525 What’s The Most PROFITABLE Accounting Firm You Can Run?

This is going to be a juicy one. What is the most profitable firm to run? A bookkeeping firm, a tax firm, a CFO firm, or wealth management? Spoiler alert. This is just one of those episodes that is going to make somebody mad. But I'm sorry, we're going to go through what, like, what is the easiest business to start? How much experience do they require? How easy is it to find clients? But ultimately, at the end of the day, how much money is people making? And if I were to go into this, either starting a new firm or extending my firm into something new, which ones should I consider? Let's do it. We're going to talk about it. This, this is definitely, definitely one of those make people mad. Okay. It is a cage match. Four types of firms go in, only one will come out. Tax, bookkeeping, wealth management, and CFO stuff. Let's look at them through four different lenses and sort of grade them for each first lens. How hard is it to get good enough to be able to hold yourself out there as a firm that does this thing? Well, right? So how much work does it take to be, like, serviceable and this and this? I mean, people are already mad. Where I have 180 years experience doing this, that's fine. I'm just talking about what can get you over the threshold of, like, being able to put out your shingle and say, I do this, I would say the easiest of the four probably going to be bookkeeping. Now, with all four of these things, there's a vast spectrum of how quote, unquote, good somebody is at this, but also your technical capability, which I think is what most people think about when we say good, buddy, that has got absolutely nothing to do with your ability to run a successful business doing this stuff. Which sucks, because if you're an accountant like me, you are a purist. Shouldn't it be that the universe rewards the most technically capable among us ever? Do I wish it were so okay with that? We've made the bookkeepers mad. I'm saying bookkeeping's easiest because there is the shortest, I think, educational track to being able to, like, hustle somebody's QuickBooks online for them. But again, huge skill ceiling there. And even running a profitable bookkeeping practice is generally about a lot of things you're doing besides bookkeeping. Okay, next one here. I don't know. I would probably say wealth management. If you think about the most direct path to getting your certifications and all the stuff that you need to be able to do this, I would probably put that next Third hardest, I would probably say CFO work. Particularly if you have deep, like, specific industry experience, you can be really valuable to other folks in that industry, like pretty quick. And fourth, I'm probably going to say tax. It is very hard to tippy toe into tax. And I mean this totally comes down to the threshold of what is good enough and how much capability is enough capability. But I can tell you as someone who came up in tax, it was probably seven years until I was like, confident speaking with clients and like being able to navigate, you know, 95% of scenarios. I think that's the norm. Takes a long time to get there. Lots of people doing tax work with much less experience than that. The reality is it is very easy to dunk on people that have less experience than you. But what are they going to do like you, you have to have that, get that experience to, to get there. For most of these things, the place to start is not with your own business. Fastest way to learn is on somebody else's dime. And, and you know, not all employment experiences are made equal. They're gonna be some that'll move you fast and some that'll, that'll move you ahead slow. But learning any of these things yourself from scratch in a vacuum, but very, very difficult to do. Let's go to the next one now. Now that I think everybody's mad. Second, how easy is it to find clients for each of these different types of firms? Easiest I'm going to flip this, I'm going to say easiest is tax because everybody's got to file tax return right now. Everybody doesn't need a tax professional to do their tax. And a very small percentage of the population actually needs a tax professional. But it is a begrudging purchase that entrepreneurs have to make. At its worst, it, it, it never grows beyond that. It is an annoyance and they wish they didn't have to engage you to do this, but they do. And, and a lot of tax professionals will never escape that. We will never become anything more than that begrudging purchase, that inconvenience that the person has to deal with once per year. But I would say, because it's a thing that everybody absolutely has to have, I'm going to say it as the easiest to find clients, all things being relative here. Next, I'm probably going to say wealth management, because people have money and they know that they're supposed to do something with that money. And even though everybody under 40 is just putting it in index funds, they go, the wealth management people. I'm going to Say tax is easiest. Wealth management is next. Bookkeeping is third. Bookkeeping tricky because the perception of bookkeeping, it's very simple. Why would I not just have my mom do it? A lot of folks just don't even have bookkeeping. They just dump all that crap on their tax pro at the end of the year, say, figure it out. And that's the extent of the effort they put into it. Fourth cfo. And I think it's just because there are, there are two types of businesses, businesses that are big enough to justify CFO and then there are businesses that don't know they need a cfo. And so you can end up in this tricky spot where it requires educating a client to justify your services, which means they're not like acutely feeling a pain that you can immediately solve for them. And any type of business where I got to educate them and show them my value before they will buy my value, that's just, that's hard. And to be clear, not all businesses are that way. But I would say CFO firms suffer from that more than the other firms we've listed here. Tax firms like they solve a requirement, a thing you absolutely have to do. Bookkeeping to a degree, the same thing, wealth management. There's an element of you losing money if you don't do that. The offer from a cfo, that's a little more abstract, right? A little bit tougher to package. I cannot wait to see the comments on this one. Okay, two more ways we're going to rank these and then we will, we will decide on a winner. Number three, market price. What you can command for this work. Let's go from worst to best. I would say worst, hardest is bookkeeping. And this is just a product of supply and demand. I think because it is easier to get it into it and because the perception of it is that it is easier than it actually is, people don't assign much value to it. Even though it's like there's many situations where this may be the most important thing on the list, like the biggest thing that the company needs. And I say bookkeeping can command the weakest market price. After that I'm going to say tax. After that I'm going to say cfo. Though it doesn't always necessarily. A lot of us are selling like CFO level stuff, but not at CFO rates. And then last, I'm going to say wealth management. Because making a, making your money off a percentage of somebody else's money is, feels like the closest thing any of these types of firms have to. An infinite money glitch just feels like cheating. Last fourth. The fourth thing we are grading these firm types on level of competition. How hard is it to stand out in your space? Let's go from easiest to hardest. Easiest. I'm going to say tax is a tax just because the vast majority of tax shops are generalist tax shops and they, they suck. Let's real. The bar is so low for tax shops, man, it's like going to the doctor and expecting to sit for 45 minutes and just accepting this is how it is. That is a lot of people's experience with a tax professional. They just assume it's going to suck. The problem is they project that onto all tax pros. I think it's a lot of our accountants get their bad reputation, like in the fact that, man, you could just be sitting there watching a show and someone will be like, well, yeah, well, that'll be the first thing to wipe out, you know, attorneys and accountants. Or there's just some, like, slovenly, unimpressive person in this fictional world that somebody has written and come to find out they are an accountant. And you're like, man, I'm just trying to unwind. Why am I catching strays here? But the bar for, for tax firms, like, it is just so low. I would say simply putting yourself out there as tax firm for X, you know, phlebotomist, taxidermist, whatever that looks like in many spaces. The bar is not any higher than that. Next, easiest. This is a hard one, I guess, not easiest, but the next, like, stiffer level of competition. I'd probably say CFO work because I still see a lot of same issues in CFO firms where most of them are generalist firms. And simply standing out as the CFO for a specific type of person gets you ahead of like 99% of the market. Next, I'm going to say bookkeepers. And then hardest, stiffest competition. I'm going to say wealth management books. Because it is, at least from the outside, it seems harder to differentiate yourself. And again, I'm an outsider here, so I've got a skewed perspective, but I know how to, like, position and differentiate. A traditional accounting firm, a tax firm, a bookkeeping practice, CFO practice. How you do that in a wealth management practice. When dollars are dollars. Obviously there's 100 different ways you can approach that work, but I don't know how to stand it up in a unique, compelling way for a specific type of person. So I'm going to say that's that's the hardest from a competitive standpoint. Hey, something super interesting that I recently learned while I was in Australia. You know how when you flush the toilet, it goes the opposite way. The same thing applies to accounting, actually. Our debits in Australia are their credits. Like it goes the other way. And this kind of blew my mind when I started talking with people because I don't know, I just, I guess assume. I assumed it was the same everywhere, but it's not. Can you believe that? Do you believe that? No, don't believe that. That is obviously not true. You know why? Because accounting is a universal language. It is like love. It doesn't matter where in the world you are, we all speak it the same way. Which is why incoming sponsor segue. Which is why services like Cloud Account Staffing are so helpful. Because they can find accountants for you anywhere in the world. And I'm just going to say it, if you are struggling to find us born snowflake accountants to come and work for you. Like I struggled with finding folks elsewhere in the world that will come and do the work. That that might be the move for you now. Cloud Account Staffing, it's run by a former accounting firm owner. It's not like a fly by night weirdo dude that's reaching out to you on LinkedIn. They can help you find accountants in the Philippines and Latin America and South Africa. But you could do all three and run a 24. 7 accounting firm. Oh my gosh, she didn't think about that. Got people like working 24 hours a day. That'd be kind of fun. It's some logistical challenges to that anyways. Cloud Account Staffing also has a platform where you can hop in and self service and see Apple applicants and schedule interviews with them directly. Pretty cool stuff. Very legit group. I actually know a large number of firms that are very happy users. You'll see this squad out at all the accounting conferences this year. If this is something that you're exploring, definitely worth chatting with Cloud Accountant Staffing. If you haven't done it before, you can have a bunch of ignorant questions like I did. Like that's just how it is. That's also the value of a group like this is they can hold your hand through that. Everything from like how does security work? What are the disclosures I need to put in front of my clients? How do I do it with an international team, like all very important blockers to work through. But if you want some help, chat with the folks at Cloud Account Staffing. Link down in the show Notes really exciting new tech announcement from one of this episode sponsors. Canopy, the practice management system. They've announced Smart intake and it's a collection of features that vastly improve the tax intake of system. We talk a lot about the new crop of like tax workflow tools, right? They're doing that really well. But then practice management systems, historically they haven't done that part well. And knowing having to run two different tools for that. This is Canopy's response. Some new things Canopy's doing. They will create predictive lists of the like the goodies you need this year using AI based on past work. They'll build out the checklist and the questionnaire based on pro forma information. This one is sick. They will pre fill those questionnaires based on everything they can see about the client in the file system. That one's pretty cool. When the client uploads goodies, it'll like match those goodies against the request items. And this is kind of related. It'll rename those documents for you automatically when they come in. Actually at the organization level in Canopy you can create file naming conventions for different types of files and anytime it identifies a file of that type, it'll auto rename it according to the convention. Pretty cool. Great news here. If you're thinking about a change to your practice management system, worth chatting with Canopy. To learn more, check out the link down in the show notes. Okay, so what's the best? What's the most profitable? That was the original question, right? What is the most profitable? If we're looking at like median firms per hour of inputs, I think it's probably either the CFO or the wealth management practice, followed by the tax practice, followed by the bookkeeping practice. Now if you hear one thing here, here's the really important thing to hear. I speak with firms on, on every, every category here every week that are so vastly above and unfortunately below the norm. And the honest truth is any one of these firm types can be stupidly profitable. And so any attention we pay to the average and what the norm is, I think totally misses the point. It is the problem with fee surveys, with benchmarking what you charge against everybody else. Is the goal to be average? No way, man. There's huge opportunities for any of these four types of firms. And I would argue that the bigger driver of how profitable a firm will be than the type of firm it is is who they serve. This is so, so important. You want to run a profitable tax practice, CFO practice, wealth management, bookkeeping firm, serve a type of person that is a profitable person to serve. What does that look like? Well, for one, they got money to pay. As the unfortunate truth is that rich people problems pay better than poor people problems. That doesn't mean that the right answer is to then just serve rich people. But you clicked on this podcast and it said profitability. So you already. You opted into this? Nope. No. Point the fingers at me. So that's requirement number one is how much money do they have to pay for help? Do they even have cash for that? But the second qualifier is they have problems that are high ROI problems. That is. One problem may just be a nuisance with, like, no financial strings attached. And that's the trouble with solving headaches. Things that keep you up at night. Do those things suck? Yes. But is there a clear financial outcome to solving them? Not really. At least not when the marketing's packaged that way. Now, another person that will very clearly make more money when they pay you money to do a thing. That's the bigger opportunity. That is me telling you to give me $10 so that I can give you $20 back. And some entrepreneurs have problems that can be framed that way and others do not. It is why some are great entrepreneurs to go after and others are not the ones that aren't. It's very hard to escape the notion that you're selling peace of mind, which is better than nothing. And that is real. And it does have a value. But it's pretty squishy. As opposed to, we know how to get your beekeeping business from a half a million a year top line to a million a year top line. And you're running 40% margins right now, so that's going to put some pretty good money in your pocket. My CFO practice for beekeepers. We will walk you through this framework and look at the last 50 people that we did this with. 30% of them got this result. Here's how much the deposit is to get started. If you find somebody that has the money to pay for that and you can find the problem, that unlocks something of value for them, that is the most profitable firm that you can run. I will hear from people who start an accounting firm, and they'll say, man, I haven't gotten a lead in two years. I will hear from others who are like, we are. We're on year two, and we just crossed $3 million. Those two things are both true. Those. Those things both happen in the universe that you and I live in. What's the difference? One wasn't selling bookkeeping and the other selling Tax one is serving a type of client that can be very profitable and has found a problem that they will pay top dollar for. Now, even if in your heart you're like, man, I want to help the little guy, like, what about the non rich people that need help? Here was my approach in my firm and how I think about this, it is more of a barbell approach. I'm going to serve the folks at the top of the market that will like, pay to solve very painful problems. That is the profit maximization side of my business. I will then use that profit to help the people that super, super need help. Where a business can get stuck and mired is an exclusively serving the middle. You end up with these, like low bono clients that can kind of sort of pay you, but also in the grand scheme of things, they're doing just fine. We're not the only people that could have helped them. But because we identify more like, these people were like, I want to serve these folks. But then oftentimes we're so busy and overworked, we're not doing anything to help people that have like, no money to pay. So you got to like, find the version of this that you feel good about. My version of it was a barbell approach. We went after super profitable work. We let legacy clients go and when they were no longer a fit for us and would have been a better fit for a different firm, but then we could take that and actually, like, give back. Not for the people who can afford, you know, a $600 tax return, but not an $800 tax return, but for the people who had nothing to pay. Those are the people that I wanted to help. And I think I used to have like a more of a evil framing of this. Like, if I was really just serving the top of the market, like, does that make me one of them? Does that make me a bad guy? I think the devil's in the details because I also lived in a firm that was serving, you know, 80% low bono clients. Bunch of people were doing favors for and man alive, did we run a whole lot of people into the ground as a result. That wasn't a great feeling either. Now it is work to find those people and to find those problems. But we need to be like archeologists trying to find those problems and when we find them, double down on them. And some of the signals to finding a new problem is when a client says yes to like a YOLO price, where they're like, holy smokes, they just said yes to this. Why did they Say yes to this. That's very important to understand. You may have just found a new problem. You didn't even know you were serving similar your A clients. I had a few of these where it's like, why do these people like us so much? And I learned more of their story and it was like, well, we've been trying to hire somebody to do what you're doing for us for the last three decades. We've gone through probably 11 people. And had I found you earlier, my entire life would have been different. And so then I'm like, okay, I actually need to then go find dentists who are trying to train their office managers to do QuickBooks. That that is where that person was living for decades. And I'm like, okay, we're not going to be the world's biggest dental office manager QuickBooks Training Company. Because if that person has that problem, 100 more have the exact same problem, right? And so regardless of the type of firm that you run, this is what we're in search for. In search for. In search of the folks who have the money to pay, who have problems that are high ROI problems. And the rarer the pain, the better. Oftentimes if we're like, okay, I'm just, I'm just going to niche into doing taxidermy. Now we say I do taxes for taxidermists or I do bookkeeping for taxidermists. And that's better than nothing. That's better than being a generalist. But what's the alternative that actually speaks to specifically to a pain that only taxidermists have? Because every other accounting firm that doesn't say we just do taxidermists, you know what they'll say? Oh, yeah, we do taxidermists. We also do fishing boat captains and farmers and all that. It's all the same. It's all accounting, salt tax. But if you are deep into that space, you know that's probably not the case. You know, there are pains specific to them that you can speak to better than other firms. And it's why in our marketing, we shouldn't fall back to tax for taxidermy. We should lead with the rare pains that we can solve for them, because that's something we can solve that the alternatives cannot. And our ability to command premium prices and stand out in our marketing and all that, it is a product of how many substitutes the buyer perceives there to be. And as long as they think we're doing something that any other accountant can do, substitutes abound. We're going to Be taking prices rather than setting our own prices. And we won't be able to attract anyone to our firm because we still look like everybody else. Oftentimes I get a lot of questions like, we do this right now. Should we also do that as a way to grow our firm? Or this is a big one. Clients love us and they now want us to go and do this other thing. They will always ask for that. They will always, always, always ask for more. If you do that, next thing they're asking you for right now, there's going to be another thing after that. I can tell you the very hard business to run is the one that is all four of these practices. What is the. Not exponential. It's not like squared twice as difficult. Squared's not twice. It's like quadratically as difficult. I don't know, man. Math was a long time ago, but each additional thing you do in your firm, it is an exponentially harder firm to run. I mean, it's so hard to do one thing well. And I think we, we perpetually underestimate how much of our focus is required to do things well. And so we usually try to do too many things and do none of them in particular very well. So I would try to steer you away from. But we're doing books right now. Maybe we should do tax. That's a very, very hard business to build. The better ver of your business is probably. We do books now, but next we're going to do books for X. We're going to do books for this specific person, this specific problem. Believe it or not, that is an easier path to growth than doing whatever those people ask you to do. Taking on wealth management, tax, something like that, man, if you made it to the end of this, bless your heart, got thick skin, man. I think we probably made just about everybody mad here. Drop a comment, tell me what I got wrong. Also tell me if you're like turning the corner on that, that new client or that new problem that you're trying to solve. I would love to see that in the comments. Anytime you stumble into those and they're very valuable problems, that is the best feeling in the world. And it's so exciting. Like it gives you that renewed excitement to go out and do what you do for a more specific type of person totally transforms the business. I've seen a few recent stories like from folks in the wild who have shared that, but they're still scared to commit. They're like, I can see it now, and that's so exciting. But I still got 90% of my business over here. That is what I used to do. Oh, I just want to not shake them because I'd probably get in trouble for that. But I just want to push you commit to that better version. You will never look back. So if you can see that better version, drop that thing in the comments. It'll actually be inspiring to other people to see. And then maybe in their own business it'll help them see like, oh, I actually do kind of have a version of that. Gang, thanks for being here today. I'll catch you in the next one. Hey, real quick for my podcast friends, we just announced 21 live events were running between now and the end of the year, starting with dinners in Denver, Chicago and New York City this week. Get the whole team out. If you do tax work, celebrate getting past the deadline. Right from there we're headed into it. Connect to Vegas. After that, events in Toronto, Orlando, Austin, Oklahoma City, Phoenix, Seattle, Portland, San Francisco, L.A. atlanta, Nashville, Chicago, Washington, DC, Philadelphia. We're back in New York City again. And then Boston. And 13 of these events, they are what we're calling Jason on Firms Live, a half day workshop experience that rolls into a dinner that I am so excited about. We've built these ones from scratch. These are events where I want you to bring your entire team to get everybody rowing in the same direction headed into 2026. If you're an accounting firm leader that has ever struggled with change management, with having all this enthusiasm but not being able to get the team to commit to your vision, it's the entire reason we built these events. If I've ever inspired you on this podcast, the idea of the idea with these events is that we can now inspire your entire team to get everybody working in the same direction. So you're not putting the whole thing on your own back. We'd love to see you out in the wild. Head out to jasononfirms.com events. You'll find up to date information about everything that's coming up. I'd love to see you there.