Megan Smith once stated that Innovation comes out of great human ingenuity and very personal passions, Mike is a clear example of this when he started SGT KNOTS. When we first met Mike we learned that SGT KNOTS specialized in the e-commerce sale of cord, twine, rope, and related equipment, a very unusual business model. In fact, I must admit that the first thing our team thought when meeting with Mike was: Who in the world buys rope online? We were quickly proven wrong when we realized that Mike’s business model allowed him to scale a successful business leveraging Amazon’s e-commerce platform without the costly overhead needed by the large brick and mortar retailers. In fact, we remember Mike stating that his objective was to create a business that he could literally run from his own backpack.
Before engaging with Polaris Tax, Mike’s objective to run a business on the go was at odds with the way his accounting process. Mike used Quick Books online mostly to track purchases, and then collect all sales data from Amazon which would be sent to his accountant monthly. The accountant would then compile all information, update the books based on the banking transactions from the prior month, and provide Mike with financial reports. The issue with this approach, the information Mike received was outdated. It told the story of what happened to the business last month and did not provide Mike with answers on what was happening in his business right now. Mike had virtually no visibility regarding SGT KNOTS cash flow, whether SGT KNOTS was meeting Mike’s goals, not to talk about any visibility related to future taxes due. Mike endured this dysfunctional process for 4 years before looking for an alternative solution.
Once Mike decided to engage with Polaris Tax and Accounting we immediately converted SGT KNOTS accounting to Xero so that all business financial information could be housed in one cohesive system. In Xero we added all SGT KNOTS Banking, Amazon Settlement Account, Invoicing and Billing giving Mike a full view of the different components of his business. Since Xero is cloud base, Mike can now access all of his accounting on the go including creating invoices and capturing receipts using the Xero Touch app. Since we update SGT KNOTS accounting information daily, we are able to give Mike a clear view of his business finances and allow us to better collaborate with SGT KNOTS. With a real-time view, we can focus on how the business is performing right now, and accurately project how the business will perform in the future. This allows us to generate updated tax projections throughout the year so that Mike knows exactly how much tax liability he will expect by April 15th. Mike stated that proactive tax planning has allowed him to better plan for both short and long-term capital investments without the uncertainty of not knowing what his tax bill is going to look like at the end of the year.
With the accounting and tax planning well maintained, Mike can focus on growing his business offering bulk materials through his e-commerce store essential to a number of industries, activities, and applications including his new lines of K-9 and Fishing products. Who knew that rope could be so much fun!