Federal Tax Updates | Post Tax Season Firm Improvements

This week, Roger and Annie deviate from their normal tax update chats to have a deep discussion about the current state of the accounting profession and how you can use this post tax season downtime to improve your firm.

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Chapters

(00:00) - Post Tax Season Firm Improvements
(02:52) - What's your general impressions about the tax season?
(04:57) - What are we seeing in the industry in terms of headwinds?
(11:59) - Why is hiring becoming so difficult in accounting?
(29:15) - Great practices to do post tax season?
(44:37) - Does the accounting industry need to make changes to the process of becoming a CPA?

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All content from this podcast by SmallBizPros, Inc. DBA PADGETT BUSINESS SERVICES is intended for informational purposes only.

Creators & Guests

Host

Annie Schwab, CPA

Franchisee Operations Manager at Padgett Business Services

Host

Roger Harris, EA

President at Padgett Business Services

What is Federal Tax Updates?

CPAs, Enrolled Agents, and Tax Preparers can keep up-to-date with the latest federal tax information while earning NASBA approved CPE credits and IRS approved CE credits by listening to the bi-weekly Federal Tax Updates podcast. The hosts Roger Harris and Annie Schwab have over 75 years of tax experience between them, which has been featured in various media outlets including Wall Street Journal, USA Today, The Morning Business Report, Bloomberg Business News, and Accounting Today.

Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

Roger Harris: [00:00:07] Well, hello again. Welcome to another Federal Tax Updates podcast. Annie, welcome back.

Annie Schwab: [00:00:13] Hey Roger, how are you today?

Roger Harris: [00:00:14] We thought we'd kind of deviate a little bit from a lot of the technical stuff that we've talked about recently because we've just finished a tax season and it's theoretically the first one post COVID. So I think it's a good time to kind of reflect back on tax season, kind of where our industry stands, because even though COVID has theoretically passed, it's left some lasting changes to our industry that I think it's time that we all kind of recognize it and and make some changes. So again, not a lot of technical stuff today. We'll get back to that in a couple of weeks. But Annie, what's your general impressions about the tax season that just ended from talking to our people and other people? I mean, what. What have you heard? Tough.

Annie Schwab: [00:01:02] Well, first you heard it was so much better than it was in the last couple of years. But you still heard, you know, working long hours and still struggling to get the information from the clients and still dealing with tax law changes. So, I mean, if you had to if you just asked someone, you know, what are what are some things that you think about, you know, the tax and accounting profession, like how would you describe it? And I think most people would say, oh, they work really long hours. They work with numbers all the time. They, you know, tax season for them is is is horrible. And for a time, I mean, I agree. I agree. They most tax professionals, most accountants from January to April 18th or 15th or whatever it is work long hours. And that's sort of just how it's been. It's you know, they've accepted it.

Roger Harris: [00:01:51] Yeah, it's almost become the norm except, you know, it's been funny. The people I've talked to, I've heard kind of. A wide range of her just back to normal, normal tax season. I've heard some. It's the worst they've ever had and I've heard some. It's the best. So it kind of makes me think that a lot of it has to do with kind of how you approach it and where you are and the industry. And we're going to sound like we're down on what we do for a living, but there are some challenges that our industry is facing, but at the same time, there's some tremendous opportunities that we should be able to take advantage of. But let's talk a little bit of any before we get into the nuts and bolts of a tax season, but just some of the challenges that we're facing as an industry, and that can be whether you're heavily taxed, accounting, a mixture. You know, whatever your book of business looks like there are there are some headwinds that our industry faces that. Some going back to what we said earlier, kind of were we're either brought to our attention or made bigger because of COVID. So what are we seeing in the industry in terms of headwinds?

Annie Schwab: [00:03:02] If I had to list one thing, and it's not just our industry staffing shortage. There are less accounting and tax professionals entering the market. And the reasons behind that mean I think we'll dive into that, you know, in a little bit. But, you know, if you work long hours and you, you know, the salaries are not up to par, it's going to be hard to hire to hire good people, educated with experience. It's going to be hard. Yeah.

Roger Harris: [00:03:29] And and Annie's husband has been in the education side of teaching people. He's saying, think maybe you can talk more about obviously than I can, but he's seeing how it's filtering back even to the starting point of, you know, colleges and universities. What what is he seeing and what are colleges and universities seeing in terms of where are these people in the future going to come from or where are they coming from?

Annie Schwab: [00:03:56] Right. So he's a professor in accounting and tax and a lot of the students are leaning more towards the financial side than they are the the accounting side. And part of it is, well, there's various different reasons. But, you know, it's whether, you know, the salaries are better, the titles are better. And and a lot of it is the extra hours that are needed to even sit for the CPA exam. So we have that 150 hour mark in order just to sit for the exam. And then most of you know, there's four parts to the exam and then you have to, you know, pass all four parts by a certain timeframe. And so they've got all of these timelines and stipulations. And, you know, doing another year of college is not cheap. No. So, you know, there's a lot of things to consider there.

Roger Harris: [00:04:50] And I've read some some articles that some people, even after going through the 150 hours, are choosing not to take the CPA exam. They they're getting the education, but then they're going, don't don't want to enter this profession.

Annie Schwab: [00:05:04] Yeah. Don't want to work the hours. It's the work life balance part of it too, right? You know, the salaries aren't as high as maybe, you know, your financial analysis analyst or your your broker. Plus, now you've got this crazy busy season, you know, where you're working hours and you don't have the work life balance there. And so I think they're choosing a different path rather than tax and accounting. Yeah.

Roger Harris: [00:05:30] And with the supply coming out of college and universities is is going to shrink or not, it's not going to go away, but it'll be smaller. Now we're competing with the bigger firms that, you know, in many instances have, you know, more dollars to pay more benefits to provide. So this this staffing problem that I think probably existed before COVID, but it really kind of manifested itself and became critical as people went home and reflected on what they were doing and said, wait a minute, I don't know if I want to go back and do that. It's now filtering into the people entering the profession. So so staffing is going to be continue I think, to be a challenge for us in this kind of middle market to smaller market firm because we're going to be playing in a potentially smaller pool of candidates.

Annie Schwab: [00:06:23] Yep, I agree. I think it's going to be really difficult. And I think the students coming out, you know, what are their goals? Well, they're you know, they want to work from home. They want to be casual. They want work life balance. They want to have flex time. They want to have, you know, all of these things that traditionally, I would say, was difficult to have as a tax accounting professional. Now, could that change? I personally think it can, you know, but it's going to take some time and it's going to take people changing in the industry to change it. To change the profession.

Roger Harris: [00:06:58] Yeah, The one that came immediately apparent to us during COVID obviously was remote work. Most of our firms were were not set up for remote work. We were working with people in an office building. We were forced to send them home. And yeah, if you did things properly, you adjusted to that because what they learned after, I guess six months to three years is they don't want to come back. Exactly.

Annie Schwab: [00:07:25] Yeah. And they can do their job from another location. And you would think that that would open the doors. Meaning, you know, if you are someone who was hiring, you realized, oh, you know, my staff, my team can can work remotely so I don't have to find, you know, my pool of candidates for the position for the job doesn't have to be local. So you would think it would open the doors to being able to hire in another state or across the country. But the but that's only available if we have available candidates. And with the staffing shortage, it's even that makes it hard even by opening from your local area, opening it, you know, through the US, let's say it's we're still having we're still struggling, the profession is struggling to hire.

Roger Harris: [00:08:09] But if you are someone who is having difficulty hiring and you are still trying to work in a environment where remote work is not an option, you're going to have struggle. Because first of all, that that restricts the pool and the size of the pool from which you can hire because people have to be close enough to drive into or take public transportation into a physical building. And if they don't meet that test, they're not a candidate. So, I mean, I guess the first advice, if you need people and you have not adapted or adjusted or considered remote working, you better start because again, we're we're fighting for for candidates. And now you're limiting yourself by saying that it must be within a certain geographic area that A hopefully there's enough talent in that area to begin with, but B, if there is that, they're willing to to meet your work standards of coming to an office every day and I'm old school. Yeah. I think there's advantages to being in offices and I like having people down the hall and next door. But, but unfortunately that's what I like. Doesn't necessarily make it feasible in today's world. So the first challenge that that we're talking about here is hiring. And again, that probably became more acute during COVID, but it certainly isn't the only thing. And and we don't see because of what's happening in the college systems that that's going to change. We keep talking about work life balance and and it doesn't matter to a lot of people where they work if they're being told that they have to put in the the long hours that people continue to be talking about during tax season. Talk a little bit about about that and how that's impacting or making hiring even more difficult.

Annie Schwab: [00:10:05] Right? So you've got to put in the hours before you even enter the profession. Remember, we talked about, you know, the 150 hours and then sitting for the CPA exam. And then so then you get past that point and you're now you're in the profession and you're expected to work, you know, 12 hour days, seven days a week. I mean, that and it used to be about like you said, it was like a badge of honor, right? I mean, it was sort of bragged about, you know, you know, I was able to put in 82 hours this week or 75 hours this week. And, you know, I knocked out this many tax returns. And, you know, it was sort of something that you were most proud of it in a way. But then, you know, like you said, post COVID people, they don't want that anymore. They don't it's not good for their health. It's not good for their family. You know, they're looking for something work life balance, and they can make the salary doing something else and they're figuring that out. And then you put on top of that, you know, the college students are choosing another path. We've had the there was a stat that I read the other day that 300,000 accountants and auditors quit their jobs in the last two years. So people are leaving the profession. They're not. And then you also have the less people going into the profession. So. Yesterday or over the weekend, I saw, you know, all these terms, staffing shortage, accounting crisis. You know, these mean it's hitting hard. It's mean. Now you're seeing articles and you're seeing, you know, well, what are you going to do and how are you going to do this? There's like a this mass exodus sort of from the profession, and now we're kind of stuck with it.

Annie Schwab: [00:11:45] You know, the graduating students, not only do they want to do not do another fifth year of of school taking the CPA exam is is expensive. The number of people sitting for the CPA exam is going down. You know, if you look at the trends, the number of people sitting are just going down, the number of people passing is going down, and then the number of people who actually do pass, where are they going from there? They're using it in a different way. They're not using it in the tax and accounting profession and don't know, you know, finance consultant and broker and investment banker. I mean, all of those terms are are fun and sexy and, you know, they meet, you know, they're they're right. What do you do? I do bookkeeping mean. How exciting could that be? Yeah, yeah, yeah. And so and then, you know, then they have the title and the flexibility and the salaries are still there and they're not doing the long hours or the tax season chaos. And so, I mean, if I was a student coming out, I mean, it's kind of an easy choice, right? I mean, you don't blame you can't blame them. And so what we're faced with is how are we going to change that? How are we going to be more sought after? How are we going to compete with some of the other professions? And I think one of one of it one of the items is we mentioned work life balance. And they're also going to have to pay more. Sure, you got to be competitive.

Roger Harris: [00:13:14] And in the.

Annie Schwab: [00:13:14] Marketplace, you have to be competitive and with pay, I mean, that's flex time. That's work from home, you know, casual attire that's, you know, more independent guidance. I mean, you know, all of these things do come together in a package. And so you sort of have to package it up in a way that's enticing for the for the candidate. And, you know, so.

Roger Harris: [00:13:35] We've heard some people, as we've mentioned this before, and what they're hearing is that we're saying that you have to provide less service to your customer by working less. And I'm going to challenge that by saying I think the opposite is true. I think because we are working so long and we're taking every client that comes to us, we are probably providing less service because we don't have the time. I mean, you've heard it. I've heard it. Did you do X, Y or Z? Well, we'll use we can't get through a podcast without at least mentioning the employee retention credit, right? We ask people, did you help your clients with the employee retention credit? And I'm going to guess more than half the time outside of Paget because it Paget We found the time and we provided the tools because we felt it was critically important that if a small business owner was eligible for some funds, no matter what you think of the program, that we should be there to assist them to get those funds. But many people told us, no, I didn't have time. So how is not helping your client to get money that the government has provided for them providing worse service to that client? I think if we restructure our practices and focus on being better to a smaller number of clients who will pay our fee, who will appreciate our expertise, who fall into our niche of expertise, we can actually do a better job, work less and provide the same level of income. But we have to take control of our practice instead of having our clients control our practice, which is what I think a lot of us have found ourselves in, that we're actually in high demand.

Annie Schwab: [00:15:27] I was just about to say it's nice to be needed, right? There's fewer of us. And so, you know, getting a new client is not difficult. It's it's well, one, I think it's, you know, being able to tell a client no is hard. Raising prices is hard. And but I agree with you. I think if you can charge the same amount that you would for 500 clients, if you can focus and have more of a narrow, more specific approach to a smaller number, you probably will provide better service and still make the same amount of money. I know that's easier said than done, right? But if you think through the concept of if you, let's just say doubled all your prices, yeah, you're going to lose some, but would you actually lose more lose money?

Roger Harris: [00:16:18] No, you would probably end up at the end of an exercise. And again, we're talking theoretically. Cool here right now? Absolutely. Absolutely. Looks different. Every pricing structure looks different. But I think all of us need to begin to look at our practice and recognize that we have some clients that are better than others. Not all dollars that come in are equal in terms of the work they cause and generate versus the return. And what is the alternative use of that time that we're not able to take? Because again, there are things change so often and so much is there. But all I hear is I didn't have time. I was too busy doing tax returns. I don't have time. And yet we want to defend that. That's better service to just work on a tax return and not have time to properly advise your clients, to not properly guide them through the things that they really need from us. So I don't think that we can continue to work the way we're working and be successful for us. It will make the hiring more difficult. We've already talked about that. We're going to make selling our practice more difficult because who's going to want to buy into to something that not attractive from? Besides, maybe there's a lot of money being turned, but you know, you look at it per hour or per sacrifice of fan or Right. Or whatever. We have to make these changes. I know internally that this is a major focus of what we're doing here. We have kind of stepped back and said we're in high demand. Yep, we're having a hard time hiring. We're having a hard time, you know, maintaining work life balance. We have to make necessary changes. And I think you started on the first key, which is we have to look at our client list and decide who do we have, who appreciates what we do, will pay what we're worth and well trained.

Annie Schwab: [00:18:16] We'll do less responsive, follow the rules of the practice. Right. You know, we've got everyone has good clients and maybe let's call it challenging clients. Right? But there are certainly clients that I bet if you took a minute and looked through how much time you spend or how much stress they cause your staff or you, you're probably you could probably identify several clients that you're basically working for free. So why why are why are we doing that? Either raise the price, fire them, or change the training of the client so that you're not chasing down documents, that they're returning phone calls that that when you say I need your information by X day, they actually bring it to you. I mean, there are changes that can be made. And the best time to look at this is after tax season. Talk to your staff, do a survey for your from your clients, find out who who is appreciative of what service you're providing. Ask the question, How can I provide something more to you? Don't be afraid to ask the question because you don't have the time to do it.

Annie Schwab: [00:19:23] That's the whole purpose. Ask the question so that you can provide a better service for a higher price to fewer clients. I know, I know. It's a difficult concept and it's hard to think, okay, well, what do I do? Print out a client list. Do I calculate this by hour? Do I? You know, But what about the family and friends? And what about the guy down the street that I've been doing for so many years? Or what about the person who never calls you and that emails their stuff and you finish the return and you send it off and you get a check. I mean, you know, you've got different types of clients or the accounting and tax clients. Are you doing their payroll? Are you doing more advisory services for them? You know, you're going to have to every practice is different. You're going to have to take a look at it. But if you if you understand the concept of providing a better work life balance without losing the revenue. And getting, you know, being able to make that attractive to better staff. It's a win win.

Roger Harris: [00:20:25] In my opinion. Oh, yeah, I think that's true. And it's going to take time. You're going to start it's not going to happen overnight. You're probably going to need coaching and encouragement from both your staff and probably outsiders. But you have to start the process at some point because we just cannot continue to to work long hours and let clients run our businesses and expect it to get better because they don't understand what we're going through. I was on a call not too long ago with a gentleman and kind of it pointed out to me the the challenges and yet the lack of seeing opportunities. He was complaining this was before tax season was over, about the long hours he was working and the fact that he had 40 new clients that he couldn't properly serve. And so what I heard in that is I've got to do all this work and it's just going to take more time. But I got all these people that want to come to me as opposed to looking at those 40 new clients as an opportunity to kind of cherry pick the best of the new, the best of the old to replace use those 40, if you will, to to maybe develop the courage, if that's the right term, to go in and have the discussions you talked about to challenge people to say, hey, I can't do this this way for ever. Things must change. My fee is going to go up. I'm going to be expecting you to be a little bit better at fulfilling what the rules of my firm are. Now, maybe the first thing you got to do is decide what are the rules of your firm?

Annie Schwab: [00:22:05] Well, yes, for sure.

Roger Harris: [00:22:06] You and your staff. And explain.

Annie Schwab: [00:22:08] That to your.

Roger Harris: [00:22:08] Staff or our clients. Yes. What is our systems? What are our processes? And when, if ever, will we allow there to be a deviation from those client definitions, systems of doing business, pricing, whatever, because it's the exceptions that create the problem. We all think we know what our business is and what we're doing. But then to your point, it's a friend. It's, well, maybe I can get it done. And we just keep making exceptions. We don't have a rule about our business that we really believe in and follow, and your staff can can help you with that. So you got to kind of start there and then kind of reconfigure and start the process again. You're not going to solve all the problems in the first year, but you're not going to find people to work for you. You're not going to find people to buy your business. You're not going to have a happy family. You're not going to have good health if you're killing yourself and making every client deciding what they how the relationship is going to work.

Annie Schwab: [00:23:08] And Roger, when you said find the courage, I truly think there is a fear of confronting a client or firing a client or raising the prices or upsetting a client, a fear of of having to tell a client, no. You know, there's it is it's a it's a mindset of, you know, I don't I don't want them to not like me. Right. You know, I don't want them to I don't want to hurt their feelings. I mean, I totally understand that. But I think if you explain, you know, I can't work for free. I can't work like this, my spouse and my or my children, they're waiting for me at home. Like, I'm not going to work on Sunday for you because you didn't hand me the paperwork I asked you for months ago. And the making those decisions is hard. Those choices are hard.

Roger Harris: [00:23:59] Well, we're afraid that the client is going to not follow the. The first thing we always hear is, well, they just don't follow rules. They're not good clients. Well, they follow other companies rules and other people's rules. But they and I think in fairness to them, they don't follow our rules because we haven't told them what they are.

Annie Schwab: [00:24:17] Maybe, maybe.

Roger Harris: [00:24:19] Because we may have told them something. But then when they broke it, there was no consequence. So they quickly realized no enforcement. That's not a rule. You know, I can do what I want to. I've always used this example as as someone who tells me they won't follow my rules. I guarantee you, I don't know what day it is and where you are, Andy, but I know that they pick up my trash on Thursdays and there are rules about what they will do to pick up my trash. And if I don't follow those rules, they leave my trash at my house. And I'm sure your clients follow the rules the same way. They don't come back. They don't call them every day and remind them I'm coming on Thursday. They don't say, Well, yeah, okay, I'll come back on Friday because you didn't have it ready on Thursday. So these people who won't follow your rules are following the rules of the garbage collector because they know they're the rules. So we have to have rules and mean them and stick to them. And we also have to plan for things that we know. We know k-1s are coming out late. That shouldn't surprise us. How do what is our company's philosophy and work pattern for clients who get k-1s the last week of tax season? Do they know what they should be filing extension?

Annie Schwab: [00:25:41] Right.

Roger Harris: [00:25:42] We should have rules. Our client. It's not our fault they don't get them. It's not their fault. They don't get them.

Annie Schwab: [00:25:48] But it just is what it is.

Roger Harris: [00:25:50] Have a discussion. Let's develop within our staff, talk with our staff. What do we do for the percentage of our clients who are always the last minute bringing in the corrected or final K-1 or whatever it may be, should be your point. Should we just put them on extension and deal with them after the pressure is removed? Do we do everything else? And then when it comes in, we've built our schedule such that we can wrap them. Whatever your rule is, that's yours. But it can't be different by the client. There needs to be one rule for the business that all clients follow, not one rule for every client. Because then if you have 500 clients, you got 500 rules. Yep. We have to start by doing a couple of things. Sit down and decide what is your business. What are you willing to do in terms of hours, in terms of clients and figure out who you are? Because we all kind of got here probably by accident. We started building clients, and the more that came in, we saw dollar signs and we didn't really stop and go, Whoa, wait a minute, what am I doing here? Because we have firms in our company and others that are working and now they're working extra during tax season. I'm not going to tell you they work 9 to 5 every day, but they're not anywhere putting 80 hours in. They're not working weekends. They're participating in their family activities. They're doing things. And what's different? What's different is that they made rules and their staff knew them and their clients knew them and they followed them.

Annie Schwab: [00:27:17] It's hard. It's a hard it's a shift. It's a change. Nobody likes change. It's a it's a mindset. It's a you've got to build a new strategy, a new plan, a new, you know. But I bet if you went home and talked to your family and you said, you know, this is this is what I'm going to do, you know, I'm not going to work on the weekends. I'm not going to stay late. You know, if there's an event for a baseball game, let's just say I mean, if you I think if you talk to your your families, they would be very supportive of making a shift and helping you and supporting you in that change because there's going to be happy clients and clients that are set. The conversation with one client is going to be different than than the other. Yeah. How much do you increase your clients?

Roger Harris: [00:28:06] Your your family probably is afraid to have the kind of discussion that you won't have with them. They want you home. They want you involved in their life. They want you at the son's baseball game, the daughter's cheerleading, whatever the case may be. But they've kind of been bought into the whole concept. Well, this is just the way it is. This is the.

Annie Schwab: [00:28:26] Profession. This is what he does. This is his job or her job.

Roger Harris: [00:28:30] But go have a heart to heart with them and saying, how would you like me to do this and watch their reaction? And even if it means temporarily, I mean, we may take a slight step back financially, I don't think you will. But if that makes you feel better and talking to them, I really believe that there's money being left on the table and hours being worked that don't have to be because we're afraid to confront clients and set rules and you're kind of telling your family the client's more important than you when you don't do that. Because I'm making a choice. I could be at my son's baseball game, but I'm going to stay down here and do my client's tax return. What did you say to your son? Clients. More important, it's hard because you want to get clients probably going to be with you for a while. The son's only going to be with you once. So it's something we have to do. It's right for us. It's right for our families. It's right for hiring. It's right for selling. It's actually right for your client.

Annie Schwab: [00:29:33] Better service for them. And they're probably pay for it. I mean, most clients are willing, your trusted advisor to them, they're not going to go anywhere, you know, with a small increase or even a 10% increase or, you know, a I promise. I promise you have to test it to believe it. That's. Well.

Roger Harris: [00:29:54] The next thing. Have you got it? The one thing and this is what we've challenged our offices that are struggling with this to do is to go through and make a very detailed examination of your current clients. And but please involve your staff because they'll have a different perspective. Yes, they will clients than you will. The more you have, the easier this is. But you kind of do a math equation. If I raise fees by 25%, 50%, 100%, whatever the number is, what percentage of these clients would go away? I guarantee you. You think it's more than it is. Exactly. And they have to make changes and they maybe get this level of increase. If they don't make changes, they have to go somewhere else. You'd be surprised how much money you've left on the table just because you haven't really had a face to face discussion with clients and don't think they're bad clients, they just think they're doing what's expected.

Annie Schwab: [00:30:51] Yeah, Roger, at our retreat, I can't tell you how many office owners came up to us and said, you know, I should have done it sooner. I was so afraid, you know, or I increased by 10% and I really wanted to do 15%. But I was too afraid. And now I now I wish I would have done 20. And, you know, I mean, I feel, you know, they feel they felt that fear and that oh, I don't know what I'm doing to my profession here. You know, I've spent years building this practice. You know, this is like my child. This is like my, you know, this is my life here. And. And they were free to make changes. But they all said they wish they had done it earlier and they wish they weren't so afraid and they were happy with it. And you just.

Roger Harris: [00:31:36] Have to and again, that's why you have to start. This is not something that you're going to come in, in 30 days. Maybe somebody can, but most people are not going to turn their practice over in 30 days. But you need to go through that kind of dipping your toe in the water first and deciding what are the rules that I have that I have to enforce. What are my minimum fees? They have to go up. What are my normal fees? Those have to go up. And you start it. And I don't know why you'd be any different than any reference. You know, our offices were. They're shocked. Yeah.

Annie Schwab: [00:32:11] They are. Because they are.

Roger Harris: [00:32:13] If you're good at what you do and I'm assuming if you're listening to this podcast and you go to tax conferences and you do all the things you want to be really good and you are good, people will pay you for what you're worth. And it's not really based on how much time you spend, it's what, you know, value. This the one thing that this profession in many instances has certainly not done, as well as the legal profession, which is charge for what we know, not what we do. It doesn't matter if it takes me five minutes, if it's worth $10,000. But for some reason we weigh time too much versus knowledge and and our clients pay us for our knowledge.

Annie Schwab: [00:32:59] That's. And they're willing to pay us for our knowledge. And they want more from you. Right? It may even be that they don't even know what else you can help them with. You know, do they know that you do advisory or payroll or bookkeeping or, you know what? Have you had that conversation with your client? You know, Yes, I do. Your tax return every year you bring it to me and I crank it out and, you know, you go away and I don't see you for a year. You know? Do they know that you do other stuff, that you can help them throughout the year, build the relationship with that client.

Roger Harris: [00:33:33] And charge for those meetings and charge for it? Yeah. And do different you know, we're all hearing about the switch to advisory services and everybody sits back because. Well, yeah, I get it. How do I do it? I don't have time to do it. Well, it's another reason that you're going to have to create time because advisory services basically means looking ahead with a client and giving them the benefits, proactive knowledge, then looking back at them by compiling a tax return. And exactly. The industry is changing. You're going to have to change change with it. And and again, we just need to find time to do things. I mean, if you have small business clients and we came through the pandemic and you couldn't do the things that they needed for you, go ask them. You know, we're hearing all these mills. Well, guess what? Most of those clients had an accountant.

Annie Schwab: [00:34:28] Oh, they did.

Roger Harris: [00:34:29] But their tax preparer, the accountant didn't do it. Yeah, because they didn't have time.

Annie Schwab: [00:34:33] And it is time consuming and it is complex. It does take time. It's not something that's, you know, just a simple form application or something that you that you fill out. It requires you to spend some time and learn the ins and outs of the rules and how to report it and what counts. I mean, we did a podcast on this earlier, but having the time and the ability, I mean, that's, that's really providing a service to your client. They will not go any if you got them money. They are never leaving you. Yeah, I.

Roger Harris: [00:35:05] Mean that's, that's the thing we fail to recognize and I'm making up numbers here so don't, don't make this as a reflection. But if they'll pay us $500 to do a tax return where they owe money, how much would they pay you to do an IRC claim where they get $100,000 check but you don't have time to do that because you're doing somebody else's tax return for $500. That's just not the way to A serve your customers the best and be what's best for you because per hour per any measurement, you you probably done better if you helped your client with getting the funds that they were entitled to or saving them in helping them plan a like kind exchange or whatever they need you for. Again, I keep saying this knowledge gets you a lot more money than time, and I'm going to tell a personal story to accelerate that. This last week I had open heart surgery 20 years ago and I had to go back in for what I thought was a routine test, and they ended up putting three stints in me. I didn't give a damn how long it took him, but I wanted it done right and I wanted to know that he knew what he was doing. Now, that's a little more dramatic than doing a tax return versus an GRC.

Roger Harris: [00:36:20] But people pay for knowledge. All attorneys have gotten rich off of their knowledge. Not how much. I mean, sometimes they bill you by the hour, but they bill you very high rates because you ever seen a smart attorney, Bill, less than a dumb attorney that may have the same hours in. But again, you know, we have to build what it's worth not the time it takes, because otherwise we should just say stupid and slow because we'll make more money that way than by being smart and spending an hour at something for $1,000 an hour. I'd be better off to spend 50 hours at $50 an hour. Well, no. Yeah, yeah. I mean, a lot of this is just our fear of treating our clients like others do. And yet or other professions, professions do. And yet I think we're a point as a profession where we have to change the younger generations just not coming in to what we do, the way we do it and not going to work for you. You're not going to I've said this 3 or 4 times. They're not going to work for you. They're not going to buy you. And both of those are important elements of how you need to run a successful business.

Annie Schwab: [00:37:28] So guess, Roger, what we're doing is if you're listening to this podcast, we are challenging you. We are encouraging you to first evaluate your current client list, your current processes, you know, your current staffing, identify, you know your pain points, consider your pricing with the market, talk to your staff about what were their pain points or bottlenecks, who were the clients that really just drain them? And then also talk to your clients, whether that be a survey or a letter that kind of says, you know. Thank you so much for your business. Just want to remind you, we also do these things and if there's anything that you would would like to discuss, you know, you know, here's how to reach me or how to get on my calendar or whatever. But, you know, you've got to first evaluate and then you have to make a decision, What is my goal? Is my goal to, you know, only focus on this niche Is my goal to only work X hours, you know, what are your probably short term and long term goals because as you said, this is going to be a process.

Annie Schwab: [00:38:33] It's going to be something that's not done in a single tax season or a single year. And then you also need to train your clients, train your staff and train yourself. You know, make sure that you're encouraging yourself. You find yourself saying, oh, but for this client, we can do this. Well, stop yourself. Take a step back and say, Nope. I said I wasn't going to make exceptions. You know, this is the rule. This is the guideline, this is the checklist. This is the the the path that we're going and then pursue it. And I bet once you get started, I feel like it will truly be a lot easier and it'll be rewarding and it'll feel good. It'll feel good. And at the end of the day, that makes your practice more attractive when you're ready to retire or to sell or or, you know, bring in a partner or any of those types of plans for the future. And and I bet you'll have a better work life balance and. Emily will be excited.

Roger Harris: [00:39:32] And there's other things that we haven't spent a lot of time on it, but obviously the technology that's in your firm may need to change. Oh, yeah. You know, there's not a silver bullet. I think the only silver bullet is that you just say, I've had enough. I'm doing it differently. But you may need different technology to help, you know, make it easier for clients to comply with your system or easier for your staff to work remotely or easier for you to transmit back and forth information. You may need some marketing activities so that you can find more clients willing to pay your new fees and your new rates, and do your way of doing your new branding.

Annie Schwab: [00:40:10] Like, you know, I'm not just a bookkeeper, you know, brand yourself, right? What is my.

Roger Harris: [00:40:15] System and what is my niche, if you will? So it's there's a lot of pieces that go into this. I don't want to oversimplify it to the point that if you just have a mind change after this podcast that the world is going to change. No, it's going to identify what needs to change in your business now. I would like to say we're the only company working in this area because you may need there are professional firms that can help you through this, but you may need the help of one to to to to put it more neatly or lay it out for you better. There are those out there. There's there's numerous companies that provide webinars that do coaching that help you with this whole process of work life balance. It's the transition, the plan in the industry. It is. It is. And again, selfishly, I wish I could tell you that the only place you can get that is through us, but that's not the case. There are others, but you may need to get the help of a professional or a firm or a coach to to to say, Hey, I'm willing, but I need somebody to kind of hold my hand and get me through it and help me make decisions. But at the long run, it'll be more than returned in the value of, Oh, I think so to your business. But but also it will be returned in the value of your health or, you know, the family experiences that you get to share. You know, not everything happens after April 15th in our lives. And shouldn't. We shouldn't have to miss everything that happens between January and April 15th because of the profession we've chosen. But we've got to start.

Annie Schwab: [00:41:55] And I've seen discussions now about the CPA exam. You know, should it be the 150 hours? Is that something you know, should that be removed? Should that be reduced? And then I also saw, you know, the CPA exam. You have to complete all the parts by a certain timeframe. And I think that time frame is 18 months currently. But there's talk about allowing it to go to 24 months. So, I mean, we may get the industry itself may get help, you know, on things like that that, you know, aren't specific to your particular practice but are more, you know, on the profession itself make it more attractive for students to choose that path.

Roger Harris: [00:42:32] You know, there's a recognition in the industry that we have to start making changes. I agree. And we don't need to be the last one to buy into that concept because you're seeing it, as you mentioned, at the educational level, you know, at the licensing level, that, you know, if we put too much burdens in to attaining something and then they're going to have to work forever to make a living. So so I think what we're seeing and I don't know without COVID would we be where we are today? I don't know. You know, I don't know. Eventually we would have, but I think we got here sooner because of it. But I think we all are going to have to look at our profession. Because others are. And the question is, are you going to be? At the front end of accepting this and moving this way. Are you going to be the last one dragged kicking and screaming at the end? Because we're in demand. What we do is very much definitely that's not going to change tax law. You know, we used to all be worried that tax laws were going to be simplified and we were going to be replaced.

Annie Schwab: [00:43:37] Out of business. Right.

Roger Harris: [00:43:38] I don't hear that much anymore. But we have to take advantage of our knowledge and our skills and and prevent burnout. And that's what we're seeing, because a lot of these folks aren't going to come into a profession like that and experience burnout. I mean, I know we're on a soapbox, but it's really critical. We're not the only ones talking about it. Yeah, there's it's very hard to but check for webinars, check for coaching firms. You know, you can check us out, you can check a lot of people out, but make a make a commitment, sit back and decide, you know. I can do better than what I'm doing right now, and I'm willing to make the change. But make sure your your staff, if you've got good ones now, don't lose them because they're hard to replace. Oh yeah, don't. Yeah. But give them some feedback in this.

Speaker3: [00:44:31] What else have we. Hopefully this.

Annie Schwab: [00:44:33] Hopefully this gave you some umph, some fire, some encouragement, something to make a change, even a small change to sort of get you going.

Roger Harris: [00:44:41] Yeah, you got to start somewhere, you know, if nothing else. Now that tax season has just ended. Sit down with your staff. Who are our problem clients? What could we do different with them, both from a work standpoint and a fee standpoint and start making incremental changes if that's the speed that you want to go at. But then step back and please do not accept the concept that what we're saying here means provide less for your clients. I really think you can provide more, but you may have to be more selective in who you provide those services to. It's going to put a burden on you to continue to keep your knowledge up as things happen. You can't. We've always used a change in how busy we were to say, Well, I can put it off in this new world, you're not going to be able to put it off because clients are going to pay you for the timeliness of your advice and your information. And they don't really want to hear that you didn't have time to tell them something because you were doing somebody else's tax return. So right knowledge becomes more important, communication becomes more important. It's a new but it's a better way of doing business. I agree it's different, but it's better.

Annie Schwab: [00:46:02] Just. Well, Roger, I don't know what our next podcast is going to be. No, but I'm sure we'll. There's always something that we can chat about.

Speaker3: [00:46:12] And I'm sure it will.

Roger Harris: [00:46:13] Go back to more technical. We just felt like this was something that coming right after tax season and now that you've had a little time to kind of recuperate from it and hopefully take a vacation and go. Yeah, reintroduce yourself to family and friends. It was a good time to say now, while it's still fresh, this is the time to go and and see what changes you can make and going forward. So there's plenty of other technical things that we'll probably be back to in a couple of weeks that'll that'll be, you know, in a lot of people, more in your bailiwick. One thing again, we keep talking about I.R.S. the IRS has let out some of their audit plans for IRC clients. So I'm sure we'll talk about that and tell you what they're looking at, because I think it tells you where they think a lot of the problems are and I can promise you if you have a client that went to a mill to get an audit. They're not going to the mill. If they get an audit, they're coming to you. I mean, if they went to the mill to get their claim and they get an audit, they're coming to you.

Speaker3: [00:47:12] No, we.

Annie Schwab: [00:47:13] That's that's definitely on the forefront for us. And they're starting. How do you deal with that? What do you charge for that? What's the right way to navigate that? Because when the audit starts, the phone is going.

Speaker3: [00:47:25] To ring and they.

Roger Harris: [00:47:26] Are starting. So the audits are starting. I guess one last technical thing for those of you. We've kind of also through COVID been in a position where all those collection notices stopped.

Speaker3: [00:47:39] Well, they're. Oh, yeah, they're back.

Roger Harris: [00:47:40] So all those problems that you've probably forgotten about and kind of hadn't thought about because nobody was hounding your clients, well, they're about to start going back out again. So expect to see probably in the next couple of weeks those notices hitting back out to the people. So be prepared for that. So see, we got a couple of technical things in.

Annie Schwab: [00:48:02] And if there's if there's something that you're particularly particularly experiencing or you're hearing about or your clients are asking you about. Type it in and let us know. We're open to ideas. We're open to sure. You know.

Speaker3: [00:48:17] We won't. Comments follow us.

Roger Harris: [00:48:19] You know, because.

Speaker3: [00:48:20] We'll take it all.

Roger Harris: [00:48:21] We're trying to find things to talk about that are relevant to the audience. And if we're missing the boat, let us know if there's something you'd like us to talk about. Then let us know that as well, because we, you know, we want to make this a useful 50 to 60 minutes of your time. So let us know. Absolutely. Any final parting comments?

Annie Schwab: [00:48:43] Now, Roger. I think I'm good. I, uh. I'm hoping that we get some action, you know, some action steps out of it. Let us know if you make a change in its successful or make a change. And. And it wasn't what you expected. You know, like Roger said, all feedback is good feedback.

Speaker3: [00:48:59] Yeah. Let us know.

Roger Harris: [00:49:00] We'll try to help as best we can. We've done our how long have we done these podcasts? This is the first one we've lectured. So guess this.

Annie Schwab: [00:49:07] Yeah, yeah. Think this is like number ten or something.

Roger Harris: [00:49:10] Informational from here on out for a while, but we felt like this was a relevant topic and we hope you found it the same.

Speaker3: [00:49:16] Hopefully you enjoyed.

Annie Schwab: [00:49:17] It. Yeah.

Speaker3: [00:49:18] Hopefully we felt.

Roger Harris: [00:49:19] It was necessary because you've been hearing it from a lot of other places and I think it's time we should finally pay attention.

Speaker3: [00:49:26] I think so, too.

Roger Harris: [00:49:27] All right, Annie. Well, as always, thank you, Annie, for all that you do and putting these things together. And thanks to all of you who are listening. Tell your friends about it. This is the Federal Tax podcast, and Annie and I will be back in a couple of weeks and we look forward to any comments that you might have. And Annie, any final parting words?

Annie Schwab: [00:49:51] That's it. Just stay positive, stay motivated, and we'll talk to you next week. Tax season.

Speaker3: [00:49:57] Is over. The week after world.