Why is it that this profession is so far behind and is the most conservative in the U.S? My office has been 100 percent paperless since 2003. I electronically send tax returns to clients, they esign the efile form, upload all of their source documents to our portal.
About 5 percent of my clients hand me paper, which we have to scan, but that number is few and far between. When we went paperless 15 years ago, we didn’t give clients a choice. If they wanted a printed return, they had to pay an additional $100.
I review a lot of returns for potential clients, and I am shocked that here we are, it’s 2018, and about 75 percent of the returns I review are printed and bound, like we did in the old days.
I was curious as to how many enrolled agents still printed returns for clients, so I asked the National Association of Enrolled Agents (NAEA) Group on Facebook. I was shocked that almost everyone who responded was still printing returns.
Printing returns for clients is time consuming and costly. You have to buy tons of paper, ink, binders, and not to mention you have to pay someone to put the returns together and mail them. That translates to a total cost of about $100 to $200 per return. Then you have to wait to get paid, by check no less, until the client decides to pay you.
Then we have software. When I was a partner in a partnership, my other partners were old and were in the business before computers, etc. They did returns by hand and sent them out to a typing service. They would tell me that they would charge the same fee as they did then, because the labor was so intensive. Could I do a return by hand? Yep. However, the one thing that I don’t skimp on is software.
My wife and I are business partners. She is not an accountant, but she does all the techie stuff. Belsis and I argue about the cost of software all the time, until one day I explained it to her. If I use this software, which is more expensive than most that is out there, it allows me to complete more of the complicated returns and work quicker.
It means I can produce more returns in an hour. I have staff accountants, but the only person who touches anything that has do with tax in the office is me. More returns in an hour means more money, and I can complete most of the returns in the year by the filing date and file very few extensions. She finally got it, and never says anything anymore.
It’s not just tax software, though. Accounting software, tax planning software, research software, you name it. Anything that allows me to do my work quicker. That’s not to mention all of my software is cloud based, so I don’t need a server anymore. That’s good because I looked into buying a new one, and as it is hardly used, I couldn’t justify the $9,000 cost of a new one. Plus, cloud-based software is just smart.
In the hours between 9 a.m. to 5 p.m., I am answering the hundreds of emails I get in a day, making phone calls, taking phone calls and meeting with clients. I get actual billable work done either at 4:30 a.m. when I wake up, or on the weekends. With cloud-based software, all I need is a secure connection, usually a hotspot on my phone, and I can work from anywhere. Being in Boston doesn’t mean that I don’t have to work. That’s not to mention most of the offseason we are on the road, either speaking somewhere, seeing clients, or something else. We travel so much that we are enrolled in TSA PreCheck.
Then, I know that there has been this movement to Xero for a few years now, but QuickBooks Online (QBO), has come a very long way. I would say that about 99 percent of my clients are on QBO. I honestly have like three or four clients who still send accountant copies, which is such a pain. The client can’t go backwards until the file is returned, and I can’t promise all of my clients that I can return their accountant copies in a week’s time.
Still, QBO integrates with my tax software, and it will electronically send invoices, which the client can pay with a bank transfer or credit card, right there, so I get paid faster. It includes a workflow system, apps, and allows our staff accountants to link credit cards, bank accounts, etc., to the system so that the transactions can automatically feed into the system. This process reduces the time it takes to do the monthly or quarterly work, getting it to me quicker so I can do what I have to do with it.
The question is, why doesn’t this industry change? When I went on my own in 2013, I decided that I was going to drastically raise fees because I was going to do more things for the clients.
I ended up losing 60 percent of my client base, but there’s a reason behind that. Those were the cheap clients, shopping for price. Within a few months, because I was doing things other accountants weren’t but were needed, my client base started building back up again. Nothing is scarier than losing over half of your clients.
But at the end of the day, those clients were the ones who had no respect and put no value on what I did for them. They were on the phone with me haggling over $20. The fact of the matter is that I don’t need to spend my time with a client that has no respect for what I do, doesn’t see that what I am charging them is about 10 percent of what they are saving in taxes. If they don’t care for any of these, then I don’t need them.
I guess the point I am making is that my belief as to why we are so successful, is that we are way ahead of the curve. Being a maverick can be scary — you have to raise fees, you have to have set rules with very few exceptions. You will lose clients, but they are the ones who don’t respect you anyway. Some self-employed people will create a job for themselves. I want to have fun and do what I want to do, and it’s something clients need.
Once it is explained to a client, they usually get it. I don’t want to be a homogenized accountant who is no different from the guy down the street. I think that I would kill myself if that were the case. I want to take complex problems and solve them, charging a good fee to do so.
About Craig W. Smalley, EA
Craig W. Smalley, MST, EA, has been in practice since 1994. He has been admitted to practice before the IRS as an enrolled agent and has a master's in taxation. He is well-versed in US tax law and US Tax Court cases. He specializes in taxation, entity structuring and restructuring, corporations, partnerships, and individual taxation, as well as representation before the IRS regarding negotiations, audits, and appeals. In his many years of practice, he has been exposed to a variety of businesses and has an excellent knowledge of most industries. He is the CEO and co-founder of CWSEAPA PLLC and Tax Crisis Center LLC; both business have locations in Florida, Delaware, and Nevada. Craig is the current Google small business accounting advisor for the Google Small Business Community. He is a contributor to AccountingWEB and Accounting Today, and has had 12 books published on various topics in taxation. His articles have also been featured in the Chicago Tribune, New York Times, Yahoo Finance, Nasdaq, and several other newspapers, periodicals, and magazines. He has been interviewed and been a featured guest on many radio shows and podcasts. Finally, he is the co-host of Tax Avoidance is Legal, which is a nationally broadcast weekly Internet radio show.