Prepared
Printed personal and business bank statements, highlighted every business-related line item with a sharpie (web expenses, gear, etc.), skipped personal purchases entirely. Typed every business expense into the spreadsheet by month, doing a best-effort guess at labeling (an accountant corrects anything off). Totaled each category per month. FreshBooks supplied the income total. (Note: expenses exceeded income in 2016 — a normal part of the early build.)
The System, in Its Simplest Form
- FreshBooks ($25/month) — handles income, expenses, and time tracking for billing.
- Mint.com — pools every transaction across every account type and auto-categorizes by rule.
- Google Sheet — a simple, always-findable running total, comparable to an old-school ledger.
Monthly reconciliation is the real secret: compare bank statements against FreshBooks reports and Mint summaries, then log the totals. A recurring Google Calendar event on the 5th of every month, titled “Reconcile,” keeps it from slipping. What felt intimidating a month earlier turned out to be genuinely manageable once broken into a repeatable monthly habit — and the payoff compounds directly into next year’s taxes.
Bonus tip: the Home Inventory app ($30) was used to catalog every piece of owned gear and equipment — a multi-day project, but the itemized report handed to the accountant meaningfully boosted the refund.