The Accounting Podcast

David: What if, instead of sending your clients a report as a PDF from QuickBooks, you could invite them to a suite of interactive reports where they can drill down on any number, gain insights, and easily communicate with you about any report, account, total, or even an individual transaction? What if you could do this for free? Stay tuned to hear more from our sponsor, Digits, later in the episode.

[00:00:20] Preview

Blake: That's exactly it, David. You've made the perfect parallel. Firms that silo teams, which is most firms. That's how it is. It's, you have your tax, you got your audit, you got your client accounting services or bookkeeping, you’ve got your consulting. And then even within, you have still, further segmentation of the P&Ls, like little tiny P&Ls everywhere.

And what you really want is a single firm. ‘Cause in the end, the only thing that matters is the profitability of the firm.

David Leary: Coming to you weekly from the OnPay recording studio, this is The Cloud Accounting Podcast

[00:01:07] Introduction and other podcasts Blake and David are working on

Blake: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.

David: And I'm David Leary.

Blake: Happy Friday to you, David.

David: Yes. I'm back in the studio.

Blake: I am lagging a bit, I must confess. I recorded two amazing interviews for my Earmark Accounting Podcast this morning. I have never tried to do three full episodes in a day. So, if my energy is a little lower than usual, that's why. It's also the afternoon, but they were great interviews.

The first one was with David Wieseneck, who is the VP of Finance at Demostack.

David: Didn’t he used to be- I think I met him at ExpensiCon. One of those like, online shopping or classifieds, like sell your- the junk in your garage, Let It Go. Maybe it was when he was at something like that.

Blake: Very close. Letgo.

David: Letgo.

Blake: He was the VP of Finance at Letgo, which raised $100 million and then raised a bunch more. I met him when he was in that role. And it was great because he was a Xero user, and he had figured out how to scale Xero for an organization up to 300 employees using add-ons, and deliver this amazing experience. So, we talked about that in the interview.

David: [INAUDIBLE] ERP. That’s cool. That would be good to hear.

Blake: Yeah. Build your own ERP, scale up Xero. You could do the same with QuickBooks these days. And so, he's got a lot of insights as to like, how he selected software, what it's like to be the VP of Finance at a high-growth company. He started as an auditor. So, how to actually get into that role, that leadership role when you start in accounting.

He was an auditor and then a controller. So, that's great. That'll come out in May, hopefully, on the Earmark podcast. So, if you're not subscribed, go subscribe to Earmark Podcast. You can search for it in your podcast player, or go to podcast.earmarkcpe.com. The second interview I did was with Eric Fraint of Your Part-Time Controller. And-

David: Oh yeah. Who sent us like three voicemails or a two-week period about the five things he's discovered he likes about timesheets or utilizes, right?

Blake: Yeah. So, he was listening- he's a listener to the show. Thanks, Eric, for listening- and heard our discussions about timesheets, and then had a lot of feedback on that because he's actually very pro timesheet. And I have to respect that, given he's built this firm that only does accounting services- no tax, no audit.

They broke into the top 100- 400 people. They're using timesheets and he says it works great. And you know, I think actually, we didn't talk about it too much in the interview, because there was so much else I wanted to learn about his firm. But in that particular case, I do think there is a place and it can work.

You know, the key is, we shouldn't get bogged down in the philosophical aspect over the practical aspect. Like, if timesheets are working, then that's great. But I think they failed to work in most organizations. And his firm is very different than most, which is, I think, why it works. So, you know, they're very focused.

They only do pretty much one thing. And that focus is fascinating. So, I'll pitch it one more time. Listen to the Earmark Podcast to hear both of those great interviews and you'll earn CPE credit for them when they come out. And also, by the way, everyone, you can earn CPE credit for listening to Cloud Accounting Podcast.

This episode will be on the Earmark CPE app next week.

David: If you can't get enough podcast, I pushed the first episode live of the Accounting Twins podcast this morning.

Blake: So, tell me about the Accounting Twins Podcast. ‘Cause I saw this- the artwork is funny. Are they actually twins?

David: Yeah. So, my interns are twins. They're accounting majors. And then the premise of the whole show is, what if you have two people, the same DNA, like, literally, same GPAs, same majors, same high school. Everything about their life is the exact same. But except for now, during this diverging path, one’s going to go be a CPA and go public.

Go to grad school here to get the 150 hours, right? And the other one's going to private. And it's like the perfect experiment. I mean, what are we going to learn? So, it's kind of funny ‘cause I feel like I was creating a show for, you know, college kids or people thinking about the accounting profession, or maybe thinking- they’re on that CPA journey.

But after listening to it, now that we've had a couple of episodes in the can, I might've accidentally created a show that every firm owner and HR department head at bigger firms should listen to. Because essentially, these are the very first Gen Y- Gen Z-ers going into the workforce.

Blake: Right. Right.

David: And they basically- it's almost like a show that captures what's going through their mind, their values, what they want out of a career, their work-life balance. It's very eye opening from that perspective. I was kind of surprised that- I was listening to it, I was like, “Oh, this might be a show for a bigger audience, possibly.”

Blake: So, how often are they going to record?

David: Well, we have five episodes in the can right now. Hopefully, we will be doing it weekly. Episode one is basically six weeks out from graduation. Go from there.

Blake: And what's it called again?

David: Accounting Twins Podcast. You can just go to accountingtwins.com and you could subscribe right there.

Blake: Wow. It's like a real study that you're doing there.

David: Well, I don't know if it’s a study. Like-

Blake: I mean, you know, you're taking two people with identical DNA and you're putting them in different situations and seeing what happens.

David: And it'd be interesting to, you know, just hear how differently their life's going, right?

Blake: Yeah.

David: And then, I mean, this could go on for a decade because I think I proposed this as a in-theory experiment on Twitter a couple weeks back and people are like, “Oh, I suspect the person that gets a CPA, in the long run of their career, is going to come out ahead.

Blake: Well, I can't wait until you're cited in the Journal of Accountancy for your amazing study that you've done, yes.

David: Amazing study. So, if you're- and I'm going to do it in seasons, ‘cause it's very- you know, we kind of have this last semester of school season. They got their summer internship season. Then they start grad school and you know, their first job. So, it's going to be done like a little bit- seasons, per se.

Blake: Got it. Well, David, let's get into the news, why don't we? What is top of mind for you?

David: Tax season. Oh, wait. Tax season’s over.

Blake: Tax season’s over. It is the 22nd, as we record this. We do have some tax news though.

[00:07:37] Disney World's special district in Florida

Blake: I had to look into this Disney world special district because there's all this news about the Florida legislature removing Disney's special district, which I didn't know about. I'd never realized that Walt Disney had gotten this amazing exemption.

David: It's like they're their own county that don't- they don't have to follow any state rules or some of the laws.

Blake: It's crazy. So, since 1967, Disney World has acted as a self-governing entity exempt from some regulations, and running its own municipal programs. Officially, the zone is known as their Reedy Creek Improvement District. And through it, Disney World can levy its own taxes, run its own emergency response units, and control construction permits and planning.

So, it's basically its own government in this area. And I guess there's tax consequences because it is allowed to issue its own tax-free bonds for growth. And so, removing the special provision for it could cost Disney a lot of money. So, that's all I know about it at the time. I'm going to read more on Wikipedia.

It's interesting because I was aware of Walt Disney's vision for Epcot, his experimental city of the future. And this makes a lot of sense because Epcot was originally going to be like, a place, a city where people lived and the- it was going to be the perfect city. So, this was sort of like laying the groundwork for that. Never happened, of course, but-

David: I wonder how he got all this exemption to begin with, because like, really, where he built this, did he get the land for free? Or like- I think it was like wasted swamp land that like, nobody really-

Blake: Well, it was- yeah, it was land- nobody really wanted it, right?

David: Yeah.

Blake: It's kind of out in the middle of nowhere. And then they went and secretly bought up all the land under different entities so that nobody knew what was happening, and did it in a very- in a secretive way. And then revealed the grand plan for the whole thing, and got the legislature on board with all this stuff.

David: I mean, I don’t know. I guess it's still part of the United States, right? I mean, that’s something- can’t you go there and make some sort of claim and then not file taxes or like-

Blake: Well, see, all you have to do is get a special exemption like that, you know, but you got to be Walt Disney, I think. You know? You can't just do that. What's that thing that people do, the crazy thing, where they claim they're a sovereign citizen, and they say they don't have to pay taxes?

David: I think they just write that across the top of the return and just send it off.

Blake: It doesn't exactly work.

[00:10:13] A few last tax stories

David: I did see Senator Warren was bitching about free tax filing and all this. And then I went to her website, and you could get all her returns and she pays a returner.

Blake: return prepare?

David: Her preparer. And it makes me wonder, did he do her taxes for free?

Blake: Yeah. Well, then, and the other news is the FTC has been suing. The FTC has sued Intuit to stop the free, free, free, free, free commercials- the free file commercials- because they say, you know, two thirds of people can't actually file for free. So, it's deceptive marketing. And the judge in the case has declined to file an emergency injunction.

Or it sounds like the judge is not going to file the emergency injunction. And part of the reason is that tax day is already over. And the- you know, what's the urgency? But that case continues to go. I'm sure we'll annoy Intuit for quite some time. But you wonder how much of this is political, and how much of this is real.

David: And then just think about- so, like, the amount of free publicity TurboTax gets.

Blake: Oh, I know. It's actually- I think it’s probably a good thing for them, right? In the end.

David: And basically makes- nobody knows that any other tax software exists because all the politicians only know the IRS exists and TurboTax exists. They don't know other products exist.

Blake: So, I don’t know. It's just sort of a- I feel like it's very similar to what Marco Rubio tweeted on tax day, which was- what’d he say?
David: Well, I think you started to try to get in a fight with Ted Cruz of Texas. I saw that on Taxtwitter. That he wanted to abolish the IRS.

Blake: Oh, sorry. Yeah, not- sorry. Sorry. It was Ted Cruz. I get them confused because they're both- they both say idiotic things all the time on Twitter. Let's see, Marco- it was Ted Cruz and he said, “Abolish the IRS #taxday.” And it got 8,000 retweets, 1500 quoted tweets, 64,000 likes. And I don’t know, I should just unfollow him.

But instead of doing that, I took the bait and I quoted it and I said, “That's the easy way out, Ted. How about you do your job and fix it.”

David: He didn’t bite? He didn’t wanna- or he didn’t bite? He didn’t wanna argue with you?

Blake: And for me it's not, was that- he didn't bite. I think he was afraid of my followers coming after him. You know, they're really supportive.

David: We can unleash Taxtwitter on him.

Blake: Yeah, that's right. Well, you know, and this is- it's not a Republican thing. It's not a Democrat thing. Like, I think Elizabeth Warren going after TurboTax and Intuit is almost as silly as Ted Cruz tweeting, ‘abolish the IRS’.

These aren't productive solutions. They're not solutions.

David: Yeah. Because both sides are- they're just getting into the news for that day. That's all it is. They're trying to insert themselves in the news cycle. Neither things make any sense. It's the- rile up their bases. They're both do-nothing senators.

Blake: Yeah. Exactly, right? You don't actually compromise. You don't do anything bi-partisan. You just get your base excited and you get elected, and you don't do anything. You don't fix it. So, that's the problem we have, right? And that's why the IRS has been limping along for so long with the funding it has.

The commissioner had a really good point to Congress this week, and I can't remember exactly what it was. But you know, it was basically, like, we have been funded by continuing resolutions. And I think it's been for decades that we haven't had a budget. We've just had continuing resolutions, which established the same amount- continue the budget that's already existed.

And he said, it's really hard- it's impossible to do technology improvements and fix the system when you find out March 15th, that you got this money. You can't plan ahead because you're going six months at a time. And so, how do you make an investment? Those kinds of changes take years. And that's part of the problem.

And so, I was arguing, I was debating with somebody on Twitter, about this saying, “Hey, you know, they've got plenty of money. They can do it. They just need to be more efficient, better managed.” And my feeling with that is the same as if you were a CPA firm, where everyone is constantly at capacity or over capacity.

You can't ask the team in a firm like that to make improvements, to increase efficiency or productivity or effectiveness when they're full. They're already too busy, just keeping up with the work. So, you got to give them more resources. And with the IRS, that means people to catch up the backlog, so that then, you have capacity to update the systems.

[00:15:08] Thank you to our sponsor, Synder

David: This episode of The Cloud Accounting Podcast is sponsored by Synder. Tax season is over, which means you can focus on growing your business, rather than hustling to handle the clients you've already got. But how do you add new clients when you're already so busy? That's easy, with Synder. With Synder, you can automate mundane tasks like reconciliation and categorization, and instead, spend more time on strategy.

Thanks to Synder’s new e-commerce insights, you become a trusted advisor to your clients, not just the data entry clerk. Give them important tools to know their numbers and make the right decisions to grow their business. Over 2000 CPAs are already future-proofing their business with Synder as their secret solution. Ready to join them? To book your free demo, head over to cloudaccountingpodcast.promo/synder. That is cloudaccountingpodcast.promo/synder.

[00:16:03] Bloomberg tax article on the IRS

David: Yeah. I saw an article. This was Bloomberg tax. The article title is, ‘The IRS is Long Overdue for Substantial and Systematic- Systemic Changes’. And this is written by Edward S. Carl, the VP of Taxation for AICPA. I think we've talked about him before on the show, but it pulls in a quote here from Aaron Collins, the National Taxpayer Advocate.

Because now they have data, before the data was kind of 2020 to 21 comparisons, but now we have 2022 comparisons. So, March 19th of 2021, the amount of unprocessed 1040s stood at 4.6 million. Now, it's actually ticked up to 4.7 million. So, we've actually- they’ve gotten worse, right? It's still not getting better.

Blake: Yeah.

David: And then it- and then it's really when it starts coming to business returns, like, that really adds up now to like 14.7 million-

Blake: Yeah.

David: -that are just behind. They just- it's crazy. And then this article also talks about a survey of AICPA members that their satisfaction with the IRS in 2016 was a crappy 21%. And then in 2020, it was 10%. So, just imagine what it is today.

Blake: In 2020, it was 10%?

David: It was 10% in 2020.

Blake: Wow.

David: So, what would it be today?

Blake: Yeah.

David: It’s got to be getting to the single digits, which is just unacceptable.

Blake: Yeah, yeah. Doesn’t work.

David: But again, if there is no IRS, because it just falls apart and crumbles, there's not gonna be any more AICPA, right? In a way, like, there’s not going to be any accountant tax- like-

Blake: Right. Yeah, yeah.

David: It’s our best interest as an industry to do whatever we can to save the IRS.

Blake: Yeah, exactly. I mean, our livelihoods depend on it. At least a lot of accountants. Like- and I don't know. I feel like a lot of the problems of being a tax professional revolve around IRS issues. If we could fix the IRS as a profession, we could make the lives of our tax professionals so much more pleasant, and the client experience so much better.

And that's why I always wonder why the AICPA isn't more on this. On really fixing it, right? I just feel like for a long time, people have actually been okay with the IRS being underfunded because it reduces your odds of an audit. Well, great, yeah, that's great until it creates all these other problems that you have to deal with.

So, you know, you go too far one direction and it gets really bad.

[00:18:35] New AICPA trends survey

Blake: Speaking of the AICPA, they released a new survey. They do this trends report that comes out every two years, and the last one was done in 2019. And now, we've got 2021 out. And this is a really valuable report because it tells us the direction of the profession. And the numbers historically, over the last 10 years, have not been looking great.

David: So, just thinking about this, 2019, people were still like, “Hey, we can never be remote. We could never work in cloud,” but that was kind of the mindset back in the day. And then obviously, COVID hit. So, this is really a pre and post-pandemic survey.

Blake: Yeah. And a lot of the data is, take it with a grain of salt because- or at least know what you're dealing with because COVID happened during all this. So, the numbers could be skewed one way or another. Interestingly- well, let's talk about accounting enrollments first because that's one of the metrics that is tracked.

So, starting in the 2000s. At the 2000s, early 2010s, accounting programs did really well. That was partly due to the 2008 financial crisis and the rise of enrollments and accounting programs because, you know when job market is tight, you want something safe, right? Accounting is perfect for that. Low unemployment.

But then starting in 2014, accounting students, even though it was growing, stopped taking the CPA exam as much. So, more people than ever in recent years have been graduating with accounting degrees, but CPA exam candidate numbers stayed the same. And they should be going up, right?

More accounting students should be getting more CPA candidates.

David: I have a podcast about that, if you guys want to listen.

Blake: Well, so, I actually have- I'm curious, are the twins going to take the CPA exam?

David: One is, the other is not.

Blake: The one who goes into industry is not?

David: Yeah.

Blake: Interesting. Well, and that would be a great example. People who don't think that they're going to have a career in public accounting tend to not take the CPA exam because it's not relevant to them. Because they perceive the CPA as being tied to that career in public accounting.

David: So, what are the stats?

Blake: So, Baby boomers make up 47% of AICPA membership. 47% of AICPA membership, Baby Boomers. That's a lot. I mean, we're talking- this Gen- my parents are Boomers. They're in their 70s. Yeah.

David: And Gen X, like me, we're basically, you could say 50-year-olds.

Blake: Yeah.

David: But that should bell-curve out a little bit by now, but.

Blake: It really should be, you know, Gen X should be the biggest group in there, but it's not. So, that, to me, is a risk. What else do we got in here? There's a shortage of accounting professors. There is ongoing difficulty recruiting diverse candidates to the profession. Yeah. Even in 2019 to 2020, I mentioned that accounting graduates were growing. They actually trended down.

Part of that is got to be pandemic-related. ‘Cause all sorts- like college enrollment in general, trended down during that time. So, I wouldn't like, worry about that as much. And then again, like specifically, for this year, the CPA numbers- like, you couldn't even take the CPA exam cause Prometric was shut down.

You couldn't go to a Prometric testing center and get the report. So, unfortunately, I think we're going to have to wait another two years to actually get like, a good trend in this because it was so disruptive for the last two.

David: And does it get any questions about how they run their practice and things like that or?

Blake: Well, so, there's data here on the hiring of accountants. So, total hiring of new accounting graduates in 2020 decreased by 10%. There was a 2% increase in Masters graduate hiring. The new non-accounting graduates, non-accounting graduates hired into accounting and finance functions increased by 10 percentage points.

So, it looks like there was an exchange there. So, accounting and finance functions are increasing their hiring of non-accounting grads. And the mix continues to shift. 57% of new graduate, new hires are accounting graduates, and 43% are non-accounting graduates.

David: Just this- thinking about majors. So, if your major was something else, let's say MIS, your major was marketing, your major was journalism, I don't know, anything else. And you had a minor in accounting, you'd probably be even more valuable to a firm maybe.

Blake: Oh, way more valuable because you can charge a lot more for advisory services, consulting services, than you can for tax or audit. And what we're seeing is that the accounting new hires are increasingly being assigned to audit, as opposed to anything else. So, accounting is actually becoming more narrow, not the opposite. It's not becoming broader.

David: So, like, you could just call it a degree in audit.

Blake: I mean, I've always thought that it's kind of weird that we bundle tax and audit and GAAP, like financial accounting, into the same major. Like, that seems- if you were just starting from scratch, designing educational programs, would you do that?

David: Because in a way, tax is law and accounting-

Blake: Tax is law.

David: And I remember sitting there at Sage Intacct. And we were sitting in the back of the room and the CEO, CFO of- they’re like a outsourced HR payroll company. I forget what the name of the company was. And they're showing kind of, their dashboards and things they do in the background, and how they close your books and all this.

And you were just in the back of the room, you're like, “That’s accounting.” They're just doing- that is truly accounting. All the other stuff people think they're doing is not accounting. And if you think about, yeah, go back to accounting 101, you learn debits and credits, you learn the accounting you’re not learning.

Blake: Right. Right. So, to me, I'm excited about the rise of non-attest accounting firms. Like Your Part-Time Controller, like the new Eisner Amper split that's happened, like Citrin Cooperman getting acquired by PE and splitting off the audit. Because honestly, I think like, accounting is our roots. That's what we did before we had audit and tax, right?

David: Yeah.

Blake: And so, we're getting back to our roots and that's good. And I just wonder, like, why can't somebody study accounting without studying tax? Why can't I be a CPA and know nothing about tax? I don't- tax came into the accounting profession into the CPA, not, you know- that's- it's not the original.

It's not what- it hasn't- like you said, it’s law. It has nothing to do with accounting. Now, audit, I understand. Audit is, you know, verifying that the accounting was done properly. So, there's like two sides of a coin there. To me- I'd be curious what our listeners think- to me, it makes more sense to have audit and accounting as its own thing.

David: So, the lawyers didn't want tax, so they said, “Hey, accountants, you take this.” And now, it sounds like you're arguing that maybe accountants don't want tax either. And it's just going to have to put it on somebody else.

Blake: Well, I just think tax should get its own thing, right? Like, that would be fair. That would be- it would be better, I think, actually. Like, if you wanted to be a tax professional, then why do you have to do all this GAAP stuff? It's not, you know? I mean, you've got to know something, but it’s-

David: Yeah. In your undergrad, you have to take some basic accounting 101, you’ll have to- a little- enough exposure, right? Yeah.

Blake: Exactly.

David: Makes sense.

Blake: But most tax professionals don't do a lot of accounting. I'm probably going to get some hate mail for that. I don't know. What would be great about that is it would just streamline the process of getting people into our profession, which is the thing that we need to do. If we want to replace these Boomers who are retiring, the half of the AICPA membership, if we want to get those people replaced, we need to bring in people.

David: Don't say it like that. That's kind of the- like, we want to- I want to replace them. It's like-

Blake: Well, I mean, we're going to have to.

David: Eventually, they’re just going to decide not to come to work. If they're eligible to retire, one morning, they’re going to be like, “I don’t want to go to work anymore.” But what if they all do that in a six-month period?

Blake: Right, right. Well, and COVID exacerbated that, right? So, anyway, let's keep going, and I'll look into this report and see if there's any more details and I'll have more insight, hopefully.

[00:27:00] Tax write-offs for teachers

David: I mean, I kind of have some more, like, people taking advantage of the tax data of create articles or get press, but this is actually a really important one. So, it's in My eLearning World. So, it's like a website for teachers. And you probably know this, or maybe you do or don't, how much can a teacher deduct for what they spend in the classroom?

Blake: Oh God. It's like really small. It's like, what, a few hundred dollars?

David: $250. On average, they spend $750 out of their own pocket. And they break this down. They spend 17% on pencils and paper, consumable supplies, and another 23% like, on books and software and other things like that. Like, in cleaning supplies, like, why- teachers have to buy cleaning supplies, right? So, here's the question I have for our listeners because essentially, teachers in the U.S. shelled out $2.8 billion last year on items for the classroom, right?

And obviously, we all know how underpaid teachers are. Like, is there any listener that has some crazy, like, way that can figure out how to have teachers claim this stuff in some other fashion, right? Should all teachers form their own little LLC? I don't know. Like, is there a way to- a passthrough entity? I don't know.

Blake: Oh yeah, yeah.

David: Just, if you're listening and you have an idea, like, this has to be solved. This is crazy. Now apparently, there is some legislation. It's going to go up by $50 to $300 for tax year 2022, and then will adjust by $50 increments based on inflation. So, that means three years or 10 years’ time, it might go up another $50.

It's- really, it's a crime. They should get 100 percent of this.

Blake: Yeah.

David: Like, 100 percent of their expenses should probably be deductible on that.

[00:28:44] Thank you to our sponsor, Digits

David: This episode of The Cloud Accounting Podcast is sponsored by Digits. Digits is building accounting tools so powerful that you'll think they're from the future. In collaboration with hundreds of firms, Digits has been thought through and built from the ground up. Their latest product, Digit Reports, can generate all your clients’ monthly reports, all at the same time with just one click.

Digits Reports aren't your typical boring, static PDF reports. They're beautiful, interactive and alive with the latest data. Using Digits is easy. You just connect it to QuickBooks. About 24 hours later, all your data will be fully analyzed, then can begin generating reports, automatically create executive summaries, and start having those much-needed, high-value advisory discussions with clients, either face-to-face, or using the built-in chat features.

And in case Digit Reports isn't enough, Digits also offers Digit Search, which you can use to quickly find and navigate directly to transactions inside of QuickBooks Online. To learn more about Digits and sign up for free, head over to cloudaccountingpodcast.promo/digits. That is cloudaccountingpodcast.promo/digits.

Digits - finance from the future.

[00:29:57] Twitter video on tax professionals and how they treat their clients

Blake: So, I've got another- this isn't listener mail, but this is something that you highlighted on Twitter, David. This is from SurgiFi on Twitter. He posted a video.

David: Before you play that, I'll read you his original tweet.

Blake: The tweet that I saw was the video. And then above the video, the caption is Taxtwitter Facepalm.

David: Yeah. So, a little background. So, his name's FI Surgi, S-U-R-G-I. So, apparently, he's a surgeon, but he does a lot of financial advice. So, he's kind of a self-made- apparently, he was homeless back when he was a youth. So, he was actually a self- man, American dream here, right? Self-made, probably a millionaire, I'm imagining, right? From Detroit.

He's a robotic surgeon. So, actually I'll read his Twitter bio. From homeless as a child to robotic surgeon. Follow me to discover your success, gain financial independence, and build generational wealth. Right. So, he's not- like, he's very aware of Taxtwitter in general. So, he sent out a tweet. This is on April 17th, 2:04 PM. Here's his tweet. “So, I sent my tax documents six weeks early to my CPA. CPA emails me today saying they were going to file an extension. WTF.” That's his tweet.

He kind of gets lit up by Taxtwitter.

Blake: Here's the video.

David: Okay.

SurgiFi: What's up y'all. It’s Dr. David Ronnie, weather shitty outside. And apparently, so is some of the attitudes on Taxtwitter. And yeah, I'm calling some of y'all out. It's kind of ridiculous. So, let me give you a little bit more context. So, every year, around the same time, because it takes a while to gather everything, I send in my documents, the entire thing, everything that's needed for my return to be done, putting it on a portal for my accountant and let him do it.

Last year, with the COVID stuff, was the first year I had to file an extension. The previous years, I never had to file an extension. So, this year, did the same exact thing, waited for everything to get to me, put everything in so that he can just grab it and go, right? I even email him every change that I made throughout the year.

Any big transactions, it's all documented, ready to go. And again, I don't even try and mess with the guy, ‘cause I know he's busy. And so, I just communicate by email, which is his preferred method of communication. And I get an email a week before tax deadline saying, “Hey, guess what, your returns done. I'm just reviewing it. We'll get it to you by the end of the week.”

And a week goes by, here’s Sunday afternoon. I just randomly check my email. “Hey, here's your extensions. Fill them out, send in a payment, and I'll be having more conversations with you in the future. So, I have some questions about your return.” And I'm just like, “Well, damn. When do I have time to do that? My week's already packed. My Monday is already set and I am busy. So, when can I fit this in?”

It's not about the extension. Extensions are not that big of a deal, right? It's not a big deal. It's lack of communication in this regard, and professionalism. And for you guys who decided to respond out all nasty to me, I mean, the world can see that.

How you guys are responding nasty, right? If a doctor did that crap, you'd be sitting in front of a hospital administrator, but you guys are getting away with it. Peace.

Blake: Pretty brutal, but I think some elements of truth in that, David.

David: And I think the bigger issue here- and it’s the same thing I've kind of been reading about the tax organizers, and you talked about the customer. It's about the experience, right?

Blake: The client experience.

David: Every single firm. I mean, we've been talking about how bad it's been for two years, telling your clients how bad it is, and this is why things are late when you don't get the work done is not the time to do this.

Blake: Yeah.

David: It’s really like taking your client on a journey, like, “Hey, here's the deal. If you haven't seen in the news, the IRS is a piece of shit. The IRS is barely functioning. Here's what we're going to do because we don't have a lot of control over this. We're going to right away, just no matter what, file your extensions.

‘Cause who knows when you get your back, your other returns from other entities you have, we're just going to hurry up, file extensions. We're going to go on this journey, the next two or three years of getting all your stuff done. Right? And- but the experience isn't there and because it's all transactional. It's just very black and white.

You give me your forms, I’m going to give you a return. It's very- and like, we got to get away from that mindset because that's- and here’s the crazy thing. Like, coming as a person that's gone on the client side this year, right? For a business return, two business returns, and a you know, personal taxes. The interactions with the people have actually been great. It's not the people at your firm, but it's this mindset, it's so transactional.

It's like, “Shit, I got to do some stuff.” It's like, it's a drag. So, I know what he's going through. It's like, “All right, I got to gather up documents, I upload them.” And you had data on this a couple of weeks ago or months ago. It's like, you actually have to do more work when you work with a firm than if you do it yourself.

Blake: Yeah. Yeah, you actually do. And this is hard for people to believe. This is hard for tax practitioners to accept. It is harder to work with you than to work with TurboTax. But it makes sense to me because TurboTax is a piece of software that's been designed to work for idiots, right?

Like, it's got all the advantages of having all these software product people who know how to make software for like- that anybody can use, right? So, it's easy. You're actually harder to work with, significantly harder. But you also then make it harder than it has to be by, like, not being in communication, not being responsive, not keeping people updated, not setting proper expectations. Really, this was an expectation-setting mistake, right?

David: Yeah. And I totally sympathize. Like, I get it. It's been a horrible two years for accountants because they’ve been busier than they've been in decades.

Blake: Yeah.

David: but we all know, but going into the same season with the same game plan, I don't know. You're right. Setting expectations would have been different, filing extensions earlier, I don't know. But it's- and then also, just like, everybody's pretty frustrated. I mean, they're burnt out, right? But I've seen this a lot on Taxtwitter. A lot of people take- they bag on their clients, right?

Blake: Yeah. Well, they- and I am firmly of the belief that it's almost never the client's fault, and it's not true that it's never the client's fault like the customer is always right, is not true.

David: Yeah.

Blake: Because some- often, the customer is wrong, but I like mentality that creates when you start from that point of view, you try to see everything from their perspective.

And I think a lot of Taxtwitter has trouble seeing things from the client perspective. You know? You see people drafting up the- people will share their fire letters. You know, “Here's the letter I sent to my client to fire them.” And it's all about, “Here's what you didn't do. Here's what you did that made me fire you.”

And you know, like, there's a reason you could have stopped- you could have prevented this, as a firm. Most of the- a lot of the time, when you blame the client, it's actually, you could have done something in better communication.

David: And a lot of Taxtwitter is firm leaders, right? They’re-

Blake: Well, it's like, a lot of Taxtwitter, I think, is solo practitioners.

David: But lots of them have teams and staff.

Blake: Yeah. Some, some, yeah.

David: So, if you're out there bashing clients-

Blake: It doesn't look good. That’s-

David: How do you expect your staff not to bash clients? Because I used to actually feel this when I was doing tech support in like, this whole, like, you can't train people to care about your customers. They got to just do it. And I remember like, you'd go on break, and as soon as like, people would get off the phone with the customer, “That customer is so stupid,” I’m like, you’re never- you can't train that person to care, right?

Blake: You can’t have that attitude. No.

David: It's that mindset. And I'm wondering if Taxtwitter's kind of slipping into this like, bash client mindset.

Blake: Yeah. It's not healthy and it's not- like, even if-

David: And he just detected and call it out, and he's like a Taxtwitter on the edges guy.

Blake: Well, and so, like, let's talk about a common gripe, right? The most common gripe that I hear, that I read on Taxtwitter is, “My client ignored my messages, and is now giving me their documents a few days before the deadline. And they say that they don't want an extension.” I think that getting documents in late is the big thing, and then expecting us to just jump and do it. That's classic.

David: I got communicated to from my firm, but I'll tell you what. I’m like, “I don't know what parts of this email are important or not important. What I should read.” It was just like, a verbal dump. It was too much.

Blake: A lot of times, they- it's too much. It's too much.

David: And I’m like- so, I just don't really read it.

Blake: No, but you know, one way that you could solve this, right? ‘Cause people don't read stuff, and we have to understand that as accountants, like, people aren't going to read your long email. Call them, have a person from your firm talk to every single client as early as possible. I mean, there's a reason, like, when you book an appointment at a doctor's office, you'll often get like, three different people calling- contacting you to confirm that you're going to show up.

That's something they're doing right, right? ‘Cause if you don't show up, they don't make money. And it's kind of the same thing for us. It's like, I don't know. If your clients aren't getting you the stuff you need to do your job, that's actually more a problem with how you're asking them for it. That's how we need to shift the mentality.

David: And then there's a whole Twitter that’s going on now. Like, what are you going to do to improve your firm, blah, blah, blah. And it's like, I can see the march is like, ugh. New processes and new software, and like, new organizers and we'll build a web form. And like, I'm not sure that's the answer for this all, either.

Blake: A lot of firms too are just operating over capacity. We were just talking about capacity earlier, right?

David: Yes, yes, yes. People, people, people.

Blake: So, it's like, if you're taking in every single client that comes and you are maxing out capacity, and you're just- your plan is just to work really hard for three and a half months so that you can enjoy the rest of the year, you're not going to be able to deliver a good client experience.

You're prioritizing revenue over the experience. That will not work long-term. You're going to have these dissatisfied customers, and it's going to create tension. And you know, sometimes, the greed is the problem, right? You know, if you just didn't take on so many clients, it wouldn't be such a problem. I'm willing to say that, right?

But that's a problem with the feast or famine kind of situation. You feel like you have to take all the revenue because it only comes once a year. And you got to survive on it the rest of the year. So, this is why smoothing it out with accounting services is the secret.

David: Yeah.

Blake: No more busy season.

David: And I think we’ll move on from this a little. But the best response of all the tweets that are in there, I thought was great, which is, “Grownups file extensions,” which I think is really funny.

Blake: Yeah.

David: That's an easy way to justify this to your clients. Be like, “Oh, we see you're a grownup. We're automatically going to set you up to file an extension, because you're a grown up and you're going to have complicated stuff. It's going to take everybody- it's going to take you longer to get your stuff.

It’s going to take us longer to deal with it. We're just going to- you're a grownup, you get a file extension.” And they won't be upset about it. They’ll be like, “Oh, thank you for recognizing that I'm a grownup.” And that's an easy way to comp- to separate that like simple tax return versus the others.

Well, you have a grownup tax return, right?

[00:41:21] Thank you to our sponsor, Relay

David: This episode of The Cloud Accounting Podcast is sponsored by Relay Financial. For those listeners that haven't been following along with my drama caused by the PNC when they purchased BBVA and botched the migration, to quickly summarize, PNC bank feeds won't work with QuickBooks Online. The website had all my old BBV transactions just listed as debits and credits with no vendors or payees.

And to top it all off, the June bank statement was just missing. Like June never happened. Let's just say my 2021 books were a mess. So, for 2022, I made the commitment to stop using PNC and switch everything to Relay. Relay is as a no-fee, online banking platform built for you and your small business clients. Relay understand themselves, all the things we, as accountants and bookkeepers, care about: security, bank feeds, automation, reconciliation.

I invited both my interns to my Relay account. They created their own user IDs and passwords, and within minutes, they were using Relay to create virtual debit cards, physical debit cards, download statements, and reconciling. Now, the bank feeds and my QuickBooks Online are reliable, and my 2022 books are in order.

To stop fighting with an unreliable bank that doesn't care about you or your small business clients, head over to cloudaccountingpodcast.promo/relay. That is cloudaccountingpodcast.promo/relay.

[00:42:40] Elon musk talking about Tesla and the SEC

Blake: Since we're talking about Twitter, we got a tweet from a listener. Michael Don, MikeDon, @BlakeTOliver, I was listening to you talk about Elon Musk's dislike of the SEC. Interesting interview here, where he said funding for taking Tesla private was secured, but the SEC made him lie about it.” So, I'm going to play this clip.

David: Wow. No wonder he's so upset.

Blake: Yeah. MikeDon, thank you for pointing me to this clip. It really makes a lot of sense now. Take a listen.

Elon Musk: With Tesla back in the day, funding was actually secured. I want to be clear about that. In fact, this may be a good opportunity to clarify that if funding was indeed secured, and I should say like, why do I not have respect for the SEC in that situation? And I don't mean to blame everyone at the SEC, but certainly, the San Francisco office. It’s because the SEC knew that funding was secured, but they pursued the- an active public investigation nonetheless.

At the time, Tesla was in a precarious financial situation. And I was told by the banks that if I did not agree to settle with the SEC, that they would- the banks would cease providing, working capital and Tesla would go bankrupt immediately.

So, that's like having a gun to your child's head. So, I was forced to concede to the SEC unlawfully. Those bastards. And now, it makes it look like I lied when I did not in fact, lie. I was forced to admit that I lied to save Tesla’s life. And that's the only reason.

Blake: Fascinating. So, this sheds a lot of light on what's been going on with Elon Musk and Twitter. My theory is that Musk is playing this game with Twitter, acquiring almost 10% of it as like, a big F-you to the SEC. You know, failing to disclose that he had acquired 9% when- back when he got 5%, he should have disclosed it.

He's gonna make a lot of money on this, and they're going to fine him, but he's going to come out on top.

David: Eventually, they're going to make a mistake.

Blake: Yeah.

David: And he’s going to get them. Like, that's probably the- yeah, he's testing the waters with them.

Blake: Don't mess with Elon Musk. He will come after you.

David: What else do I have? I saw some crazy news and like, even tuned out for two seconds, ‘cause the headline was an interesting one.

[00:45:21] Scuffle at Taiwan accounting meeting

David: ‘Scuffle sparked at Accounting Act Reform Meeting’, Taipei Times.

Blake: This is in Taiwan?

David: This is in Taiwan. The Chinese Nationalist Party and the Democratic Progressive Party got in a scuffle about an amendment that will decriminalize the misappropriation of the special affairs fund, which apparently, the presidential office can use to carry out “state business”.

Blake: Wait, there's a bill to decriminalize fraud for this fund that the president gets to use?

David: Well, apparently, 6,700 people had benefit from legally misusing the special allowances fund. So, it feels like it's a pretty big- everybody's got their hands in there, but yeah. So, the photo, like, they're wrestling and grabbing, you know- everybody has their mask on and-

Blake: Really?

David: Yeah. And actually, the photo, the sub-headline’s even better. ‘Cause the sub-headline says, legislatures brawl at the podium at a meeting of the legislators finance committee yesterday over an amendment of article 99-1 of the Accounting Act.

Blake: How did it- does it say how it started? Did we like, was there an insult that was thrown and then-

David: Both appointing figure who did what. Like, it’s-

Blake: Wow.

David: Everybody has partisan politics, obviously.

Blake: Yeah. Well, hey, there's nothing that can take you down as a politician, like misusing taxpayer funds, right? That's always the one that you get- it's a career ender, in a lot of cases.

David: Yeah.

Blake: Interesting.

David: So, both sides are accusing each other of violent actions. So, anyways, but it was the headlines that really got me. I was like, you know, scuffle and brawls around accounting, so.

[00:46:54] The Steve Jobs accounting story

Blake: Well, speaking of accounting standards, I don't actually know how to transition into this one. This is just a great story that I became aware of about Steve Jobs and Apple that I had no idea about. And it's fascinating. It's an accounting story about Steve Jobs.

David: There’s many stories about Steve Jobs, I’m like, “This is exciting. I’d love to see.”

Blake: Yeah. No, it's an accounting story. So, you know, I think most people are familiar that- with the story now, if you saw the movies that came out about him after his death, that Steve jobs started Apple, then he got kicked out of Apple and then he went and did a bunch of stuff. And what, like, created Pixar and sold that, and then had a bunch of money and great reputation, and came back and took over Apple again.

And of course, when he came back, it was a mess.

David: Yeah, it was on its last, like, heartbeat.

Blake: It was losing-

David: Well, actually, Microsoft, I think, gave a loan to keep Apple alive, if I remember correctly.

Blake: Yeah. Yeah. He-

David: That's how- that's where they were. They had to borrow money from Microsoft to stay alive.

Blake: Yeah. In 1997, Steve Jobs had to make an announcement that they had borrowed 150- no, taken a $150 million investment from Microsoft. And that was back during the Apple- you know, the Apple-PC wars. And if you had a friend who was an Apple fan, boy, it was fun to make fun of him for that, right?

David: Yeah.

Blake: It was the same year that Dell CEO, Michael Dell, said that if he was leading the company, he would shut it down and give the money back to shareholders. This was a dark time. So, the commonly known story is that Steve Jobs came back and he used his amazing product vision to create the iMac. And that is what saved the company.

And while that is absolutely true, that he is a creative genius when it comes to products, there's another behind-the-scenes element to his turnaround at Apple. In the first year that he was back at Apple- and this is according to a story in Inc.com- he came back and he was looking at the accounting.

David: Which makes sense. ‘Cause I think they screwed him when they fired him originally.

Blake: Really?

David: I think he got screwed really bad on the original firing.

Blake: Lost a bunch of equity or something?

David: Yeah, yeah, yeah. I think they really hosed him.

Blake: I think you're right. He had to give back shares or something?

David: Yeah.

Blake: Yeah.

David: So, of course, he's going to look at the books. He has access to them now.

Blake: Okay. So, he's looking at the books. Oh, and I should preface this whole thing by saying like, this story came to this reporter because it was Tim Cook giving testimony in this epic lawsuit against Apple about the App Store.

So, on the stand, Tim Cook, CEO of Apple, current CEO of Apple was asked about the profitability of the App Store. Like, what is the profitability of the App Store? And he said that it's actually impossible to say because the company doesn't track expenses that way. Apple doesn't track profitability of a segment called the App Store.

So, why is that, right? It's because when Steve Jobs came back to Apple in 1997, he found a company where they were doing accounting for every segment that way. And so, you know, each, business unit- and the App Store would be one of those, even though it didn't exist then, it would be one- you know, maybe a business unit would be- I don’t know, what was Apple making at the time? They had their MacBooks.

David: Well, they- he reintroduced the MacBook, that colorful thing. They basically, had that little square box and they didn't have much. It was not very good.

Blake: Maybe they had software that they were making. They had some hardware, you know?

David: Unless you needed to do Adobe Photoshop, basically, you didn't use Apple. Nobody did.

Blake: So, each business unit at Apple had its own P&L, and the divisions would regularly fight over where to allocate costs. Each manager was primarily concerned with whether or not their unit showed a profit, regardless of whether the company itself was healthy or profitable. And the amazing thing is the company was losing a billion dollars a year at the time, but every division was reporting that they were profitable.

So, what Steve Jobs did is he got rid of all the general managers of those business units; fired them all. And he put the entire company on one P&L. He said, “I'm not going to track profitability for your particular product. I'm not going to try to allocate costs that way. We are one company. And so, that's how we're going to track our profit.” And it's counterintuitive.

As accountants, we think that by getting nitty gritty with our cost accounting, we are helping business owners make better decisions, but often, we are not. And in the case of Apple, they had all these different business units fighting over these imaginary cost allocations. It wasn't changing cash. Cash was going out the door.

The only thing that was changing was this P&L. And so, it's, I think, a lesson on the dangers of cost accounting and not aligning, you know, the goal of the company, which is to be profitable with the goals of these managers where, you know, they were measured on. How profitable is my business unit? And what is the kind of behavior that can create if you have that situation?

Well, if you're allocating like, employee costs to different departments, David, if you're a different department than me and you want some of my resources, and why would I give, you know, why-

David: There's no motivation. Yep. Yep.

Blake: I have no motivation or to go borrow resources. If I borrow resources, you're going to charge me for it, right? And that's going to hurt my bottom line. And, yeah. So, he-

David: It makes so much logical sense from a cost-accounting perspective, but it's-

Blake: Right. So, think about this. one of the most profitable businesses I think isn't Apple. Like, if not the most profitable business in the world, one of them, right?

David: I think so, yeah, yeah. Ever created, yeah.

Blake: They don't allocate costs. They view Apple as one business and it makes sense the way Apple-

David: Imagine if they did. If somebody was pricing the iPad based on cost to produce, or the iPhone, they'd probably be like, “All right, let's make this X markup. We're going to sell it for $328 because it cost us $80 to make.” No, instead, they're selling them for $900 because they don't care about how much it costs them to make it.

Blake: Yeah. So, every business- there's no more business units at Apple. Everyone is organized by function, and your job is to maximize the value of your function, and not to worry about costs. And this goes to the whole value-pricing, anti-timesheet discussions that we've been having on our show the whole-

David: Well, I think it goes to the- just the conversation but you bought the whole, like, trying to, “Oh, we'll look at CAS, if that's profitable. And look at if audit's profitable and tax is profitable, instead of looking at the whole picture.” And one helps the other, right? You've been saying this for a time. And it's funny, ‘cause I remember Intuit at one time.

Obviously, you have TurboTax, you have QuickBooks, you have different business units that exist. And at one time, I think the VPs used to get their bonuses on their own business unit. And I don't when this was changed, but it was changed so that way, the VPs of QuickBooks, their bonus was dependent on the TurboTax's growth and vice versa.

So, because TurboTax does- they have people that have businesses, drive them to QuickBooks. You know, there's people that are using QuickBooks, drive them to TurboTax, right? And that's how they- it encourages all- it was a way to encourage higher-level company growth. And so, yeah, the firms should, you know, think about it, this mindset, right?

Blake: Yes, that's exactly it, David. You've made the perfect parallel. Firms that set silo teams, which is most firms. That's how it is. It's, you have your tax, you got your audit, you got your client accounting services or bookkeeping. You’ve got your consulting. And then even within, you have still further segmentation of the P&Ls, like, little tiny P&Ls everywhere.

And what you really want is a single firm. ‘Cause in the end, the only thing that matters is the profitability of the firm. And we get too in the weeds. And the actual, real-world consequence of this is that stuff like bookkeeping, which is not as profitable as advisory or tax, gets the short end of the stick, right?

Or I don't know what the proper analogy is, but it doesn't give resources because people are looking at that P&L for client accounting services. And they're saying, “Oh, well, our hourly rate for- our effective hourly rate for bookkeeping is so low. You know, we get three times as much for tax,” and they don't invest in it.

But what they don't realize is that if you don't have good books, you can't do a good tax return. You know, like, it's all tied together. So, firms that really want to do what Apple did have got to get rid of this. And they are imaginary cost allocations, right? Because, well, and even- and we even get down to the- where they're really imaginary is the job profitability.

So, costing down to every single client engagement, that doesn't change how much cash is going out the door for salaries. My salary is fixed. At most accounting firms, the salaries are fixed. So, like, allocating all these costs for salaries is just insane. It doesn't give us any useful information. Anyway, I love that story about Apple.

And so, you know, the conclusion of the article is, yeah, Steve Jobs made some amazing product innovations, but that accounting change, management change could be more important because, you know, one guy can only have so many good ideas for products. But like, when you align an organization around the mission of the company, which is create a single unified experience, and that's what Apple is, right?

It's- the app store is worth nothing if you don't own an iPhone. The iPhone is worth nothing without the App Store. So, how can you divide them up and measure their profitability separately? Yeah. All right.

David: No. I think you're really right. Like, hey, just look at the whole entire firm. And it's not these individual business units. Again, like, I made an argument against Costco. If they only- if they did just a P&L on the dairy section, they probably would‘ve killed the dairy section.

Blake: Yeah. Then people would stop coming into the store and buying stuff.

David: Store, right, yeah, yeah. It's kind of that same thing. I know we have app news. I have something that’s not app news. I don't know if we have time to do app news today. If you want to notify the authorities and let them know we're going to run long, I don't know. It's kind of up to you. How are you feeling? How's your energy?

Blake: Well, how- I'm dropping ‘cause it's Friday afternoon. But I will entertain any of your stories that you feel are especially relevant, that you want to get off your chest.

[00:57:54] US Appeals Court rules screen scraping is legal

David: Yeah, I think I just have two. Well, one is, the U.S. Appeals Court has ruled that this is the U.S. ninth circuit of appeals in a long running legal battle. Really, a lot of it was because of LinkedIn trying to block this, that screen scraping is legal. And the reason this [INAUDIBLE]-

Blake: What’s screen scraping?

David: -is because that's how Hubdoc and a lot of different apps have used to go, “Hey, go get your bill from Verizon,” and suck it into the accounting system. So, it's been deemed legal, screen scraping. It is not hacking, it's not a violation. ‘Cause they're not going to the code and stealing office servers. If it's on a public- now, if it’s a private server somewhere, and they're hacking in, and not through the front end website, yes. But it's not scraping, but so that's- it's officially, you know, it's totally legal.

Blake: And great news for marketers who use software that does screen scraping.

David: 100 percent legal.

Blake: You know, some of it is- some of it is not great because it creates spam, but like, a lot of it is very useful and there's tools that we use to get, you know, information about prospects, and not have to like, do data entry. So, yeah, that's great.

David: And I actually find it annoying when I use other apps and they can't just get a nice connection to LinkedIn because maybe you don’t have so many names spelled correctly, or where they work at in your CRM. And it's nice when they can just go and get it from there. And, you know, they want to block that.

[00:59:09] Plaid cofounder buys and starts a bank

David: And the other big news is Plaid. We've all talked about Plaid forever, right? So, Plaid is really the bank feeds. You know, most of these apps- it's probably, I'd say 85% of the apps in your tech stack probably are using Plaid somewhere in their journey. Here, most are using Plaid. The other co-founder of Plaid, William Hocqui, like H-O-C-Q-U-I.

He has been on this journey for three years. Because one of the big problems, I think in general, with tech and fintech is they love to partner with these traditional banks that already exist. Tech doesn't have a true bank charter. So, they got to partner with a legacy bank, you know? And it's always these smaller ones or kind of out of the Midwest and, you know, blah, blah, blah, blah.

So, he's been on this march and he- so, this is from his tweet. It's a series of three tweets. “Today, I'm publicly announcing Column Bank. The company I've been quietly building for almost three years. We were the first charter bank built from the ground up for developers. We've built it- okay.

Blake: Did he buy a bank?

David: No, they built it from trash.

Blake: Wow. But they must have bought like a bank with a charter or something. To go get a charter is really hard, right?

David: That’s a good question. I should have prepared for this more. I should have- he should have tweeted that part out and he didn't. He said that they've built every single component from scratch, from the direct integration, with the fed, to their API docs purposely built for developers to be able to build that bare metal. “I've always wanted to do this for 10 years, and it’s going to be exciting to see what people do with this for the next 10.”

But essentially, yeah, they’re- because with all these majority of people in the middle you have to go through, right? So, if you're building an app, you're going through Plaid or you're going through Evolve or Silicon Valley Bank, right? And then they're doing rails to other parts to the fed. Like, this is a true bank connection to fed, connection to developers.

Blake: So, the bank- he did buy a bank.

David: He did buy one, you found that. That’s good research. Good job.

Blake: Well, you know, I just- I opened up the article, David.

David: Well, this is his tweet. This is his tweet. This is his tweet, is my article.

Blake: Ah, I see. So, you're reading the tweets, I'm reading the Wall Street Journal article here ‘cause I pony up for that subscription. The Northern California National Bank is the one that he bought for $50 million last year and gutted it's operating systems. So, you know, basically, when you do that, you're buying it for the charter.

David: It's like the spec-type game here.

Blake: Yeah, sort of like- and I'm actually surprised that more fintechs don't do this because then you can really control the whole thing, end-to-end, rather than just being-

David: And there are so many little, teeny, tiny banks with bank charters in this country.

Blake: Yeah. Yeah. Like, why not do that? But again, I guess then the issue is, you know, banks are what, chartered by states, and then they're chartered by the feds, and it just gets, you know? Nobody in tech wants to deal with the regulation around banks. It's a pain in the butt.

David: And apparently, they've already let some companies, like Brex's using it already.

Blake: Nice.

David: And I think that we can make our point up. So, I think from a developer standpoint, it's very interesting for apps in our space. Right?

Blake: So, is this going to be something that any fintech can use? Like, are they going to let people plug into it?

David: The theory is, yeah.

Blake: Yeah.

David: So, instead of the using a Frankenstein set of different tools from different API providers that each have this little thing, they’re kind of doing, like, there's an app over here, that's connecting the fed, there's an app over here connecting to the Swift.

You're going to just be on a real bank, going to do a real network. And so, who knows what people are going to be able to build with this? Right?

Blake: That's exciting.

David: But it's going to also be able to- the rates, because now you've eliminated a whole layer of middlemen out of these things. You'll be able to offer your customers lower rates on transfers and, you know, wire transfers, etc.

Blake: There's an interesting thing about the deal, like, actually buying the bank. Apparently, it was a challenge. The Hocqui’s got regulatory approval in June, but needed shareholders to tender at least two thirds of their paper stock certificates. Paper stock certificates.

Records are incomplete and several shareholders lost their certificates in the 2018 campfire that burned more than 100,000 acres in Northern California. NorCal's CEO and tellers reached out individually to customers to help fill the gaps. Shareholders who brought their certificates to the Chico branch got donuts and coffee. Ultimately, 94% of investors tendered their shares.

David: Wow.

Blake: Physically, like, this is how small that bank was. They’d physically get the shares, the stock certificates.

David: Amazing. So, but this one's going to be like- this is going to be one of those under the cover things that you may not even know you're using when you use other apps.

Blake: But if you see- what's the name of the bank? Column? Is that what it's called?

David: It’s called Column.

Blake: Yeah. So, if you see something powered by Column, like, at the very bottom of the screen, that's, you know, what they’re using.

David: And the terms of service, or whatever. Yeah. Eventually, you're going to see that along the way. Yeah.

[01:04:01] Thanks for listening, earn free CPE for listening to this episode

Blake: Yeah. David, always a pleasure. Have a great weekend. If our listeners want to follow you, connect with you online, where can they do that?

David: I'm on all the socials, just @DavidLeary. And make sure you go to accountingtwins.com and listen to that podcast.

Blake: Yeah. I'm @BlakeTOliver. Send me your emails, your voicemails to Blake@Blake Oliver.com. We love hearing our listener feedback, or @ mention me on Twitter, or @ mention The Cloud Accounting Podcast, @CloudACCTPOD. It's awesome. Thank you so much for everything you've contributed to our show.

And if you want to get CPE for listening to this episode of The Cloud Accounting Podcast, go to earmarkcpe.com. Sign up, download the app. You can take a quiz and get credit for listening to this episode. Courses come out about a week after we drop an episode of this show. So, if it's been more than a week since this came out, go on Earmark and find it.

Find the channel for Cloud Accounting Podcast, take the quiz, get an hour of free continuing professional education.

David: Quizzes go down the last two weeks because of the tax deadline [INAUDIBLE]? I mean, you have been around a year, so what? [INAUDIBLE] is going to loop back up next week?

Blake: So, like most accounting products, we built the GL, and we're still working on the reports. So, my analytics that I can pull are only for like all-time right now, but we're getting there. And I can tell you some interesting numbers. So, we've had over 1500 people sign up for the app. Of those 1500, 1000- more than 1000- have taken at least one course.

It's an average of four courses per person. So, about four CPE hours, since virtually, all of our courses are one hour. So, yeah, a thousand people have each taken four courses. I was trying to think, is that good? Pretty decent for like the first three, four months without any advertising. We're going to try to get the word out this year and grow that audience. You know?

I want to go from 1000, to 10,000, to 100,000 people using this app.

David: So, are you gonna get t-shirts made for you? I’d like to help you out with that.

Blake: ‘Cause I tried and my- the t-shirt I made was terrible. So, I need your expertise, David. ‘Cause you make the best swag.

David: Well, I think I’ll scope some things out. I'll talk to Chrissy, you know, who does a lot of ordering stuff for me. I'm gonna have to track down some big, green foam ears for you to wear.

Blake: Oh. Maybe I can get elf ears, you know? Like, green elf ears.

David: But they won’t be elf ears. They’ll just be real ears, but they’ll be big.

Blake: Just big, green ears?

David: And- but somehow, the check mark will be in there. We'll figure it out.

Blake: It'd be cool.

David: The check marks you wear on your ears.

Blake: What if they’re ear muffs that look like giant ears?

David: Like giant check marks.

Blake: Giant check marks on your ears. Earmark.

David: I’ll help you out with some of this marketing. Maybe we'll get more people getting their CPE credit.

Blake: That sounds great. Thank you, David.

David: Awesome.

Blake: Talk to you later.

David: Out. Bye.

[01:06:54] Classifieds

David: Time for the classifieds.

[01:06:58] Future Firm

David: If you're looking to quickly grow a scalable, systematic, seven-figure accounting firm without having to work 50-plus hours per week, check out Ryan Lazanis’ online coaching membership, Future Firm Accelerate. Designed around Ryan's experience taking this cloud firm from scratch to sale so that you don't have to reinvent the wheel.

You'll get online learning in topics that help you automate and systemize all aspects of your firm. You'll get coaching when you need help with implementation. And you'll also join a collaborative community of hundreds of other forward-thinking firm owners. For more details, head over to www.futurefirmaccelerate.com.

[01:07:35] Get W9

David: Tired of clients not remembering to get W-9s? getW9 automates and streamlines the collection and storage of W-9s. getW9 has a QBO integration, and they have a partner program that pays 25% commissions. getW9 plans start at only $19 a year. Visit getW9.tax today to get started. That is getW9.tax.

[01:07:59] Firmsta

David: Are you still using emails to exchange sensitive files with your clients? Maybe you're using that old, complicated client portal that's painful to work with. Stop suffering and start using Firmsta. Firmsta is an innovative and secure client portal designed to help your accounting firm work more efficiently with your clients.

With Firmsta’s intuitive interface, you will quickly add your clients, easily create folders, and securely share files in no time. Firmsta also allows you to add your staff members so that you can access all your clients’ information and collaborate effectively. Start your free 60-day trial now at firmsta.com.

You'll love it, or it's free. That's firmsta.com.

[01:08:37] Oh My Fraud: A True Crime Podcast for Accountants

Blake: Hey, podcast listeners, it's Blake, and I wanted to let you know about a new show I'm working on with CPA/comedian, Greg Kyte, and blogger/former CPA, Caleb Newquist. It's called Oh My Fraud, and it's a podcast all about financial crimes. That's right, a true crime podcast for accountants, by accountants.

Caleb and Greg are going to come together every couple of weeks to unpack their favorite frauds, and explore the circumstances, psychology, and interpersonal dynamics involved. They also fully indulge in victim blaming the defrauded widows, orphans, infirm, and feebleminded - because who can resist?

If you fancy yourself a trusted advisor, or prefer your true crime with spreadsheets instead of corpses, listen to this show to learn what to watch out for, and to keep your clients, your firm, and even yourself, safe. To subscribe, go to ohmyfraud.com, or search "Oh My Fraud" on Apple Podcasts, Spotify, or wherever you get your podcasts.

[01:09:37] How to advertise in these classifieds

David: Want to get the word out about your newsletter, webinar, party, Facebook group, podcast, e-book, job posting, or that fancy Excel macro you just created? Why not let the listeners of The Cloud Accounting Podcast know by running a classified ad? Hit the show notes for the link to get more info.