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The federal government may be shut down but the Cloud Accounting Podcast continues! Blake and David are back in 2019 with an episode all about what the shutdown means for tax season, employment verification, getting news from the IRS, and more. Also, learn why perks such as foosball tables no longer cut it for workers and why David thinks 2019 will be the year of instant payments.
Show Notes
Show Notes
E-Verify AND E-Verify SERVICES ARE UNAVAILABLE — e-verify.gov — E-Verify and E-Verify services are currently unavailable due to a lapse in government appropriations.
What the federal shutdown could mean for tax season — CNBC — Accountants are worrying about the prospect of an extended federal shutdown as tax season approaches. That means there's a possibility that tax refunds may be delayed and it could be difficult to get your questions answered by the IRS. What you should know.
@IRSnews — Twitter — Whoever manages the Twitter account for the IRS appears to have been furloughed during the federal government shutdown.
Why Perks No Longer Cut It for Workers - WSJ — The most successful companies give employees a sense of belonging.
Indicators Of The Year: Opioids — Planet Money — Life expectancy in the U.S. is down for the second year in a row. One main reason: opioid abuse. But increasingly, companies are stepping up to address the problem, offering treatment plans to workers and supporting employees through treatment.
Indicators Of The Year: #MeToo — Planet Money — The #MeToo movement transformed the experience of women in the workplace. The strong job market helped some women feel secure enough to speak up, but for others it still doesn't feel safe.
Getting Ready for Making Tax Digital (MTD) with Cloud Accounting Software — Business Partner Magazine — Despite the deadlines and fines being highly publicised, approximately 750,000 people missed the deadline in 2018.
2019: The Year Of Instant Payments — PYMNTS — The year 2018 saw a rise in instant payments and disbursements among workers, particularly in the gig economy, indicating the trend will only increase in 2019.
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Creators & Guests
What is The Accounting Podcast?
The Accounting Podcast (formerly the Cloud Accounting Podcast) is the world's #1 accounting, bookkeeping, and tax podcast! Join us weekly for a roundup of accounting news, analysis, and interviews. Plus, earn free NASBA-approved CPE credits for listening with the Earmark app. Learn more at https://earmarkcpe.com.
David Leary: Foosball's expensive, doing catered meals is expensive, giving out company cars is expensive, but fostering a good workplace culture is free.
Blake Oliver: Welcome to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: I'm David Leary.
Blake Oliver: Happy New Year!
David Leary: Yes! 2019 is upon us. How did you kick off your new year?
Blake Oliver: I went to bed at maybe 10:00 at night and was woken up by some fireworks. I have a kid, so that's the way we do things.
David Leary: Got it. I got it. I spent the ... In [00:00:30] Arizona, [inaudible] Flagstaff, Arizona, in the snow, and then came back to Tucson, and it snowed in Tucson. I've been kind of in the snow a lot. My windshield cracked, and now, there's a guy out there replacing it, right now. I'm off to a new windshield in 2019, here. Anything else exciting?
Blake Oliver: The government is shutdown.
David Leary: The government's shutdown, yes! For all of you listeners, unlike the government, Blake and I push through. We still show up and do the podcast.
Blake Oliver: Yep, we are not ... We are not stopping. Probably helps that we don't get paid for this, so, it doesn't [00:01:00] matter.
David Leary: We have no budget constraints wrapped around us, tied to a wall-.
Blake Oliver: Exactly. The funding has dried up, but there was no funding to begin with, so it really doesn't affect us. I was just on the Future-Proof Podcast with Bill Sheridan, this morning. He invited me on, and it was really exciting. If you haven't listened to it, I suggest you check it out. It's called Future-Proof with Bill Sheridan. He's the resident thought leader over at the M.A CPA, and it's all about [00:01:30] future of the profession.
David Leary: Cool.
Blake Oliver: Really cool. Hopefully, that episode will come out sometime soon.
David Leary: All right, I'll add it-
Blake Oliver: We talked all about cloud computing, and what's gonna make firms shift to cloud, versus on-premises.
David Leary: Got it, and you put lots of plugs in for The Cloud Accounting Podcast?
Blake Oliver: You know, I kinda forgot.
David Leary: Oh, amateur ... Amateur hour, here.
Blake Oliver: I know, right? I forgot to plug my own podcast on the other podcast.
David Leary: I think I saw you on some [00:02:00] Going Concern's list of people we loved in 2018, or will love in 2019, and I think I saw you on that list. Then, I was reading what you provided - your quote - and you didn't say anything about The Cloud Accounting Podcast there, either.
Blake Oliver: Yeah, sorry about that, David. I'm gonna have to do better. I'm pretty bad, for a guy in marketing, not to plug my own stuff, yeah.
David Leary: Beautiful, beautiful [cross talk]
Blake Oliver: I'm an accountant. What can I say? [cross talk] I always undersell myself. Yeah, let's jump into the news. [00:02:30] We were talking about the government being shut down. What does that mean for accountants?
David Leary: I think that's the number-one news. The article is like ... It's from CNBC; I think even CNN had articles. This is the biggest story, right now, in the country, arguably. Obviously, it affects the accountants. I think there's two keys to this. One thing is apparently E-Verify, and E-Verify services are all down, and unavailable. If you [00:03:00] are trying to hire people, there's a ripple effect of this, because some of these apps, now, like Namely Hr, Zenefits, or any of those ... If your clients are using those apps, those apps might not be set up to bypass this process of connecting to the E-Verify servers and running some of these processes. It's just something to be aware of ... When the app may not work, it's not because of the app, it's because of E-Verify is down.
Blake Oliver: This is gonna be a real problem, if it doesn't get resolved soon. E-Verify [00:03:30] is for verifying employment eligibility, right?
David Leary: That's correct. It's not really under IRS; that's Homeland Security, but you have to do the I-9, and verify eligibility, correct.
Blake Oliver: A lotta people are getting new jobs; it's the new year ... It's gonna be a big problem, if people can't do that.
David Leary: Apparently, though, they've [in their] policy, and we'll put this in the links, they've suspended their three-day rule. I don't know what that means. Does this mean it just goes on forever, till it's over? It doesn't really say when it kicks back on.
Blake Oliver: The rule is that you're supposed to verify [00:04:00] employment eligibility within three days of hiring somebody. At some point, they'll say, "Okay, now you have to verify everybody," and I guess you'll just have to catch up.
David Leary: Yeah, so, a couple of questions I have that are kind of more ironic ... If this is all E-Verify, can't it just run without people? Why is the "E" part of this being shut down? Then, two, if all this is about the wall, and people coming over, and taking jobs, this would be the one service you would leave up [cross talk]
Blake Oliver: That's [00:04:30] true. This is actually the ... This is the most important-.
David Leary: This is the wall. This is the wall.
Blake Oliver: This is the employment wall. This is the barrier, and we've taken it down. Oh, God ... All right, well, let's [cross talk] Let's not get too political, even though we're talking about the shutdown. Let's move on and talk about tax [cross talk] because the shutdown is gonna have some big implications for tax season, if it doesn't get sorted out soon.
David Leary: What [00:05:00] does the federal shutdown mean to the tax season? This is an article from CNBC. It's pretty straightforward. Couple of interesting stats in this one. 12 percent of the IRS staff are expected to continue working, but they're gonna cut off a taxpayer questions [cross talk]
Blake Oliver: Oh, great, so, whereas in the past, you would try to get on the phone with the IRS, and it would take all day long, now, you just won't be able to get on the phone with them.
David Leary: Here's the difficult part. Everybody [00:05:30] has to file under the new tax cuts, and Jobs Act. There's all these new rules, and new laws that people don't understand. Then, on top of that, the stupid 1040 form got postcard-sized ... I'm doing air quotes, here, and people are gonna have questions on that. They've just completely stopped everything. Now, you can still pay taxes, but they won't issue refunds, either. It's just a trickle effect of this. It's kind of a mess, when it comes to a tax.
Blake Oliver: Last year, the filing season started January 29, but [00:06:00] it's hard to imagine, if the shutdown doesn't end soon, how they're gonna manage to do that. Maybe it'll get pushed into February, or-.
David Leary: It could stack up. If they were already anticipating more questions than normal, because of the tax changes, and the new 1040, does this mean things are just gonna queue up, and they're just never gonna recover in time, and maybe they'll extend the actual filing deadline, potentially?
Blake Oliver: Well, yeah, I don't know. The [00:06:30] April 15th deadline, is that in the law? Because, then, you'd need a change in legislation. How is this gonna work?
David Leary: I think they've changed it, like last year, or the year before. Didn't something happen with some of the E-File servers, and they actually extended it out a day?
Blake Oliver: Yeah, last year, the E-File servers crashed, something like the day before the tax deadline, so they pushed it out a day, or two, I think.
David Leary: That's right. I think it impacted you. You couldn't get your taxes to file [cross talk]
Blake Oliver: Yeah, I [00:07:00] couldn't pay my taxes. Well, I could pay, but I couldn't file, I think, was the issue. I just paid, and filed later, and then, it wasn't an issue. That's probably what they'll have to do. If the shutdown continues through January, then I can't imagine that they'd be able to process everything by April 15, but maybe they will.
David Leary: The best part of this, though, is ... It said 12 percent of the people are still working. The person that's not working, though, is ... I went to the IRS News - @IRSNews Twitter [00:07:30] handle - it hasn't been updated since the shutdown started. If you wanna get up-to-date news, that person's not working.
Blake Oliver: Yeah, all the nonessential personnel have been furloughed, and, I guess the Twitter intern counts, right?
David Leary: Yeah. I don't know, at this point, how do you, as a professional in our space, stay on top of the shutdown, and the impact it's gonna have on your clients, because the IRS is radio silent.
Blake Oliver: I guess just try to catch up as much ... Get ahead [00:08:00] as much as you can on everything, and then be ready to file, as soon as that opens up.
David Leary: You could go back, and listen to a bunch of old episodes of The Cloud Accounting Podcast [cross talk]
Blake Oliver: Yeah, if you're looking for something to do. Yeah, check out our historical episodes. We're up to Episode 52, now. Hard to believe.
David Leary: Gees. You got anything this week?
Blake Oliver: Yes, I do. Well, it was a slow news week, other than the shutdown, so, I'm pulling one out of my Evernote that I've been saving for a while. This was an article on December [00:08:30] 3, in The Wall Street Journal, called, "Why Perks No Longer Cut it for Workers.".
There's been a trend over the last few years ... More, and more companies, more, and more accounting firms of all sorts, offering perks to their employees. The classic one is snacks in the break room, like kombucha on tap, or espresso machines, [cross talk] prepared meals; break room with ping-pong [00:09:00] tables, and beanbag chairs ... That is starting to saturate, and people - employees, workers - want more. The companies are gonna have to do more to attract workers than just offer those types of perks.
This story is based on a Gallup Annual Employment Engagement Survey. There's some really interesting stats in here that I'll share, but the big takeaway is that, "What [00:09:30] will distinguish the most profitable companies from the rest in the coming year won't be whether they offer foosball or free food. It will be whether leaders foster a workplace culture, where employees feel a sense of belonging, like their jobs, and trust their managers to help them move onto a better one.".
The key takeaway, or the key advice, if you wanna be that kinda company, is to offer a clear promotion pathway to your employees. Tell them what [00:10:00] they do, from the day they start, to move up in the organization. Give them the training that they need. Companies that rank in the top 10 percent in engaging their employees give them lots of training, and encouragement to do their best work. Those companies that were in that top 10 percent of employee engagement posted profit gains of 26 percent, through the last recession, compared with a 14-percent decline at comparable employers. If you engage your employees, it directly leads to greater profits, [00:10:30] and growth.
David Leary: Fully agree. This is interesting, because I heard two podcasts this week, too, that were from ... I think we've talked about The Indicator from Planet Money; NPR's Planet Money. They had two "Indicators of the Year." One was opioids, and the other was the Me-Too Movement. Essentially, the theme of both of those is the strong job market. Companies are ... A) a lot of females felt more empowered than ever to raise Me Too type [00:11:00] concerns, because they're so confident they can get another job.
Then, the opioids one is interesting, because companies are now ... Instead of trying to hire new employees, it's cheaper, almost by half as much money ... They could put an employee through rehab for opioid addiction for maybe $15,000, when maybe it costs $36,000 to replace that employee. That's just because the labor market's so tight. This just really ties ... You have to go above and beyond, like you just said.
Blake Oliver: That stat on opioids, it's [00:11:30] incredible, because I remember, not long ago, when, if there was a hint of your employees doing drugs, or having addiction problems, they were out the door. You could not show up to work and have that be a problem. They would terminate you, hire someone else. Now, the job market is so tight that employers are actually spending the money to send their own employees to do drug rehab. That is a symbol of where we are at, when [00:12:00] it comes to talent.
David Leary: Yep.
Blake Oliver: Going back to this Wall Street Journal article, I forgot to mention that one of the reasons this stuck out to me is that two companies are mentioned, in particular, as creating great employee engagement. Intuit is one of them. Intuit is known, and David, maybe you can speak to this, having been there for ... You were there for 19 years?
David Leary: 20, yeah ... Almost 22, yeah.
Blake Oliver: They stress career planning for employees, [00:12:30] and promoting from within. "28 percent of Intuit's openings are filled with insiders," says Scott Beth, Chief Diversity, and Inclusion Officer. That compares with a national average of 21 percent, so they're doing better with that.
David Leary: Then, Intuit does a survey of employees, asking if they feel like they belong to the company; that's engagement, right? 82 percent said yes. That must have something to do with all the success Intuit has had recently; all the amazing product development [00:13:00] that has happened there, over the last five years, in particular. It really speaks to the culture at the organization.
Blake Oliver: Thinking back to the public accounting firms that I have encountered, the one- the large firm that I worked for, I would doubt that employee engagement is anywhere close to 82 percent of people feeling like they really belong. I think engagement, and belonging is abysmal in public accounting.
David Leary: Yeah, and I could look at Intuit, over [00:13:30] my career there ... Intuit always had different value pillars. Kinda the pillars were ... We solved for shareholders, we solved for customers, we solved for employees. You try to do all three pretty much equally. What happened was, and I forget who it was, a previous CEO, prior to Brad Smith; things got a little too weighted towards shareholders. Obviously, it impacted employee morale, and it eventually impacted the product, and the customers. Really, I think once Brad Smith came in, and he [00:14:00] really almost weighted it more towards employees, trusting that the customers would be happy, and then, eventually that will trickle down into making shareholders happy.
Blake Oliver: Yeah, that is going to be the key to success for companies of all sorts, and, I think, in particular, for service businesses, going forward in 2019.
David Leary: I think the takeaway for maybe our listeners, if you have your own firm, and you have employees, is foosball's expensive, doing catered meals is expensive, giving [00:14:30] out company cars is expensive, but fostering a good workplace culture is free. Letting your employees work from home know, letting them ... It's all free. This is cheap. Any of you [cross talk]
Blake Oliver: Even just coming up with a career path for all of your new employees, from day one; showing them what it takes to get from staff accountant, to senior accountant, to manager, to director, to partner - mapping that out for them, and telling them what's expected - it's not something that a lot of firms do. I never [00:15:00] had that conversation with anyone, and I had to demand it. A lot of organizations just don't make time for that. Again, it's free. Well, all it costs is your time, but it's time well spent, as a manager, or as a partner.
David Leary: Unless you're using time sheets, and you can't be filling those in with career development for employee-
Blake Oliver: That's the problem is firms don't make time for that; they don't allow enough non-billable time.
David Leary: I have a [00:15:30] two interesting, quick number articles, if you wanted me to throw some stats out?
Blake Oliver: Do it.
David Leary: One is, this is for the U.K. I know we've talked about making tax digital. What that is, is the- It's through the IRS. Her Majesty's Revenue ... Revenue and Customs. Basically, it's the IRS of the U.K. ... They're requiring everything to be filed digitally; everything has to be digitally, start to finish, which means a lot of people have to adopt [00:16:00] new accounting software, et cetera, and processes, and procedures.
I remember during the year, everybody was so confident, like, "90 percent of my clients are gonna be ready." Well, they just released some ... This article, it looks like it might be a paid article, by Sage, but I thought the stats were interesting. There was a 2018 deadline, because they're doing this as the size of the businesses ... 750,000 people missed the deadline.
Blake Oliver: That's a lotta people in the U.K.
David Leary: I don't think this is going as fast as they thought it was going to go, and [00:16:30] I think there's a ripple, because I think we, a couple weeks ago, maybe a month ago, we talked about how California's kind of possibly gonna require a lot of E-filing, and ... Obviously, you have to E-file your payroll taxes, but E-file sales taxes, and all these other types of things. If the U.S. has this happen, I think it's gonna be ... We have to note, how long is this really gonna take, because it feels like it's rolling out much slower.
Blake Oliver: Again, unless the - we've talked about this before - unless the IRS gets more funding here, there's just no way they're gonna do the technological [00:17:00] development to do something like making tax digital and have everybody filing electronically through accounting software.
Remember, we were talking earlier in 2018 about how the IRS just got funding from Congress to replace their mainframe computers that were the oldest computers [cross talk] in use in the entire federal government? I think, other than the ones that we use for our nukes, which is kinda even scarier; maybe [00:17:30] the ones for the nukes are a little bit newer. Yeah, the IRS had the oldest computers in the government. Finally, they're modernizing, but the shutdown isn't gonna help with that.
David Leary: Not at all. That's going slower, but I do have another quick article about things are going faster. This was in PYMNTS.com, P-Y-M-N-T-S dot com. It's basically how 2019 is the year instant payments [cross talk]
Blake Oliver: You were talking about this, an episode or two ago, about what, same-day [00:18:00] payroll for employees, and stuff like that?
David Leary: Exactly. ADP announced they were gonna have same-day payroll, or they've kinda started to roll that out. Instant pay. Visa did a survey of 2,800 consumers in their "2018 edition of How We Will Pay study." 70 percent of people surveyed expressed the desire for shorter pay cycles, and 24 percent expressed interest in being paid on [00:18:30] demand.
As soon as you do work, get paid on demand. It's even more interesting with gig workers; 84 percent of gig workers said they would work even more, if they're paid faster. Could you imagine, you have a TaskRabbit person, and they're getting paid instantly, every time they do another task. They'd just be out there hustling [cross talk]
Blake Oliver: I can tell you, from my own experience, when I was a starving musician, before I went into accounting, I worked at Starbucks. I was an hourly [00:19:00] worker, and we got paid every two weeks. It was a paper check that was mailed to our store. I had to pick it up from the manager in the safe. Sometimes, that wasn't convenient, so, often, I would get paid, really, three weeks after ... I would work for two weeks, and then, it would take like a week to finally pick up my check. That's a long time.
Psychologically, it was really hard to motivate myself to wanna get more hours, because [00:19:30] it was so divorced from the actual payment that I was receiving, which was pathetic, anyway. I would've, at that time in my life ... I really needed the money. I would have loved to get paid, after I clock out, every day. I woulda picked up more shifts. I'm sure I would have.
This is something that I think that professionals, who are on a salary, and when you have ... When you aren't living paycheck [00:20:00] to paycheck, you don't really feel this pain, so, it's hard to imagine how this could really make a difference. Why would getting paid every day make a difference, versus every couple of weeks? It really does, when the money in your hand is what you are using to live on, and we should be sympathetic to that.
David Leary: That's a survey, but the real proof in the pudding is Walmart rolled out, about six months ago, this ... They partnered with another company, Even, to roll out Instapays, and they're gonna let employees [00:20:30] opt into this eight times a year, for a small marginal fee. It basically eliminates a payday-loan type situation. The Instapay can be up to half of your wages that you earned during that two-week pay cycle-
Blake Oliver: That's great.
David Leary: Six months into this program, more than 200,000 Walmart employees have taken advantage of that. This is not just a survey, like, "Hey, do you wanna get paid every day?" People are actually going outta their way to sign up for programs to be paid right away.
Blake Oliver: This shows the demand is there, and, as you mentioned, the [00:21:00] talent market is tightening. It's getting harder, and harder to find people. This is going to be one of those perks that not a lot of companies offer, that those that do, especially those who hire hourly workers, will be able to benefit from.
David Leary: Yeah, and just not employees; small businesses, as well. PayPal's announced that they've launched Funds Now. That basically, essentially lets merchants get instant access to their funds based on their card sales at their establishment. The [00:21:30] way they've been able to do that is just they have the data. They can evaluate hundreds of thousands of variables in real time and make decisions accordingly.
Blake Oliver: We talked about what Square, isn't it, and Stripe are now offering next-day deposits for credit-card payments. I can't remember which one, but that's a huge perk for business owners.
David Leary: If I remember it correctly, at QuickBooks Connect, that was a theme of all the QuickBooks Connect announcements. It was like next-day payroll, next-day payments, and something else next - next-day loans, or instant [00:22:00] loans. It's all instant-instant-instant.
Blake Oliver: If you think about it, it is ridiculous that our banking system is so slow, and it takes like two days to send somebody money. It's about time that we finally had this. They've had this for years, and years in Australia, and the U.K., because all the banks have a much more sophisticated system for sending payments.
David Leary: Yeah, and that's about all I have.
Blake Oliver: All right.
David Leary: I don't know if everybody else has any more ... I would actually find it interesting, if everybody has an example of something instant payment that's beyond payroll, [00:22:30] and maybe paying business to business. I would love to hear about another example. I'm sure there's gotta be one I'm not even thinking of.
Blake Oliver: Well, actually, a good example is expense reimbursements [cross talk] expense reports. We use Expensify, here at FloQast. I love it. The way we've got it set up, when I scan a receipt for an expense that I had, we use their automatic-submission thing. My expense, if it meets the criteria, gets automatically submitted, and reimbursed, next day, [00:23:00] if it meets the requirements. That's way better than waiting weeks to get reimbursed for travel expenses, and whatnot.
David Leary: If anybody has any other articles, or maybe wants to vent about the IRS- the government shutdown, please tweet at Blake about this, since he's gonna run for Congress, eventually.
Blake Oliver: No, nope. Never happening, but you're welcome to tweet at me. I am @BlakeTOliver, and, how about you, David?
David Leary: I'm @DavidLeary, and I think this is a wrap.
Blake Oliver: That's it. Great talking to you, David, and I'll see you next week.
David Leary: Everybody [00:23:30] have a good 2019. Bye, everybody.
Blake Oliver: Bye.