Knowing Which Direction to Take Your Firm
I realize that a business plan is something that is created before a business begins, to set the initial course of a business. However, every year around this time, I redo our business plan.
I review what I did the year before, and take inventory to see what I accomplished from the plan in the previous year; what worked, and what didn’t. Then I begin the process all over again.
This plan contains what I want to pursue in this year, and then gives a five year plan for what I want to accomplish this year, and then where I see our firm in five years. I realize that probably no one else does that, but like I said, I think differently than most people.
Something that I want to point out, that is important: I have never in my professional career done anything just to make money. I do what I either want to do, or what I am passionate about. It’s the same advice I used to give my kids. Do what you love for a living, and the money will follow.
Summers in Florida are unbearable. I mean the humidity mixed with the heat, makes it to where you can’t really do anything outside, until either nighttime or after it rains, which it does, every single day in the summer. The rain cools things down, but it isn’t just rain. These are violent thunderstorms. Interstate 4 connects Tampa to Daytona and in the middle of the I-4 corridor is Orlando.
The I-4 corridor is the lightning capital of the US and my wife and I have decided that from June to November our dream is to have a place to live to escape the summers. We decided that this place will be Los Angeles. LA’s weather is perfect. It’s never too hot or too cold.
In five years, my oldest son, who is now a sophomore in college majoring in accounting, will have his CPA license. I never see myself retiring, but eventually I will slow down. I will simply give my son the business, provided that he still pays me what I was being paid.
In five years, we will be able to leave for the summer and my son can run the business. Worse comes to worse, I might have to fly back a few times to help him out, but we travel so much, that we can work from anywhere, so it shouldn’t be a problem.
I’ve applied to law school in California. I’ve been accepted pending them receiving my transcripts. In two years, I will sit for the California Bar Exam. After being admitted to the California Bar, and knowing that I can work from anywhere, in California I can focus on Estate Planning, cannabis, transactional law, and obviously tax law.
Outside of California, I can do legal consulting, but the Federal Bar will be open to me, meaning I can practice as a Tax Attorney in Florida. So, our firm in five years will have a one-two punch. I’ll be a Tax Attorney, and my son can audit, review, and compile financial statements.
What I love doing, and what has started happening lately in our firm, is that I’m being asked to do a lot of tax, and business consulting. How this has worked is that I offer an initial consultation for an hour at no cost.
If the client sends me an email with a tax question or wants me to expand on the written advice that I have already given them, that email is met with a tax consulting engagement letter, asking for as retainer, and a credit card authorization. What this does is I either get the client or the person will go away. This cuts down on me doing non-billable work all day.
The consulting can lead to traditional accounting services, which is another engagement letter. My wife and I have determined that my time is best spent doing work that I can charge my hourly rate for.
If I spend all of my time doing non-billable work, or work that I’m not charging $275 an hour for, then it’s not the best use of my time. Then I have created an hourly rate of $100 for my Staff Accountants.
One thing that I need to get ahold of is email, calls, text messages, Facebook Messages, and Tweets. Just to get this out there, I have hardly anything to do with my Social Media. My wife and equal business partner is the head of a Social Media Team. From my understanding, and my wife can give you the exact numbers, I am retweeted a lot.
My wife has been telling me now for a long time that I am a public figure. I don’t know, I guess she is right. However, I need to walk a very careful line because of all of this exposure, I get at least 200 emails a day and 50 calls a day.
I want to be assessable, but at the same time, simply answering these emails and calls takes a lot of time, which forces me to work at least 100 hours a week. This is because during work hours, I am spending all day answering emails, and calls; none of which I can bill for. Not to mention that all of this notoriety has created stalkers seeking free advice and just like everyone else, I have food to put on the table, a mortgage to pay, employees to pay.
Then if something happens, like right now I am recovering from surgery. Right before I was wheeled in for surgery, I was on the phone with a client. It should be expected that there are boundaries.
I am one person, and my wife jokes saying that she thinks I am a machine, but I need down time too, and people don’t care that you are recovering from surgery, or enjoying a day with your family they just want what they want.
One thing that I am thinking about is putting a limit on clients that aren’t paying me by the hour, to the amount of emails, and phone calls they can expect to be returned, and any emails or calls over that set amount are billed by the hour. I really don’t want to do that, but I feel like if I don’t it will just get worse and to a point where I can’t manage it all, which is where I am at now.
Don’t get me wrong, I am very blessed to have this kind of attention, but at the same time I can’t be expected to talk to a client about something complicated as I’m sitting in a hospital bed, just administered a heavy narcotic and give a cogent answer to a complicated issue.
The point is, with everything you do in life, I feel that you have to pay your dues. For instance, you have to do things for next to nothing to get into some new service that you eventually want to monetize on.
I’ve been doing CPE webinars for some big players in the CPE field. You’re paid next to nothing, but last year, one of those webinars parlayed into several speaking engagements all across the country, where I am paid, and both my wife and my travel expenses were reimbursed. As part of my plan this year, I am going to focus more on that in the offseason.
Something I know a lot about that most accountants haven’t caught onto yet is cryptocurrency. I’ve been working with crypto now for five years at the institutional level, blockchain level, and with miners. It’s work I love to do.
Recently, it has become popular for someone to write a white paper and parlay that paper into an Initial Coin Offering (ICO), where you are basically bringing other miners together, to buy the coin , and then release that coin on a blockchain. However, the advice these people are being given is horrible.
It includes forming a company overseas, and offering the coin in the US. The architects of this structure state that it is the best way to do it for taxes. It is exactly the worst way to do it. What these organizers have created is a tax mess.
First, you are a foreign company, usually in a country with a low tax rate, you have created a nexus in the US, by doing business here, causing you to have to pay tax in the US, plus the country that you organized in. Typically these countries don’t have a tax treaty with the US. Then with the new tax law, there is a 15% tax on any money that is repatriated back to the US. These idiot architects that have created this structure have created a situation where the same transactions have been taxed three times when all is said and done.
I have created a way to make these ICO’s tax exempt in the US. As a consequence, I want to get into consulting with these companies more this year. I know that I do things differently, but the lessons I learned last year, and will be implemented this year will accomplish cutting down on free advice, grow a tax and a business consulting business, then the consulting can lead to traditional accounting services, and more tax returns.
Give this a try, and I can assure you that you will find areas where you can do what you love and make more money doing it.
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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...