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On this episode of From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets, Taylor Zork invites guest Harry Shurek, owner of The Crypto Accountant, to share how he entered the crypto industry. They discuss the shortage of accountants with specialized knowledge in both cannabis and crypto, as these industries continue to grow. Harry also introduces his accounting firm, which has grown to service high-profile clients with 25 staff members, over half of whom are CPAs. They also discuss the challenges of managing investments in the crypto space and the need for specialized knowledge in the industry. In addition, he shares insights on their involvement in the Metaverse and how NFTs are used to connect with the community. The episode concludes with tips on how to learn about the crypto space, the importance of proper tax reporting, and the increasing demand for accountants with knowledge of both cannabis and crypto.
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What is From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets?
"From Niche to Necessity: Tax & Accounting for Web3 and Digital Assets" is your source for expert insights on the rapidly evolving world of crypto and digital assets. Hosted by Taylor Zork, CPA, and presented by CryptoCFOs, this interview-based podcast delves into the complexities of tax and accounting for Web3 and digital assets. Tune in as Taylor sits down with top finance professionals, and CEOs of Web3 organizations to explore the latest developments and best practices in this exciting field. Whether you're a seasoned finance professional or simply curious about the future of digital assets, this podcast will keep you informed and engaged. Subscribe now to stay ahead of the curve and unlock the potential of Web3 and digital assets in tax and accounting!
Taylor Zork, CPA [00:00:09]:
Hello and welcome to Niche. To Necessity. This is a podcast hosted by Crypto CFOs. Today we have a very special guest, Harry Shrek. He's the owner of he is the crypto accountant and also the cannabis accountant. So he is great person that we would love to kind of hear from. He has a very similar background to myself. Both of us have some ties to the cannabis industry from an accounting perspective, crypto industry. And we both were a little bit wild and decided to marry French Canadian wives. So that's another piece there. I guess we like chaos. I'm not talking about the wives, but just the crypto and the cannabis. So let's keep that clear and keep ourselves out of the doghouse. So Harry, thank you for joining us. And I'd love for you to just introduce yourself and tell me a little bit about your background and how you made it into the crypto verse.
Harry Shurek [00:01:05]:
Yeah, thank you for having me. Yeah. So I've got a whole sales and banking history before I started in accounting. I started doing taxes back in 2004. Started in public accounting 2007, started my first practice in 2009. We grew to about 800 clients in the first eight years. It was a pretty good mix of like four or 500 small to medium sized businesses. Bunch of personal taxes. Back in 2015, I had a client who was working in the cannabis space that introduced me to that space for investment purposes. Went to Denver, Portland, and Seattle, all in one week. Met a bunch of groups, had some cool opportunities, but residency requirements kind of made it difficult to invest. So investors I had weren't really interested in putting money in one person's name to lend it to another, to hopefully change laws in three years. As we know, cannabis was a crazy industry back then. Still a little crazy, of course. But after being there, I was talking to some people about raising money. I had a person was raising, he had five stores, was raising for his six. Talked to him about the shortage of accountants. It was in May, he said, it's funny that you asked that because I talked to ten accountants last month and one got back to me and said they could help me, but they wouldn't be able to help me for like, five months. And so I gave him my crazy. Five months later, I got a text from him asking if I wanted to work in the cannabis industry. Still went and signed him as a client. He ended up going vertical. Six stores. Worked in that space for a couple of years until I realized there was a pretty good niche opportunity there. Sold off about 600 of my local clients in Georgia back in 2018 to focus on the cannabis space. Went national at that point. We now work with like 26 states, over 100 licensees all across the vertical along that path. In 2017, I was introduced to crypto by some clients, actually in the same week, one of my big clients in Georgia and one of my big clients in cannabis, actually one of my regular clients, one of my cannabis clients across the country, both kept talking about crypto. One was mining, one was trading. So pretty quickly I jumped into the space. I had 40 machines running in my basement for the first two years I was in crypto mining all sorts of coins, a little bit of bitcoin, a little bit of see, a coin. And a lot of them, I can't remember all the coins. It was a minute that kind of fizzled when everything dipped the first time. And I also put, I had a bunch of bitcoin, maybe a half or so of bitcoin I put into one machine that ended up bricking. So the machines basically went bad and I couldn't use them. But since then, I've been helping my clients with crypto. Since then. I have one client that's been doing mining for that whole time. He's got thousands of miners been doing work for him for years. I got into the NFT space pretty hard a couple of years ago and then really been helping clients for about six years now in crypto. But really about a year or so, a year and a half ago realized that there was another opportunity where just like cannabis, the crypto space was really underserved even more so I started the crypto accountant, and we started doing work in the space on a higher scale. And now we do work. We've done work now with pretty much everybody. We've done work with NFT groups, we've done work with nodes, miners, traders, all kinds of companies, all individuals. We've done a lot of portfolio reconciliation work, get people ready for audits. We help them prepare their tax returns, tax forms, and the whole returns if they need it, or we give them what they need to take to their accountant to get their taxes done. So really just kind of work my way into this space just like the last one, really. Just a lot of underserved clients with the need that unfortunately a lot of accountants like you and I, we don't exist. There's not a lot of us that understand either one of these spaces, let alone both. Right. It's a very unique set of skills that we bring here. But it's really needed, especially with all this crypto space is just exploding now. And everybody's, you know, everybody's been, I mean, look, everybody's been investing for years. They just really started claiming it the last couple of years when there were profits that really came on board and they realized they had to. The need for people like us is going to be just increasing more and more every day.
Taylor Zork, CPA [00:05:47]:
Yeah, I think back in 2021, in November, pew released a study that stated that I think it was 16% of Americans had either bought or sold or traded at any point crypto assets, and that was up from 3% back in 2019. So we're on a strong trajectory here. And I think it's funny seeing your background and my background, and a lot of people that at least from the accounting profession that I see in this space, they took a similar trajectory to us. Not everyone, but some people came from cannabis as well because we're the people who are seeing some opportunities in these underserved arenas and maybe kind of have a willingness to jump in. And I think that some accountants are starting to learn from what they saw with the green rush. Because if you were early as an accountant in the cannabis space, you can make a lot of money and you still can. But there's now a lot more accountants serving the space than there was before. And my business partners and I ran the numbers on this, and I think that crypto is an opportunity that I think it's either 300 or 303,000 x the opportunity as far as accounting help in crypto as it was in cannabis. So if you missed out on the green rush and you want to get in on the digital gold rush, then you're not too late for sure. And it's interesting to hear that you're basically the niche master. It sounds like tackling all those industries. So very cool.
Harry Shurek [00:07:19]:
Well, I think the problem though, is, yeah, there are definitely more accounting accountants in cannabis. We definitely teach people to learn what people's experience are when they hire. So we want to make sure they're getting the right help in both. But I think it's going to be trickier in crypto, because the crypto accounting, our slogan that we've trademarked is you can't understand crypto without being in crypto. Right? Exactly. Yes. Cannabis is different. You can do cannabis accounting without actually understanding cannabis, even though it definitely helps and it's definitely gotten us where we are today because we understand that product and we've been a fan and the user of that product for decades. But crypto, it's a little tricky because so many accountants were hands off with crypto for so many years, and maybe they bought a bitcoin, they bought some ethereum, but you start talking about things like LP contracts and staking and rewards. I always tell people like, yeah, ask your accounting. So what I hear from a lot of clients that we talk to, that we do the crypto for, is that their accountants are going to learn about crypto. And we already know how busy accountants are to begin with, and we're 300,000 accountants quitting public accounting in the last two years. We're already short regular accountants, cannabis accountants, and crypto accountants. Now you're going to go learn. Look, the reason I understand crypto is because I put all my money into mining and trading and NFPs and all this stuff, and did I win like some of my clients? No, we wouldn't be talking here, but I did okay, and I also got a good experience, and I got a good knowledge base we were able to take to our clients. So I think it's like what you guys are working on, the platforms, the education platform, it's going to help. But I still think there's going to be, like you say, ones like us that actually understand this space and really understand this product right now, there is a window of opportunity here to really help clients on a grand scale. That is going to take a minute for others to truly understand how to advise their clients. I ask people, I say it's hard to advise a client properly when you don't understand where a chunk of their portfolio is. And crypto people put a lot of money into crypto. They put a decent amount of their savings, typically into crypto. And what you said earlier is true also, the similarities in both spaces. I always found that I think it's the out of the box mentality, and people who are in cannabis for years, they're already out of the box because they can deal with the stigma from society of telling people they work in the camp. I've been told that I work with drug dealers so many times, people who are cannabis, and especially when I started back in 20, look, I'm a cannabis accounting. I have mycannabisaccount.com and I am in georgia, okay? Which trust me, this is not a cannabis friendly state. And when I started in 2015 as the cannabis accountant, I got a lot of flack for that. But it's being able to see those opportunities. Same thing with crypto. Like, nobody really knew what I was talking about with bitcoin. I have plenty of friends. I have texts from people when bitcoin went back down to six grand saying, oh, ha ha, bitcoin bust back in 2018. And I laugh now. It's like, okay, well, you missed out on this. And these are people that, honestly, if they would have listened to me, they wouldn't be working anymore. They had the ability to go put things, invest in different coins and stuff that I told them about that they thought was bad. So no, there's a big opportunity here, and it's crazy because really, there's a lot of risk for people to go to people that don't know what they're doing. And the risk of that on a tax return is we can't even put it into words honestly.
Taylor Zork, CPA [00:11:26]:
Yeah, it makes a huge difference because I know a lot of tax accountants that are saying, oh, yeah, I do crypto. I just tell them to print off the report that Coinley gives them or whatever tax report and it's like, yeah, I mean, those are great tools if you know how to leverage them. But ultimately they're going to miss. Your basis on a lot of transactions, especially if you're in DFI. If you're in like you're talking about LP accounting, if you're in LP liquidity pools. If you're doing any sort of dex trading or even multiple exchanges, you're not going to have proper cost basis tracking. It's just none of those softwares are capable of that to a super accurate degree. So you're probably paying taxes on the proceeds and showing a zero cost basis on at least some or there's some shitcoin airdrops that you have in there that say that they're valued at $20,000 that your accountant is going to miss because they just don't know the space. And like you're saying, I totally agree. You have to have some involvement in the space, even if it doesn't have to be a crazy amount of money. I tell people, put $10 into ETH, transfer it into a self custody wallet, and do, like, one trade on uniswap and just follow the trail. And that at least gets your feet wet to see how to read this stuff on chain. Because that's one of the keys here, is being able to read this stuff.
Harry Shurek [00:12:50]:
Yeah, what you just said is exactly right, because everything you just said I've had clients. I had a client last year that he hired us. I was like, wow, you did really well. You made $1.9 million. No, I did. Yeah. It was a shit coin drop. That was not real. It was actually fraud. He never touched that coin. It went into his wallet. He never saw it. And same thing. Yeah, I have clients literally right now that we're working through millions of dollars of zero cost basis because it didn't because you're right, the softwares are good. We use coinly. We like that one. We've used all the other ones. Coin tracker, all of them. Crypto, all of them. They're good for getting it in there. The problem is sometimes, depending on the order that you put them in, it may connect one to another wallet and then it won't disconnect it to go to the new one where it's supposed to depending if it has the hash information in there or not. The ether scan. The problem, what I find, in my opinion, is that and I could be wrong on a software guy, but I know crypto, and I feel like what's missing in the algorithm of these programs? And I don't know how you program it. I guess it's the Ether scan is the only way to really, truly, somewhat do it is human motivation of an investment of a coin. Because you can do so much with a coin and so many different things. Like, I can take Ethereum, I can trade for another coin. I can buy into an LP contract. I can buy an NFT, I could stake it. There's so many different ways I can use that coin. And if it tags it the wrong way. And the people like you say people are just dumping API information into a software. And if you hit print, I'll be honest, I've been in accounting almost 20 years and I've been doing my own practice, my regular practice, 14. And we literally work with over 2000 clients. I have never been given a perfectly correct QuickBooks file from any client in my entire time of being in accounting. And even mine isn't perfect right now. So if you're telling me that people are putting crypto wallet portfolios together in software and getting it perfect without human intervention and handing it to accountants, well, the audits are coming. And not only the audit is coming, it's really easy. What people don't realize is how easy it is to audit crypto because you just need a wallet address. I can go find your Openc and get one NFT and probably rebuild your whole crypto history from your trust wallet or your MetaMask or whatever is tied to that one NFT account by taking the trail back. And they don't realize that this is so serious. And so, yeah, I mean, if it costs you extra money to go to an actual crypto accountant, you get what you pay for. And this is the other thing I think people need to change their mentality. They look at this like an investment, like it's Morgan Stanley or Goldman Sachs, where I'm going to get my 1099 B at the end of the year.
Taylor Zork, CPA [00:16:06]:
And I'll just throw that to my accountant. Right, you get your 1099 B. Yeah.
Harry Shurek [00:16:12]:
And every month I get a thing that tells me how I'm doing. But then all of a sudden now we're at the end of the year and now we have 25 Fidelity, Morgan Stanley, Goldman Sachs accounts all over the place so we can't remember where 13 of them are. And we ask one software package to put it all into one place. Nothing knows where anything came from, nothing knows where it sent it to. Forget cost basis unless you bought it inside that bucket. I don't know. It's hard to explain. This is a business. This is like a business. It's like running a business, but it's just another level of investment. And it's funny because crypto people are so advanced on that level to do the crypto part of it and then it's trying to make them understand that, yeah, you need these extra steps that we do because what are we creating when we go through? If a regular accounting goes into coin league, they're just going to hit print. Well, we're going to hit print. And if we have to change things, which we most likely are, we're literally creating a whole audit file of what we're changing from the minute it got in there to the last part and we're going to give them a whole file. That's basically not an audit file per se, but it's justification for every number being taken on their tax return. We're positioned because if you get audited, well, everyone, that whole H and R block, we're going to pay charge $40 for you not to get audited this year. Well, you don't get audited in the first year. You get audited in years two and three, and then by the time you get to the audit table try remembering what you did in crypto three or four years ago in Crypto World, when you're an audit in front of an auditor and you're under, I mean, there's just it's, you know, it's just part of the space. And I wish people understood that this is not like anything else. And if you're here to try to they put all this money into the space, and like you're right. They cost themselves so much because those yeah, you're right. I mean, the LP stuff oh, my gosh, forget it. Going in and out of pools like that. They're distributing stuff left and right that should be going in and out of a pool. I have taken numbers drastically down from putting stuff in and out of a pool as opposed to just dumping in and out like it showed because it wasn't connected and it wasn't programming. Yeah, you're right. It's a dynamic space, and it's going to be hard for people to really even look. It's going to be hard for accountants to catch up to this level. It's good that we're all able to put this stuff together for them to try to help develop this program for people to really help this space. Because it's needed because unfortunately, it really wasn't there for cannabis. It wasn't needed on this level, though, either. That's the thing.
Taylor Zork, CPA [00:18:52]:
Yeah. Well, it's just so much dimmer depth to everything here.
Harry Shurek [00:18:55]:
Yeah. And it's just so many more pieces, and there's honestly a lot more money at play. And then now with I forget it. Dealing with all the shakeout from the FTX and Celsius Voyager and all that crazy stuff that happened last year, now everybody's putting out there, just extend your taxes and deal with it later. And it's like, no, it only gives us six months.
Taylor Zork, CPA [00:19:23]:
It's not going to be resolved by then.
Harry Shurek [00:19:25]:
Yeah. You're building these false hopes because you don't want to deal with it now. But we need to be proactive now so people have helping people make calculations and letting them make their decisions of what they want to do with their taxes. That's the responsible way to do it. I'm just not going to deal with it now. I'll deal with that after April 15 because I don't want to deal with it too busy. No, that's not how it works. It's not how we treat people. Yeah, treat them like you want to be, right? Yeah, exactly.
Taylor Zork, CPA [00:20:01]:
So you're a major pioneer in the space. One of the things that we've talked about in the past is kind of your foray into the metaverse. So your firm is making big moves there. Can you tell me a little bit more about what you guys are currently doing and what you guys are planning on rolling out in the future?
Harry Shurek [00:20:22]:
Yeah, for sure. So I actually wanted to be the first firm in the Metaverse. I'm not going to lie, I think I had the idea first like two years ago. But Prager Meta is deep into it and I'm okay with that because they got FTX and we know how that went.
Taylor Zork, CPA [00:20:39]:
Yeah, we tried to claim that as well. We set up something in December 2021 in Decentralland, but then when that came out with Prager mates, we're like, okay, we're not going to try to correct this. I think we're going to let them take that and step back.
Harry Shurek [00:20:56]:
We're actually like maybe like the fourth accounting firm, I think in the Metaverse, what we've built is pretty cool. I've got a multi level building that we've created. It's on the spatial IO app. So I've got my first. This is a big courtyard. In the first building we have the bottom floor is my regular accounting, quote unquote, it's jerk accounting and tax. It's been around for 14 years. Second floor is the crypto accounting, which is kind of a little futuristic look. Third floor is the cannabis accountant, my cannabis accountant, which is a cannabis lounge. All of these have music going and NFTs all throughout the space for different groups that we're part of. My fourth floor level is a rooftop lounge, kind of similar to a Vegas nightclub lounge on a roof. We have a DJ playing 24 hours, people dancing. All of these spaces are open 24/7 through 65. We have tax tips that are there that are connected to our website, free tax information. It allows free networking for anybody to go in 24/7, connect with people on their network, meet other people from the space. It's pretty cool. We do event. We'll have events there. All the floors are always open. We also, in our second building, have created an educational complex. And inside there we have three lecture hall that we're going to be using to do educational events. Kind of like with your company, crypto, CFOs and other groups to talk about not only crypto tax, but also the cannabis tax, and also regular taxes and education about crypto. Not just taxes, but also all the different communities. And along with that, we have another company I've created, which is Metawork, which is the company that's going to help other companies do what we did, which is launch in the Metaverse and not only show how to launch in the Metaverse, but how to monetize. Like one thing we're doing, we have all these NFTs on our spaces. Like I said, I bought a ton of NFTs. I never aped in which I should have, but it is what it is one day. But I've got about 80 or 90 NFTs. But it's funny, you know, I both very active on LinkedIn. A lot of people say NFTs are just pictures and stuff. But here's the thing, NFTs come with communities. And all of these communities, these have communities on Twitter, discord telegram instagram. So we're using these as a gateway to go to all of these communities and say, listen, we've got your NFT in our space. And what we're doing is we're offering AMAs for all of the groups that we're part of, talk about crypto and crypto taxes, and get our word out there and really help the space and help educate the space. So that's kind of what we're doing. So we're kind of taking a different approach to the metaverse. I see it a lot of people looking at it as a way to get people to work for me. I see a way for the communities to connect and collaborate and really grow. And there's a lot of obviously marketing opportunities there as well, because we're all sitting there in the middle of space. And what's really cool is spatial is a 2D app, but if you put on the metaquest glasses, you can actually go in in three D, and that's pretty wild. I spent some serious time walking through my spaces in there, and it's pretty impressive to go through there, but even that so you can literally put on your glasses. I can put on my glasses and we can go meet in the space and we can talk to each other and lock onto each other and have a conversation, and you can lock it in and keep other people out of the conversation and make it private. We can do token gated events for communities, so if we do one for one group, you have to have a password to get into the location. So it's some pretty cool stuff.
Taylor Zork, CPA [00:24:52]:
I love it. Yeah, we kind of saw that opportunity. Sorry. Go ahead.
Harry Shurek [00:25:02]:
Go for it.
Taylor Zork, CPA [00:25:02]:
Okay. Sorry. Yeah, we saw the opportunity there as well, and we got some quest glasses, so I'm going to have to check out your space. I haven't been in spatial yet, but we've seen some opportunities there as well. Once we get our feedback underneath us, I think we're going to do some developments there. And we'd love to do some educational events with you guys as well because I think there's a lot of overlap there. And I know that we as a company have a lot of respect for what you and your firm are doing, and I think that would be cool to collaborate on that stuff. So, yeah, that's going to be great.
Harry Shurek [00:25:34]:
I appreciate that. Same here. No, it's cool. It's interesting that, like you said before, it's the niche master. Yeah, it's kind of funny. I don't know, man. I just like smoking weed and making coins, and then I make businesses out. I took my day job and made them into those. But it's kind of cool to be able to do that. And then now with the metaverse, it's kind of that next level of, okay, well, now let's take this to the next level. And with your company, you guys are innovating also. You're teaching on topics that really the ultra high, the top accounting firms don't even understand at this point. Pretty cool.
Taylor Zork, CPA [00:26:17]:
Yeah, it's a fun space to be a part of. And for me it was about escaping kind of that nine to five. I worked for corporate firms, I worked for Burton Snowboards, which is a great company to work for. But I just kind of realized that I needed to be doing stuff on my own and I need that kind of constant stimulation. And cannabis gave that to me for a little bit. But, you know, with cannabis, there's not a whole lot to learn. I mean, there's obviously depth of knowledge that you need to have to serve the industry. But once you understand 471 C, 471 eleven 471 three and then 280 E if you kind of have a really good grasp of those aspects. Crypto is a whole different level. There's new protocols. I just heard about reflection tokens that are a new thing. There's like constant innovation and so for me, it's a lot more mentally stimulating. Same sort of deal. I like cannabis, I like crypto. So it's a good fit for me as well. And it's fun to kind of be constantly learning and having the opportunity for that as well. Well, I was going to ask you at the end here, what sets your firm apart, but I feel like our whole conversation is pretty much already told everyone what they need about that. Like we say, your new coin is going to be that you are the niche master, but yeah, I just didn't know if you had any other final thoughts of what you wanted to tell people about your practice and kind of how you guys operate.
Harry Shurek [00:27:52]:
Yeah, no, I mean, what makes us different? Look, we're actually a pretty large practice. Like I said when I sold my practice years ago. It's funny, I started as when I sold in 2018. It was me and my current accounting director and an office person, like one part timer maybe. And now we've got 25 on staff altogether and we've got over half CPAs accounting. Different accounting professionals, different finance professionals. We are now as someone who ironically, being the niche master in the crypto world, hated the cloud and did not like anything digital because I'm as innovative as I am. I'm still an accountant and I'm still old fashioned that way. The pandemic kind of forced us to the cloud. So we're all digital, we're all in the cloud. Everything is very doing work with us is very easy. We make it very simple. We have Canopy Tax, which is online portal. You can literally print stuff from your email to the app, which is insane. I actually tried it myself the other day, which I never it's terrible to say that I never use it myself that often because I'm not buying it, but I was using the other day just to do something. It's so easy. But yeah, one thing about our firm, I think that really sets us apart, because we come from the again, we're not just cannabis and crypto. We've been doing regular businesses for 14 years in our practice, and I have people who've been doing this for decades. CPA has been doing it since longer than I'm alive, literally. But what sets us apart, honestly, is we're a non judgment firm. Okay? What that means is if you're in cannabis, you're in crypto, you're in other industries, whatever you did. But if you're back, if you're behind in taxes, you owe taxes, you didn't file taxes, you made a mistake on your taxes. We're not going to make you feel bad, we're not going to make you feel guilty. We're not going to lay into you and get the guilt trip. We're going to just help you get your stuff cleared up. And I think that's one of the reasons we've been successful is that we have a lot of high profile clients that we deal with that obviously, I wouldn't talk about on our phone call or confidential. But we get a lot of high profile clients for that reason, because we deal with look, finance and accounting is a very sensitive thing for people. And so it's a very sensitive topic. And you need to have people that understand it. And also, not everybody's perfect and people make mistakes and things happen. So one thing we're very good at, I think that sets us apart, is just dealing with it. We take care of it, we fix it, we move on, and we take it very seriously. And as much as we have in the matter verse, we do parties, and I'll be at every party, at every event when I go out of town and everything else, and I'll be the one standing next to you at two in the morning at the event, every time. My staff will make sure everything's done on time. Like I said earlier, we don't miss deadlines and we're very customer service oriented, which is one thing I brought from my customer service background to accounting, which also, again, it's treating people like they want to be treated. Again, it's sensitive information. In addition to be the niche master, we're very good at helping people and making them feel comfortable with a very sensitive topic, which is money.
Taylor Zork, CPA [00:31:14]:
Absolutely. I think more firms need to take that approach and I think what you guys are doing is great. Really happy to have you as part of the crypto CFO's community and looking forward to doing more work with you guys.
Harry Shurek [00:31:25]:
Awesome. Thank you so much. Same here. Looking forward to as well.