The Accounting Podcast

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Keila Hill-Trawick, CPA: [00:00:04] For me, it's really about balance, about getting to a place where I can touch the things that I'm really interested in. And the flip side of that is when I go to conferences or when I go to events, being able to have that as time to meet and actually enjoy people and not feel like every time I'm doing something that talks about accounting, it is only about work.

David Leary: [00:00:25] Coming to you weekly from the OnPay Recording Studio.

Blake Oliver: [00:00:31] Hello and welcome back to the show. I'm Blake Oliver and.

David Leary: [00:00:35] I'm David Leary.

Blake Oliver: [00:00:36] And joining us today is a very special guest. We've got Keyla Hill Traywick, CPA. Hey, Keyla.

Keila Hill-Trawick, CPA: [00:00:43] Hey, thank you so much for having me. I'm excited to be here.

Blake Oliver: [00:00:46] You're a celebrity. You were on the like. You were on the cover of the Journal of Accountancy for the one for the December issue, with not just a feature. You actually wrote a really powerful article about how you're growing your firm, and I really want to talk through that. It's it's it's totally different than the traditional gotta grow top line revenue. Get bigger, get bigger, get bigger idea. And you have kind of the opposite idea. So I think that'll be fun to talk about. But first I'm curious, you know, like it's the end of the year. We're recording on December 13th. David and I are kind of doing like a big push to get to the end, try to get some stuff done. What about you, Kyla?

Keila Hill-Trawick, CPA: [00:01:31] Yeah, we're in sprint season right now, so my firm closes three times a year. Um, we close for spring break right after tax season. We have a week off in the summer, and then we close for the last two weeks of December for winter break. So it's the roller coaster of like, get everybody stuff out, answer all the questions, make sure we're reminding people over and over that we'll be closed and then a drop, hopefully next week of rest for the next two weeks.

Blake Oliver: [00:01:56] Very nice. How about you, David? How are you doing?

David Leary: [00:01:58] I'm doing okay. We're, uh. I find Kyla fascinating from, uh, like, at one level, I feel like I didn't even know who she was a year and a half ago. Two years ago, per se. And then now she's on the cover of Journal of Accountancy and. But and I find and it's fascinating I want her to talk about this like at one level she talks about building a firm just big enough and just kind of this nice, manageable size firm. But then her personal brand and career has gone like a rocket ship. So I want to understand that that that relationship there a little bit more.

Blake Oliver: [00:02:29] Yeah.

Keila Hill-Trawick, CPA: [00:02:29] Yeah I'm sure I have questions on how we do that too, because it all feels new to me as well.

Blake Oliver: [00:02:35] Well, so let's, let's, let's dig into this piece you wrote in the Journal of Accountancy. Um, you know, you talk about intentional growth, pursued carefully, helps a firm thrive now and in the future. Maybe just let's start by where you started, right? Where you're in Washington DC. Yep. How did you get started? When did you get started? And and where are you? You know, take us on your journey.

Keila Hill-Trawick, CPA: [00:03:01] Yeah. So I guess I'm an accidental firm owner, like many that I have met in between, I never worked in public accounting. So I came from, uh, corporate accounting when I, I'm from Atlanta. So I did corporate accounting there, decided to move to DC. The easiest way to do that was to get into the federal government. And so I worked for a couple of different agencies in the federal government. But I had never had a job longer than like a year and a half, maybe two years. I would quit my jobs regularly and do something else. And so I was at the Patent and Trademark Office. I was doing, um, internal control audits and had gotten to that place where I was like, yeah, we need to do something else because this is not it. And two things happened. My husband, my husband at the time, at the time, my husband, who is still my husband now, said, hey, um, I don't think you need a new job. You need something else to do with your time. So the problem is you keep thinking that the next job is going to be the thing that makes you passionate or makes you excited about things. That's not it. You need a hobby or something else to do. And at the same time, I had a bunch of friends who were quitting their jobs to go into business for themselves. They were doing consulting, they were doing training, a lot of them doing what accounting firm owners do, which is like this thing that I used to do for corporate.

Keila Hill-Trawick, CPA: [00:04:13] I'm not going to make my own business doing it for other people. And I was like, oh, I don't know a lot about it, but I know more than they do. I could learn how to do that. And so the firm really started as a side hustle for me not to quit my job. And then I quit my job a year later, um, during tax season. And part of what I knew from the beginning and the reason that the firm is called Little Fish is because I knew that I wanted to serve very small businesses who are often overlooked because they make good money, but they're not expected to make good money. So it's like if you're not bringing in at least $5 million, we're not talking to you, or they don't even get to where they're asking them about their revenue or profit, because they just assume if there's only two people on your team, you probably don't make enough for me to deal with you. And so we knew from. The beginning that we wanted to serve businesses who would otherwise be overlooked. But also, how could we kind of build a resource, library or ability to serve people who to some extent were just not going to be able to afford ongoing accounting help, but still needed something to be able to do it themselves with support.

David Leary: [00:05:18] So I find it. You're just mean by you naming it what you named it, Little Fisher County. You're self-selecting who your clients are going to be. There's nobody at a fortune 500 or fortune 2000 or fortune 5000. That's going to go to their their board and be like, we found our accounting firm. It's called little fish accounting. Right. You're self-selecting who your clients will be. And like, I think a lot of people don't think about that when they're branding and naming their companies and things like that.

Keila Hill-Trawick, CPA: [00:05:42] Yeah. And one of the things that we knew from the beginning was even in that self-selection, there was going to be variety. So I think a lot of people assume, oh, you're working with, you know, small businesses in quotes. And I was like, I am, but our businesses are making high six figures, mid seven figures. They may not have a lot of people on the team, but it's not that they're not making money. And I understood early on that people who made more needed something different. So like once you got beyond a certain point when you got 50, 100, 1000 people, we shouldn't be your accountant, because the things that you need and the complexities that you're running into is not our kind of secret sauce. The path that we take for most of our clients. So the more alike that they could look in a specific kind of arena, the better we could serve everybody, because we had best practices that would apply to all of them.

Blake Oliver: [00:06:35] So in your article, Kyla, you talk about how when you started your firm, you were doing not just the monthly and quarterly deliverables, but you were doing weekly invoicing, biweekly payroll, contractor payments. And as you grew, it got difficult to take time off and that wasn't something you wanted. So you stopped doing payroll, you stopped doing AR and AP in contractor payments. And so walk me through that decision, because it's not often that a firm decides to cut back on services to clients. It seems like we tend to add more and more and more.

Keila Hill-Trawick, CPA: [00:07:13] Well, first of all, that was terrifying because they were our highest paying clients like we were. I think one of the things that I don't think we talk about enough is it is easy to say you're going to niche and you're going to change and all of that when people are not willing to pay you to do it anyway, so you can make the decision at the beginning to say, I will not offer this service. And that feels very easy, because in the moment, nobody's asking you to offer that service in this. It was hard because I was telling people who were willing to pay us, who were happy with service, who loved everything that we were doing, hey, we don't do that anymore. And either you're going to have to downgrade into the service that we offer or I'll help you find somebody else. So my first thought was, all these clients are going to leave us, um, we're going to lose all this money. What am I going to do? But there were a couple of things. One, we couldn't take off because as long as you need something weekly or ongoing and you're paying that much money for it, your idea is like, I know that y'all are closed, but I need payroll run, and I need these invoices paid, and so you could be off, but you always had to, like, check in on Wednesday and make sure that it actually processed the way that it was supposed to. Um, the other thing is, I realized that that all encompassing idea made boundaries really hard to enforce, because every time you had something that seemed remotely related to a dollar, you thought that we should own it. And so there would be things like somebody would have a question on sales tax, and I'd be like, well, we don't do sales tax, but it seems like because we do everything else that is related to finance for you, that we would also take this thing on.

Blake Oliver: [00:08:47] So what are your core services like an ideal client? What are you doing for them.

Keila Hill-Trawick, CPA: [00:08:53] Yeah. So now we're down to two. Um, you can be in tax prep suite. So that's our year round tax service. It includes annual tax prep, quarterly estimates and payments. We do two tax planning calls, one in the middle of the year and one at the end of the year. They get ongoing email support. And then we do the things like, um, entity review, setting up their escorts to the extent or their election to the extent that we can talk to them about reasonable salary and accountable plans. Basically, just trying to make sure that throughout the year we're doing enough for you that by the time we file the return, it's just settling up, like the value add is that we're also filling that form out for you. And then our next service is a fractional CFO service called Financial Manager, where we always include everything that's in taxes. But we also take care of bookkeeping, financial statements, um, monthly calls with a video to review, um, their financials, budget forecast, all of that like monthly financial information, stuff that we're doing.

Blake Oliver: [00:09:55] Okay. That was that was my big question was, are you still doing the bookkeeping? Because everything I've heard about doing CFO services or advisory services is that you can't do that effectively if you're not also overseeing the books because, yeah, bad, bad data in, garbage in, garbage out. Right. So you're still doing that. You're just not doing the urgent stuff. The the payment. Related stuff.

Keila Hill-Trawick, CPA: [00:10:18] Yeah, we call it the day to day stuff that usually needs an internal email address is the things that we don't do anymore. So we won't send invoices and then follow up on them to see where they stand or pay bills on your behalf. We'll match all the payments. We'll answer any questions that you have about them. But the other thing that I noticed about when we were doing that work is it felt like a game of telephone because so much. You could have already. By the time you sent it to me, you could have sent the invoice because you knew when the milestone was. You know, we have a lot of ad agencies and consultants and trainers, and so they would have stuff in the SSW of when an invoice should go out, and then you had to complete the work, and then you had to do it, and then you sent it to me. And I'm like, by the time you sent it to us, you could have just gotten their invoice out to them and tracked it properly.

David Leary: [00:11:07] So are you training your clients or staff at your clients to do this work, or are you just kind of letting them be on their own? Are you coming and saying, hey, use these three apps to accomplish this. We're going to put you on on pay payroll or whatever it might be to do your payroll. And do you set it up and do that kind of app advising and setup, or do you just, hey, we don't do these services?

Keila Hill-Trawick, CPA: [00:11:27] No, that's a really good question. So it started with we will teach you how to do it regardless of which one you're using. So whoever you're using for payroll, these are the things that you should be aware of. If questions come up, we will tell you how, but we're not going to press the button. One of our goals for next year is to really hone in on that tech stack and say, really? You need to be using this. This is the best way to do it. And honestly, as a firm owner, part of that came with hiring people who could be software champions, because as long as I was the person that thought you should use this payroll or this receipt management or whatever it was, every time you had a question that became my job to be your tech supporter for the thing that you signed up for. And so now we're building resources and having the team really be invested in. You need to understand this so that when they ask you questions, even if you're not the person that answers it, you can give them a really direct response to where they should look for information. And not just this is how payroll works. Look in your app and see how they'll take care of it for you.

Blake Oliver: [00:12:28] So speaking of staffing, you created a staffing strategy to make sure that your firm was sustainable. What's your team look like? How did you build it?

Keila Hill-Trawick, CPA: [00:12:37] Yeah. So one of the reasons that I wrote the article and that I've been thinking a lot about kind of this, this size of business, is because I didn't know any accountants when I started my firm. And then like a couple of years ago, I got on Twitter, and then I met a lot of accountants, and I realized that many firms seem to be on opposite ends of the spectrum. So either it was like a solopreneur that has a couple of contractors, maybe some extra people on their staff, but they're mainly doing the work and they just have helpers or these huge firms that were big to me, they could have had. 50 people, 100 people. But like they were serving thousands of tax clients and monthly clients and all of that. And what was weird to me is that the people that were in what we call the messy middle were really only there because they were trying to be on their way to get big. They weren't purposefully having ten people on staff. It was like, I have ten because this is what I can afford. Until we get more people so that I can get to 50. And I knew a couple of things. One, I didn't know this at the beginning, but realized soon after that I wanted to be a business owner and not an accountant. I have no desire to review tax returns or do the bookkeeping or all of those things. And so in order for me to get out, it meant that we have to have enough people on the team to do all of that work.

Keila Hill-Trawick, CPA: [00:13:59] So I'm not always the flex employee. So the way we've set it up now is we have kind of the tax side and the monthly side. Um, there's an account manager for both of those and a staff or senior accountant for both of those sides. Um, and then we have we'll hire a director of accounting next year that will be kind of over that whole side. And then we've got an operations. I mean, these titles are arbitrary, but we have a operations director who manages everything that is not accounting. So partnering with our HR, um, outsource department, partnering with legal, managing the IT outsourcing that we're doing. Like basically I wanted to have it where they were kind of two columns that work together, where the operations you're taking, the part of my brain that does not require the accounting expertise, and the accounting director takes everything that actually requires that you understand how accounting works. Um, so there are six of us now. We are hiring two people in the spring. So, uh, staff accountant and an admin person. And then my last hire, it's when I feel like, yes, I did everything that I was supposed to on the team. I can kind of get out. Will be that director of accounting to be the final level of review on all of that. So I think we'll end at about ten.

Blake Oliver: [00:15:12] And you're gonna, you're, you're keeping the revenue, the revenue cap at like around a million.

Keila Hill-Trawick, CPA: [00:15:19] Yep. And basically we can take as many clients as this size of team can actively and support with excellence. So anytime we get to a place and I know that this will change, like I, I don't make goals. And so I tend to just be like, I mean, this seems like a good idea to do this for now, but I what I want to be careful about is if we add somebody that we're intentional, that like we are doing this because we are trying to get to this thing, not what I feel like a lot of us do, and probably what we were doing early on, too. If three more people are willing to pay us, I will just hire a person and then we'll be able to support them. And then a couple more people come and then I will add more people. Um, I think we'll stay in the 1 million to million and a half range, and that'll cover everybody and give us a healthy profit.

David Leary: [00:16:07] What are you charging your clients for those two packages? Approximately a.

Keila Hill-Trawick, CPA: [00:16:11] Month. Yep. So, um, tax prep suite starts at about 6000 for the year, and our fractional CFO starts at 3500 a month.

David Leary: [00:16:20] So it's not because some part of me is like, oh, I see she's picking up and I'm like, you know, people, are you reduced services to fire clients? But but you're already charging a decent fee. Yeah. They're charging just because they're little fish. Right. You. Right. There's a real there's a real. Prices like these are. Yeah.

Keila Hill-Trawick, CPA: [00:16:38] Yeah. And I think that was the thing that I wanted to emphasize too, is that we tend just entrepreneurially, not just in, um, accounting. We tend to treat small businesses like all of them are hobbies, like you're making a little bit of money, you've got a couple of people on your team, maybe you hit six figures. Congratulations. But we have people who have five people on their team and are making two, $3 million a year. They can afford to invest in an accountant. And when we reduce small businesses, which is like this wide range to, oh, they're usually making a little bit and they just need like a bookkeeper. We want it to be really clear that like at that level, you may not need all the things that we're doing and that's fine. Maybe you just take taxes from us and you have a bookkeeper who's handling all of the ongoing stuff for you, but that it didn't mean that they just because they were small didn't mean they were broke.

Speaker4: [00:17:31] Yeah, yeah.

Blake Oliver: [00:17:33] My big takeaway from this is you've distilled down your offering into basically two core services. You've got the recurring monthly, you've got the annual tax prep. I love the fact that the recurring is such a big piece of your revenue. Like because you don't you probably don't have the compression in tax season. I mean, you know, there's some of it, right? But not like as if you were doing 90% tax work. And that to me we.

Keila Hill-Trawick, CPA: [00:18:03] Only have one tax season. So like we don't extend a lot. There's very few. There's only so many people in our service. And so we can do them all during the regular tax season. And the anomalies that like don't sign on time or don't get in on time, we're getting them done in the summer, so we don't have to regroup in October of like we could only get 600 in during tax season, so we had to move the rest to the end. We can actually knock them out on a timeline.

Speaker4: [00:18:30] Because you're.

David Leary: [00:18:30] Not saying yes to everybody.

Blake Oliver: [00:18:32] How many of those monthly clients would I have if I were a staff accountant in your firm? Like, how many would I be responsible for?

Keila Hill-Trawick, CPA: [00:18:39] Ah, so probably I would say. 8 to 12, depending on like how complicated they are. We've also still got some legacy like we used to have this, but now we don't offer it anymore. But you didn't need as much as the current service offers, but I would say about 8 to 12 before we're like, okay, we probably need to add usually at the bottom we need another bookkeeper, we need other staff accountant because their ability to review is pretty fast.

Blake Oliver: [00:19:08] That's a nice number because I feel like I, as a bookkeeper, an accountant, would I'd be able to give them a lot of attention. You know, if I'm doing 50, it's like a teacher in a classroom that's got, you know, 50 students. It's just not going to happen. Yeah.

Keila Hill-Trawick, CPA: [00:19:23] And, David, to your point, part of the reason that we charged how we did, because we're not saying yes to everyone, means that everybody gets that level of like, you can talk to somebody. We know your business. We've been working with you all year. We know what everything looks like, as opposed to, I think, some of the hamster wheels that they end up on when it's just tax prep and it's 1500 of you, as long as I can get these out and I give you a deliverable, you should be glad.

David Leary: [00:19:48] Do you see like so. So Blake sure. He works for you. Uk has 12 clients. Do you see you increasing his load by using other apps and AI and technology. Do you see that number changing soon?

Keila Hill-Trawick, CPA: [00:20:01] Yeah, I think that the ability to do the input work would be greatly, uh, helped by AI, other apps. There's stuff that I haven't even been able to investigate yet so that the people on the team, their brain is used for the analysis. So even if you're a bookkeeper, your job isn't just getting the numbers in the buckets, but it's really when I review this, does it make sense? Am I catching anything that's not, um, automatically happening with AI or something like that? So I think what I am hoping will happen is that everybody on the team just like, levels up their ability to serve the client differently because they're not so focused in on categorizing or checking boxes, especially since our clients tend to look the same. So all their chart of accounts are the same. So we know what to look for. We know what kind of rules to build in. There's not a lot of like, well, you're a restaurant, so I have to make you a whole different set of rules of what this should look like. If we can make it look really similar. The ability to automate a lot of that will make it so that when the first time that somebody looks at it, they already know what they're looking at the same way for each client.

David Leary: [00:21:11] Yeah, that makes sense. It's really yeah. Just standardizing is going to make it more efficient. Makes a lot of sense, right. What's the ultimate goal? I guess when you say you're just building enough or building big enough. I mean, I've heard you so far. It's like, hey, I want to I want to shut down my firm for four weeks. And you've structured a lot of that to do that four weeks a year. But like. And you're saying you don't want to you just want to be an entrepreneur or own a business, right? So like, what's really in it for you I guess, as you move on?

Keila Hill-Trawick, CPA: [00:21:36] So it's funny when you said that you hadn't seen me before and then I'm up on things. It's weird to be almost again accidentally building a personal brand. Like my initial thought was, I just want to talk about it because I don't see other people talking about it. So can we say it out loud? So maybe I can meet other people who are trying to do the same thing? Um, I love speaking, I love teaching, but I also don't want another job. I don't want to fill all the space that I got from not working at Little Fish with like. And now instead of doing all of this client work, I travel the world, you know, 30 weeks out of the year. And so for me, it's really about balance, about getting to a place where I can touch the things that I'm really interested in. And the flip side of that is when I go to conferences or when I go to events, being able to have that as time to meet and actually enjoy people and not feel like every time I'm doing something that talks about accounting, it is only about work. So there are ways that I want to show up and teach and talk, and then there's ways where I'm like, let's do that for, you know, a part of the summer. And then I go to the beach and I don't take my life. I have never found value in being able to take my laptop to the beach. I want to be on the beach. I don't want to work from anywhere. I want to work from my office, and then I want to go on trips. And so trying to get better at that, of saying there's a really clear boundary between when I'm at work and I'm doing everything that I can to make sure that my team and our clients are taken care of. But then I am off, and when I'm off, there isn't anything that's kind of pulling me back on a regular basis to be attached back to the firm.

David Leary: [00:23:12] And what you've done so well, I think, is communicate this. It's okay to grow to a certain size. And it makes me think about and we've talked about all these growth surveys we've seen in the past where firms get X big. And then when they go to that next 3 or 4 steps before they become really big, profits go down, satisfaction goes down like everything just tumbles until they push through to like the 100th employee they get. But that like ten employees to, you know, 99 employees is just a mess. For accounting firms. It's really difficult.

Blake Oliver: [00:23:41] Yeah. We actually.

Keila Hill-Trawick, CPA: [00:23:42] That.

Blake Oliver: [00:23:43] Oh, sorry. No. Go. Keila.

Keila Hill-Trawick, CPA: [00:23:44] I was just gonna say some of that, I think is because people aren't being intentional. They didn't get to 15 on purpose and stop and then think. Okay, so before I go to my 20th employee, what's working, what's not there is this constant trajectory of like, I got to get bigger and I got 15 people and I'm trying to get to 100. So I'm just going to keep doing the things, not really realizing that like these many milestones in between matter two. And so you go from 15 to maybe 25, pause for a second. Is 25 good? Are we is profit doing what it's supposed to? Because if it's not, you don't you don't correct that by going to 100. And I think a lot of people are just plowing through thinking that that 100th employee in this example on the other side is what's going to break them loose when it's like, yeah, but like at 50, we should have stopped to say, is this the right structure? Are we making enough money? Do our clients like us, do our teams like us? And a lot of people aren't thinking about that, except at the front and at the end and not along the way.

Blake Oliver: [00:24:44] I feel like this is a psychological problem that starts in school and starts when we're staff accountants working in public accounting. I remember the number one piece of advice I was given when I went to work at a large firm was, just say yes to everything. Don't say no, right? Because you don't want to say no to a partner that asks you for something and you got a bunch of them asking. And so the best thing is just to keep saying yes, yeah, and get it done. And that's how you advance. And at a certain point that becomes very damaging. And yeah, you know, like and also just like overloading ourselves, we're taught in school, especially when we're doing CPA exam prep to just put everything to the side and work and work and work to get through the exam. But then it continues after that too, with your first job. Right? Okay. Just grind for 2 or 3 years, right? Then the reward will come. But somehow it's always it's always off in the distance, right? You never quite get there.

Speaker4: [00:25:40] And when you.

Keila Hill-Trawick, CPA: [00:25:41] Start a firm, it's a matter of survival. Right? Like you're saying yes to everything because I need money and I cannot tell people no. So if you come to me with a thing that I think you'll pay me for, sure I will take it. And then you're ten years down and you're like, hey, you know, you don't still have to take everybody who asked you, right? Like we're in a better position now. You can make different decisions. And some of it, I think is to your point about learning it early. I think the flip side of that is then we never stop to reassess. We're like, obviously the goal was to keep grinding. So I've just kept doing that and I'm like, but do you like it because you don't you don't have to do it that way. But we don't stop to assess whether or not we want to do it that way.

Blake Oliver: [00:26:23] Well, should we talk about the news? Kayla, we'd love to have you hang out with us and we'll go through our stories. We're going to talk about some artificial intelligence stuff. Uh, I want to talk about Berkshire Hathaway and the the lawsuit.

David Leary: [00:26:39] Please do not skip it or forget it. Like, make sure you get it this week. It's been like, three weeks in a row. I think you've been wanting to do it.

Blake Oliver: [00:26:44] I know, and there's probably somebody there shaking their fist at me like, come on, Blake. So, um, I don't there's my screen. Uh, for those of you who are on the YouTube or the live stream, this was in the Wall Street Journal. The headline is what's behind Warren Buffett's fight with a truck stop mogul. As much as 1.2 billion is at stake in an argument over a seemingly obscure accounting method. And the accounting method in question is push down accounting, which, uh, Quila. I don't know about you, but I have not encountered push down accounting in my life as a CPA since, you know, the exams and since accounting, uh, school. And so I had to refresh, I had to refresh my memory. And Ron says, uh, wtf is that? Um, it's definitely not profit first, Ron. Uh, it's kind of the opposite of it because it it is supposedly it's what, uh, has reduced the profits of the pilot truck stop or gas station chain. And that is what is at issue here. So quick refresher on what's going on here, uh, with this lawsuit if you haven't been following it. Um, pilot. Is pilot. Where is pilot? In the country? I don't see them a lot in Arizona or California.

David Leary: [00:28:04] You're driving on the highway in the remote areas. Okay, so there's one between Tucson and Phenix, and.

Blake Oliver: [00:28:10] They have the huge gas station, big gas stations, right.

David Leary: [00:28:12] For the truckers. Yeah. Yeah, the showers and all that.

Speaker4: [00:28:14] Yeah. Okay.

Keila Hill-Trawick, CPA: [00:28:15] I never see it in, like, residential areas. It's always like you're driving down the highway and relatively remote, and it's the only one that's off the exit.

Speaker4: [00:28:23] Yeah.

Blake Oliver: [00:28:23] So the Haslam family owns pilot. They created it. They you know, and then they sold it to Berkshire Hathaway for a lot of money, uh, a few years ago. And according to the lawsuit, the Haslam family has accused Berkshire of unilaterally and without consent, adopting push down accounting rules for pilot. This accounting method allegedly artificially reduces pilots earnings before interest and taxes, which in turn significantly lowers the valuation of the remaining stake that the Haslam's hold in pilot. So they sold most of pilot to Berkshire Hathaway and kept 20%, with the option to sell the rest of the 20% in the future at some sort of valuation method. Now, I was trying to remember like, why would push down accounting, change the earnings before interest and taxes? And so I went to ChatGPT and I asked, I said, hey, what is push down accounting and ChatGPT for? I'm using the the paid version told me that push down accounting is a method used in accounting. When a company, the acquirer becomes a subsidiary of another company, the acquirer after a business combination such as a merger or acquisition. In push down accounting, the financial statements of the acquirer are prepared as if the acquirer is basis of accounting for the assets and liabilities it acquired are pushed down to the acquirer. This means that the acquirers financial statements reflect the new basis of the assets and liabilities based on the acquirer's cost, rather than the historical cost previously used by the acquirer. So this was not explained in any of the articles that I read as to like why this actually caused. Earnings to decrease. And it's basically because most assets are held at a lower value on the books than they are in reality. Right? Fair market value of most assets is higher than their net book value because assets increase in value over time. But most of the time we're conservative in accounting, right. And we don't recognize an increase in the value of.

David Leary: [00:30:31] And usually this is where like in acquisitions, a big old chunk of funds just gets thrown into goodwill. That's the difference usually.

Blake Oliver: [00:30:39] And so in pushdown accounting what the acquirer does is like Berkshire goes to the pilots books and increases the value of all the assets to the fair market value, whatever it paid. Right. It it takes that purchase price and allocates it to the different assets on the balance sheet. And usually almost always that that that increases the value. And then whatever they can't attribute to specific assets gets put into goodwill on the balance sheet of pilot. Now how does this affect earnings? Well, when you increase the value of the assets that increases depreciation expense. So now pilot has greater depreciation expense which then decreases their net earnings. And that reduces the valuation. If the valuation is is based on earnings before interest and taxes, or EBITDA. So there you have it. A little accounting.

David Leary: [00:31:34] Lawsuit is there. They're saying that that's an illegal move. It's unethical. Like, what's the basis they're arguing.

Blake Oliver: [00:31:41] Well, they're saying that Berkshire wasn't supposed to do this, that they did it unilaterally and that somehow there was an agreement that they weren't going to do it. But it's not clear to me. And I suppose we'll find out as the lawsuit unwinds or goes forward, whether or not, you know, they did this properly or not. Um, but I think there's a connection to the other lawsuit we talked about in previous episodes, which was that Disney lawsuit. Yeah. Where they had that film financing company sued Disney, uh, for manipulating the earnings of subsidiaries to show lower earnings so that they didn't have to they reduced their profits with inter-party inter related transactions so that they didn't have to pay as much to the financing company, which had a share of the profits of each of these films. So like the connection here, is that the accounting, the way you do the accounting can manipulate profits or earnings. And it's really easy to do that because there's lots of different ways to do accounting, right? It's a classic joke. Yes, a doctor, a lawyer, an accountant. What's one plus one? And the doctor and the lawyer say two. And the accountant says, what do you want it to be? Right? Yeah. So that's, you know, with profits like, that's it's it's possible to do it. And so whenever you're negotiating a contract like this, I'm taking this as like a life lesson for me. I'm never going to negotiate based on profits. If like. Like if I'm selling a business. Never, never. Based on the bottom line. Always something that you can't manipulate. Top line revenue.

David Leary: [00:33:23] I mean, that's what Michael Jordan did with Nike, right? It was his top line. I think that's why he never got screwed. And he's still getting $1 billion a year of cash because it's off the sale. I think it's off the sale. Yeah.

Blake Oliver: [00:33:35] So you know whether or not Berkshire did the right thing, I guess depends on what its agreement with. You know, pilot was or the Haslams was, but like. In general, I do like the idea of pushdown accounting. Right. It seems like it makes sense to bring the asset values up to what the acquirer paid for them, to make the book value realistic. Um, but I guess in this case. Yeah. And so the impact is huge. It's like billions of dollars because the rest of the 20%, you know, of pilot could be worth billions more, depending on how you calculate earnings before interest and taxes.

David Leary: [00:34:12] So. So it sounds like maybe the family owns pilot, their lawyers and team their accounting accountants and their team who negotiated this deal maybe got outsmarted. Possibly. Maybe no contract. And now they're they're they're crying. Crying about it. If you don't.

Blake Oliver: [00:34:30] Have control over the accounting method or the accounting or the books, like don't take a profit share. That's my lesson here. I don't know, Keila. I know this probably doesn't happen too much with, you know, the professional services businesses. But like, you know. Do you? Do you ever deal with, like M&A or like your clients getting acquired or merging and stuff like this, this kind of this kind of stuff?

Keila Hill-Trawick, CPA: [00:34:51] We don't. But even talking about this now is a reminder of what the numbers do and don't tell you. So I think a lot of times in all businesses, it's like I looked at the profit and loss. I know that it's profitable and that is not it. Always a black and white answer. So to your point about the ways that this can be manipulated, you could be profitable one day and seem not profitable, or at least less profitable the next day based on how they're doing the accounting method. And so you need to be able to see the other parts of the financial statements and the other ways that the business goes that I think can be ignored when everybody gets so obsessed with the PNL. Yeah.

Blake Oliver: [00:35:32] All right. So that's my accounting. I think that's great, Kyla. Like, um, that's my accounting standards gap story for the week. David, uh, what do you got on your plate?

David Leary: [00:35:45] Well, I've been itching to talk about. I got dental aligners, uh, five months ago now, and so I've been I wanted to talk about this because I really think it kind of ties into our industry, like the disruption that's happening.

Blake Oliver: [00:35:58] So these aligners, these are the plastic things you put in your, on your teeth. I mean, the.

David Leary: [00:36:03] Famous ones would be like Invisalign.

Speaker4: [00:36:05] Okay.

David Leary: [00:36:05] Right. I think the and but so I've been waiting for a story to let me bring this to the show. Right. Because what happened was in my brain is I, I go to the to get these done before they, before you get them because they probably 3D print them. You have to go to your dentist, and your dentist has this like magic wand and he scans every tooth. And they kind of build this 3D model on the. My dentist used a company called Dandy Aligners, so it's like a SaaS app. They roll out the computer, they scan your teeth. It, you know, builds this 3D model of your teeth in this app. But then after he scans it all, he pulls out his crack screen Samsung phone and puts like a lip or mouth spreader in my mouth and takes photos with his, like, literally the same phone all of us have in our pockets, right? It cracks screen phone and he makes this comment and he's like, I don't know why they make me take these photos with my phone and upload them. So. So he takes those photos off his phone, uploads this website. But it stuck with me, him saying that. And I'm driving in the car later on that day and I was like, Holy crap, he's training the model. So they have the high tech one scanning the teeth, but when he takes the photos with his cell phone, he's training their model how to figure out the teeth from from cell phone photos.

David Leary: [00:37:19] Right. And which what's the next step in that. Right that you'll be able to consumer could do it at home. Exactly. That's what went through my head. And I actually saw a commercial for I think at the time was Smiledirect a couple of days later on the TV where people were taking photos with their cell phone at home of their teeth. Right? Yeah. And if you really think about the disruption, at one time, orthodontist owned the market for braces. Now with this technology, a dentist is now adding revenue to their not firm, um, practice. Right. They're adding revenue to their practice and stole that revenue from the orthodontist. My money's not going to an orthodontist. It's going to the dentist. Right. And now these companies, these tech companies, in theory, are going to steal that from the dentist on a long enough timeline. It's very similar, I think, about these accounting AI startups. Some are partnering with accountants. They're going down these paths. But just like in our industry, where some of these companies are discovering, it's harder than it is, skill factor being one of them that has vanished. You know, pilot has these huge valuations. Well the similar situation. So I don't know if you heard Smiledirectclub. Is one of these these companies where you take pictures of your teeth and they they print you the aligners.

David Leary: [00:38:32] They just declared bankruptcy. So they went public in 2019 at a valuation of 8.9 billion. There are 2 million customers who have who have been getting these done. They were they always offered a lifetime smile guarantee. Right? Um, but now they, uh, they have debts reported at $900 million. And they declared chapter 11 bankruptcy. Now, if your current customer, you still have to keep paying your bill, even though they're not going to give you your lifetime guarantee. And then there's also issues between, um, the District of Columbia attorney general's office, who's suing Smiledirect because they have some unfair and deceptive practices. The British Dental Association, uh, is pointing to, um, that there's misdiagnosis, you know, on they're not handling things correctly. And so I think the summary is just in the same way, these AI startups that are trying to disrupt accounting are finding it's a little bit harder than you think. I think the same thing in other industries. They're getting fully disrupted, but it's turning out it might be a little bit harder to do all on your own. You probably still need to partner with a dentist, right? At a minimum. But so that's the kind of thing I, you know, that's went through my brain and it's they're going to take the dentist out of the game in the same way these AI startups want to take the accountants out of the game. Right. It's kind of similar. Mm.

Blake Oliver: [00:39:47] Yeah. The smile direct bankruptcy is fascinating to me given how much money they raised. Right. You said how many billions of dollars were they valued at in their IPO and 8.9 billion.

David Leary: [00:39:59] That was the value.

Speaker4: [00:39:59] Yeah.

Blake Oliver: [00:40:00] And so apparently at the bankruptcy at the time of bankruptcy, which was just December 8th, so last week they had $900 million in debt. So they had really loaded up on debt to fuel their growth. And they had competitors that they had lost market share to because there's nothing proprietary about their technology. And I think that's something too, that's going to be interesting to watch in the whole apps, technology, AI space is that there's actually nothing proprietary about these large language models that, as far as I can tell, anyone can use the theory to go out and build them. So just because OpenAI has the one that most people are using right now with ChatGPT doesn't mean that they're going to be the leader in the future, right? The first mover is not always the is not always the winner. As we saw with Google, which was the 13th search engine, and Facebook, I think was the 10th social media site.

Keila Hill-Trawick, CPA: [00:40:58] So it's also a reminder, um, that like all the lawsuits that were coming out, that you're not just going to disrupt and dentists aren't going to want to push back and say, you actually still need us and you're misdiagnosing, or you're doing this wrong or whatever these things are that like, how much of your time ends up time and money ends up getting wrapped up in these like, fights for what you're doing to.

David Leary: [00:41:25] I mean, the the marketing impression is you don't need a dentist that is full in the same way. It's like, you know, QuickBooks used to market like that. You don't need an accountant, just buy QuickBooks. Right? That's more marketing. Because what I didn't know, like they had to put little, uh, brackets on my teeth for the aligners to hook on. To write, the dentist had to file space between different teeth. So you can't do that doing the instructions provided to him, but.

Speaker4: [00:41:49] Well, they just send you a little I didn't know.

Blake Oliver: [00:41:51] You file your own.

Speaker4: [00:41:53] Your own teeth, your own.

David Leary: [00:41:55] But I didn't know how the dentist had to be involved that much versus the impression they give you, right? As you could just do the whole thing on your own. So. So I think the real lesson is just so hard to disrupt.

Speaker4: [00:42:05] You know.

David Leary: [00:42:06] It. The money will keep going to these startups, but it's going to be very hard to do.

Speaker4: [00:42:09] And.

Keila Hill-Trawick, CPA: [00:42:10] That it's hard to disrupt overall. Like if they were if they had stayed partnering with dentist where it's like, I want you to use my version and then I'll talk to your customer outside to like get the reps on the things that they need, but we're still going through you that that's a whole different thing than you actually don't need to exist anymore because I'm here.

Blake Oliver: [00:42:30] We have a comment, a question from a live stream viewer. Sager says what is your opinion on accountants slash CPAs pursuing a career in IT auditing? Does it have scope in the future? Kyla any opinions on IT auditing?

Keila Hill-Trawick, CPA: [00:42:46] Um, I think that accounting professionals have some of the most transferable skills of any industry. I think our attention to detail, and even if you don't actually audit, you have to look at so much to be able to like, support all of the things that you're doing that I think that it's a reasonable move. I also think that anything that can use your accounting and finance knowledge to really impress upon another industry is a good thing. Sometimes we have all the we're having all these conversations about like the accountant pipeline. But I also think they don't all have to be accountants. Like, we want you to have that knowledge and maybe go into other areas where you can use that accounting information to be able to potentially disrupt even other industries that don't start from the same place of where you did. So I think it's a cool direction for people to be able to go into.

Blake Oliver: [00:43:36] Yeah, I agree, like the I didn't do auditing myself, but I did get my highest score on the audit section of the CPA exam. And I have to say, just even studying for it really improved my ability to be analytical and to like, think about when I'm looking at a set of financial statements, to really think about what could what could be wrong with this, right, like think about what could be missing from this, which is honestly the thing that I use AI for the most is I give it something that I've thought about and I say, what am I missing? It's really good at blind spots, and I think auditing teaches you to see blind spots.

Keila Hill-Trawick, CPA: [00:44:12] And at the end of the day, it's all coming back to the numbers. Like the reason that they're even doing these IT audits is probably some financial mechanism of where is money going? Where should we be investing, what are these things. So you have both brands. You have the ability to really be able to dig in and audit on that side. But you also know the financial potential implications of the work that you're doing. Yeah.

David Leary: [00:44:35] And at the end of the day, I mean, all the financial stuff is moving through the computer system. And I don't know, Blake. Was that Sage Intacct or if it was Oracle NetSuite, one of those two conferences. And I want to say it was Sage Intacct, and it was Aaron Harris, a founder and CEO of intact. And he talked about how, like the accounting system is basically the entire tech system of a business now, like from the shopping cart on the front end to the back end, payroll, like every single thing is part of the accounting system now. Yeah, he said that.

Blake Oliver: [00:45:02] He said that, um, the general ledger or the accounting system, the information system is the business.

Speaker4: [00:45:09] So yeah, that's it.

Blake Oliver: [00:45:10] Whereas in the past it was used to record the activity of the business. Now it actually is the business like that. If you're a Shopify seller, that Shopify store is your business. And everything that goes on in the back end, all the data moving around in that database is your business. Yeah.

David Leary: [00:45:25] Which is justifies it auditing. Right?

Blake Oliver: [00:45:29] Yeah, actually. So to answer your answer, the question. Yes. Especially it I mean, as more and more businesses are completely automated and that information system is the business IT audit will become even more important, probably potentially more important than financial auditing, because financial information is just one piece of the whole information system.

Keila Hill-Trawick, CPA: [00:45:51] Well, an even as we were talking about earlier, like the ways that we're using automations and computers and tech and all of that stuff on the back end to even encourage what our clients use and how they do their work. It's all tied, like we're not doing anything without the tech. So having somebody who understands that, being able to go behind the scenes and really, um, articulate what is working and what's not and what's broken and what's fraudulent, and all of those things kind of in the IT side is a natural progression, because that's where all of us live as accountants now, too.

Blake Oliver: [00:46:25] Here's an article that has been in my queue for a while that is relevant to Keller's philosophy. I think the headline is exactly how much money do Americans need to be happy? So when we talk about focusing on building a firm that allows us to take vacations and not focusing on top line revenue. We've also got to talk about how much money do we need as accountants to be happy, right. If all you're pursuing is top line revenue and salary growth and making making lots of money, that doesn't necessarily result in happiness, as we have seen with Big Four partners.

David Leary: [00:47:03] I always bring that up.

Blake Oliver: [00:47:04] Well, it's because that's that's the it's it's the meme that has a lot of truth in it. Right? It's like there's you pursue money at all costs and you sacrifice your family and your, your physical and mental health. And what do you end up with?

Speaker4: [00:47:19] Right?

Blake Oliver: [00:47:21] Gosh. And we just saw like Ernst and Young is laying off partners at the end of the year. Now, can you imagine if you worked that hard to make partner at EA and you get laid off?

Keila Hill-Trawick, CPA: [00:47:31] Anyway, I'd be furious.

Blake Oliver: [00:47:34] But anyway, let's talk about this. How much money do Americans need to be happy? So this is a survey, uh, that, uh, was reported in CPA Practice Advisor. And, uh, generations have a different idea of how much money they need.

Speaker4: [00:47:46] Surprise, surprise.

Blake Oliver: [00:47:48] So, um, this was a survey by empower, a financial services company. They surveyed 2000 Americans over the age of 18. And here's the results. So most Americans think money does buy happiness. 59% of Americans agree with this. And this shoots up to 67% of Gen Zers and 72% of millennials. So I'm in that.

Speaker4: [00:48:10] That sounds right.

Blake Oliver: [00:48:10] Millennial crowd. Right? I think, uh, yeah, 72% happiness is a six figure salary on average. Americans say they need $284,000 per year to be happy. Millennials are driving up the average while other generations millennials.

Speaker4: [00:48:27] I feel like it was just.

David Leary: [00:48:29] Like a blink of an eye ago, and this was like $86,000 was like the perfect amount.

Speaker4: [00:48:33] To like, you.

Keila Hill-Trawick, CPA: [00:48:34] Cannot be happy without a half a mil. That is crazy.

Blake Oliver: [00:48:38] Well, so so the other generation say happiness is $130,000 a year, but millennials say they need $525,000 a year.

Speaker4: [00:48:47] Wow.

Blake Oliver: [00:48:47] And the comment in the article.

Keila Hill-Trawick, CPA: [00:48:49] Right.

Blake Oliver: [00:48:50] Well, so okay.

David Leary: [00:48:51] So and that's your one. They need that year one straight out of college like.

Speaker4: [00:48:55] So every.

Keila Hill-Trawick, CPA: [00:48:55] Year after like not one time but like on an annual basis I need to be bringing.

Speaker4: [00:49:00] This. It's amazing.

Blake Oliver: [00:49:01] Well so I think that I think maybe that's what's distorting this, uh, survey is the fact that, like, millennials are in their prime, like house buying years.

Keila Hill-Trawick, CPA: [00:49:09] Oh, yeah.

Blake Oliver: [00:49:10] Right. And if you think about it like, how much do you need to buy a house in America? It's a few hundred thousand dollars at least. Right. Um, I think what is the I forget what the price of an average home is not.

Keila Hill-Trawick, CPA: [00:49:21] Buying it in cash today, like, right?

Blake Oliver: [00:49:24] Right. No, but maybe they don't understand that when they take the survey, right, I don't know.

Speaker4: [00:49:28] Yeah. That's my anyway that millennials.

Blake Oliver: [00:49:30] Are like I need to make half $1 million because that house I want to buy is half $1 million.

David Leary: [00:49:34] Because they have student loans that add up to way more than that a year.

Speaker4: [00:49:37] Yeah. Gotcha.

Blake Oliver: [00:49:39] Well, don't forget, in the past, decades ago, you only, you know, a home a home costs, you know what, 2 or 3 times the average American salary. Yeah. And now it's like 10 to 20. Yeah. Right. So, um, happiness here's here's another stat from the survey. Happiness means paying the bills on time. While you might argue that people define happiness differently, 67% of Americans said financial happiness is paying the bills on time, 65% said it was being debt free, 54% said it was being able to afford everyday luxuries without worry, and 45% said it was owning a home. However, 54% of people say they have debt, 36% said they could not pay for an unexpected expense over $500 without worrying.

Keila Hill-Trawick, CPA: [00:50:24] That's terrifying.

Blake Oliver: [00:50:27] So. Yeah.

Speaker4: [00:50:30] It's.

Blake Oliver: [00:50:33] I guess, you know, like. I think a lot of this depends on where you live. If you live in a high cost area, then your your need for income is really high, especially if you're spending, like a lot of Americans, 50% of your income on rent. Mhm. Um, but like I just feel like there's room here to adjust our expectations. Like I made a conscious choice. At some point in my career. I guess it was when I left public accounting that I would take the lower long Terme salary. Right? I'm not going to go for being a partner and I would just be happier, right? Yeah. And I have been very happy with that choice, you know, and I've like eucheila I've like designed my life around having flexibility.

Speaker4: [00:51:25] Yeah.

Blake Oliver: [00:51:25] So you know I want to my goal now is like I want to work out an hour a day, two hours if I can. Right? I want to like get lots of physical activity. I want to be outside. I don't want to sit in a box for, you know, eight hours a day.

Speaker4: [00:51:38] Yeah. I mean, and.

Keila Hill-Trawick, CPA: [00:51:40] Obviously happiness is subjective, but I also wonder the difference between what would make me more than good. Right? I can pay bills on time, I can take vacation. And what would make me like ecstatic? Because I can take five international trips a year and I can buy the house of my dreams and I can buy the car of my dreams. And so that requires way more money than if I could live the life that I wanted to, and not have to worry or sacrifice a lot in order to do it. I don't need quite as much money as I need two nannies for my kids, and all of these other things that would make your life, yes, that much easier, but then keeps bringing the needle up to because your expectation of happiness gets more and more expensive the more things you add to it. And not that you know everybody's standards is what it is. But I do think about this idea of like, if happiness to me is I could leave the country twice a year, that's a much lower salary than I would like to live in a different place every month of the year. That's what would make me happy. And then that cost a whole lot more money than 130 K.

David Leary: [00:52:46] And I think you know, that crazy half $1 million number for the millennials is a lot of this is tied to like social media and expectations and comparison to others.

Speaker4: [00:52:53] Maybe that's it.

David Leary: [00:52:54] We are nations. And this is why that whole generation tends to be more depressed, to write the expectations of the world and what they want out of the world, and comparing themselves to their peers just makes all that very confusing.

Speaker4: [00:53:07] Yeah. And how fast you should be.

Keila Hill-Trawick, CPA: [00:53:09] Able to do it. So it's like I, you know, I'll see people online who are turning 30 or something. And I'm like, the things that you are requiring of yourself at 29 to be able to do and buy and achieve are things that I just probably hoped I could get in a lifetime. And so the pictures with a bow, because I turned 25 and I bought a brand new Mercedes, I'm like, that is cool, but that's not like an actual age 25 goal. That is like a thing that I hope that you can achieve for yourself, but that's different from now. It would make me happy to be this person at 25.

David Leary: [00:53:47] And they're all exceptions, right? In theory, that's an exception. But what happens? Social media makes it feel like it's the norm and it creates a lot of pressure, a lot of pressure. It's worse than the partners kind of pressure. Like it's yeah, it's creating that same kind of pressure for a whole generation. And not just, you know, people that work in accounting.

Keila Hill-Trawick, CPA: [00:54:04] That sounds stressful to feel like I needed a half $1 million a year just for me. And salary feels stressful because it just seems like you'll you're always, like, shooting for a new thing.

Blake Oliver: [00:54:14] Yeah, yeah. I mean, so let's let's just take that out and say that's an outlier and say the average is $130,000 a year with the other generations. Right. And, you know, the average CPA in the United States makes $119,000, according to the Bureau of Labor Statistics. I just asked I just searched for that on Bing Chat in Microsoft Edge, which is my new way of searching the internet now. Sorry Google, and it took me to. It's great. I can actually click through on that and see where that comes from. That comes from you. World accounting. David a blog post on New World accounting where we just interviewed Peter Olinto and and Roger Philip.

Speaker4: [00:54:54] From New World.

Blake Oliver: [00:54:56] Um. Yeah. Average CPA salary. Cpa is working in public accounting firms earn an average of $120,000 a year. If you have more than 20 years of experience, you can earn an average of $150,000 annually. Now, let's say you're a partner, right? How much does the average CPA firm partner make? Isn't it.

Speaker4: [00:55:17] Between 500.

David Leary: [00:55:18] To 900?

Speaker4: [00:55:18] Like, is.

David Leary: [00:55:19] It like every millennial wants to be a CPA partner? Apparently. I think it's crazy numbers.

Blake Oliver: [00:55:24] Uh let's see, I'm going to share I'll also share my screen so you can all see this, uh.

David Leary: [00:55:29] While you're pulling that up, I think I had an article, the article last week about how AI is going to help people become partners faster. And I was talking about in the UK that the average partner, maybe at KPMG is getting 900,000 or 900,000 pounds. Yes.

Speaker4: [00:55:42] Yeah.

Blake Oliver: [00:55:42] So listen to this. Um, according to a survey by the American Institute of CPAs, the average equity partner at an accounting firm earned $660,000 per year. So they're beating they're beating that millennial want to want to.

David Leary: [00:55:57] Be the partner should be the happiest. Like like they should be the happiest partners.

Blake Oliver: [00:56:01] But they clearly are not. Right.

Speaker4: [00:56:03] Right.

Blake Oliver: [00:56:05] I mean, I don't know if we've seen any survey data to support this, but I feel like all the anecdotes that I hear are they are not.

Keila Hill-Trawick, CPA: [00:56:12] That's the impression I get to. I don't know them, but everything that I hear, read and am privy to sounds like it's just so much work and pressure that you're basically getting paid for your worry.

Speaker4: [00:56:27] Yeah.

Blake Oliver: [00:56:28] And you're cutting years off your life too. Potentially. So a small firms is different, right? A small firm with less than ten partners can pay an average of, you know, $300,000 a year. A large firm with more than 100 partners may pay an average of 1.2 million per year. You. Incredible. Incredible. But I think like it just it just shows you that like, what we what we think we need to be happy is not what we actually need to be happy. Like there's.

Keila Hill-Trawick, CPA: [00:56:55] And do we stop when we hit that? So if you think that your number is 200,000 and then you hit to where you're making 225, a lot of people don't stop there. Like if I can make 225, I can make 300. If I can make 300, I can make 500. So the idea of what could make me happy or content or like cover all of my bases and I still feel good isn't enough for people to say, and that is sufficient. And so now I'm good making a little bit over this number. It's like that number keeps moving as your opportunity to make more comes up to.

Speaker4: [00:57:33] Yeah.

Blake Oliver: [00:57:34] Yeah, we will expand our consumption to match our income. That's human nature. And then now you need that amount of money every year. So my goal recently has been to actually shrink my needs, right, to figure out what do I like, how can I lower it sounds it sounds bad when I say it this way, but it's like, how can I lower my expectations for life so that I'm actually happy with what I have? Yeah, and find hobbies that don't cost any money, right?

Keila Hill-Trawick, CPA: [00:58:03] Or stop going on Amazon every day or whatever. The spending all my money at target, whatever the things are that I feel.

Blake Oliver: [00:58:11] Are you monitoring my computer? Are you?

Keila Hill-Trawick, CPA: [00:58:14] Listen, if my husband could hear me, he'd be like, yes to this. Everything that she's saying she should actually do.

Speaker4: [00:58:20] Um.

Keila Hill-Trawick, CPA: [00:58:21] But yeah, like, what am I spending on impulsively or not really thinking about? Because the money exists for me to be able to do it, whereas I would take that walk outside longer if there wasn't this bucket that was just kind of waiting for me to be able to spend it. But I think in addition to consumption, making you make different decisions, it's also this like what feels like an opportunity cost. So you make that number and then somebody comes into your firm and they're like, I'll give you $100,000 for the year to work on this thing. For me, most people are not going to say no, even if they're not prepared for it, or that's not the thing that they're the best at. They're like, I will make a way to make this 100,000 from you, even if it means I hire somebody who cost me 98 K to run this program for you. Not really thinking about if I'm adding enough. I don't need to take advantage of this opportunity.

David Leary: [00:59:14] And the framing I really love this for me is the the what's good enough or if it's just good enough. And I think about that a lot. You know, like I have a car, it's fully paid for. It's like Ford Flex, I don't my kids are starting to get to the age where they're either driving on their own, they're going to move out of the house soon. In the next three years. I'm like, I probably don't need that much space. But I'm like, yeah, it's good enough. I'll just keep driving this like it's good enough.

Blake Oliver: [00:59:34] David's thinking this way because he's about to start paying for college.

Speaker4: [00:59:37] Yeah, it's a whole different soapbox.

David Leary: [00:59:39] We can go on.

Blake Oliver: [00:59:39] He's like, what can I.

Keila Hill-Trawick, CPA: [00:59:42] Um, can I get rid of so I can keep paying for you to get educated?

Blake Oliver: [00:59:46] Hey, Peter, thanks for joining us in the live stream. As a reminder to our listeners, you can subscribe to us on YouTube, get notified when we go live and pop in and say hello. Peter says, thanks, Blake. I'm a college accounting lecturer, and I have been recommending my students to watch your show to learn about what's happening in the industry. Look forward to more exciting shows next year. Thanks, Peter. That's awesome. I've got one more story to take us out here. This was this is like listener mail. I was tagged on LinkedIn. Jacob G posted on LinkedIn. Went to see the new trolls movie with my wife and kids this weekend. The trolls movie. I think this is the third one I could be wrong. Went to see the new trolls movie with my wife and kids this weekend, and of course there was an accounting reference unbeknownst to me. The boy band group of five from the beginning of the movie had very specifically named tropes to tie them to the 90s boy bands. One of the trolls was the fun one. The troll wore undies with a lightning bolt on them and did funny dances. I'll abbreviate it here. Not to ruin it for everyone. The five go their separate ways for many years and when they come back together, the fun one is now a licensed CPA.

Speaker4: [01:00:56] Ha!

Blake Oliver: [01:00:58] He makes some funny accounting esque jokes and I kept looking at my wife and she would roll her eyes. So, uh, there it is, your reference and modern culture to the accounting and specifically the CPA license. So now I've been trying to convince my eight year old son to go see the trolls movie with me. Maybe we'll do it this weekend.

Keila Hill-Trawick, CPA: [01:01:19] You two could be the fun one that turns into an accountant. That could be fear listening. That could be your journey.

Speaker4: [01:01:26] Next time.

Blake Oliver: [01:01:26] Maybe they'll do the the CPA who turns into the fun one, right? That's what we need. That's if we want to change the image of the profession, we need to be lobbying Hollywood to give us some more positive.

David Leary: [01:01:37] So this could be a position the AICPA should post, a position to be like their LA Hollywood influencer correspondent. And that's your only job is to influence scripts and movies and production and directors to give accounting shine. Good lights on accountants.

Speaker4: [01:01:52] Well, you know, we talks.

Blake Oliver: [01:01:53] We talked in the last episode about how they're making the movie The Accountant, they're making a sequel. So we're gonna have the accountant to know that. Yeah, Ben Affleck's coming back and The Accountant three. Apparently. So maybe this is our opportunity to lobby whoever's writing the script to, you know, maybe make Ben Affleck's character slightly less autistic.

Speaker4: [01:02:14] You know.

Blake Oliver: [01:02:15] Not that there's anything not. I'm not saying that's like.

Speaker4: [01:02:18] Yes, I know, you know, it's fine.

Blake Oliver: [01:02:19] Right? Like I understand, but but, you know, like, do we have to represent all accountants as being, you know, unable to understand emotion?

Speaker4: [01:02:27] Right, right. So or just.

David Leary: [01:02:29] Put him in with like. Like haven't be around accounting peers. It's a very diverse group. They all have fancy cars, they drive. They are all happy. Like just just put them in immediately. He goes to a conference with other accountants and they're all happy people. It's very diverse. Everything we want the profession to be. Yeah, maybe we could pitch that.

Blake Oliver: [01:02:47] That's what we need. We need that character in the movie.

Keila Hill-Trawick, CPA: [01:02:50] Better representation.

Blake Oliver: [01:02:51] The happy accountant.

David Leary: [01:02:52] The happy accountant.

Blake Oliver: [01:02:53] Hey Kyla, thanks for joining us so much. You have your own podcast and our listeners should go discover that. Where where should they follow you online?

Keila Hill-Trawick, CPA: [01:03:02] Yeah. So we're on Instagram at Little Fish Accounting. We have a podcast called Fish Food um, that you can find in your feeds. It's changing at the top of the year. But go listen to what we have so far. Now, um, and I am on LinkedIn. You can search me by my name and find me there.

Speaker4: [01:03:18] Fantastic.

David Leary: [01:03:18] And the Journal of Accountancy. You can find her there.

Keila Hill-Trawick, CPA: [01:03:22] You can find me on the cover of the Journal of Accountancy for December. Um, and you can read all about my thoughts about building to enough and being intentional about how you grow your firm.

Blake Oliver: [01:03:31] I love it so much, David. Where can people find you online?

David Leary: [01:03:34] I'm just on all the socials @DavidLeary.

Blake Oliver: [01:03:36] I am @BlakeTOliver on X and find me on LinkedIn. That's my favorite place these days. Ankhila I know you started on Twitter, but like the changes, I don't know.

Keila Hill-Trawick, CPA: [01:03:48] Twitter makes me sad. So I spend a lot of time on LinkedIn now.

Speaker4: [01:03:51] Yeah, LinkedIn.

Keila Hill-Trawick, CPA: [01:03:51] Threads.

Blake Oliver: [01:03:52] I spend a lot of threads. I haven't really tried threads. I know Instagram keeps trying to push me there in the feed. Oh yeah, you know, I wish they'd just build it into Instagram. I think it would just be.

Keila Hill-Trawick, CPA: [01:04:01] They'll probably get there. They were like, first we want to show you that we're better than Twitter and then we will own you in all of these places. So I'm sure they're headed that way.

Blake Oliver: [01:04:11] And don't forget, you can earn CPE Continuing Professional Education for listening to this episode and every episode of the accounting podcast. Download the earmark app and search for the accounting podcast. You can take a free quiz. Get your CPA certificate. So if you've been putting it off, now's the time. Get that CPA before the year end. Thanks everyone.

[01:04:35] See you around. Bye.