Unbreakable: Tracy Dombeck’s Story of Grace, Grit, and Growth

In this deeply personal and inspiring episode, Tracy Dombeck opens up about her journey of self-discovery, resilience, and the often-overlooked role of a woman supporting a successful entrepreneur. As the wife of real estate investor Derek Dombeck, Tracy shares what it’s really like behind the scenes—raising kids, managing chaos, overcoming trauma, and reclaiming her own identity after a traumatic brain injury. Listeners will get an honest and heartfelt look at marriage, mental health, family dynamics, and personal growth—all wrapped in one powerful story of perseverance and love.

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Welcome to the Generations of Wealth podcast. I am your host, Derek Dombeck, and today’s show is going to be a little different than what we’ve ever done before. I actually have somebody in the studio to record right alongside me, and this woman has traveled great lengths to get to the office. But, you know, this is something that, quite frankly, a lot of entrepreneurs mess up big time, right? We’re talking about bookkeeping. It’s not a sexy topic. It’s not a fun topic, but it can save you thousands and thousands of dollars. And almost everybody that approaches us is doing it wrong. They’re trying to do it themselves or they’re hiring it out, but they don’t actually even know what they’re supposed to be asking their bookkeeper. So all the way from our home to our office, Tracy Dombeck. Hello. It was. a long, long commute. Very long commute.

Absolutely long commute. And so, Tracy, I guess at this point, you know, we have people in our community that are always coming to you and asking questions about bookkeeping. And we just thought it’s time to put a show out there that’s going to give you the highlights. And then certainly if you need to reach out to us, reach out to Tracy, we’ll have that available for you as well. But to start with, let’s just talk about our history, right? We’ve been doing this for over 20 years. Yes. And you have always done the bookkeeping for our business. And at this point, we’ve done, we don’t keep track anymore, but thousands deals. And they’re all different, right? They’re not just rentals. They’re not just flips. There’s a lot of different aspects to it. So to start with, in your opinion, what do you think most people do wrong? I think a lot of people try to ignore it at first. They think my business isn’t big enough. I don’t need to hire a bookkeeper. I can just do it later. And then it just becomes for better, I guess, better use of words. It all starts out as a small dragon and then grows into this giant dragon. And pretty soon you’re six months, a year, two years behind on bookkeeping. And you don’t know receipts. And, you know, I don’t even can’t even hardly tell you what I ate for lunch yesterday. How am I supposed to remember what I bought six or 10 months ago or what it was for, who I had lunch with, anything like that. So writing on your receipts and having notes, keeping your receipts is a big thing. A lot of people are like, I don’t need a receipt. That’s fine until you get audited. And then you need those receipts to prove where you were, what you spent your money on.

They can be digital, though, right? It can be digital. You can scan them all and keep them in the cloud. I’m not saying you have to keep files and files and files of receipts. And for a lot of paper receipts that are on that funny paper, you really do want to scan them anyway because over time those fade. So if you’re going back for several years, you’re not going to be able to read that receipt anyway. So knowing your numbers, and we’ve seen and we’ve been involved with people, quite frankly, as business partners, who they felt like running your business based off what was left in the checking account was okay versus actually running your business off of P&Ls. Like that doesn’t bother you at all, does it? Oh, not at all. No, there’s money left. There must be doing something right. No, not at all. And then what do you do when tax time comes and now you owe this big tax bill and you only have the money in your checking account? Where does that come from? So you have to do a little bit more pre-planning than that. And just because there’s money doesn’t mean that it’s profit for you to spend. And so that’s, I think, probably where we should start is separate bank accounts, co-mingling of funds. Talk about, you know, your personal credit cards versus business credit cards. How do you, how do you, how should people have that set up?

If you have an entity of any sort, and even if you’re doing like a DBA and you’re just starting your business, you need to have a separate bank account away from your personal stuff for that business. You also need to have a business credit card and it doesn’t necessarily need to be an actual business credit card when you’re first starting out that has your business name on it. You just need to designate one of your credit cards that is your business credit card and keep all of your transaction on that. Because with most of the cloud-based bookkeeping programs these days, you can link your bank accounts. You can link your credit cards. And then you’re just having your bookkeeper come in and making sure that those are classified correctly and your income and expenses. And it’s just, if you’re commingling things, A, you’re not running a real business and B, you’re going to pay a bookkeeper to sort through your grocery bill. And I don’t think anybody wants to do that. No, I mean, that shouldn’t have to be done anyways, because the more questions your bookkeeper has for you back and forth is going to be more expense. So we’re going to talk about some deals we’ve done and how you classified those. But before we probably get into that, because some of the deals we’ve done have been really interesting. And, you know, we had to also learn the best way to classify them. But I do want to touch on a couple things first. Employees versus 1099 people. How many people do we know that think there’s no way I’m going to get caught? Everybody’s a 1099. We got caught. And we weren’t even trying to do anything wrong.

But we got audited by the state on our, yeah, whether it was an employee versus a 1099 contractor. The easiest way for people is they don’t want to pay for payroll. They don’t want to set up payroll. They don’t want to have to do with payroll taxes, which is, again, something you don’t have to do when you have a bookkeeper in place to do it for you. But you need to look at how much control you have over that employee. Do you have control? Are they only working for you? Are they working for somebody else? Do they actually have a legit business where they work for other people and then they can be a 1099 contractor employee? If they are solely working for you and you have solo control over what they do in and out of a day. They are your employee and you need to set up payroll.

Right. And I know that there’s many contractors that start out working for you and other people, and then you get busier and busier and pretty soon they’re just working for you. Well, again, it may have started off with the best of intentions, but if they come in and audit, it’s not up to you. It’s going to be up to what they see and you have to prove it. We had a contractor that was doing a lot of work for us. And that was one of them that was in question. And ultimately they found that, that he was his own business. We did not have to pay anything in extra penalties, anything on him. But then we had another person who was working for us doing acquisitions as a 1099. And he was to be paid off of commissions, but ultimately he didn’t work acquisitions for anybody else. So we did end up having to go back and pay the taxes and the penalties and everything else on that individual. And it’s nothing you’re going to be able to hide because when they come in to do that audit, they are taking your entire checkbook register and going through it line by line. Who did you pay and how often and how much? And that’s where they’re going to get you because you cannot hide that from anyone.

So since we’re on the topic of taxes, sales tax, here’s another pet peeve. How many people probably should be paying sales tax that aren’t? How does that work? Well, a misconception that a lot of people have is that if you are a service business, you do not have to pay sales tax. That is not true. You need to know what the sales tax laws are for your state. Then there’s also sales tax and use tax. These are all different things that you have to track. You have to track, you have to report, and you have to remit accordingly to your state. And so you need to know these things. That is a place that a lot of people try to neglect, and that just gets you into more trouble. And then you’re paying more fees, more penalties, more interest on things that you don’t need to do if you just figure it out up front. Definitely. And we did touch on scanning your receipts, but that just kind of brought something up for me with the whole thing of people that ignore a lot of their receipts, like the small ones. Yes.

And again, we’ve had people we’ve dealt with in the past who were like, well, you know, that was $5. That was $10. It all adds up. And at the end of the year, when you’re paying Uncle Sam, we all should pay our fair share. However, we want our fair share to be as legally small as it can be. That’s what entrepreneurs and business owners should strive to do. Absolutely. If you’re ignoring your receipts and you’re ignoring these small transactions, you’re only leaving money on the table. Those are expenses that you could take to go against your income and you don’t want to overlook them. That’s for sure. Definitely. So payroll, it’s another one that, I mean, quite frankly, I don’t have to deal with it because she does. But it seems real scary, but how scary is payroll Payroll is not that scary. Once you get it set up correctly, you know the rules of your state, the IRS rules. You get it all in there. You have tax deadlines for filing your employee tax. It’s another area you don’t want to get behind on and you certainly don’t want to mess with. But once you have it set up, it is generally pretty easy with all the software things that are out there now. Two or three clicks of a mouse and you can have your payroll done. So once you get it set up, it is relatively easy, but you need to know what you’re doing and you need to get it set up correctly. Definitely. And you have to have all the forms that are required by both the IRS and the state on file in your hands, signed by your employees and ready to go so that it is legit payroll that you’re doing. Definitely. And the last thing I would say on just taxes in general, getting W-9s. W-9s is a huge thing. Anytime you pay somebody, just use a general rule of $600 or more, you need to get their tax information. That’s going to tell you how they run their business. Are they a regular LLC? Are they a solo entrepreneur? Are they an S-Corp? Are they an actual corporation? Because all of those things determine if you need to issue a 1099, and those 1099s need to be out to them by January 31st every year.

How does it work with interest? So, you know, we, we had this come up a few times where, cause we pay private investors for the use of their money and to do our deals. Um, but then we also may go and borrow money from an institution, which those of you that follow me know that doesn’t happen hardly ever, if ever, but we got to talk about it. So an institution is issuing an interest 1099 to us 1098 interest see this is why i’m having her on the show obviously so they they issue a 1098 interest to us but when we’re using private money explain that it depends on how that private person is structured if we are using their ira money we do not have to issue them a 1099 for interest paid in because it’s all in their IRA and that is all encapsulated. But if they’re running it, if it’s a personal loan from that person to us, then we have to issue a 1099 for interest paid. The reason that the bank gives you an interest statement at the end of the year is because they’re dealing with the common people, I guess for lack of better words, and they need, you know, most people are not breaking out what they pay in loan payments, you know, principal versus interest versus insurance versus taxes. But when you’re running a business, you do need to break those out. So that’s where a bank will send that to a regular person at the end of the year because they do need that information for taxes. But most people are not tracking it because most people don’t keep their personal books in a financial software. But we’ve done it for years because that’s just how I run things. So we’ll call them civilians. Yes. You know, because we’re real PC around here. Okay, so we’ve kind of got through all that. And, you know, this is meat and potatoes that everybody needs to know about. But let’s talk about some deals. You know, we buy a rental property. And, you know, we’re gonna maybe do a little bit of rehab to it just to spruce it up and then put tenants in it. Let’s compare that to flipping and then we’ll kind of get into more of the creative stuff that you and I do subject to and options and stuff like that. But just rental versus rehab, where do people incorrectly categorize? Where do they make their mistakes?

Okay. The first thing is that when you purchase that property, what is your intent, which is kind of where you’re going along? Are you keeping it as a rental or are you putting it in as a flip? Either way, that property is going to be a fixed asset. And you need to break out whether that the cost of it, not only for the building, but you need to break out the land portion of it as well. And that is across the board for whatever property you purchase. Once you’re determining if you’re keeping it or if you’re flipping it, that’s where the other aspect of it comes in. If you’re going to hold it for less than a year, all of your expenses to rehab that property are actually go in a fixed asset account. They do not go into an expense account because what you need to do is you cannot take any of those expenses on a flip until you sell that property. And usually those are, you know, you’re talking six months to a year timeframe on those. So those have to be categorized separately. And then once that transaction is sold, you have to convert into cost of goods sold to make it come out on your profit and loss and balance sheet correctly. But if you’re just going to hold it as a rental, then you want all of those expenses for your rehab, your holding costs, all that kind of thing, go into an actual expense account by the property. That’s a big thing is you need to break everything out by the property. And you can use the address for each property. That’s usually the easiest way to do it. And just keep track because that’s where you’re going to know your numbers and whether or not that one single property is profitable for you or not.

So you’re not just lumping everything all together like when I throw everything on your desk. Yeah, right on your receipt what property it’s for. Makes it so much easier. I’m a slow learner, apparently. I don’t know. Otherwise, I’m guessing. Just because you went to the town and bought something at Menards doesn’t mean it was for the property located in that town. We might have to edit this part out. So, you know, we don’t edit. Okay, so now you’ve got a rental property. I’m sorry, you’ve got a flip property and the intention was to sell it. But we saw this quite a bit in the past with our former lending business that we co-owned. We had a lot of borrowers that bought a property, they were going to flip it and then it didn’t sell. Now they’re turning it into a rental. So how do you then categorize that, the short version? I mean, we don’t have to go into all the details. To convert it all back into an expense account. So you would have a fixed asset account for rehab repairs on that property. Now you’re just going to move all of those transactions into, and you can do it in a one lump sum transaction, a journal entry in your accounting software that is going to move it into an expense. Or you can do it line by line, but that takes much longer. You’re just going to move it into a general expense category and take it out of a fixed asset.

So now once you do that, now you can start depreciating. You can do cost segregation studies if you want to and accelerate your depreciation. The only place you have to be a little careful is if you bought that property, say the end of the year, and then come, you know, and you’ve already filed taxes for that year. And now you’re going to turn it into a buy and hold that you’re going to keep. Then you need to talk with your accountant because they’re going to want to see it differently for everybody. If you need to go back and amend a return for the year before to capture those expenses, you can do it. But they can also maybe do an adjustment, depending on how many transactions you have, that going forward you get to take those expenses in that current year. So you’re also saying you have to communicate with your accountant? You do. Not just once a year? You have to. That is a very important step. Not only do you need a bookkeeper, but everybody needs their own accountant. Because bookkeepers are here to give you the snapshot of where your business is at. But we don’t really offer tax advice. That’s something your CPA because they’re seeing your entire tax picture. I’m only probably seeing just this business, but that doesn’t include all your personal deductions, how many family members you have, what the tax bubble looks like outside of that business. So that’s where you need a CPA to do all of your tax stuff. And some bookkeepers will do both. It just depends. But you really want a CPA that you work with and your bookkeeper needs to work with them as well because every CPA wants to see things just a little bit different. And the reason they do that is because they want to be able to pull that information super fast so they can get your taxes filed because they have so many clients, they don’t want to have to be sorting through the weeds to find the numbers that they’re looking for.

Makes perfect sense to me because I don’t deal with it. So, okay, so now we do some different types of structures and there’s a lot of confusion oftentimes. Let’s just talk about subject to. So we buy a property subject to somebody else’s debt, their financing, staying in place. We are now making all the payments. We own the property. We’ve taken the deed to the property. And a lot of people don’t understand, well, who gets to take the deductions? Who gets to, how does that work, right?Absolutely. You’re still going to put that loan on your books as if it were your loan. And whoever is paying the interest payment gets to take the deduction for it. So even though that interest statement may come at the end of the year with that person’s name on it, you still paid the interest. You still get to take that deduction. You just take that sheet and put it with your paperwork. And once we get the deed, we have a closing statement. We do all these transactions through our title company. So it’s no different than buying any other property. You start depreciating that property. Yes. just like any other rental, assuming you’re holding this as a rental. Going back to closing statements, are you entering those closing statements as a journal entry in your software? Because you need to do that. You need to take that closing statement and create a journal entry that is identical to that closing statement so that you are getting all those expenses and all your numbers shown correctly every time you buy and every time you sell. Including if you’re buying from wholesalers. Yes. Right? A lot of times people may not pay their wholesaler or the wholesale fee through a title company or on the actual closing statement. On a closing statement, it’s a line item. But if it’s not, let’s say I paid $10,000, $20,000 to a wholesaler to get the deal. Well, that still has to be put into that property and they need to get a 1099 from you or however you’re assuming you’re wiring money to them or paying them by check or cashier’s check, same thing. That’s part of the expense of closing.

Absolutely. All that stuff has to be added out. That goes back to even just simple cash transactions. If it is for your business, you cannot overlook it and you need to make sure that that stuff is entered into your books. The other thing that we do a fair amount of is options. Okay. And sometimes these options may be attached to leases. Maybe they won’t be attached to leases. But if we have an option on a property, we pay somebody an option fee and let’s talk straight options. So we’re not using the property. We’re not leasing it. We just pay somebody a chunk of money and we now have the right for future years to buy it. That in itself, how would that be classified? If it’s an option that we are purchasing, then that option is an asset. So it goes in an other current asset account and it just kind of sits there until you actually exercise that option, but you do not want it to be in an income or an expense account because it has to sit there because you’ve paid them the money, but you actually have not realized the property yet. So it has to sit there. Now, if somebody is paying us an option fee on one of our properties, it goes in a liability account. And again, it just sits there in another current liability account until those people exercise their option. Then it gets pulled into the transaction at the time of sale.

So that is something that I think people make a big mistake on is how do you classify, like when we give somebody an option to purchase a property from us and we now have this chunk of money, right? Let’s say they gave us $20,000 as a non-refundable option fee and they’re leasing the property from us. Okay. The lease part, that’s easy. Yes. But it’s like a residential lease. But in this example, that $20,000, that option money that’s given to us, how do you classify that? Because correct me if I’m wrong, that’s not income. It’s not income. It has to sit in that account until the actual sale of the property. And then it comes in as it gets mixed in that whole lump of the sale of the property. So when you say sit in the account, just to be clear, that doesn’t mean you can’t spend the money. You can’t spend the money. The money is still in your checking account, but the transaction doesn’t get classified. It just sits in kind of a limbo liability account because it has to stay in your books because it is still something that you have to have recorded. But you can spend that money, but just know that when it comes time for that to actually close, you need to move it, do a journal entry, move it into your transaction so that it is all accounted for. And now if the option does not get exercised, then at that point in time, it becomes income. Yes, absolutely. Just like you sold it, if the deal is dead because it was non-refundable money, then it does get moved into the income category.

Perfect. And we’ve had that question many times over the years. And this is why it’s important to communicate and know what you’re doing with your bookkeeper. Again, you have to know the questions to ask. your bookkeeper may or may not because they don’t know the inner workings of all your deals, especially if they’re only seeing a closing statement. How could they possibly know that afterwards you might give somebody an option? I mean, they should see that paperwork as well, but you’ve got to have these conversations. And that’s where it’s important to go over your profit loss statements every single month and go over your balance sheet with these people, because if this stuff is sitting out there on your balance sheet, you need to know that it is still there so that at that specific point in time, it gets to where it needs to be and it’s not overlooked. And that’s a problem that we see a lot of real estate investors have is they’ll go hire a VA to do their book work, which can be fine for most data entry things. But if you’re looking at more of these creative deals and different transactions, they really need to know what they’re doing or you’re going to be leaving a lot of stuff on the table. I would say that hiring a VA that unless they are real estate specific and unless they have a lot of past workings with people a lot more experienced, I do not recommend that. If you’re just selling widgets on the street corner, that’s fine. It’s a pretty cut and dried system. But when you’re starting to get into the creative stuff of real estate, that’s where you run into a lot of problems hiring VAs.

And that’s a catch-22 because you’re trying to save money on the front end, but you’re leaving so much money potentially on the table on the back end, which could cost you tens of thousands, if not more, in missed deductions. Absolutely. Very much. So what does it cost? I mean, somebody goes out there and they want to hire a bookkeeper, right? And you’ve got TrustPoint Bookkeeping, right? That’s your bookkeeping business. business name. But TrustPoint Bookkeeping, you know, it can do books for anybody around the country and everybody is different. But just know that we want to give you a kind of a guideline as to what should you expect. So if you kind of went through the basics, like just a simple start versus something that’s a little bit more essential, a little bit more time versus advanced, What’s some ranges that people could expect to pay on a, is it monthly? It’s a monthly basis, yeah. And if you need somebody to go back and say you haven’t entered anything for 24 yet, but you’ve been in business for 24, then you’re going to pay accordingly for that. But all of these, just remember, it’s all a cost of doing business. And if you start skimping on certain things, then that’s where you’re going to run into trouble. So a simple start where you just really need your accounts reconciled every month, you’re categorizing your basic transactions, that’s going to run you about $300 a month. It is going to depend on how many transactions a month you are doing. So none of these numbers are set in stone by any means by anyone. If you need a little bit more of that where you’re going beyond just reconciliation, you’re doing accounts receivable, you want more things, there’s more transactions, and you’re doing some more of that creative deal structuring where there’s a lot more general journal entries that need to happen, that’s going to run you around $600 a month. Now, if you’re doing all of that and you also need full service accounts payable, accounts receivable, and payroll, and or all of those things, that’s going to run you closer to $1,000 to $1,200 a month because that is just more complicated transactions that you need to make sure are being done right. And you’re going to pay for that. And it’s also going to depend on the experience I, you know, I’ve got over 20 years experience and we’ve done a lot of creative stuff. You’re also going to pay for that, but you know, it’s going to be done right. Well, and I can tell you from our personal experience, again, with a former business partner, there was bookkeeping on this other business that, you know, we hired a bookkeeper and they did it incorrectly. And then we had to hire another bookkeeper and it was actually made worse. And the further and further we got down the line, right, the cleanup got harder and harder. Yes. Absolutely get what you pay for. And you get what you pay for, but you also have to communicate. I will say that that was one thing, lesson learned on our side. That lack of communication or just making assumptions, the bookkeeper also made assumptions. And then there just wasn’t the clarification. So as you said earlier in the show, right, you can’t remember necessarily what you had for lunch yesterday. Well, now you’re trying to remember what was that transaction a couple of years ago and you’re doing cleanup on aisle seven. It’s not fun. Yes. And if you are that far behind and you are trying to memorize, you know, trying to remember stuff, probably the closest we can get you is close counts and let’s move forward. We don’t want to have to do that, but sometimes it’s just, if we can get it, is an expense, is an income, and at least get it close, we can do that. That’s worst case scenario. You don’t want to have to do that. But I will tell you one thing, your businesses are only as simple, they’re only going to be as simple right now. They’re never going to be any more simple than they are. So the best time to start with a bookkeeper was yesterday, but you can also start today.

Yeah, and honestly, even if you are at the $1,000 a month, right, $12,000 a year, that’s of money. That’s a, you know, a fraction of a flip. But if you are not doing this properly, the taxes and the penalties and the IRS hounding you and the audits and everything else, cost you way more than that. Potentially six figures. I mean, it’s a real thing. This is, you know, there’s many of you listening to this show. It’s fun. We bring on people that are are talking about all these crazy things that we can do, right? Like we can go and do all this, these fun businesses and take over property sub two and, and trusts and options and everything else. But when you’re not keeping track of it, um, it turns into a monster. You can do all the fun things. You just have to know how to account for it. That’s the biggest part of it. Or yes, you’re running into a big dragon instead of just a baby dragon. Absolutely. And so, so at this point, um, most of you don’t ever get to see the, the other half of generations of wealth, you know, so she’s, she exists.

She’s here. I’m in the office doing the book work. Exactly. Exactly. But, um, if you want to reach out to Tracy, um, trustpointbookkeeping.com, there will be a web form there and you guys can chat. You can figure out, Hey, if you just want to jump on a quick call or something with Tracy, you know, just to talk through maybe a couple little things, that’s fine. If you’re looking for actual services, then you can discuss that as well. Yep. Just fill out that web form. I will receive an email and I’ll get back to you. We can set up a discovery call, find out exactly what your needs are and move forward from there. Absolutely. Well, I know you have a long commute to get back to your office. But, you know, at this point, you know, we actually get to do something that I normally do myself. But we get to thank all of you together for helping us grow the generations of wealth. Anything that you can do to spread the word. You know, if you know somebody that you know this show can help, then please share it with them. And, of course, jump on all the social medias. Give us the likes, the shares, the loves, the hugs, the kisses, all that stuff. And from the bottom of our hearts, we really appreciate you following us. And can’t wait until the next show. Thank you.

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About Tracy Dombeck