The Accounting Podcast

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David Leary: 8% of you are trading your accounting services for something else.

Blake Oliver : Bartered goods or services is 8% bartered goods or services? What are tax preparers bartering for? Coming to you weekly from the OnPay Recording Studio.

Blake Oliver : Hey everyone, and welcome back to the show. I'm Blake Oliver,

David Leary: And I'm David Leary and Blake. As you can see, I'm not in the normal studio as [00:00:30] usual. I'm actually in Atlanta at my mother in law's house trying to take a couple of days off of work here, but obviously you didn't have anybody supervising you. And I see you've applied for a new job.

Blake Oliver : Yes, I did, um, sorry for the surprise, David, but don't worry, I am not giving up on earmark. Um, I did, however, see that the National Association of State Boards of Accountancy is hiring a new president and CEO. And I looked up what Ken Bishop, the current president, [00:01:00] makes. And it's basically $1.5 million. So I thought might as well throw my hat into the ring. I have lots of opinions on the future of accounting and how to solve the problems that plague our profession. So if I could make $1.5 million while I do it, heck, I'll even take a pay cut. I'll save nasba a bunch of money and do it for less. Um, yeah. So I, I applied. The deadline is today, January 5th. So if you're watching the live stream and you want to apply for the president and CEO position [00:01:30] at Nasba, you can do that.

Blake Oliver : Just search for, uh, president and CEO Nasba. You'll find it. You email your application in. I put my cover letter on LinkedIn. So I was going to ask, so this is not just like, oh, you created a letter and put it on LinkedIn.

David Leary: Like you actually went and submitted this.

Blake Oliver : Yeah. Properly through the correct channels. Right. So I, I had ChatGPT help me write a really good cover letter. I think it's, it's not bad. And uh, then I use LinkedIn's export feature to create my resume by exporting my profile [00:02:00] and, uh, yeah, I emailed it in and the response has been fantastic. Uh, posted this last night close to midnight. We've got, uh, 95 interactions here. 22 comments on LinkedIn Shannon Weinstein, CPA, asked, uh, if you became president, what would be your top 2 to 3 priorities in terms of changes or initiatives? And I figured, what better place than on the podcast to talk about what I would do in my first 100 days as president of Nasba. And the [00:02:30] first thing I would do, David, is I would survey prospective CPA candidates and young CPAs to find out why are they leaving? Why are they quitting? Why are they not pursuing the CPA? I feel like this is one of the things that AICPA and Nasba could very easily do with their massive databases that they're just not doing.

Blake Oliver : They're not they're not talking to their customers. And we should think of CPAs as customers of the CPA license, right? They spend a bunch of time and money to get it. Let's treat them like customers and give them good customer service. [00:03:00] So you got to ask them what they want. And then once you know what they want and what's not working, you got to go fix it. And with Nasba, it's actually pretty easy because you just go onto Reddit and you look at all the threads about Nasba and the struggles of taking the exam and applying for the exam, uh, and how old fashioned a lot of that stuff is antiquated. I mean, I'd fix the exam portal, the accessibility, the custom customer support, the transparency, all that, all those complaints that address that. And then I'd go on to fix CPA mobility [00:03:30] and reciprocity, which is a completely broken system that our listeners have been writing to us about. We've got some listener mail on that. Try getting a CPA license in Michigan and moving to California, and you'll see what I mean. When you find out that California has no reciprocity for CPAs in other states. And we'll give you a really hard time because.

David Leary: The argument has been changing, the 150 hour rule will break. I can say the word because I'm going to mess it up again.

Blake Oliver : Just say just say mobility [00:04:00] because that's the one mobility.

David Leary: But it sounds like mobility is already not not as smooth as everybody wants it.

Blake Oliver : No, it's not ready. It's not, it's it's not. It's already a broken system. Uh, we need to modernize accounting education. It hasn't kept up. And then finally, the elephant in the room is we need to address the issue of gap and audits, not providing value to investors. And this is the thing that nobody wants to talk about. I don't even know if the leaders of AICPA and Nasba are even aware [00:04:30] of this issue, because they don't talk to investors, they don't talk to the people who use financial statements and use audit reports. Um, but if you do, you'll realize. Very few people read financial statements these days, and the reason is that financial statements, according to GAAP suck at accounting for intangible assets. They're great with physical assets, factories, railroads, that sort of thing. But when it comes to the intangibles that drive economic growth in this country. We expense most of it because we don't have the confidence [00:05:00] to put it on the balance sheet. And it's just crazy to me. That's why you have all these companies that are worth billions and billions of dollars, that have no assets on their balance sheet, basically. So what's the point of accounting if you're not going to account for that? Uh, so there you go. That's my manifesto. That's what I would do as president of Naspa. And you know what? If I have to put on a suit and tie, I'll do that.

David Leary: You don't you don't get the there's no vote. It's more of a committee selection type process.

Blake Oliver : Right. There's a board [00:05:30] of Naspa that will select the new president, and there's a committee that the board is designated to do. This whole search, this whole candidate search. Um, and as we pointed out in one of our last episodes, one of the funniest things about this is the job description says that you don't have to be a CPA, which I understand, right. There's a lot of great administrators who are CPAs. Yeah, you could apply, David. And by the way, Ken Bishop, who is the current president, is not a CPA. He has a career in law enforcement. And so, uh, but I [00:06:00] am a CPA, so I feel like that gives me an advantage. And also, you only have to have a bachelor's degree. And I find that a bit ironic that to run the National Association of State Boards of Accountancy, which all require you to have a 150 hours of education to be a CPA, you only need a bachelor's degree, and a master's is simply preferred. So I've got both. I've got the 150, I've got the CPA, checked all the boxes, I checked the boxes.

David Leary: Can you add one more thing to your thing? Fix the email. [00:06:30] Because whatever spam filter Naspa uses, all my emails get rejected. I think you've gone through this dance. They might even get your application. They, for whatever reason, we have bad luck trying to email nasba. The emails always bounce no matter what email addresses I send from, so please fix that on your list too.

Blake Oliver : Uh, so I don't expect nasba, by the way, to take my application seriously in the slightest, but I hope that by putting it out there, uh, we will encourage them to think differently about [00:07:00] their selection process and find somebody who's really going to shake things up. Because when you look at the numbers, we're only turning about half of the accounting majors that we need to fill demand every year for accounting jobs. And the talent shortage is reaching epic crisis level proportions, with 75% of CPAs at or near retirement age. So it can't be business as usual. We need some new ideas, fresh ideas. So, uh, if you are running for Nasba president, if [00:07:30] you have applied for this position and you are, say, the president of a state society or a president of a board of accountancy, we'd be happy to interview you on this podcast to hear about your exciting ideas for how to solve the accounting talent shortage, and ensure the success of the CPA and accounting profession in the future.

David Leary: And if there's multiple view, we could set up a debate. We could have a the first debate.

Blake Oliver : There you go. David will be the moderator. Yes. Well, um, what do you got this week, [00:08:00] David?

David Leary: So I mean, I'm in Atlanta and. You know. Remember when we did the interview with, uh, Wayne Burson, the CEO of BDO, when they rolled out the ESOP and he said one of the companies they really used as a model and they paid attention to was Publix grocery stores. Now we don't have Publix on the West Coast. We don't have them in Arizona. I don't think they're in California, but they are here in Atlanta and they're everywhere. It's super common, but I wound up going to a Publix and the customer experience I got there, which is [00:08:30] totally because these people are owners of the grocery store. Every employee and, you know, there's the I got a sandwich from the deli counter and it's, you know, like it's subway. You pick your meat, you pick your decorations and your oils and your salts. And it was like a fun experience. It was like truly an experience. The the lady making the sandwich had so much pride in what she was doing. It was an amazing experience. Then I couldn't find coffee. I was walking up down the aisles and I asked somebody for coffee. She didn't know where the coffee was and she asked the person behind the the bakery counter and the the [00:09:00] baker. She's like, I don't know, the coffee is, but I'm gonna learn. So she came out of there out of the bakery, walked with me through the whole store to go find the coffee because she didn't know where the coffee was. And then you go to the cash register, and just every turn, you get an amazing employee experience. And it made me think. I think I texted you like I was like, if Bdoe offers 10% of the public experience I get at Publix of the customer experience, Bdoe wins everything. It's it's shocking, shocking, shocking.

Blake Oliver : That's really interesting to hear because there was just a [00:09:30] story about how RSM, one of Bdo's competitors, is definitely not going to do an ESOP and doesn't think it's the right model. And so we will see this battle of the midsized firms. I mean, really they're large firms. They're just not big four. Right. Um, the battle of these big firms over the future is going to come down to does employee ownership work? Does an Esop incentivize employees to stick around and provide great service? We'll find out.

David Leary: I guess I haven't told you [00:10:00] about any other times I've gone to a grocery store. That's right. I've ever been compelled to text you about my grocery store experience. No, you have not.

Blake Oliver : That's what to think about. Well that's cool. Uh, well, we promised in the headline of this episode in the title that we would talk about how much tax preparers charge, and I am prepared to do that today. I have had this in my queue for a while now. The 2023 Tax Professional Fee Study from the National Association of Tax Professionals. So let's find out, shall we? [00:10:30] If you're on the YouTube live stream, you can see my screen. But I will be sure to narrate for our podcast listeners. Uh, what's interesting about this study is that it covers a very wide range of tax preparers. As you know, you don't have to be a CPA to do taxes, even though for some reason, the public seems to think that that's all that CPAs do. Only 17% of those surveyed in this study, uh, are CPAs, 43% are EES, and 32% are AF, SP, [00:11:00] um Cfrps, 5% no designation, 10%, other 9%. And I'd say most of these folks have been in business for actually quite a while. The the largest group has been in business for 21 plus years. Um, so these are folks who are experienced, seasoned, seasoned tax preparers. Almost half of the respondents are just in business for themselves, and the other half have a small number of employees. Most tax preparers, most firms [00:11:30] that do tax preparation in this country are very small, under ten employees. And in this survey, uh, 90% are five or fewer people. Isn't that interesting? Like tax preparation is actually a very mom and pop business in the United States. Other than as you're going to talk about David, the giant tech companies that do tax prep.

David Leary: I just I'm just pausing. I'm trying to digest that like. So in this survey, most people have 20 [00:12:00] plus years experience and most are sole sole proprietors. There's there's a solo shot, right?

Blake Oliver : 45% are solo.

David Leary: And then they're probably if they've had their practice for 21 plus years, going back to some of the other stats about the retirement age and things like that, where are people going to get their taxes done if.

Blake Oliver : If from TurboTax in the.

David Leary: Market just goes away or retires, right. Yeah.

Blake Oliver : Well, and I think, I think that's what's going to happen. That's why Intuit is in such a good spot, is that these [00:12:30] tax preparers who've been doing it forever, who've had this client base that stuck with them forever, are going to retire. And what are people going to do? They're aren't going to be enough tax preparers in this country to do it. So they're going to go to tech solutions. And that's why Intuit has just been on a tear recently. Right. And that's why more than half of the market for individual tax prep is now done by technology companies. Right? Denise calls them kitchen table tax preparers. Yes. Think about it. I think that makes a lot of sense. So I think this survey, given that context, will provide some interesting information because the [00:13:00] fees charged by most tax preparers are shockingly low to me. And you can kind of see that in this overall gross revenue number, almost a third of tax preparers earn less than $50,000 a year in gross revenue, and only 20% earn $300,000 a year or more. And then there's a good chunk in the middle there, the middle 50% that earn between 50,000 and $300,000 a year, 65% [00:13:30] of them earn all their revenue during tax season. 65% earn it during tax season, only 23% earn it outside of tax season. So these are folks who are, you know, churning along January through April getting it done. Gross revenue by services offered. Tax preparation is 70% of the gross revenue of the respondents and bookkeeping. Monthly accounting [00:14:00] is only 12%. This is a humongous opportunity for most small tax preparers is reduce the percentage of your gross revenue that is due to tax preparation, and increase the gross revenue for bookkeeping. Monthly accounting, business consulting slash strategic advisory is only 3% of gross revenue as well, so increasing those monthly fees will reduce your workload compression during tax season. This is why client accounting services is about more [00:14:30] than just revenue. It's about spreading out the revenue over the whole year, reducing compression, creating better work life balance for you and your team.

David Leary: I'm really shocked that tax planning and projections, you know, and some of that holding my hand during the year to make better decisions regarding my taxes is only 5% of the revenue like nobody is. It seems like such an easy sell. You finish the tax return and say, hey, let's make it better next year. Like like actually, actually, I've not had that experience [00:15:00] when I've done my taxes with paid preparer's like nobody's offered to put me on to, to do planning, like, like more of a quarterly check in or monthly check in or any type of a plan. It's just like, do the return. It's very transactional based.

Blake Oliver : And the tax planning and projections doesn't have to be complicated. It could be just doing estimated tax projections and meeting with you quarterly to make sure that you actually get that number right and pay it. Would you pay for that, David?

David Leary: Yes. Because I, I [00:15:30] feel like I scramble at the end of the year, actually, not at the end of the year. I scramble after the deadline the following October when I try to get my stuff together, but I'm thinking from a percentage like, are they only selling tax planning to one out of every 20 clients? It feels like you should be able to select at least 20% of your clients, like twice as much, and you'd get ten. Would think that, right? Yeah, yeah.

Blake Oliver : Yeah, I think it's a big opportunity. It's an opportunity to do more for fewer clients. Nathan asks in our live stream, does it mention whether these are mostly patent holders or whether they have a certification [00:16:00] in something else? We kind of blew through it at the beginning. There are designations listed here in the survey, 43% are EES, 32% have the AF SP, and then 17% have the CPA. David, do you know what Afswp is?

David Leary: I, I actually learned about it and I cannot tell you exactly what. So it's you're not an annual agent, but you're trained to do taxes that year. Like you can sell [00:16:30] or prepare. You can prepare. Right.

Blake Oliver : That's if you. So you get a patent basically. Yeah. That's it I mean and there's there's some you you're a non credentialed return preparer and you do 18 hours of continuing education, six hours of federal tax law refresher with a test. So not an E like a little less than an E but it's like a certificate.

David Leary: It's like a yeah. It's like a certificate.

Blake Oliver : Yeah. Okay. Hope that answers your question Nathan. So. Let's keep going [00:17:00] through here okay. Tax client current and target markets. So 35% are doing mainly complex returns. 82% have a mix. And 41% say easier returns and volume focused. I don't know how that all adds up. Moving on. Client community size. Half of the return preparers are in communities with 50,000 or more people, 52% [00:17:30] say that their business is growing. They're gaining new clients, increasing fees. Only 16% say that they are downsizing. Business growth factors. The increased number of tax returns is responsible for most of the growth. 77% report that tax consulting is driving growth for 43% of respondents, and bookkeeping is next on the list. 39% of respondents say that is driving business growth. So that demonstrates [00:18:00] the growth of client accounting services, bookkeeping, outsourced accounting, that sort of thing.

David Leary: But the largest growth is just more tax returns. By far, 77% is just because they're doing more returns, just they're just filling up the filling up the capacity funnel, basically. Yep.

Blake Oliver : Um, are you looking to expand services? 28% say yes, but half say no. 53% are not interested. If you are increasing your services, what are you increasing? Amending previous tax [00:18:30] returns, bookkeeping, monthly accounting, calculating proper W-4 withholdings. Those are the top three estimated tax. Oh, sorry. No, I missed this. Uh, estimated tax projections is in the top three. So it's amending returns like fixing returns for people, then the bookkeeping and then estimated tax projections. Oh, and tax consulting. Tax planning. That's actually. Sorry, this list is not sorted in alphabetical order. It's alphabetical. It should be. Yeah. It's actually the tax consulting. [00:19:00] And tax planning is the thing that people really want to be doing. So interestingly. Right David. Only 5% of revenue is from tax planning. 63% want to grow that revenue.

David Leary: Of the people looking to expand their services. Yeah, of.

Blake Oliver : The people looking to expand, but only remember, only 28% are looking to expand. Uh, they've got a breakdown of services being considered by designation. I'm not really seeing anything interesting here. Well, I guess. Okay. Cpas, 78% of those looking to grow are looking to do more tax consulting and tax planning. That's [00:19:30] a big number. Average number of tax returns prepared by your office. The biggest group, 31%. Prepare between 100 and 300in returns. Next biggest group, it's 21 to 100 returns. And then the rest. You know, we got a few that do more than that. We got some that do less than that. Amazingly, 5% only do 0 to 20 returns a year. Individual returns. We've heard about firms dropping individual returns in favor of [00:20:00] business returns. Well, that's actually increased for 48% of respondents in 2023. It's only decreased for 16% of respondents. Why are you losing individual tax returns? What is contributing to a decline? If you said you have a decline? Half said by choice because I'm phasing out of my business, so I'm getting older or I'm retiring. I want to do fewer returns. 23% said free file [00:20:30] is what's causing.

David Leary: Yeah, 29%. It's other software like tax software. People could buy it. The DIY, um, only 13% competition. But then again, the last one is another 27% saying they're choosing to handle more complex returns. So they're cutting back on easier returns.

Blake Oliver : So if you add up the tax software and the free file, which is basically tax software, uh, more than half of the decline is due to software. Which makes sense because software is eating [00:21:00] up tax prep on the individual side and on the business side, as we saw last year when we did our business return, our LLC return with TurboTax business, David. And we're going to do it again this year. We can't forget because now they have the assisted product, and we're going to see how well it does how business operations were conducted. Did they do in-person or virtual interviews? 50% did virtual client interviews, 81% did in-person client interviews. [00:21:30] Clients submitted documents online via website. This is a little disappointing. Only 61% had this happen, 29% had clients submit documents through an app. And this is, um, this is the this is the paper we can't get rid of 72% had clients submit documents via curbside drop off pickup or mailed documents.

David Leary: I'm shocked if 72% are still having clients drop off paper documents that 60 were [00:22:00] able to successfully do it online, but I think that 61% is probably lower than.

Blake Oliver : This is not exclusive. Yeah.

David Leary: No that's true. Yeah. So you can have clients that do both. Right? Right. Yeah. Yeah I just my gut is not that many people are doing it online. I don't know.

Blake Oliver : Only 11% have say they have limited staff working in the office slash virtual staff. So basically 11% of tax preparers. Our virtual, fully virtual is what I'm taking away from this. Yep. [00:22:30] All right, moving on to the pricing. That's what we said we would talk about. And here it is. It is it is kind of shocking to me. The method for pricing 1040 individual tax prep services. Let's talk about the way it's priced first, right. 50%. Half are charging a minimum fee plus cost based on the complexity of the return. 35% have a set fee for each form and schedule. That's pretty [00:23:00] old school. Charge a fee per form. 6%. Do it hourly. An 8% do other. So I'm going to guess that the 8% is the value pricing folks, or the subscription pricing folks. What is the average charge for an individual return, regardless of method? In 2023, it was $248. $248 for an individual tax return. If you charge by the hour, [00:23:30] your fee was $179 per hour. And then there's a bunch of breakdown of all the different forms and how much people charge for that. If you have a schedule C, your average fee in 2023 was $308. I wonder if that is this the fee that you add on to the 1040 return? Because it says here the 1040 is $231 and schedule C is $308. So do you sum those? Or is [00:24:00] that like if.

David Leary: You if you start summing these. Yeah, I have a 1040, I have a schedule C, I have a schedule E and you start adding those up. It comes into about what I paid. Right. So I think that's what people are doing there. You know all these. It's all by the cart. Yeah.

Blake Oliver : All the cart.

David Leary: Now it's not broken down that way on my invoicing or billing I just get a fee.

Blake Oliver : Chayton asks if the end goal is to own my own firm. Is tax or audit a better path? Would you recommend [00:24:30] spending a few years in Big Four or starting at a small firm? Oh man. Chayton that's a this is the question.

David Leary: Every week, every week we get this question. Yeah.

Blake Oliver : Well the the traditional let's come back to this one, David Starr, this comment, and we'll come back to it after we get through this. Okay. Yeah. So basically I mean there's a lot of detail in here, but the fees are pretty low. Then there's a breakdown of fees by region. You know, it varies. [00:25:00] East. West. But not that much. There's a variation in fees by designation. If you're a CPA, you charge a lot more than if you're an ASP or no designation. So for instance. The average set fee for form 1040 by designation. If you don't have a designation, you're charging $124. If you have the E, you're charging 177. If you have the CPA, you're charging 210. So [00:25:30] that's a pretty big difference, right? 124 up to 210. The value that you get. All right. Let's talk about the method for pricing business tax prep services. So up till now we've been talking about individual the method for pricing business tax prep services. Again it's mostly minimum fee plus cost based on complexity for return. And the average fee in 2023 was drumroll please, $604.

David Leary: I think you should say only $604. That just seems. [00:26:00]

Blake Oliver : $604.

David Leary: Astonishingly, astonishingly low for that to be the average. That means people are probably getting business returns for $250 $300.

Blake Oliver : It doesn't. It doesn't shock me, though, because when we did our business tax return, our relatively simple LLC return partnership return with TurboTax Business Full Service, the list price was like $1,500, but we saw them discount it by 50% during tax season. So [00:26:30] Intuit is saying with that that the market rate should be about 750, and they probably are pricing high because they didn't have a lot of capacity because that was their first year. Yeah. So market rate on average across the whole country, across all different types of tax preparers, $604 for a business return. And then we got a bunch of breakdowns. I'm going to skip through a lot of this stuff. David. Let me know if you see anything interesting. The additional [00:27:00] cost added for complexity. The average was $202, so basically a 33% complexity charge. They have the breakdown by different regions. Here's fiduciary returns. We'll skip through that. Well, I'll just mention that the average fiduciary return was $458 last year. State returns. Whoa, whoa.

David Leary: It's just this gray area in the middle of this graph. How do you charge for state returns [00:27:30] in 33%? Say they only charge for state returns if there's more than one state. So they just include it in the in the prep in the fee. Don't charge anything for a state.

Blake Oliver : So I think is you're missing an opportunity there because all the tax prep software companies charge, it's going to say Intuit.

David Leary: You cannot you have to by the state. You do not get the state for free even if you got federal for free.

Blake Oliver : Well, that's the that's the bait and switch, right? Is it's free to file your taxes. Small print [00:28:00] federal only state $79 or something like that. Right.

David Leary: And for most, I mean, I get it right for if you're using some sort of tax prep pro pro tax prep software at your firm. The state. There's not a lot of work to do because you've just done all the work on the federal, and in theory, those numbers suck through to the state. So I could see you saying, well, it doesn't cost me much to pump out a state return. But at the same time, it's even more reason to charge for it because your state returns could be very profitable for you. It's like just 100% profit. Yeah, a little bit of work. [00:28:30]

Blake Oliver : David. A quarter of tax preparers do not charge any additional fee for any state returns when they prepare the federal return. Not at all. 41% charge for any state return. So there you go. There's your other really easy fix is charge for the state returns. Charge something. It's pure profit. All right. Moving on. Payment for services. This one kind of hurts. So how do you get paid? When do you get paid? Only 2% [00:29:00] of tax preparers are paid in full before the return is started. So my friend Logan Graf, who was interviewed in depth on my earmark podcast, go listen to that episode, search for Logan Graf, go to the earmark podcast. Podcast earmark Cpcomm. There's a whole hour in which he talks about everything he's doing in 2024 that's different, and how he has moved to a fully 100% upfront pricing. Method. He gets paid up front now before he does the return for all new clients. [00:29:30] This is doable, guys. The world works this way.

David Leary: That's what doesn't make any sense. I'm here at my mother in law's house. We had a termite inspector this morning. We're going to write that guy a check before he does any work on this house. Right. To take care of termites like this is what I don't understand. Why? As an industry, we are completely opposite of every other industry when it comes to this platform. Getting paid for performing services.

Blake Oliver : 37%. [00:30:00] So just over a third receive payment when completed and e-filed or mailed. So this is concerning to me because that means you have already sent in the return. That's completely billing after the fact. So the client has gotten the work done and you haven't been paid yet. So what do you think the odds are that you're going to get paid? They're definitely going to be clients that never pay you. You did the work. They can just leave you. [00:30:30] And maybe you don't care about that. But like like you said, David, the world doesn't work that way, right? Yeah, it most, most way.

David Leary: And for those that are listening, you can't see this. So when they created this survey and they created these graphs, they made that bucket green, which psychologically says that's the good bucket. Like you want to be in that bucket, but know that that bucket, it should be painted red on the graph.

Blake Oliver : Yeah. Now 60% are doing slightly better. They are getting payment when the return is completed, but [00:31:00] before it's e-filed or mailed. But that creates pressure, because what if you're really close to the deadline? The return might be late if the client doesn't pay. I would much rather get the money up front so that I don't have to worry about that. Or as Tidy Force said, at least get 50% up front. There's no reason why you can't get 50% up front. Now. How are you getting that payment? Are [00:31:30] you getting cash in an envelope? Are you getting a check in the mail? Are you getting automatic payments such as credit card or bank account on file? This is one where we really need to improve as a profession. We are not doing very well. Only 11% of firms have a credit card or bank account on file for their clients. So even if you're waiting to get payment until you've got that return done, you're ready to file. You still have to go out and ask the client to pay you. You can't just charge the card. [00:32:00] Get the credit card before you start the return.

David Leary: Before you start the return, at least get the way. The method of payment.

Blake Oliver : You want to make a reservation for a hotel. What do you have to do, David? I have to give.

David Leary: My credit card.

Blake Oliver : And there's a cancellation policy, right? I'm going to charge you your card. So even if you're not getting the payment up front, at least get the credit card so that you can charge them when you file. Well, an hotel.

David Leary: That's a good option. The hotels. Right. You have to pay for the first night, but they refund it to you if you if you cancel. So if hey, if we don't do your return, I'll give you the money [00:32:30] back. Yeah, you could do it that way.

Blake Oliver : Norman says is it okay to charge the tax return preparation fee up front? I've never heard it not being okay to do that. Why not? I mean, if you're worried about maybe having to refund those fees, then put it into a trust account, create one. I mean, not a real trust account, but like create a savings account and put the fees in there and then transfer when you've done the work so you don't, you know, feel like you are like that's that's one of the objections that I've [00:33:00] heard is I don't want to get paid until I've done the work because I don't want I don't want psychologically, right, I don't I want the money. When I do the work, it motivates me.

David Leary: It's track is a liability. Then.

Blake Oliver : Yeah. Then we're we're going to track this. Yes. Yeah. Uh, it's a deposit, right? Customer deposit. Hk geek says I'd like to see these numbers compared to similar data from earmark listeners. I bet it would be skewed differently. We're a different breed. You know, that's something that I want to do this year. David, now that we have a big enough list, we've got like 10,000 people on [00:33:30] our email list. Now, we should start surveying our listeners or our, our members and, uh. And sharing the data back with them, because I bet you it would be different here than than here, right? Yeah. Earmark listeners are both attractive and intelligent, and they're probably charging up front.

David Leary: It's the 2%.

Blake Oliver : And getting credit cards. Yeah. So overall, as.

David Leary: You've gone through this and do you have some more individual slides.

Blake Oliver : Well it's the payment methods [00:34:00] accepted. This is this is the best part 88% take cash. When was the last time you accepted cash? 96% take checks. Only 62%. Only less than two thirds are taking credit or debit cards. And look, if you don't want to pay the fee, add on the processing fee. Uh, we've got two great options for you. Ignition and anchor. Anchor is a sponsor of the podcast and ignition charge as well. Yeah, they've been a sponsor too, so [00:34:30] use either Ignition or Anchor to both. Do your engagement letter and charge through the credit card fee. If you can set it now where you charge a surcharge for the credit card. And if you, uh, if they don't want to pay the credit card fee, they can do ACH, you give them both options, only a third accept ACH debit. Only a third of preparers accept ACH debit. Like that seems like the easiest thing you should do. There's so many ways to get ACH now, um, mobile payment services actually [00:35:00] are more popular than ACH debit at 42%.

David Leary: That one kind of makes sense to me, and I can explain why when I kind of recap of my observation of this whole thing. The barter.

Blake Oliver : Thing is.

David Leary: 8%, 8% of you are trading your accounting services for something else.

Blake Oliver : Barter goods or services is 8% bartered goods or services. What are tax preparers bartering for?

David Leary: Well, maybe it's other. I need my house painted. I need this done. I'll do your taxes. You pay my house. It could be those.

Blake Oliver : Types of things. Well, I mean, you know, the benefit of barter goods or [00:35:30] services is, uh, if you don't put it on the books, it's not taxable. Right. Well, it is taxable, but it doesn't get taxed. Uh, little ethical question there. Now, here's another thing that's interesting. Payment plans are installments. Um, this is a great way for clients to have big bills to pay you over time. And you don't have any risk. Is these like sites that offer payment plans or installments? Do we have any sponsors of the podcast that do that sort of thing? David. Well, quick. [00:36:00]

David Leary: Fee does it. I mean, I mean, so there's two of these people that do this. You have the ones that, um. Or you'll see on eBay and Amazon these smaller companies. And actually even Amelio has that now where you can spread out your payments over 12 payments. There's kind of those. But then bigger companies like Kwik Fit does it across your client base. But I think like they want you to have like $1 million in R to to because you as a firm don't want the R sitting on your books. You want that cash, right. And they help your clients spread out those payments. [00:36:30]

Blake Oliver : Regarding credit card fees, Matthew says that if you're charging enough, credit card fees are negligible and a cost of doing business. Yeah, and the studies show that if you absorb the credit card fees, your business, your customers will be happy and your business will grow, and it will offset the credit card fees, which is why most businesses absorb the credit card fees. I know psychologically that is difficult, but you could just raise your prices. And that's the next section here. How [00:37:00] many tax preparers increase their fees? 90% will raise fees for new and existing clients, 49% do it once a year and 28% do it every two years, so only half are doing it every year. There's another opportunity raise your fees every year. Not every two years. Not every three years. Not every four years. What percentage did you increase fees the last time you did it? About a third increase their fees 1 to [00:37:30] 5%, which to me is not even really a fee increase in 2023 because of inflation. 40% did it 6 to 10%, which is better than inflation was, I think, in 2023. Can we frame.

David Leary: What 1% is if the average return fee was $268? People are increasing the price by $2.60. Like it almost seems ridiculous. A 1% raise or increase. [00:38:00]

Blake Oliver : Yeah, I know, it's like you should be doing minimum 5% if you ask me. So like the people that are only raising 1 to 5%, you know. What are you doing? 3% raised their fees. 21% or more. Right. There's a good chunk, about 23%, let's say a quarter that raised their fees 7 to 20%. Reason for increasing fees. The number one reason is I want to stop giving away as much free work. And. Main [00:38:30] concern for increasing fees. By far the biggest concern is I don't want to upset or offend existing clients. I don't want to upset or offend existing clients. Come on. I know it's hard. It hurts. You love your clients, but raise your rates. Don't worry about upsetting or offending them. It's a business. You are running a business. Treat it like a business. One [00:39:00] tactic I've heard that works very well is to appoint somebody else in your company, or if you don't have somebody else, your spouse.

David Leary: That was, I've always heard, is the best way the spouse.

Blake Oliver : Make your spouse responsible, or your significant other responsible for pricing because they value you. They're willing to live with you, right? They value you the most. Your clients aren't willing to live with you. If your spouse is willing to live with you, they value you. They should [00:39:30] help you raise prices. And if you don't know how to communicate those price increases, this is probably the best use for AI. Chatbots in our profession is drafting those fee increase letters and doing it in a way that sounds professional and sympathetic and empathetic, and it's fantastic at doing that. So no excuses anymore. As Darryl says, get paid your worth 100%, Darryl 100%. [00:40:00] When is annual? When? When is the fee discussed with the client? What do you want to? I already showed it to you, David, but.

David Leary: I don't even. It's a little small, so I haven't even read it. But I'm just the way this is going. It's it's. Well, after I've done the entire return, I finally tell you the fee.

Blake Oliver : Just under half, 49%. It's after the return is complete, which is totally not what you should be doing. You need to be talking about the fee. Disclosing the fee [00:40:30] before the return is prepared. If you've already done the work, then you have no power. You have no pricing power. You have no leverage. If you charge them after the return is done, the client will complain.

David Leary: Leverage. It's common courtesy, like nobody wants a surprise price at the end, even if it's a cheap price. You just don't want to be. You don't want to surprise. You'd rather know up front.

Blake Oliver : Yeah. Interestingly, 63% of respondents have staff who prepared the tax return, discussed the annual tax preparation and filing fee with the client. I don't think that staff [00:41:00] should be talking about fees with clients. Separate them from that. They hate doing it. You don't want to do it right. They don't want to do it. They really don't want to do it. Don't make them do that. Just let them do their job. You as the owner of the practice. Should be dealing with the fees and the clients and negotiating and all that. Uh, if you make your staff do that, you're a jerk. You can add me. Send send your emails to Blake@blakeoliver.com. Reasons [00:41:30] work went unbilled last year. Uh, the biggest reason 36%. No surprise is I build the client. But I didn't receive payment. Well, it's kind of hard to get payment when you build them after the fact. And you didn't tell them what the fee was going to be before you did the return, and you've already filed the return. The next reason about a quarter said I didn't want to add friction to the client relationship. Oh, [00:42:00] so you're a nice guy. You're so nice. You didn't bill the work to the client. This is the problem when you have the person who has the relationship with the client doing the billing. Don't put them in that position because they'll be nice. And accountants were nice. We're nice people. We're servants. Right? We want to serve. We want to help you do. Personality profiles of accountants, like most of us are in that like I want to be helpful group, you know, depending on I mean it's all all [00:42:30] these personality, you know, profile things where there's like four different personality types. We all we tend to fall into that category. Right? Yeah. We're not we're not mean. You need the mean person in your firm doing the pricing.

David Leary: Pause on this one. The most common work that went unbuilt.

Blake Oliver : Yeah.

David Leary: Tax strategies planning recommendations 43%.

Blake Oliver : Yeah.

David Leary: So people are doing tax strategies and planning. They're doing it for free. Just not charging for returns.

Blake Oliver : They're not they're [00:43:00] not charging for the tax planning because they don't know how. Because you can charge for a form that's easy right? I just look at what forms I've filed and I bill. But how do I price and bill for tax planning and so many. If you don't know how.

David Leary: Forms can be solved by just a monthly subscription, we're going to put you on this fee. Figure out how much you know, you can figure out what you think the return is going to cost you. Do you stack it all up and you charge that divided by 12, you charge it per month, and now you don't have billing problems. [00:43:30] Now, if you give advice over the phone, you know, tax planning, coaching, whatever, whatever advice you're doing, right? Yeah. That's included. Like you just you stabilize a lot of you get the awkwardness out of the relationship that goes away because the billing, like so much, can be solved by just a monthly fee. Yeah. Well, and.

Blake Oliver : Actually I'm not a fan of monthly for tax if you're just doing tax, because I think that the the billing schedule should be lined up with the deliverables. So unless you're meeting with them monthly, I don't think you should build a monthly thing. But if you're meeting [00:44:00] with them quarterly or bi annually, then I would say split it up into four minutes or two payments, get the payment up front. That's what we did in my firm. We merged my cast practice, my 100% virtual cast practice, merged with a CPA firm that did tax prep. The reason we did that was because we knew we had a ton of clients who could benefit from taxes. We weren't doing it, and it worked right. We got a ton of clients up on tax and that firm, which is now April Cloud, billed [00:44:30] twice a year. We billed once at the beginning of the year and then once halfway through the year. And the halfway point was when we did the tax planning meetings. Right. Summer or fall? Easy. No pushback. Very little pushback from clients. Matthew says 12% didn't have time to bill or collect. Wait, is that here on their.

David Leary: The graph above if you scroll up a little bit.

Blake Oliver : Oh my God, [00:45:00] I missed that. I didn't have time to create and or send invoice to collect payment. 12% gave that as a reason that work went unbilled last year. Wait wait wait wait wait. So you. You were so busy that you didn't have time to bill your client. And then I guess it was too late to bill your client. Well, I mean, I'll have to say this is true. I just paid for 2022 and 2023 [00:45:30] tax returns. No, I just paid for 2021 and 2022 tax returns. You know why? Because my preparer didn't send me a bill until last month. For two years.

David Leary: I got a bill from an accounting firm a year after once two the following year, when they were preparing for the next tax season. They. Oh, we never billed that person. I mean, I.

Blake Oliver : Understand, right. Like if you if you're overwhelmed, um, and you're just trying to like decompress after busy season and you're doing all your billing, then like you might miss it, but [00:46:00] that doesn't mean we should keep doing it that way. Like, I understand why that happens, but this is why you should get paid up front. Make it part of your engagement letter process. Use one of these tools. The technology solves a lot of this problem. And guess what? You can say you have to pay me before you can accept this engagement letter.

David Leary: Yes, you can do that.

Blake Oliver : You can require it. Okay. The work that went on billed, we talked about tax strategies. That's 43%. [00:46:30] Um, but bigger than that 49% child, student, friend and or family returns. So we're giving away these family returns, friends and family returns to our clients. Uh, that should get billed for. And there should probably be engagement letters and all that going on for that, right? Online proposal software will help you with that. 44% didn't build for IRS or state correspondence. I mean, if you're billing by the forum, you could probably build by the like, um, notice at [00:47:00] least. But I would roll that into your subscription. So as part of your tax planning service, you also get representation. I mean, you could you could probably figure that out or at least Bill every time you have to respond.

David Leary: Yeah. I think as you're going through this more and more and more, it's getting clear to me that this probably should have been like two cohorts. I feel like there's a vast majority of the people that filled out this survey are for lack of because when you showed their average [00:47:30] salaries at the top, like slide 1 or 2, a big chunk, we're only making like 40 grand a year preparing returns and another well pushed up to. And if I'm thinking stereotypically thinking the average tax preparer. In general probably is. It's either a side hustle or a solo once a year gig, and they're pumping out some some returns for trade. They're pumping. This is why those payments via Venmo and Zelle are so high is because they're they're just it's a hustle. It's just a quick [00:48:00] side hustle. They do some returns every year. They get out. And so it'd be better to have the survey broken out those people versus because the behaviors, it would maybe make sense for those people to not invoice at all or give a lot to friends and family. Based on the chunk here.

Blake Oliver : I think you're right, David. It would be good to see the data broken out, but also that group that makes less than 50,000 is only 29% of the survey. And, you know, making $50,000 in a rural area in this country is nothing to sneeze at. Like, that's a [00:48:30] good that's a middle class life. So. I think what you're saying is true. But also I think that, like, there's a lot of truth in this survey. Yeah, but.

David Leary: They're also doing most of the returns. It's it's the smaller people. The side hustle or the solo are doing the vast majority of the returns. Right? Yeah.

Blake Oliver : Um. All right. We're almost done with this. Let's see, going back to the common work that went on build in the 20 percentile. We've got amendments set up work and urine [00:49:00] cleanup work. But by far, again it was like the friends and family returns and the tax strategy planning recommendations and the IRS correspondence that didn't get billed discounts offered, 25% did not offer any discounts. Uh, I think you should probably not be offering discounts given the demand that we're in in our profession. So good for the quarter of repairs. Uh, 40%. Give a free consultation. Okay? Get rid of that immediately. Don't do free consultations. Make people pay you something to talk to you. [00:49:30] I charge $500. When I was a bookkeeper to do an assessment. That was when I'd gotten to, like, you know, my firm was in a good spot, right? We were. We were really. We were big then. I mean, relatively, we were like 12 people, right? We would charge $500. If you wanted us to assess your QuickBooks file, you know, you could do something between 0 and $500 very easily, I think. Or at least, you know if you're going to meet with the client. Like they got to put down their deposit for the return. And you could say it's refundable, something like that, that would be another option or at least a portion [00:50:00] of it. Okay. Uh, friends or family discount, 38% gave a friends or family discount and, um, 38% gave a discount to family or dependents of the client. I would reconsider your discounts.

David Leary: Yeah, like, don't give discounts if if you want to give a free state throwing a free state. Right. Something like that. Like don't.

Blake Oliver : Yeah. Uh, the types of tax consulting offered. Year end tax planning, 87% if they offered tax consulting. But we know that most [00:50:30] firms didn't seem to offer that, or it's not a percentage of their revenue or they're doing it for free. Uh I'm going to skip through here. Let's see. Like we said, 49% don't have any staff. Staff are typically paid an hourly wage, 77% pay their staff an hourly wage, 30% pay a salary. And then we have wages here. A licensed tax professional gets paid on average $30 an hour full time and $23 if you're not licensed. [00:51:00] So getting that license will increase your hourly wages as a tax professional administrative staff get 20 and partners get $53. Again this is average. 41% offer health insurance. 60% offer flex time. We've got some recruiting networking stuff. We'll skip that. All right. I think that's good. Wow. We spent almost the whole time I know we did.

David Leary: Spend on that one survey, which is kind of amazing.

Blake Oliver : I think this was good. Right. It's relevant. Right. It is tax season. [00:51:30]

David Leary: Tax season. There's just a lot of insights.

Blake Oliver : We got some questions here from the audience from the live stream audience. Let's get through these um tidy four set. A mentor told me that you should fire 10% of your clients every year until you get to your ideal client base. I mean, that that is, uh. You know, I would phrase it differently. Instead of firing your clients, firing 10% of your clients. Raise your fees so that 10% of your clients [00:52:00] decide to fire themselves. Yeah, that's right, you achieve the same effect, but you make more money.

David Leary: Because if you keep raising the fees and that client just keeps paying and staying, they might be an ideal client at that point. Right?

Blake Oliver : Right. Exactly.

David Leary: Become an ideal client because you didn't know if you fired them, you didn't know they were willing to pay until you beat.

Blake Oliver : Digging, beat digging, Cougar said. That might be the best username we've had yet on the show. Beat digging Cougar said $30 per hour average for a CPA that's so low. But remember, this is across the entire [00:52:30] country and these are very, very, very small firms. And um, that just meant licensed doesn't mean CPA. It means they could be an E. Uh, it could even mean I don't know if this is true in the survey, but it could even mean that you just are one of those annual filing season preparers. So it just means that you're not unlicensed. Brian says those wages look very low for full time, year round employees. Yeah, that's true. But again, we know that the accounting profession has a problem with pay. [00:53:00] And that's why people are leaving the accounting profession. Right? A lot of firms are paying crap. So this validates that maybe the average salary wage is more useful to look at. So if you've got a full time licensed tax professional they're making 70. Call it 71,000 on average full time nonlicensed tax professionals. Now remember licensed tax professional just means you have some kind of license. And I don't know if it means CPA license or if it means like [00:53:30] designations as well, that it's not clear here. Nonlicensed tax professionals make, let's call it 52,000 on average. And the partners are making on average $90,000. Now again, these are very small firms. Most accounting firms, most tax firms in this country are small main Street mom and pop kind of businesses, kitchen table businesses. Even. So, you got to take that with a grain of salt. Brian says you have to charge enough to pay your staff, enough to keep [00:54:00] them. Raise your fees? Yes. Tina says, I think it's absolutely customary to pay the fee up front. There's nothing wrong with that. Many industries charge up front. Tax prep shouldn't be any different. I agree 100%.

David Leary: The only ones that don't charge up front are people that they got you, the mechanics, you. They roll your car, they put it on that rack and you don't get your car back until they've.

Blake Oliver : Got some leverage.

David Leary: They have some leverage, but you don't have or.

Blake Oliver : They know where you are. They know where you live, right? They're in your house.

David Leary: You, as well [00:54:30] as the accountant have to have that same leverage. But there's nothing you do. You gotta get paid first.

Blake Oliver : Yeah. Um, Daryl says, I'd appreciate your thoughts on my next steps. I'm starting my M.S. in accounting at a decent school this fall, and I'm unsure whether to aim for a job with the big four only or explore other firms. I want to focus on tax. What do you think? Undergrad? Not in accounting.

David Leary: I feel like we kind of talked about this last week or the week before, and [00:55:00] there's all these forward thinking firms that we talked to. I mean, some of them are here attending. Bryan has a firm, uh, um, Tino's got a firm. And where they're paying their employees good. They're taking care of their staff. They're billing customers in these forward thinking ways. They're very progressive firms. But really, almost all of these people we know that are running these progressive firms had a stint at Big Four at one time in their past like they did. They they they got some experience at Big Four and it influenced their decisions to possibly [00:55:30] create these new style, you know, modern firms. But so it's hard to say, like, don't do a stint at a big four. But it's also I know you didn't do one either, right? Blake?

Blake Oliver : No, I didn't, and I have had a great career. Right. And I could have made partner at the large firm that I ended up joining. But I decided to leave for tech. I guess I would say only go to big four. If you think there is some kind of experience that you can get there that you can't get elsewhere, because I don't see why [00:56:00] you would do it otherwise. The benefits do not outweigh the disadvantages. Right? So the big four will extract everything you've got. So you better be getting something in exchange. And I think in tax, there's plenty of mid-sized regional firms that could give you great experience. I guess it depends on what kind of tax you want to do. If you want to do massive international corporate tax kind of stuff, then probably Big Four is the only place you're going to do that, right? But if you want to stick with like Main Street businesses. [00:56:30] Or even smaller public companies. You can do that at a smaller firm. I'll tell you this if you're a career changer, the big four will give you a really hard time. They are very stuck in their ways, and I've heard from many people that you just can't get them to give you the time of day if you're not following that traditional path.

Blake Oliver : So, you know, do you want to go through that hassle as well? Let's see, Brian says great point. If you're not going to do a stint at B4, at least start with a progressive [00:57:00] firm so you can see what's possible. Yep. Yeah. Don't go out on your own without like any experience at all. I mean, that's what I did, but I was doing I mean, I was I started as a freelance bookkeeper and I was doing bookkeeping work, and it's not like there were firms that I could go to that were going to teach me how to do bookkeeping the right way. They would be teaching me how to key transactions into, like, ancient accounting software. So I'm glad I didn't learn it that way. But I'm sure if I was doing tax, I would have learned a lot. Yeah. Um, any other live [00:57:30] stream comments that we should go through? David here. Wait, we had a question that we said we were going to get to from Chayton.

David Leary: I think that was.

Blake Oliver : Yeah. Chayton we haven't abandoned you. I hope you're still there. If the end goal is to own my own firm, is tax or audit a better path? Would you recommend spending a few years in Big Four or starting a small firm? Okay, if you want to own your own firm, tax is the place to go because you can do that at almost any size. You can be solo. You can have a big firm. You can grow a firm, right? Tax [00:58:00] is super flexible, whereas I don't know too many solo audits. Solo audit firms. Right. And also you should know whether or not you want to do audit or tax by like trying it. I tried doing a little bit of audit at one point I did some. Some of that and I hated it. So that will determine then if you start at Big Four or started a small firm. Again, I'm not a fan of the Big Four path. I feel like when I talk to people [00:58:30] who worked at Deloitte or KPMG or PwC or EY, all they all say, yeah, it was a great experience. I learned so much, but I'm not convinced. Like I feel like there's a survivor bias to that. Like I, I put in the time there, so now I have to justify it. I wonder how much of that is present. I mean, the reason you go there is to get it on your resume, right? So you're not going to trash it when you leave. Yeah. So [00:59:00] and it's sort of like going to a top you travel.

David Leary: Right. You could maybe possible opportunity to travel go on site to a client. There's some some benefits like that that are intangible.

Blake Oliver : But it's like it's like you talk to someone who went to Harvard, you know, like, are they going to are they going to dish on Harvard? No. Obviously not. That would seem stupid. Right? I'll tell you this. I went to a top university and I'll say, you know, I think I could have gotten the same quality of education at many other places that were a lot [00:59:30] less expensive and a lot less exclusive, like the exclusivity of it doesn't actually correlate necessarily to what you will learn. It's all what you take out of it. So that's just my my take is, don't you know, the the Big Four do a great job marketing themselves as places you want to go. And, um, is that true? Right. Accountants like to say that marketing doesn't work on us, but I think it really does when it comes to the big four. [01:00:00]

David Leary: Did you want to touch? I mean, I know we've ran over a little bit longer than usual, but with with these career choices that are happening here. Talk about that CPA mobility a little bit, that email listener email.

Blake Oliver : Oh, the mobility question. Yeah. Let me get this email open.

David Leary: Well, Blake's opening that email. Um, I'll let people know we won't have to play the commercial, but TurboTax just released their strategy for their commercials. And [01:00:30] the reason I like to bring it to the show is because they're going to run 600 to 900,000 commercials over the next four months, and you got to be aware of it. It looks like their theme this year is they're going to say that it is, um, make your moves count, which I thought last year's was better, which was don't do taxes or don't do your taxes, I thought was a great thing last year. And they have all these personas. And but one of them was interesting. All the commercials I saw so far are very heavy TurboTax live and the the tax expert is centered [01:01:00] and focused very heavily in these commercials, except for one of the commercials is about free TurboTax. Like, I cannot believe they're running a commercial about getting taxes done for free again. And there's no tax professional, you know, no TurboTax, uh, expert or TurboTax live presented in that commercial at all. But I was really surprised. One of the commercials we're going to run is free again. I'm shocked by that. But it ties to the pricing, right? Like people probably feel pressure to charge nothing when there's commercials being run hundreds [01:01:30] of thousands of times that say taxes are free. So yeah, be aware of.

Blake Oliver : So we got an email from a listener about reciprocity, which is related to mobility. We talk about CPA mobility on the show a lot. It's the number one reason why the AICPA says we shouldn't change the 150 hour rule. And they put out put out a lot of fear, uncertainty and doubt about it. And if, you know, Minnesota [01:02:00] changes their requirement to only require four years of education. Now, the CPAs in Minnesota won't be able to practice in California, for instance. Well, one of our listeners wrote in and said, John said, thank you for starting this podcast. It has been a nice source of both entertainment and information for accounting professionals. You are both honest and fair, and your sincere thoughts are what make the show great. I wanted to ask your thoughts or potential show topic on using the CPA designation online. I live in California [01:02:30] and there is significant red tape around the experience requirement, so I have applied to licensure in Michigan. The California State Board told me I cannot use the CPA designation, but what does that mean? Can I not use it on LinkedIn and other social media sites? Now that commerce is done on the web, do you need a CPA license in every state to call yourself a CPA online? This seems like a gray area that needs to be addressed. So this is actually not mobility. This has to do with reciprocity because this [01:03:00] is a person, a CPA, living in California but licensed in Michigan. And it turns out that California does not recognize reciprocity, meaning that if you're a Michigan CPA, you can't call yourself a CPA.

Blake Oliver : If you live in California, you can't call yourself a California CPA. They put limits on what you can do. Um, so the California Board of Accountancy Enforcement Division called John and said that if you are [01:03:30] in California and you're a non California CPA, you cannot use CPA next to your name. If you give your address on social media or on a website, as in California. So you can't put CPR next to your name and then have your location be California on LinkedIn. You can't do this for your business Facebook page or for your website. The California location and CPR cannot be together, but he is allowed to just put United States as his location on LinkedIn and [01:04:00] then have CPR next to his name. He also has to clarify to California clients that he is not a licensed CPA in California, but in Michigan. And they apparently they have thousands of enforcement cases out against CPAs who are licensed in other states that have that are located in California. So this is the thing about mobility. The only thing the mobility allows you to do is to have clients in other states. As a CPA. It doesn't let you actually practice in other states, [01:04:30] like if you're located there, then you got to go through reciprocity. And very few states have an easy reciprocity situation. We get we've gotten emails from listeners who move from like, there was a listener who moved from Tennessee to another state and like, can't get licensed in that state because they're they want to see college transcripts from like 20, 30 years ago. You know.

David Leary: And I think what drives me crazy because it's definitely bureaucracy. But at the end of the day, the clients don't care. They just care about the three letters. When [01:05:00] you have those three letters, that's all the clients care about. They don't care. Yeah, they never ask. Like, is your CPA only good in this state, or can I use it in this state? They don't care. And there's just there's something out of touch. Maybe this is why you need to get to Nasbe and become the president, but there's something out of touch from the state societies and the enforcement agencies and Naspa and ACPa that's out of touch with what consumers think of a CPA. There's just a disconnect.

Blake Oliver : Well. Let me, [01:05:30] uh, let me propose a crazy idea. Why can't we have the CPA license be like a driver's license? If you get licensed to drive your car, David in Arizona, you can drive it into California.

David Leary: I drove all over Atlanta. I drove everywhere in Atlanta at this trip.

Blake Oliver : Yeah. There you go. Georgia accepts your Arizona driver's license. They think that you are qualified enough to drive a car in Georgia. If you got a license in Arizona, why don't we do that [01:06:00] with the CPA license and then handle exceptions on a case by case basis, but make the default that every state accepts every other state's CPA license. And if there's a really egregious case where a state like goes over the line, then a state can address that. That rather than having it be something you have to do proactively. There's only four states that have automatic mobility. I don't remember what they are off the top of my head. I think North Carolina [01:06:30] is one. So you can go to North Carolina and if you have a CPA license from other states, you know, like you get automatic mobility. Actually, I don't know if reciprocity works that way too. And. I think these these states that like the reason you wouldn't want to do that is because then you say, oh, well, you know, I'm the California Board of Accountancy. I don't want other states with lower standards. You know, I don't want CPAs going to other states with lower standards and getting licensed there and then coming to my state. [01:07:00] But you got to realize the situation as it is, is like. I'm in Arizona, I can serve clients all over the country. And how are you going to know? How are you going to take any enforcement action against me? This happens all the time. Like, I don't think these states that claim to be upholding high standards are really doing it. It's effectively a free market.

David Leary: But but it's show, right? They they show they are by we're we're we're watching people's LinkedIn pages.

Blake Oliver : Yeah.

David Leary: Not the returns going through and being [01:07:30] filed. Nobody's watching that number.

Blake Oliver : Yeah. So? All this is going to do if we perpetuate this system, which is totally dysfunctional, is discourage people from being CPAs and being CPA firms. What if I was going back into practice? I would not start a firm as a CPA firm because all that I have, I just get a bunch of red tape. If I'm not going to do audits, why would I be a CPA firm? I'd rather be a non CPA firm. I will use my CPA as [01:08:00] I, you know, online to promote myself and my staff. They can use their CPA on their bios and all that stuff to the extent that it's allowed in my state, which it generally is. And we'll get all the benefits of being CPAs without having to be a CPA firm or go through any of that crap. So if you make this stuff too difficult and complex and you make mobility a challenge, you make reciprocity a challenge. You're just going to turn people away. So there's disadvantages to this too, which is like this is why the CPA is dying. And [01:08:30] that's what's happening right now. It is dying. 75% of CPAs are at or near retirement. That is like not that far from death, right? The average age. What's the average age of, you know, Americans. We get to what, like our mid 70s. And if the retirement age is 65, that means that, you know, 75% of CPAs are 10 or 20 years from death, right?

David Leary: I don't know, searching for stories last week. And I sometimes when you're doing searches, you [01:09:00] want to see recent news. So you search for bookkeeping or bookkeeper or accountant. And on Google you filter it for last 30 days. The amount of obituaries that mention somebody who was an accountant or a bookkeeper is insane. Like, I'm shocked. Like I'm just looking for news articles that mention it and you're just getting obituaries. Just there's a lot of people who have worked in this profession that are dying.

Blake Oliver : So we can't have it halfway. I think the problem with the current situation is that we've tried to create this national [01:09:30] standard with Nasba and the 150 hour rule, so we're locked into this national standard of five years of education, which we can't change because if any one state changes it, then all the other states have a gun pointed at that state's head. Right? It's like a Mexican standoff with 55 people, right? If anyone changes, if anyone changes their licensure requirements, then, you know, their their their CPAs are screwed. So nothing can change. But at the same time, we [01:10:00] don't have any of the benefits of having a system where everyone can actually move and practice across states, because in reality, it's a huge hassle. Mobility is not what was promised to us. So the people running the show are deluded. They think that they've created this great system. But like the reality on the ground is it's not that great. It's not that easy. And it's a pain in the butt. And the reason they think this is because they created it and they don't talk to the, the people who are actually [01:10:30] on the ground doing the work. They're only talking to the leaders of the state boards of accountancy who are. Really out of the picture. They're not, they're not. They are basically retired. So you got a a bunch of retired people who are not practicing. Determining the licensure requirements for the profession. And they make it really hard because they're upholding they're upholding the high standards. Well, what do you get? You get a situation where all the [01:11:00] KPIs are pointed downward.

David Leary: I mean, we can fix it.

Blake Oliver : It's really not that hard to fix.

David Leary: And breaking, like.

Blake Oliver : Strong national leadership to fix it.

David Leary: Brian made a comment about Texas and he can clarify. But I think in Texas you can't even say you're an accounting firm if you're not a CPA, right? Like you're not even allowed to use the word accountant or.

Blake Oliver : Yeah, Texas is the one state that actually like creates value for CPAs in terms of branding in this way. And this is also something we should do on a national level. I think right is like actually create more [01:11:30] value for CPAs. Like why should you be a CPA? Why should it be a CPA firm? Like give us a reason other than I need to do audits because most of us don't do audits. So, uh, but but if you're going to do that, also make it easier and less burdensome to be a CPA firm and create value in that way, too. Like so I don't know. I don't know why it has to be so complicated. I guess that's just the way it's always been and people put up with it in the past.

David Leary: But these are they're not [01:12:00] truly governmental agencies, but they kind of function that way. Right. And that's their nature is to be convoluted and more complicated and more convoluted and like like you to to change it, you'd have to blow things up. Right. And maybe that's your step one for Nasba would just burn it down and start it over. Maybe that's your that's your that's your your plan.

Blake Oliver : Yeah, maybe maybe that's what needs to happen. Start from scratch. Matthew says in Indiana, [01:12:30] you cannot call yourself an accountant unless you're a CPA, like in Texas. And yet in California, which does not, does not have reciprocity. You can call yourself an accountant if you're not a CPA. So that's why I had an accounting firm before I was ever a CPA. In California. Couldn't do that in Texas, couldn't do that in Indiana. So think about this like we say that we have this national standard, right? Everything's like similar. But all these states like Texas and Indiana have a completely different situation than California when it comes to how you [01:13:00] market yourself, which is arguably the most important thing when it comes to being an accounting firm. If you're allowed to advertise and market yourself online, whether or not you can call yourself an accountant. If that's if that's decided by whether or not your CPA, that's probably the most important thing, the most most important consideration in a lot of places, a lot of ways. Boring accountant says many states require new residents to obtain their driver's license and registration after moving and taking up residency. California requires a driver's license in ten days of residency. That's true, but [01:13:30] they also don't I don't well, maybe this is that's not about.

David Leary: Your driving skills and the driving. That's about taxation. And yeah, it's a whole different game. They're just using the driver's license as the hammer to get you to.

Blake Oliver : When I've moved states and I've done it quite a few times. Let's see. I've lived in Illinois, Florida, Colorado, Arizona, California. I've never had to take a driver's test again. I've never had to prove my, like, driver's ed education in order to get licensed in that state. Like, [01:14:00] it's really just a formality. All right.

David Leary: I think we beat this down.

Blake Oliver : That's all I got this week. David. This was a pleasure, as always. Safe travels back from Atlanta. And, um, thank you to everyone who joined us live. As a reminder, you can earn free CPE for having watched or listened to this episode. Download the free earmark app on the App Store and get a head start on your CPE for 2024 and you can watch us live! Subscribe to us on YouTube, search for the accounting podcast, get notified when we go live and join us and [01:14:30] let us know your thoughts. If you disagree with us. And I know some of you do, because you tap that one star icon on the the apps on the podcast Apple podcast, like either write a review and say what you actually think or, uh, join us in the live stream and tell us what you think, because I think you're cowards if you just tap one star review. Yeah, I do well, and there we go. I'm not worried about that because we have wonderful listeners who give us what is it? We are a 4.7, I think, stars, lots of five stars, a podcast. Yeah. Which [01:15:00] is uh, it's wonderful. So thank you all for listening and write a review if you want to support us. Because now I might get some haters and drag our rating down.

David Leary: I was just thinking, here's the beauty of the survey. If you heard this episode today, since most of you aren't charging to the tax returns are done, you today can still raise your fees for this season, and your clients won't even know because you're just going to give them a bill when it's done. They have no idea you raised the rates. So all that's right the window of opportunity here. So go raise your rates, hit pause and go raise your rates.

Blake Oliver : Awesome David talk to you next week. [01:15:30]

David Leary: Bye. Thank you. Bye.