How Much Should A CPA Charge For A Business Tax Return? (with Roger Knecht)

As a small business owner, I've had my share of accounting, tax, bank feed, and app issues. Some kids say I'm a mess, kind of like some of your clients. But as it reflect them the last three years of my business, the one app that I've had not any problems with is on pay. It's been said it and forget it payroll. Stay tuned to hear more from our sponsor on pay later in the episode. The conversation that I'm sure most of you are having is too many people are pricing themselves too low and not really considering how much their services are worth. And so it's not uncommon for me to have conversations with firms where the first thing that we're addressing is that their pricing hasn't been changing. It needs to be increased. They're not valuing their services correctly. And so I would say more than the average is typically a pricing issue. Hello and welcome to the accounting podcast. I'm Blake Oliver and I'm David Larry and we're joined today by a special guest, Roger Connect. Hey, Roger. Pleasure to be here. This is going to be great. Blake, I'm actually at the on pay offices, so I got you some swag. I'm actually in Atlanta at on pay. It's not the fake on pay studio. It's the real on pay studio this week. That's great. Roger, welcome to the show. Pleasure. Roger is the president of Universal Accounting Center, a post-secondary school for accounting professionals. And Roger has helped thousands of business owners work on their businesses to increase revenue, improve profits, and build value. You have your own podcast, Roger, building the premier accounting firm. What's that about? We basically address various things that business owners of bookkeeping and accounting tax firms need to consider as they're running their business, training their staff, finding new clients, and most importantly, retaining and working with their clients. And Universal Accounting here in your bioit says post-secondary school for accounting professionals, what does that mean? So different than what you might imagine, it's not just a single program or offering that we provide. We're registered with the state of Utah where corporate headquarters are as a post-secondary school. So just as you would expect to go get like a CDL license, your cosmetology license, we work with individuals that have their degrees typically in accounting bookkeeping. They have their two year for year degree, let's say, CPAs, and they're wanting to specialize in small business accounting procedures. So we have a variety of curriculums to help individuals start their businesses, offer those services, train their staff. We work with about a third of the people that are non accounting professionals by education, so they've had experience and trade, and they want to get maybe certified. And so we provide a pathway for that. We work with a lot of CPAs and role agents that want to get into running their own practice. And so we're helping them transition into the small business spectrum and learn marketing, selling techniques, pricing techniques for them to start and build their businesses. Well, that's great because I didn't learn any of that in school when I went back for accounting to get my CPAs. So it's great. Yeah. It's great you're out there providing that resource to people. So David, we got so much to talk about this week in the news. We have Markham getting fined by the SEC. They're going to pay $10 million in fines for widespread failures in their audits. We've got Hunter Biden pleading guilty to misdemeanors that involve failure to pay his taxes. The son of the president. He didn't pay his taxes. CPA Ontario and CPA Quebec leaving the CPA Canada alliance. What about you, David? Remember a month ago I talked about the accounting error that gave the word in Ukraine word money. Well, apparently they found some more money. Oh, yeah. Yeah. There's even more available now. So it went from. They thought they had three billion, but maybe it's closer to like six billion. That's available. Dependent of Congress. Billions. Just five million dollars. Okay. Sounds like a rounding error. All right. Well, they still haven't successfully done an audit of the Pentagon ever. So I mean, doesn't surprise me. Well, if I remember right before 9-11 on 9-10, there was I think a trillion dollars that were unaccounted for. So there you go. Which we start with. Do we start with this hundred Biden thing? I didn't hear anything about this. So I'm fascinated. All right. Well, okay. So Hunter Biden has been under investigation forever. I mean, you've heard about this, David, right? I mean, the whole hundred Biden investigation for like five years has been going on. Yeah. The laptops and money, questionable money. Yeah. I've heard about lots of these things. So, you know, for our listeners abroad, Hunter Biden is the son of US President Joe Biden. And he is going to plead guilty to two federal misdemeanor counts of failing to pay his taxes. The plea agreement with the US Attorney for Delaware includes a provision for probation for Biden, meaning he is unlikely to face jail time. The agreement also includes a gun possession charge that will likely be dismissed of certain conditions or met. This is a decision by a Trump-appointed US Attorney, and it indicates an end to the five-year investigation into Hunter Biden's conduct. The resolution suggests that prosecutors did not find cause to file charges related to Biden's dealings with foreign entities or other wrongdoing. So two misdemeanor counts of failing to pay his taxes and then one on a gun possession charge. And what I didn't mention is the fact that Hunter Biden had a drug problem for years and years and years, and apparently during these years when he had a drug problem, he didn't pay his taxes for two years. And I was like thinking about this, and I'm trying to imagine how that happened because the guy was making like a million dollars a year. So we know he had an accountant, right? Like he had... I don't know that we know that. I think his tax is on turbo tax, right? So I hope not. So the question for me is, like, who was the CPA doing the taxes? And then was he like trying to call Hunter Biden? And then the guy was like just not responding, and eventually they gave up. I'm trying to figure out, like, how does that even happen? Can you clarify me? It's just like, oh, he didn't file taxes because he just was busy. He had very valid W2s and proofs of income, or is this like... We don't know where his income came from, and that's why he didn't file taxes. It's unclear. It's unclear. I was curious about the charge because, of course, the complaint from the folks on the right is that, you know, Hunter Biden's getting off easy. He's not going to jail. He's not going to serve jail time. He's just pleading guilty. It's misdemeanors. And so I looked up, you know, what exactly he's pleading to, which is the failure to pay. And failure to pay your taxes, you know, that often gets a lot of people in trouble and gets them jail time. I mean, it's the classic mobster way to get mobsters in jail, right? You don't actually get them for the crimes that they committed with alcohol or drugs. It's with failing to pay your taxes, right? Who is the famous guy, Al Capone, right? Al Capone, record tearing. Yeah, right. So I looked up, you know, I was curious, like, when, when is this a felony versus a misdemeanor? I didn't really get a good answer. It seems like failing to pay or failing to file your taxes can be a felony. If they want to make it a felony, and it can be a misdemeanor, if the prosecutor wants to make it a misdemeanor. That's all I know. I'd be curious what any of the tax resolution specialists that maybe listening would want to contribute here because on a regular basis, they're representing their clientele before the IRS to try and get such resolutions. I would be just curious, is this an abnormal, not traditional favorable thing that hunters getting out of this situation, or is this a typical resolution that someone could expect if they likewise didn't pay their taxes for two years? I know there's devils in the details, but at the same time, I'd just be curious what some of our tax resolution specialists might think of the whole situation. Yeah, I'd be curious as well. I did read that it's very uncommon for this to be prosecuted as a felony. There's only a few hundred of those cases in the whole country every year where it's prosecutors of felony. So I think it sounds like if you come clean and you make a deal, you're going to get the misdemeanor and you pay your past due taxes and you pay your fines and your penalties and all that. Yeah. I think NFL linebacker Bill Ruminoski was like, oh, I think he used to be the raiders and he moved over to the Denver Broncos and he apparently, this broke this week, that the government's suing him for 15.3 million and back taxes. Apparently, he had a nutrition company and they just like use that bank account to like pay for their kids' apartments and just use this money for years and years and years and obviously didn't pay him on it, but there's nothing in this news article, even though the Department of Justice is going after them, that there's going to be criminal charges, right? There's going after them for the money, right? And so you're right. Like, there may not, you know, here's another case where it doesn't seem like they're putting anybody in jail over it. I think the key is, don't go to trial, right? Resolution. Right. You go to trial and you lose, then you're going to jail. Well, since we're on the government beat, David, let's talk about this accounting mistake that caused the Pentagon to overestimate the cost of weapons sent to Ukraine by $6.2 billion. So now we get to send more without having to do another authorization through Congress. So yeah, because I guess it's just the book value of those jets, right? Like, oh, those jets aren't really $40 million, they're only worth $16 million or $20, yeah. And it's not jets, right? Because I think that's the one thing we've refused to send them yet is we're sending rockets and drones and all that stuff, but and bombs, but or whatever, but we're not sending munitions, but we're not sending jets, but yeah, javelins and so forth, yeah. But so this is, this is fascinating, right? The accounting explanation for this, I think the public generally misses is the Pentagon when they came up with the number, so so we're not we're not shipping new equipment to Ukraine. We're giving them the old stuff. And this is what we always do when we supply other countries, right? We give them our old inventory and they make use of it. And then we get to go buy new inventory from all our defense contractors who are really happy because now we're placing a bunch of orders, right? So yeah, it's referred to as the military industrial complex, I want to get down to dirty. So there you go. So apparently what happened is that the Pentagon in tallying up the value of everything we've been shipping over to Ukraine from our inventory, used replacement cost instead of net book value. And so when they adjusted for net book value because of depreciation, that's where it's going to go. They, they realized that they overestimated, they over, yeah, they overestimated the cost of the equipment. So now we can send more equipment and they did two years in a row. So it's 2.6 billion for fiscal year 22, 3.6 billion for fiscal year 23 and that's how big your 6.2 billion. And they said it's great because this is going to mitigate the need for Congress to pass additional legislation to spend more money, right? But like thinking about this, this doesn't really make sense, right? Because we're going to end up paying the replacement costs of all this equipment. So well, I can dip into the IRS budget now on that. Remember if you're short, you can dip into the IRS part of the, the, um, that's the only agreement now. I guess so. I guess so. This is just a game. You're, it's a game and you're right. That's in the accounting world. They're like, yeah, this is a game. But for most people, like, they're not going to understand this and it's, it's, this is a scam. It's a level. Right. It's a game to these numbers. They're playing. It's, it's, it's an accounting trick. Yeah. Right? That's, that's what it is. And I wonder like in the, in the law or in this, like under the authorization that the Pentagon has to send equipment to Ukraine, does it define what accounting to use? Does it say you have to use replacement cost or book value or is it just vague and they can do whatever they want? And if, if so, that's kind of clever what they're doing, I suppose, from an accounting standpoint. And it still keeps you out of figure out the valuation because is there an aftermarket to resell this into? Like, I don't know. It makes any sense. Like, why don't they just value it as a dollar? I mean, here, look, we have hundreds of billions of left. Right. So, Roderick, I got a question for you. Yeah. Who do you think would win in a cage match? Elon Musk or Mark Zuckerberg? I've seen this. Yeah. And I saw something that said, no, this is legit. Yeah. Well, it made the Wall Street Journal. So. So, if I remember correct, Zuckerberg is like into into Jiu-Jitsu. Yes. So, and I understand he's good at Jiu-Jitsu and Joe Rogan is big into Jiu-Jitsu. I'm going to assume that there's some favorability there. I don't know if Musk has any formal training. So, I'm going to, I don't wager, but I'm going to lean towards Zuckerberg. So, there you go. Yeah. I think I got to go with you on Zuckerberg. Musk is notoriously unathletic and- Didn't he have to get in street fights as a teenager though, he said, or just made up? In South Africa, at the, what the Emerald Minds, his father owned or something, I don't know. But I just love this picture, by the way, on the screen, the Wall Street Journal article has, it's Zuckerberg's head and Musk's head on the Rockham Sakham robot game and they're like punching each other in the face. So, so I've got to ask, do you think one of them just needs money and they want a pay-per-view event? I mean, do they, it's hard to say, I don't think any, either of them really need money right now. I'm kidding on that. Yeah. I'm just a pay-per-view. You hear about these pay-per-view event events that are millions of dollars for people to have access to the actual viewing rights and they turn into big events when you get those, you know, the boxing matches and so forth, so. They could stream them on their own platform. On their own platforms. Yeah. On their own platforms. Yeah. Yeah. So, what about like in our own industry? Like, obviously Brad Smith, he's left Intuit, he's retired, you know, he's retired from zero basically, but think about like those types of fights, should we have had the CEO battles in our own industry? Now, I think Brad Smith would have taken Rob Drewey down because he's a black belt, his guns are monstrous, like you probably would have, but I'm just basically like, do like, are there other battles that are brewing here we could have CEO fights of different tech companies that we love in our space? You do know there's precedence, there's that YouTuber that went boxing. Yeah. I'm trying to remember his name right now. This is the, this is the, this is what's, this is everything that's bad about social media, right? There's a lot of good, there's a lot of good about social media, but this is like, this is the worst of it. And I can't believe that Zuckerberg and Musk got like, got into this, like challenging each other to a fight, I mean, how childish can you be? And that's, that's billionaires. I'm waiting for our email next week where some accounting podcasters challenging Blake to a fight. That's over to settle things nowadays. And Mark who's Paul Logan, there it is, I see Paul Logan. Thank you, Mark, who has joined us for the live stream. It was Jake Logan, Jake slash Logan Paul prop, probably, it's Paul Logan, it was, oh wait, we already know the battle. Where's the fight? Do you have? Wait, is it Jake Paul or Logan Paul? Yes, thank you, Mark, thanks David and Trinity and Heather and Randy for joining us. Randy says Roger has the best voice in podcasting. Right, Randy. It was amazing because he's just using like earbuds. It still sounds amazing, yeah, it's, no, I think you've got a real mic, right? Oh, yeah, it's soft. It's great. Oh, perfect, perfect. Yeah, Roger's got the mic. Yeah, professional here. We do have a fight going on in our industry. We kind of let it a little bit here. You said the CPA Canada versus Ontario and Quebec. So yeah, so Ryan Luzanna sent this over and I want to read his message here. He said CPA Ontario slash CPA Quebec are terminating their relationship with CPA Canada. I think I'm happy about this. Here's why plus my interpretation. The profession isn't trouble right now, fewer and fewer want to become CPAs. The numbers speak for themselves. We are also less competitive than ever. My feeling is that CPA Quebec and Ontario are concerned about the direction of the profession and are going to take matters into their own hands. CPA Quebec and Ontario both said the same thing in their communications. They need to better support their members as the world evolves. They need a professional body that is innovative, efficient streamlined, responsive and nimble in order to attract talent and better prepare them for the future. So I wonder if we might see this, well, I guess we don't really have this in the United States because everything's all state by state anyway. State society, state boards of accountancy, but I guess we could see maybe some state boards of accountancy severing more of their ties with the national association of state boards of accountancy and doing their own thing. And I mean, we've seen that with Minnesota moving to replace or provide an alternative to the 150-hour requirement with 120 plus two years of experience going back to that model, that bill is in the legislature. They might actually do it. And that would be something kind of akin to this. Isn't Quebec historically like the Texas of Canada, like they want us to seed, it's the French Canadian part, right? I think in general they're a little bit more of the rebel rosers. They don't want to be part of the bigger picture. And so is it some of that just their nature of rebellion against this? You're right though, I think this is a bigger trend of possible indications what could happen in other places because I think the talent crisis and the leadership and all of these fields broken and everybody's doing desperate acts. And then did you see the response from CPA Canada? No. So this is an article, it's actually picked up in Yahoo Finance. So it's just, you know, it's obviously just a press release. And it says CPA Canada is disappointed and surprised that CPA Ontario and CPA Quebec have decided to sever ties with the national organization, triggering 18 month withdrawal period in accordance with the terms of the current collaborative agreement. And then they also have another paragraph that was in there that says we strongly recommend that CPA Ontario and CPA Quebec re-engage with CPA Canada, including all provincial territorial and Bermudian bodies and work with a world class conciliator to guide future deliberations like they, they almost like are, they're now just communicating through the press. So obviously the communications are that broken where they're doing the press release things, which is really similar to what the ACPA did with Minnesota, like they were doing letters, public letters back and forth. Right. We'll see what happens. Keep us posted if you're in Canada and you're listening to the chat. Let's see. Saas boss 18 says, nice, a story from Canada, I'm originally from Quebec, actually, but got my CPA license here in the US. David is right. Quebec always wants to go its own way and be different than Canada. You're right, David. This episode of the Cloud Accounting Podcast is sponsored by OnPay. OnPay is built for accountants. I'm a 30 plus years of payroll experience. They can be the payroll partner you can always rely on. They offer a dashboard to manage all your clients in one place. And when I say manage, I probably should say balance that fine line between control and delegation. OnPay lets you keep 100% control. You can delegate payroll to someone at your firm or hand off payroll duties to your client. But no matter who runs payroll, OnPay always takes care of all tax payments and filings, even local filings. And with integrations with QuickBooks Online, Zero and QuickBooks Desktop, you can use OnPay across your entire client base regardless of the accounting GL they are using. OnPay's partner program offers free payroll for your firm, discounts or a rev share, and a dedicated support team of in-house payroll experts who will do all the heavy lifting. And setting up your dashboard to adding your clients and their employees will even enter any prior wages to make it easy to switch. If you're looking for a great product with great support to match, check out OnPay. To learn more about switching your clients to the award-winning OnPay payroll in HR, head over to cloud accounting podcast.promos-onPay. That is cloud accounting podcast.promos-onPay-onPay. OnPay. All right, so we talk about Marcom. The Securities and Exchange Commission and its audit watchdog, the Public Company Accounting Oversight Board, have charged accounting for Marcom with systemic quality control failures and violations of auditing standards related to its work for hundreds of special purpose acquisition companies, also known as SPACs. Marcom, based in New York, has agreed to pay a total of $13 million, $10 million to the SEC and $3 million to the PCAOB, to settle these investigations without admitting or denying the allegations. The firm has been accused of prioritizing revenue over audit quality, especially during the SPAC boom, neglecting standards around audit documentation, risk assessments, audit committee communications, and engagement, partner supervision. And as a consequence of the investigation, Marcom has been mandated to make structural changes, which have never been mandated before by the SEC or PCAOB. They have to put in place a chief quality officer role and an audit committee to oversee its quality control system. So Marcom took on hundreds and hundreds of these SPAC audits and did not increase the number of audit partners and quality just dropped. They prioritized revenue over quality. And I got to say, I'm not surprised that this happened because that's the whole system. The business model of public accounting firms that do audits is designed to prioritize revenue. Topline revenue is what everyone talks about all the time. And quality only matters to the extent that you avoid getting in trouble with regulators. Now they went way, way, way over the line, apparently, like adding hundreds and hundreds of audits and not upping their staffing appropriately, but like this is not unexpected. So was there any indication as to how long this would be going on? Is it a systemic thing that's been happening for five years, 10 years, two years, one year? So this happened in 2020 and 2021 when the SPAC rage occurred when it became super hot to do SPACs. So the market saw more than 860 SPACs, complete IPOs from 2020 through 2021. And Marcom audited nearly half of them. And I think it's because the big four weren't touching these SPACs because historically SPACs have been something that have been a little bit. The big four had their own audit quality issues. They were dealing with a bunch of other companies never mind the SPACs. They didn't need to help out with it. Was the total fine then? $13 million. So $13 million and they were forced to create a new position, or whatever, right? So it's very clear, I heard a podcast on Bloomberg's Talking Tax and they're really talking about KPMG's troubles right now because they basically had the bank failures audits, right? So come by the bank and they added all the banks of failing. The other one, right? Looking at first from public. Our first from public and the other one, the other one, the other one, the other one. First from public did not go under. It was signature. Signature Silicon Valley. Signature Silicon Valley. Yeah. Yeah, those are the two that went under. And they're talking about like a little bit of like, I guess in my brain I was listening to this is like, how big of a penalty does it have to be? Because essentially we're having the same problems they had with Anderson when they broke up Anderson. Yeah. 20 years ago. So it's 20 years later and the same things are still happening and like, what, how big of a penalty is it going to take? Like, what's $13 million? That's not going to accomplish anything. You have to add a position. And then they destroyed a whole entire firm and it never improved it. So yeah. You make a good point, David. Markham, US, annual revenue is like $800 million. Okay. $800 million in 2021. The fine is $13 million. So I mean, it's not immaterial. And probably in this, you know, if we took the revenue that's just for audit, that's a big amount. Right. I don't know. I don't know if it's big enough fine. But I also don't know if fines are even the solution when it's the, the business model that encourages this kind of risk-taking behavior. Roger, you were shaking your head there. Well, I think there's two things to consider. First of all, the fine is meant to obviously penalize the entity that's done the, the egregious thing. So there's that slap on the hand and it's intended to actually curb future intentions of doing it. It should be enough to say, wow, that was significant. I don't want that to happen again. And then them change the routine. But it's also a message to everyone else around watching to see, is this worth being worried about? Should I be concerned? And am I going to change my business model because of what I saw happen over here? And the question that I think you're asking is, was the messaging of the $13 million fine significant to get everyone else's attention to say we internally need to address this within our own organizations? And that's where I don't know if the $13 million is accomplishing that. Is it too insignificant of a fine? Not for the entity that's being fined. It's the messaging to the, to the profession. Well, and, and, and were any partners held accountable individually, yeah, if you don't hold individuals accountable and find individuals and, you know, like, what, what, what do I fear as a partner at a different audit firm, like, okay, my firm might end up paying a fine. But if I don't pay the fine, I'll just keep doing what I'm doing. Well, who just got fined for the exam cheating last week, which of the big four was that? I think it was, well, I think it was KPMG in Australia that was cheating on the ethics exams. And then they, they, it was like a $60 million fine or something. But my understanding is two years before it was one of the other ones, I might have been UI, they got fined like 30 million because they were, there were some sharing of answers for some of the exams, right? And so now they've doubled it, like, going back to Roger's thing, like, and obviously it doesn't matter how other people are going to do business. Right. Like, nobody's getting, like, okay, let's make sure our deduction are in order because we don't want to get the next fine. It doesn't seem a $30 million fine was enough to wake up. Well, continuing on with the unethical behavior at large firms, PWC in Australia got in big trouble for sharing confidential government plans with their private clients about tax avoidance schemes. The Australian government was consulting with PWC Australia on ways to reduce tax avoidance by multinational corporations. The partners at PWC then turned around, took that information and gave it to their corporate clients to help them avoid taxes. And this all came out. And now it's been all over the news, PWCs in big trouble, they're under investigation in Australia. And public opinion has not gone well for PWC there. A poll by the Australia Institute found that 80% of Australians want PWC banned from receiving any further government work due to the tax leaks scandal. The survey found that 45% of respondents believed that the ban should be permanent, while the remainder believed it should be for a period of between two and 10 years. The survey also found that a permanent ban was the most popular response across all voting intentions. So despite political party affiliation, people really don't like this. Well, just to be conversational, I'd be curious on a personal note, the information that was actually shared with their clients were these loop holes that were legal, that were established by government for them to take advantage of and they were just passing along the loop holes that existed and were meant to be taken advantage of anyway. Or really they sharing information that was something different, I'm just curious about that. So my understanding is that PWC was consulting with the government on proposed changes to legislation. And that was supposed to be confidential. And they gave that information to their clients so they could get ahead of it. They're double dipping, they're getting paid by the government helping them close some tax holes. In the meantime, because they have such deep awareness of them, they're double dipping in terms of clients to avoid those. And this is the same thing I think we talked about in Canada with all the audits of the forest and the forest protection. It turns out they're issuing these reports on deforestation, KPNG was, so they're getting money from the government over here on this hand, but they're also in the committee creating the rules. And also auditing the actual, the forcing companies are, right, like it's just, they're just double and triple dipping and it's all conflicts, it's all conflicts. That's the right word for it too, by the way, it's conflict. All right. So pivoting away. Definitely enough. New Sherry. Do you want to say in the big firms because there's news about BDO, CLA, I was thinking we could save that unless it's burning, David, because we've talked enough about the big firms. Small ones, because I think most of our listeners are small firm owners. They work in small firms. That's what, you know, that's a drama, it's exciting. Small firms, you can create some, some 30 million R5. This episode of the Cloud Accounting Podcast is sponsored by Relay, between Blake and myself. We now have three, four, or maybe five business entities, 20 or so checking accounts and dozens and dozens of virtual cards. It would be impossible to manage all of this, we weren't using Relay's or small business bank. Relay is truly a part of the tech stack we use to run our businesses. Relay allows Blake and I to each have our own logins. We can grant access to our team and even our account without sharing passwords or two fact authentication codes. Relay allows us to grow and scale our baking needs without ever going into a physical branch. I recently added an account to receive inbound merchant services with just a few clicks. And I had to create a payroll checking account. Again, just a few clicks and I instantly had access to my ACA chip vote to give to my payroll provider. With Relay's virtual cards, we can issue debit cards toward team around the world for needed business expenses. I can instantly spin up a new Visa debit card and set both daily and monthly spending limits. And when a team member doesn't need their card, I can freeze it until they need to use it again. To learn more about using Relay in your firm and with your clients, head over to cloud accounting podcast.promo slash relay. That is cloud accounting podcast.promo forward slash RELY. So I saw this article on Yahoo Finance. I'm a small business owner. How much will ACPA cost me? And David, you and I have been talking on the show about how we tested out TurboTax full service business and we finished that experiment and it cost us $1,500 to file our LLC tax return with TurboTax business. So I saw this headline and I thought, oh, that's interesting. I wonder if what we paid is in the range. What we should have paid. Was it too high? Was it low? In my conversations with many some CPAs and enrolled agents, tax preparers. Some have said it's low. Some have said it's high. So it seems like there's a wide range. So anyway, quoted in this article is accounting firm D Mercuyo advisors, a small, they said a small business owner should expect to pay between $1,500 on average to have a CPA firm prepare both their individual and business tax returns. So David, according to this firm quoted in Yahoo Finance, we overpaid because we paid $1,500 for just a business return. I've been over paying a lot the last three years. Roger, you teach about pricing, right? In your school. I do. Okay. What's your reaction to this? Is that reasonable between $1,500 on average to have a CPA firm prepare both your individual and business tax returns? Short answer is yes, based on the people that I speak with. The one thing I will kind of temper that with is this. It does change based on that being a national average where you're at, metropolitan areas, you're definitely going to be charging a different amount. So the regional or the metropolitan variable there does play into it. If you're actually dealing with specialty services, that'll add to that as well. So I think that's like an average, I think it's a safe number to be throwing around. But it wouldn't surprise me at all if somebody added on another $500 to maybe $1,000 more to put into that $2,500 range. So that's at a face value that's totally fine. At least it's starting to be a thousand and the article didn't say like, yeah, $250. And everybody price that's off of that. I saw this article. You should be charging me $250. Yeah. Honestly, the thousand is a little less than what I would have expected. I would have expected something like 1,200 to 1,500 as the lowest. So the thousand is a little bit on the lower end. But when you consider that there's definitely places in rural areas where you do see traditionally these numbers just a little bit less than average, it stands to reason. So depending on your listenership, you could find that somebody up in Montana, somebody in North Dakota, they're going to say, oh, yeah, that's perfectly fine. But then you talk to somebody in San Francisco and they're going to be like, are you kidding me? This is a $2,500 or $3,000 thing. So that's what I experience. Yeah, it's highly local. And it depends on, yeah, if you're in a metro, if you're in a rural area, it's impossible to generalize across the whole country. The US is a big place. Yeah, it is. And just like housing costs very dramatically, like there's places where you can rent a whole house for, you know, under $1,000 a month. And then there's places where that's going to cost you five to 10 times as much, right? Yeah. So you basically start with a national average and then with that you start to put in some regional components such as metropolitan specialization, so the industry components, whether or not there's anything unique going on with the service. But as a starting point, that's a national average. Yeah. So if you look at what into it is doing with TurboTax full service, the business returns are $1,500 flat fee. David, do you know what TurboTax full service individual is? No clue. TurboTax live full service. Let's just take a look at the personal price. Says start for free. Pay only when you file. Of course, they always say start for free. I come in at $3,50, $400,000. Okay. So full service is $219 to $409 state additional. So let's just say it's like $300 to $500. So basically $1,800 to $2,000 if you did TurboTax full service for both individual and your business return. So Roger, I mean, should everybody be raising their prices? So that's our minimum? Well, here's where it's going to go. The conversation that I'm sure most of you are having is too many people are pricing themselves too low and not really considering how much their services are worth. And so it's not uncommon for me to have conversations with firms where the first thing that we're addressing is that their pricing hasn't been changing. It needs to be increased. They're not valuing their services correctly. And so I would say more than the average is typically a pricing issue. So if this the average is $1,500, that's great. But you're saying that you paid that for just the filing for the business and they're incorporating there the business and the individual. So it's just a proof in case for the fact that the people are today in the industry just under valuing their services and not charging enough. So maybe a 10, 20% increase would be a warranted thing. Absolutely. Think back to when TurboTax Live started launching. They're undercutting all my clients and all this. But when the first moves into it really made was they changed the prices immediately because I think they realized like we can't do this for $99 and they just so so you're right. Now maybe the market price wouldn't do it has is probably pretty close. If you're below that you have some room to move up because it's for you to be well you could go to TurboTax. They cost this much. I'm only like $10 more. You have room to move your prices up right now. And if I could give into a credit, I would basically say they're helping the market because it's causing everyone else to skittish to raise their prices to basically do so because they can see that the market can demand and expect that. So all of the sudden these people that are squeamish about whether or not they ought to be charging their clients more, they're realizing their clients are paying this. The businesses around the corner are going to into it and paying this amount. So it does give them that confidence to perhaps go out there and do that or just price themselves a little bit below and say for $1,500 I'll do your individual and your business. And be that competitive person in the local market. And if anyone complains you just say, hey, you can go have into it TurboTax do it for more. Right? That's a great argument. That's a great argument. And a very impersonal experience. Yeah. Yeah. So that's where I go. So I've got a story about online gambling. David, Roger. Do either of you... Do you want the Bahamas? Well, you don't have to do it in the Bahamas anymore. It's all legal here, right? I feel like every... Give yourself a phone you can gamble, basically. Yeah. So we've got major league sports going to Las Vegas, which used to be totally untouchable because of the stigma against sports gambling and now we're all like into it. We're all on our phones. We're all gambling on every game. I haven't tried it yet. Maybe it would get me more into watching sports. I'm not mature enough to install gambling up to my phones. I know my person I enough, like, you know, I won't do cocaine, I won't put a gambling up on my phone. There's two things I just know. The personality might like too much, so I'm not going to do those things. Well, isn't the gateway drug to all this the fantasy football type thing? I guess so. I never got into that too because it was like too much work, you know? Like, I don't need another full-time job during football season. There's a lot of whether it's fun or brackets or 20 bucks to make. Yeah. I'll do it. I'll do it. I'll do it March Madness bracket because that's easy, right? You're doing that without your done. It's too much work. You pick them by the colors of their jerseys, right? Or randomly. So, here's the story here. So the story here is I saw this in the Wall Street Journal. Online sports betters lose more as parlay's gain popularity. So parlay bets are these bets where you have to win the bet, you have to satisfy multiple conditions. My team is going to score X points and this receiver is going to score this many touchdowns and something else happens. And you combine all these smaller bets into a bigger bet and if all these things happen during the game, then you win some amazing amount of money and it could be, you know, like I put in $50 and I could win thousands and thousands of dollars because it's unlikely that all those things will happen. But it's a way to bet with a small amount of money and have a potentially big outcome, right? The same psychological reason people like playing the lottery, you know, spend a dollar, you could win a billion dollars kind of thing. And parlay bets have increased in popularity with betters and they've been pushed by these online gambling sites so that it's one of the top things that you see, you know, they're promoting these parlay bets a lot. I dug into this article and I wanted to know why, you know, why, what the Wall Street Journal wants, you know, why is parlay betting getting pushed so hard and it's because the house makes way more money on parlay bets than they do on, you know, regular bets, like just, you know, who's going to win or that's the margin points. And there's a lesson in here for accounts, but first let me tell you the difference because it is a lot. So on a typical straight bet involving single contest, the house is hold rate, meaning their margin is about 5%. So they keep about 5% of all the money that's bet and, you know, that's their take, right? And the rest goes out back to the betters. Because those are goals to keep, if for straight bets, a little balance, they want to be perfectly in the middle, perfect equal amount of bets on both sides and they just take their 5% big and that's it, right? Yeah. Which like, if you think about it, hey, that's pretty reasonable for the house to take for given the service they're providing as the, as the booking hold rates on parlay bets on the other hand, offer the house 15 to 25% 3 to 5 times the margin. And why is this? Well, it's because betters can't easily compare parlay bets across betting sites because every parlay bet is unique. So I can't go to one website and see, oh, you know, the payout is this and the payout is this. I can't compare. It's apples to oranges. Yeah. You can't compare the spreads on each of the bets, right? And so that's why all these sites are pushing parlay bets. And so from a sales and marketing perspective of running an accounting firm or let's say, you know, you're in corporate and you're helping your company come up with pricing strategies, this is what you want to do. If you want to have a bigger margin on your services, you don't want to be easily compared to the guy down the street or the other service provider in your area. So you want to create bets or services or prices that are not comparable. So if you're pricing your tax return, like if you're selling a tax return for a price, like a business tax return and everybody else is selling a business tax return, I can easily price shop. So the question is, how do we change the way we price so that it's not easy to compare? And subscription pricing is a great way to do that. So if I'm selling you a subscription to bookkeeping and tax services that costs $X per month or quarter a week or whatever it is, you can't compare that to the price somebody's charging for a tax return. Or even just bundling, even though you're bundling price, like somebody could try to do the math at the two or three separate, but even that's hard, right? Right. If you just do one bundled price, that's a better way to say it, David, because that's what a parlay bet is. It's a bundling of multiple bets. So when you bundle, you make it harder to compare. Roger, I'd be curious to know what you think of that and like what you teach in terms of pricing strategy. The way I basically simplify this entire discussion is there's five pricing strategies, and there's more popular ones within this, but it's hourly flat rate, menu pricing, revenue pricing, and value pricing. Value pricing is that enigma one that a lot of people just have a lot of fun with. But when you go to the menu pricing, menu is by default that bundle pricing that you're talking about, and that's where you're saying, pay this fee over a period of time, and you'll acquire all these services. And so I'm quite a fan of it. In fact, I would dare say I encourage most of my clients to work with two pricing strategies. Typically, it's the hourly, and generally it's the menu pricing because of that bundle component. You can really kind of create these nice packages that the client is able to kind of determine, okay, what do I really need? You can then take that client and have them just pay over time. So just an example, that $1,500 tax return that you paid for your firm, what we would want to do is amortize that and just basically take in over the course of months, just have them pay, say $150 a month, over the course of the year, such that when it came tax time, I didn't have to collect $1,500 from you, and that transaction, I've already secured you as a client. You're not going to go anywhere else because you've been paying me. You don't want to leave that on the table. And at the same time, it gives me an ability to kind of nurture you. So all of a sudden, I'm getting a lot of these best components. I've got the subscription, so I've got the recurring revenue, I've got the client retention, I've got the bundling, so there's a lot of great features that come into play there. So you take the $1,500, break it up into 12 payments, say $125 a month, but then you could layer on the bookkeeping, the advisory, maybe you increase that $125 a month to $200. You could also bring into it the tax planning component. So not just the preparation of the return of the tax time, but the planning that I'll be meeting with you in the second, third and fourth quarters to come up with a strategy, see if we can implement the strategy, see at the end of the year if there's any implementations that we need to do before year end. And that tax planning, I've built into that monthly fee as well. So now I'm not doing, say, $125, I'm doing $200 a month, and that's reasonable. For $200 a month, $250, $500 a month, I'm getting tax planning and preparation. Okay, we're making sense here. If you roll an app, I'll cover your quick subscription, your other subscriptions, and that makes it even harder to figure out the total. I think, I've been, I've been, we've talked about this before, and it was just in my mind this morning, but Mr. Carwash is based out of Tucson. And I think they're doing $700 million in like car wash subscriptions, right? So if car wash can do a subscription model, everybody should be able to do this. But I just pulled up here in Atlanta, and there's a Mr. Carwash, right? You know, they'll tell me, oh, you know, it's like, yeah, that's based out of Tucson. But going back to what you said about this bundling, you're not being able to compare prices. You drive around your car, you will see occasionally the $9.99 car wash out there, or even gas stations, all the gas prices are on the curb. But most of the car washes, the ones that make a lot of money, don't have prices. You pull in, and then it's this confusing menu. It's all bundled. It's all bundling, and you're like, I guess I'll take that package, even though I'm pretty sure the $27 package and the $12.99 are the same. It just looks different on the menu, but it's that same thing to bundling. You can't compare prices if they don't put the price out there, and it's bundled. Yeah. I can never figure out like the sealer, the wax, the stuff that they spray onto your car, like, does that do anything? I should probably look it up. But it looks pretty though, it's the nice colorful thing coming down on your car while you're driving through. I'm just the sucker who ends up signing up for whatever the highlight is, the most popular package. You know, that's me. I'm like, okay, decision fatigue. Let's just go. It's called group sync. You're just trusting the masses. Exactly. This episode of the Cloudy County podcast is sponsored by Helsum. 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If you're ready to simplify your payment processes, save on processing fees, enjoy top-notch support, and feel good about your payments. Hit over to cloud accounting podcast.promo slash Helsum, that is cloud accounting podcast.promo forward slash H-E-L-C-I-L. David, you got anything else? It turned out to be like AI. Like, yeah, sure. Let's talk about AI. Oh, a lot. And specifically accounting. So, this is a story firm out of Australia. There's the headline of the article. New bookkeeping platform Friday, I think Friday, but starting with the word Thursday. All right. It's Friday. The right is AI is on its way to save you from taxes and accounts. So, I know, Blake, you have a presentation that how AI is going to save accounting. Now, somebody's saying AI is going to save people from account. From account. So, what's... And so, what are we doing that needs? What do people need to be saved from? Well, like, it's going to help AI is going to automate banking and accounting and tax and eliminate time waste that I'm financial admin costs. Like, that's kind of what their play is. But then, you know, digits this week and outs, they have some AI play where they're going to have... They're going to have a chat tool, you know, a generative chat tool. But because they have the math data, now it's going to be math data, and they're making a claim that I'll read this directly from the press release. This allows digits AI to understand the user's intent and request computations without knowing the data's underlying schema or encryption keys, while delivering 100% accurate responses to every request. They're making that claim, and then I don't know, I actually put the link to the tweets. There's another product that's just launched called puzzle.ai, and this is autonomous accounting. You know, you as a startup won't have to spend money on an accountant, it's going to save you time. I feel like it's right back to these overclaims we're seeing, right? Like, it's just... Well, I don't know, and then I also feel like a lot of these per things are just like, you're connecting with bank feeds and pulling on data, which is what QuickBooks and Zero have been doing for a decade. Like, to me, it's not that there's nothing mind-blowing about this, but they're definitely getting all the press right now for this. Yeah. Well, I think the problem with these tools is, sure, they might be able to automate coding of transactions, like you said, from the bank feed, ingesting those credit card transactions, bank transactions. But without more context, the insights they can deliver are pretty useless. Like, a great example is marketing spend. Oh, your marketing spend increased 40% from last month to this month. Okay, great, but that's useless information without context. Why did it increase? What did we do? What did we spend the money on? And the bank feed's not going to tell you that. I mean, it might tell you that you spent it on Google ads or Facebook ads, or it's not going to tell you, like, what campaigns you ran. And I still subscribe to your belief that, like, start up accounting is easy. You have payroll, and you have some expenses on a credit card. You don't have any income, like, pretty much like this. It's super easy to automate that kind of accounting through bank feeds. It's super easy. You have the same spend every month on a credit card for Amazon Web Services and Facebook ads. And it's very easy to do this, but I don't think anything real, unless you're real. I'm not knocking at startups that are not real businesses, but I'm just saying, like, real companies have complicated stuff. No, I think what you're saying is fair, David, is that most startups are just looking at burn. That's the number every month they look at is how much are we spending? And a lot of, I think there's like five major categories that, you know, SaaS spend can be condensed into. And so you just agree all the transactions to those five expense categories, and you report that to your board. And that's all they care about. And then all the other stuff is non-financial metrics, right? The SaaS metrics on, like, cost to acquire customer and all that, but, like, these platforms can't deliver that information. I don't know. It's just, it looks cool, and then you go in, you actually start asking questions, and you realize, like, okay, what's the use of this? What's the utility of this? There's not much. You jump in on this, and I'm going to be kind of bold. If you will remember, and I'm going to date myself with this, I believe QuickBooks had a campaign early on that said, if you could write checks, you could do your own books. Yeah. And it was helping people transition from quick and over to QuickBooks. And it was simply saying to the business owner, look, if you can write a check, you can do your own books. And initially, I think the accounting profession was like on their toes, you know, or should we be scared of this whole thing? In the end, it became a blessing to the accounting profession because the business owner gets in, starts using the platform, and soon realizes, after three to six months, they've messed up their books. This doesn't make sense. I don't want to do this. And all of a sudden, you had people leaving QuickBooks coming out to the accounting profession, saying, can you go clean up my books? Can you figure this out? And will you just take care of it for me? And I presume that a lot of these things that are just trying to play the magic AI card are going to fall into the same situations. You'll have startups, you'll have people that are expense sensitive that will actually go ahead and try out the thing because they're early adopters and they just want the sexy little AI thing, but they're going to eventually need, as a business, great accounting advice and insights. And that's where they're going to have to turn to the accounting professional and get that perspective because we're not going anywhere, I refer to it and I jokingly say this all the time, we're the second oldest profession, we're not going anywhere, we're going to be around for a long time. We are relevant in business and the AI thing, if you embrace it, can be a tool that we can utilize as a profession to actually simplify and help us become more efficient, but it's not going to change the relationships that we have with our clients in the sense of necessity, they need us. And somebody tweeted that, because if you think back, things are going very fast, but let's go to the previous generation of these AI plays, let's go to Skullfactor, Bench, and Pilot from a whole two and a half, three years ago, if we're going back into accounting history here, and those like Skullfactor, whereas they couldn't do it because they can't scale the humans. And Pilot and Bench have really started to add a lot more humans to this process, like you have to have the humans in the relationship and the people, like you just, in somebody said at the end of the day, when somebody has to make a really important business decision or they're facing bankruptcy or whatever it is, they want to talk to a human, they do not want to talk to an AI type thing. So long term, can these businesses scale? Like, they probably get excited, they're going to get lots of investment, they have all the buzzwords. Oh, look, 160 other founders invested in our company, like they got all the buzzwords, but at the end, they're going to discover, just like what else, you have to have humans in this. You know? So I'm going to simplify this, and I'm sure both of you have some great comments on this. I really feel that this breaks down into three areas, and this is how I feel it relates to the accounting profession. The first thing is there are those who want to go into the interfaces, the chat, GBT's, the barge, they want to go in and actually write the prompts and may become great prompt writers. And the results that the AI provides is contingent upon how well the prompts are written. So if you're a great prompt writer, yeah, you can get some excellent insights, but business owners don't want to become prompt writers. And so that's where I think we need to go to the next level, which is all these different tech support things that we have within the accounting wheelhouse, all the tech stack services, all of them are going to integrate into their platforms, AI for us. You're going to go to HubSpot, you're going to go to finance, or I can't remember the name of it right now. The point is they're going to integrate these things into the platform so that as accounting professionals, we're able to actually through what we're already using today, access this powerful tool. And that's going to be wonderful because they're providing for us this interface so that we don't have to become expert prompt writers, but yet we're leveraging the AI experience. But here's where it's going to be really, I think, the deal breaker for the business owner. What they're looking for is they're going to ask the question, therefore, what? I'm a business owner getting this great insight from the accounting software. The AI is telling me I need to do certain things in the business because I asked a certain question, or it just volunteered a certain bit of information. How do I implement this or who's going to hold me accountable to make sure I follow through and do this? And that's where I think it comes to that real life person, the accounting professional, whether you're considering yourself as CFO and advisor accountant, whatever role you're considering yourself as, that's going to be the contingency as to the successful implementation of all of this in the business of our clients. Well said, Roger, I think that's a great way to leave this episode. If our listeners want to get in touch with you, find out what you're up to, where should they go? Universalaccounting.com, great bit of information. There are free resources that everyone could take advantage of, also the podcast is mentioned as well. Oh, yeah, what's the name of it? Building the premier accounting firm. Find that wherever you listen to, find podcasts. And David. Not only does Roger have that great voice for podcasting, his photograph of himself that's on his podcast. It's very well, well done. He's very attractive on the cover of his artwork. Thank you. David, I appreciate that. Very good. Very important. He comes up very authoritative, too. It's a very, yeah. Very, very important. David, where can our listeners follow you? I'm just in all the socials at David Leary, easy to find. And I am at Blake T. Oliver. Thanks everyone for listening. Don't forget, you can earn free CPE for listening to this episode with the earmark app. Learn more at earmarkcpe.com. We'll see you around and hopefully join us live next week, subscribe to our YouTube. Here are the accounting podcast on YouTube. Bye everyone. Take care. Bye-bye. Time for the Class of Fides. Is it possible to scale your firm while significantly reducing your workload so you can spend more time with your family? 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