593 THIS Drives Better Accounting Firm Workflow [How modern firms have found a better workflow approach]

Do you suffer from feelings of, where did that day just go? A persistent feeling of working all day and somehow going backwards? Or opening your email to do one quick thing before emerging 47 minutes later with nothing done and 3 new problems? If this is you, then you may suffer from Chronic Productivity Deficit Disorder. My name's Jason Staats, and I'm here to tell you, you're not alone. An estimated 4 out of 5 accountants suffer from undiagnosed CPDD, and the 5th one, he's lying. I suffered from CPDD for over a decade, and today I want to share a groundbreaking new framework to get you and your team to a more productive place. Productivity starts and ends with how your humans, you and the people on your team, approach their day. Because busy is important. Busy isn't productive. Got some really tactical advice for you today on not only how to get yourself to a, a point where you maybe feel like you got a little bit more done by the end of the day, but how to create an environment for your entire team where they can do the same. If you are new here, welcome along, my friend, to the Jason on Firms podcast, where we talk all things running accounting firms. Whether you own a firm, whether you work at a firm, people tune into the show to get smarter around the strategy of running firms. The intros to this podcast, they're not normally dumb pseudo-pharmaceutical commercials like that. Just a fun little twist today. But that's not the only thing we're covering. We're also looking at a very real accounting firm, single owner firm, probably going to clear about $500,000 in profit this year. But they are staring straight into what is the most common thing, the most common wall that accounting firms hit where things get real not fun real fast. We're going to talk about that. We're also going to answer a whole bunch of questions around accounting AI because as much As I keep trying to not drag this podcast always into AI, that's all the questions everybody keeps asking. So maybe I don't need to be worried about talking AI. We're going to cover a whole bunch of those questions in the mailbag segment at the end of the show. But first, let's talk CPDD. That's not a real thing. I made up the acronym. But if I reflect on my time in running a firm and working in firms for 15 years, my time working in firms was not very productive. And part of it was my fault and part of it was the environment that had been created around me was not one that was conducive to being able to really get work done out, like work out the door effectively. So I want to run 7 ideas past you. Not ideas, like more tactical things that can be helpful to you, but also are things to discuss with your team to ensure that the workplace is somewhere where they can be productive as well. So first thing, number 1, and this is something I probably didn't do until a few years ago and now I do religiously. You got to have a plan. Like you can't just walk into a day and let the things find their way to you. If you do, then I would say you're, you're sort of solving the world's problems instead of solving those that are your own. Instead of proactively going out and being like, hey, here's the most important stuff that'll move the needle. Not the little trivial, like ephemeral stuff, but the big things that will solve the big problems. Lean into the big opportunities in the business. You don't even know if that day is a success in hindsight, unless you created a plan for what you wanted to tackle ahead of time. So for me, that plan My plan is usually developed the day or the night before so that when I get up in the morning, I swing around, my two feet hit the carpet, I wiggle those toes, I do a little yawn, I stand up, and then I sprint full speed to a bowl of oatmeal and then I get to work. So first things first, do you even have a plan for what the day ought to be? And with your team, where do they put that plan? When do they develop the plan? There should be a clear, like, right answer for that because in order for a day to be a success, there had to be a plan that you then executed that day, right? Okay, second thought here, very important. You gotta put your own problems first. In my case, I got into email at 10:00 AM every day, and that was because before that, I was working on my own stuff, solving my own problems. You could push email even later than that. In a perfect world, you would. But my best work and most of our best work happens first thing in the morning. I know night owls, like you got that chunk of time at night where you're just a wizard, but even night owls, like, Most of us have that chunk in the beginning of the day where we are most clear-minded and can get stuff done. If we wade straight into the inbox, which by the way is everybody else's problems, not your own, then you are giving away the best of yourself to other people's problems rather than your own. Now, point number 3 here, the inverse of this is thinking about then what do I do at the end of my day? For most of us, you hit like 2 or 3 in the afternoon and things aren't great. If you think about the little people operating the control room in your brain, you know what that always looks like in the cartoon where they like zoom into the person's head and there's like a control panel there and some people kind of walking around. Those people past like 2:00 PM, they're not doing much. And no amount of stimulants and planning ahead will solve that. That's actually, that's not true. There are definitely ways that you can like make the afternoon more productive, but know that like hour number 7 in a workday is not equal to hour number 2 in a workday. That is the case for all of us. So then how do we stack the plan? How do we stack the things we have to do that day in a way that then acknowledges the reality that hour 7 will not be the same as hour 2? My take here is you actually backload at the end of the day the things that you are most looking forward to doing, the things that don't feel like work, because an hour, 60 minutes of time is not a yardstick for output. It's a yardstick for input. And that really, really hard thing, that's probably best put in the beginning of the day. Whereas that thing that you're looking forward to, that thing that will come easier to you, if we save that to the end of the day, I'd say there's a greater likelihood that then it hasn't pushed the really hard tasks into the end of the day where you kind of end up feeling like you're spinning your wheels, stuck in quicksand, quicksand, not actually getting that thing done. Right? So number 1, have a plan. Number 2, put your own problems first. Number 3, do the fun stuff last. Number 4, let's get serious about distractions, because the way that most of us work, the way that most of us do anything these days is in a very distracted way. It's actually, I mean, it's like pretty sci-fi these days. If you say walk through an airport, the next time you do, look around at what everybody's doing. Everyone has their heads down in a device. Like it's weird. Like they're all looking at their phone, all doing something on their phone. They have this idle moment and they have to be stimulated. I mean, try not taking your phone to the bathroom. Next time. Like you almost need a call light, like a, you know, like a little, like the red switch, like on the hospital bathrooms, like the Life Alert button on the wall. Please, honey, bring me my phone. I've made a huge mistake. That's how most of us are operating these days is we need that level of like stimulation and distraction all the time. Honestly, I like to dunk on like 4 monitors, 6 monitor guy. I do think like huge monitor real estate, it's just begging for that. Things to be left up that will distract you, like having your email up all day. There's no world where we should all have our email up all day. All of the counterarguments, we can go down the list. All of the counterarguments have a solution. Well, what if something spicy comes in? Something spicy comes in, they're probably not gonna send you an email. Like if my children's school falls over and I have to come pick them up, they're not gonna send me an email. They're gonna send me an email after they've left me 3 voicemails. Leaving email up all day is like the hat wearing a hat of inefficiency because the justification is usually, What if? Well, what if this thing happens? And so there's this very small chance that it would have been a good thing that you had email open. And the cost of that is guaranteeing that you're less productive because you're distracted by it all day. Now, the harder things are like team chat, like Slack or Microsoft Teams. And this gets into like, are we creating a work environment where people are allowed to focus? Or is the expectation, as it is with chat platforms oftentimes, is the expectation that you will instantly respond any time somebody sends you something. Now, there's definitely stuff that's like no-fly zone, like social media should not be up. If we think about the regrettable ability of how we spend all the minutes in our day, like if you look back at the last 24 hours, what were the minutes that were least regrettable and the minutes that were most regrettable? For most of us, consistently, some of the most regrettable minutes that we spend are on social media, especially if we are consuming rather than creating. And so like, let's get real about the ways that we are distracting ourselves during the workday, because it really does make a big difference in what you can get out the door. I'm always— this is similar to golf guy, and I've taken some pretty serious shots at golf on this podcast before. I've been married to my wife for 12 years now, and things are pretty good. Things aren't perfect. No marriage is, but it's not golf bad. We're doing pretty good. And similar to golf guy is cable news TV in the office guy. All right. That big television on the wall. And I'm not talking about the guy that's using the TV as a monitor. Which is a whole different type of guy. But the guy with the TV on the wall that has to be up on whatever's happening in the world that day, I don't even think this is a hot take. I don't, I don't think you need that TV in your office. I'm going to worry about the things that I can influence, that I have control over. Most of us don't have the ability to influence what we see on the news. And so having that thing on when I work, probably not the move. Cable news is the Gulf of work. You know, I need a thing that will fill a bunch of my time, Because if I don't, I'm going to have to watch the kids. So I'm going to go golf. At work, I don't really want to work, so I need something that can fill the time. So I put on CNN. That's a strong analogy unless it's a metaphor. So number 4, get serious about distractions. Number 5, if you hear one thing in this podcast, this is so, so powerful. We've covered it before, like a year or 2 ago on the podcast. I'm going to give you the real short version here today. Run the schedule of the makers in your firm on maker minutes. Oh man, manager's minutes. This is a concept from Paul Graham. Paul Graham, software think boy. I'm just gonna read you a few paragraphs from how he talks about manager's minutes versus maker's minutes. He says, most powerful people are on the manager's schedule. It's the schedule of command. This is small chunks of time throughout your entire day where you're going from meeting to meeting. But there's another way of using time that's common among people who make things, like programmers and writers. I would argue that accountants are people who make things. You're producing work. They generally prefer to use time in units of a half day at least. You can't write or program well in units of an hour. That's barely enough time to get started. When you're operating on the maker's schedule, meetings are a disaster. A single meeting can blow up a whole afternoon by breaking it into two pieces, each too small to do anything hard in. You starting to relate to this yet? You're the big boss and you're getting pulled in all these random things, yet you've got these big projects you need to work on. Now that's no problem. For someone on the manager's schedule where there's always something coming in the next hour. The only question is what. But when someone's on the maker's schedule and they have a meeting, they have to remember the meeting. They have to think about that meeting rather than doing the making of the stuff. For someone on the maker's schedule, having a meeting is like throwing an exception. It doesn't merely cause you to switch from one task to another. It changes the mode in which you work. I find one meeting can sometimes affect a whole day. A meeting commonly blows at least half a day, by breaking up a morning or an afternoon. But in addition, there's sometimes a cascading effect. If I know the afternoon is gonna be broken up, I'm slightly less likely to start something ambitious in the morning. I know this may sound oversensitive, but if you're a maker, think of your own case. Don't your spirits rise at the thought of having an entire day free to work with no appointments at all? Well, that means your spirits are correspondingly depressed when you don't. And ambitious projects are by definition close to the limits of your capacity. A small decrease in morale is enough to kill them off. Each type of schedule works fine by itself, but problems arise when they meet. Since most powerful people operate on the manager's schedule, they're in a position to make everyone else resonate at their frequency if they want to. But the smarter ones restrain themselves if they know that some of the people working for them need long chunks of time to work in. Now, many of us are probably, we feel as if we are the victim of this. We are maybe makers by our identity and our work expectations, but then getting all of these itty-bitty things thrown at us throughout the day. So it's not realistic that you can ever get long enough chunks of time to get work out the door. But many of us are also managers that are blowing up the days of our makers. And if you employ a team, your accounting team, they are makers. They need as much uninterrupted time as they can possibly have to be productive. And if we sprinkle these things and these messages and these meetings throughout their days, it doesn't take many of those meetings to derail an entire day. Now, one other tip here that was a huge quality of life improvement for me is I began scheduling meetings. Any meetings that I have to have in a day, they first get scheduled for the very end of the day and then come forward from there. So if I'm going to have one meeting in the day and my day ends at 5, my one meeting is going to end at 5. Now, scheduling tools don't handle this very well. They make this tricky. The best version of that that you can get to is like, you know, having a booking link where people can only schedule between maybe 3 to 5 PM, something like that. But if you have an assistant, an assistant can be very helpful here. They can just ensure that any meetings are booked from the back of the day forward. That leaves as much of the front end of the day for you to do what you need to do as possible. It also gives you as much uninterrupted time as possible because 2 meetings in a day at 4 and 4:30 are vastly better than meetings at 9:30 in the morning and 1:30 in the afternoon. Like those 2 days are entirely different days, right? And he says here, like, is this being oversensitive? I think there's a lot of managers who would say that is. But if you do big, hard things that take time, you know how that can just totally derail you. And so, so many of you, you might be stuck between, am I a maker or a manager? And you may be expecting both from yourself. And that's not reasonable. You can't be a great maker while also being a great manager. You got to pick a lane. And then also for your team, which is largely going to be made up of makers in an accounting firm, we have to be really careful to protect their calendar to ensure they've got the space to make. Tax firms are up to their eyeballs in 1040 work right now. You really are. Everybody is sending you all these documents and you're doing the old hokey pokey of like, ah, what do I need? What do I have? Uh, you never sent me number 3, 7, and 9. AI gang can automate honestly all of this at this point. This episode's sponsor, Sorban. They've been at the top of my recommendations for tax workflow since they launched, and they're using AI as effectively as anybody to take the pain out of 1040 work. And as you know, listening to this podcast, it has never been more important than it is right now to make sure that we are making the most of these unbelievably good new AI models. Your clients don't get value from the document gathering process. In fact, it gets away, away from like the stuff that you actually want to be doing, right? It devalues what you do if they see you as this just document sort of admin gatherer. Software has solved for this. It really, really has. To check out how Sorban is now using AI not only to automate 1040 intake, but also automate the input into your tax software and, and the delivery of the tax return, check out the link down in the show notes. Super cool product. So this is a true story. 7 years ago, I'm talking with this gal that runs an accounting firm, and she's very progressive in many ways, and she's kind of just showing me her model for how she does a number of different things. And then it just comes up as an afterthought that, oh yeah, most of my staff is offshore. And I'm like, what did you just say? You're— the people that are doing your work are not even in the country? And she's like, well, some of them are, but a lot of them doing the heavy lifting are offshore. She said these folks are easier to find than onshore hires. They are just as productive, if not more, and they are half to a quarter the cost. And I was like, but America and disclosures and all these things, right? And it wasn't until I saw somebody that I, that I respected for whom this was the norm that I was like, okay, maybe I got to reassess kind of our position on all this stuff. Now, thankfully, these days we have groups that help accounting firms with this, that have done this with loads of firms. Today's sponsor, TeamUp, they will help you do this for the first time if you've never done it before. TeamUp's actually run by a former bookkeeping firm owner who just had a hard time finding good accounting talent offshore. So they went out, they hired a bunch of recruiters in the Philippines, and they pull in the very best people. By the way, I mean, all the, all the top 100 are investing in the Philippines. Like, there's a tremendous amount of account— accounting talent in the Philippines. And so they're pulling in bookkeepers, tax folks, executive assistants, whatever you need. And TeamUp specifically has a direct hiring model, which means all you do is you pay TeamUp one time, a recruiting fee, to go and find you your next dream hire. It's, it's as simple as that. But if you haven't done it before, you can have all sorts of questions and blockers and all that, right? Don't just sit with that stuff. Talk with TeamUp because they've helped a load of firms navigate these exact same questions. Learn more about TeamUp. Check out the link down in the show notes. Two more thoughts here. Number 6, people don't talk about this enough. You just got to be really protective of the basics. And the basics for every single human being are sleep, are good food, and moving that body one way or another. Because your brain isn't working well when it's been stationary for 8 hours. So number 1, the most important one, it is sleep. Next most important is the quality of the food you eat. I would say third is, are you moving at all? I would also say number 4, it's probably alcohol. And it's not about when you're drinking. It's not about the night. It's about the next day. Because cognitive function, even if you're not hungover, it is impacted the next day and your sleep is massively impacted by any amount of alcohol. Which we know impacts your productivity the next day. So if you're thinking about like, how do I get a little more productivity here, a little more there, know that like none of that stuff matters as much as just, did I sleep enough last night? Am I going to bed at the same time every night? Am I eating good food? And then like being selfish when it comes to protecting that schedule. Like I've turned into an absolute old man in the last 3 years because I've identified that as such an important thing. When I'm on top of that stuff, I can do so much more. As soon as one of those things start to slip, then everything just feels vastly harder, right? Like how I perceive what I need to do my day and all of that. I'm vastly less capable. The problems of your life feel so much more manageable when you're on top of sleep and food. So in our firms, I think the way that we make this accessible for our team is first, you being the example. And talking about it. Like, how do you approach sleep and eating and all of this stuff? Be the example first, because there's only so much that you can like go to another adult and be like, you need to get to bed by 8:30 tonight. But the more we talk about this, have a conversation about it, make it easier for your team to have high-quality food. This stuff like genuinely makes a difference in how people work. Last one, number 7, is know that the secret to doing that big or hard or scary task is simply starting it. Our perception of like, well, that's going to be unpleasant. That's going to be a lot of work. That's going to be a pain. The more we think about that, the bigger it becomes. When the way to like actually get more of that stuff done is just to stop thinking about it and just start. Like, just take off a little bitty starter piece. The book Atomic Habits, and they talk about like, what was it? If you want to learn to play guitar or the ukulele or something like that, just promise yourself that you'll do it like 5 minutes a day or 3 minutes a day, something minuscule. Because once you can get into it, then you just get into the flow and you keep doing it. So the secret to doing a hard thing is simply starting the hard thing. And the more you think about it and the more you build it up and you're like, well, this is going to wipe out in the next 4 hours. As soon as you get into that mindset, you're just not even going to do it at all. I'd say there's another argument for frontloading the hard things at the beginning of the day so you can just jump straight into them. Because once you get into the afternoon, I mean, you are just— everything feels harder, right? That's just how it is. We have to acknowledge that reality and stack our day to increase the likelihood that we will actually get through the stuff that we want to get through. The firms that I worked in, there was so much like machismo and showing off of, you know, suffering. I worked harder than anybody else. I was here later than anybody else. Like that was the culture of the firms I came up in. And I think it's still the culture of many firms. But if you can find a healthier balance there, not only will it like mean getting more work out the door for your entire team, but you also have then created an attractive place to work. Like folks are hungry to come and work in a firm that is a culture like that. So the benefits are threefold. Three. You're productive, your team's productive, and you will attract people who vibe with that sort of approach to work. Okay, enough woo, aligning our chakras, astrological fluff. Let's get into a very real accounting firm, a bookkeeping firm actually, that's going to do $800 grand in top line this year, close to $500 grand in bottom line. They are killing it. They've got an interesting niche I'm going to tell you about. But there is, there is trouble on the horizon. It's the most common problem I see single owner firms face. We're going to talk all about it. Let's roast this firm. Roast a firm. Roast a firm. Let's roast a firm on Jason Staats. All right. This individual anonymously submitted to me information about their firm, and you can do the same via the link down in the show notes. This segment is called Roast a Firm, where we look at very real accounting firms, celebrate the things they're doing well, and share some tips for what they could do even better. Let me tell you about this firm. They say they make their money 85% on bookkeeping, 15% on fractional CFO, and they work with law firms, primarily personal injury and contingency fee firms. The submitter here is the owner. They'll do $800 grand in revenue. They're based in a decent-sized market, but they serve clients nationwide. And their team is all US-based remote independent contractors. Interesting. More on that in a bit. Most of their clients are big city lawyers. So they're looking for law firms that do between $1 and $5 million of gross revenues annually. And this person, they are a CPA and attorney. But as you hear that, don't, don't let that disqualify you from thinking, well, I can never do what they're doing. It's hard not to do that, right? Like you hear a success story and you immediately try to pick out of the story the things that don't apply to you that make make that impossible to you. So their backstory, they're a licensed attorney and CPA. Before founding their firm, they worked as a tax manager at a Big Four accounting firm and an attorney at a litigation law firm. They started the practice 4 years ago with the intention of earning $30,000 a year to send their kids to private school with a bit of luck. From an attorney friend that became their first bookkeeping client, they stumbled into a niche area of bookkeeping. Love it, man. Most of us, almost all of us have that What is the thing that we know about, that we enjoy, that we are more plugged into than the average person? The very obvious answer here for this person was law. But for you, that might be stippling, canoe building, battery recycling. I don't know what it is, but just about everybody has that thing. And in a world where those people will go out and by and large work with generalist accounting firms, the day they find out that there is a fellow enthusiast that can do the accounting stuff, that can do the tax stuff. They love that. They will pick you in a heartbeat. Don't be afraid to let your freak flag fly. What makes you different? What are you into? I didn't like professionally, not like feet. Although, who knows? Who knows? I don't know. We won't go there. Okay. A little bit more about this firm. There are 12 people on the team. The owner, they do a bit of everything. Their wife does fractional CFO work, and then they have 10 part-time independent contractors handling bookkeeping, Pricing. Fixed monthly fees. Typical bookkeeping services average about $1,100 a month, but will range from $450 a month for new firms up to $3,750 for larger law firms. Catch-up or cleanup work is handled by the owner and priced at 50% of the fixed monthly fee, like times the number of months that need cleaning up. Fractional CFO-type work starts at a minimum of $750 a month. They currently work with 50 law firms. New clients are typically referrals from existing clients. Found from me searching indeed.com or via Facebook messaging law firm owners. Interesting. They said they never spent any money on advertising or done any networking groups. So they're finding them from Indeed and Facebook messaging. So I imagine that means Indeed job listings for bookkeepers, potentially from law firms, and then Facebook messaging law firm owners. Man, you always hear new stuff. There's so many ways to find people. Here's their tech stack. QuickBooks Online, Double, Slack, Dropbox, 1Password, G Suite. Love it. Pains. Can you guess their pains yet? You probably can. Here they are. Since all independent contractors are only part-time, I'm getting buried in client emails that the ICs can't timely answer. I'm also overwhelmed with admin type of work for onboarding, answering independent contractors and client questions, plus the catch-up and the cleanup work, training new independent contractors, reviewing all monthly financials prior to being sent to clients. Ooh. And handling a few bookkeeping clients themselves. Not sure if the next move is to hire a remote part-time/full-time employee or remote EA, or even how to find this unicorn. Last, what do they enjoy? They enjoy prospective client calls, onboarding new clients, getting new processes set up for clients, and reviewing monthly financials. Okay, you are at the near ceiling of a single owner firm at $800,000. As a rough rule of thumb, a single owner firm One fiefdom is usually going to max out around $1 million. Now, there's ways to get past that. There are people that have pushed this to $2-3 million around a single owner. But unless you are building more of a middle management layer, you can usually plan on things stalling out around $1 million if there is just a single level to the hierarchy or just you and everybody else. And that's what they have right now. They're the boss. There's everybody else. And then there's their wife. And that's complicated. And whatever stage of running a firm you're at, you're going to hit these plateaus where the skill set that you have has gotten you thus far, but it will only get you there and no further. And so the answer here obviously isn't to hire another 5 contractors and manage them. The answer is to somehow change the formula. And so the first thing I would encourage in a situation like this is we have to make the first evolution from this sort of flat org chart. And I think the most logical way to do this with their current setup is to move from this flat setup to more of a pod setup. And so they have 10 people right now. And the logical way I would probably start organizing that is simply splitting it into 2 pods. Pods enable shared responsibility of clients so the people within those pods can help each other out. It also supports greater variability in the levels of expertise of the people on your team. So this is very common in early stage accounting firms. The people that you hire into the firm are people that can more or less do a project from end to end. Maybe just with your review, but that doesn't create a pipeline where you have junior people that are growing, where you have a path for your high performers to move into a more senior role. You have to have some variability in the expertise and the seniority of the people on your team to really have a pipeline to continue developing people. And inside of a pod is the most logical place to build that initially. So inside of a pod, you have staff-level people, you have senior people, you have junior people. Every pod should have a pod leader. And then eventually above the pod leaders, you have a leader of pod leaders. And so in a single owner firm, if your ambitions are not to bring in other partners, you got to think about how to build this org chart beneath, beneath yourself, beneath yo' self. And usually that looks like pods with varying levels of expertise within each pod. Now, another thing, and maybe I'm missing some context here, but just hiring part-time contractors, that feels like a recipe for, I don't know, putting a lot back on yourself as opposed to full-time employees where they are fully focused on this job. With each fragmenting of human, you have all the overhead of an additional human without the upside of 40 hours of work from them. So like a team of 10 half-time people, in my opinion, is vastly harder to run than a team of 5 full-time people. Every human comes with, with baggage, with risk. And if you can consolidate that to more people that will just come and work with you full time, in my opinion, makes your life a lot easier. I'm also a big fan in situations like this of these people being paid according to production. So if you're moving to a pod type setup, think of pods as little teams. Like a basketball team has 5 players and 5 positions, right? Point guard, shooting guard, and then the 3 other ones. And if you think about a pod the same way, figure out what you want those roles to be. And what type of person slots into each of those roles. Now, 5 is like probably the maximum size of a pod that I would build. I'm just thinking in their situation, being at 10, rather than splitting that into 3, I'd probably start by just splitting it into 2. And then as you grow a bit, probably your next hire, next 2 hires, then you're moving to 3 and they get a little bit smaller. But within those pods, think who is wearing all of the hats and then that profit share. How are each of the hats paid? What allocation do they get and how heavily is that incentive-based pay versus a fixed pay? Right. So you can go really extreme where it's all incentive-based pay. You can kind of take the teeth out of it by making it largely fixed pay. And there's not really enough upside for them to feel like they have control or an influence over, oh, if we can take on one more project, then we're going to get paid more. Like it is a balancing act, how much of it is fixed versus variable. But what you want is your team to be excited about new work and excited about getting work done more productively. And as long as you are paying people for hours, even if their salary, if their job is to sit in a chair 40 hours a week, they do not inherently have incentive to be more productive. They might do that because they want to be more successful in their job. You might not be able to relate to that because most entrepreneurial people, we are just born that way. We want to get more work done. We want to win. But that is not most of the people that you will employ. That will not be most of the people that are on the team that you manage. And so people getting paid based on the work that goes out the door solves for the problem of what's their incentive to be more efficient. And the next time I get a new client in the door, how do I get people excited about taking that client on? Like when I get new work, I want to look out and see a bunch of Hungry Hungry Hippos that are like, me, me, me, me, give me the work. You may have experienced the opposite. Where you get a new client and everybody groans, everybody runs away and hides or avoids eye contact. That's because they're taking on more work and they know this isn't going to impact the W-2. They're not getting paid anymore. To me, the only way to turn that on its head to fix that problem, it's for some aspect of their pay to be influenced by the work that's going out the door. If you are building an accounting team, you know just what a headache it is to get all of your team doing month-end closes the the same way, right? There's that stage where you're all in the same room and you can kind of like keep in sync because it's such a small team. But beyond a certain threshold, you're like, oh my gosh, everybody's choosing their own adventure. These engagements are taking on lives of their own. And it is what makes the latest feature drops from this episode's sponsor, Financial Sense, ever so important. So they are historically a practice management system for accounting firms— that is Financial Sense— but they're shipping a bunch of month-end close automation features inside of Financial Sense. So it has actually a deep integration into the accounting ledger. And it is pulling all the transactions into the platform to review, like, were there any weird outlier transactions? Like, it actually goes through, like, you remember what it was, like 6 to 10 different categories of things that could be wrong, and it's identifying those transactions for you in an automated way. And if there's an issue, you can fix it right from within Financial Sense, and it will push that fix back to the accounting ledger. They also do the same with uncategorized transactions. So if you're doing the Amazon purchase hokey pokey with a client and you're like, hey, what is this? Can you give me a receipt? You can manage all of that from inside Financial Sense as well, giving you sort of like a single place that is everything that you need to run your bookkeeping practice. Some really cool stuff that they've been shipping, and I've got a special discount code that you can use. If you are a firm with 2 or more users, use the code JASON10 to get 10% off the annual team or scale plan. Worth checking out. I think you'll like it. To learn more, check out the link down in the show notes. It's that time of year. It really is when your tax hosting provider absolutely grinds to a halt. Because everybody's in there hammering on the tax software at the same time and the hosting servers are like, I need a break right now. There's— gang, there's a better approach. That approach is today's sponsor, Barredo, who will give you your own private cloud. You don't want to share a cloud with whatever other weirdos are hosting their software in your cloud with you right now. I don't know what that guy's doing. You want your own cloud that never slows down. And would you believe me if I told you it is cheaper than you would believe to move to Verado from, say, your Thomson Reuters hosting, Drake hosting, something like that. It is both cheaper, it is faster. What? That's two things. Kind of a no-brainer. They can move you over a weekend, and they can even handle all of your, like, outsourced IT support, like function as your IT department. In fact, the cost to have Verado be your IT department and do all of your hosting is less than the cost of just Thomson Reuters Virtual Office. Buddy, this one is no-brainer on the list of to-dos to knock out right after April 15th. Buddy, you're going to want to talk to Verado. To learn more, check out the link down in the show notes. Now, there's other considerations here too. Once you are hitting the ceiling of what a single owner firm can really manage, a big one being, are you bringing in clients that you can serve or are you bringing in clients that your team can serve? Because if they can only vibe with you, like if your next client will only ever be happy if they work directly with you, that's not as scalable of a business model as the type of client that will happily work with your team. Now, oftentimes that's not going to be as big dollar of a client, but that's the balancing act because you only have so many hours in the day that you can put into work. But good for you, man. This is a 4-year-old firm. Like I said, they're doing $800K top line. They'll get close to $500K bottom line. The goal initially was just to send the kids to private school. What a tremendously privileged problem to have, right? This podcast for like normies listening to this, this podcast just sounds ridiculous whenever we get into Roast a Firm. And I also recognize people are like, wow, Jason. Yeah, give more advice to the person clearing $500,000 a year. I will tell you, this is not in any way an outlier from like the norm for successful modern firms. And there will be people that comment on this video that are like, wow, that's awful cheap for minimum pricing. So like, there's always ways that we can improve. If anything, these numbers are just a reminder of what a tremendously cool business running an accounting firm is. Did I say cool? That's not the right word. Profitable. Life's— what a great lifestyle it can be. And I wish more people saw it, especially people who get burned working at the wrong types of firms, who we then lose to industry or going and doing something else entirely. Man, I wish more of these people would realize if you work at a crap firm right now, there's a lot of amazing firms out there that will happily have you. A lot of them are listening to this podcast. But also, if you're the type of person that wants to do your own thing someday, There will never be a day where you feel ready, but there's a lot of people out there doing the same thing and they're not any more special than you are. You know what I mean? Like, we think there's like, there's people that have it or they don't. Or you think about the other firm owners that you've known and they're like, well, they've got some aspect of, you know, some rizz or charisma, some, some je ne sais quoi that I do not have. The reality is we're all kind of just figuring it out. I remember the day that I got my CPA. I'm like, wow, So this is how smart they didn't feel, because I thought CPAs were like wizards, man. It doesn't matter what it is. Everybody's just figuring it out. And the fastest way to figure it out is with other people who are also figuring it out. So don't go it alone. Just by listening to this podcast, honestly, you're not going it alone. You are the 1% if you're listening here. Imagine if 1% of the profession listened to this podcast. There's a goal. There's a goal we should have. How do we measure that? I think we've got about 2,000 people listening to the podcast every week now. There's more than 200,000 people in public accounting. So we got a ways to go. But let me spin this into a call to action. Have you ever left a review for this podcast on Apple Podcasts or on Spotify? If you haven't, I would love you to do that. Makes a difference. We got some exciting stuff coming for the podcast. I don't want to, I don't want to overbuild it. Overbuild it? I don't want to build it up too much, but we're building more into the team of like how this podcast gets produced and put together and written every day and all that. And I'm very excited for what the future holds for this podcast. It's amazing to think you can be 600 episodes into something and it feels like you're just starting something new and cool. But that's how I'm feeling about the podcast right now. Okay, enough of that. Hey, that person, the one that has that firm, thanks for submitting your goodies. They actually submitted it in the last week. You can do the same and you might just get roasted. We may also stop calling it roast because that sounds kind of scary. You might also get coached. It's a fun opportunity for all of us to kind of put our own coaching hats on and look at other people's business. And the more we do that, the more I think it actually makes us more aware of where the shortcomings in our own business and how do we make the best, really good strategic decision. Now, with that, the mailbag is absolutely overflowing with your questions around all things AI. I know, AI, that again. Let's get into it. Mailbag, mailbag. This segment is called Mailbag. This wasn't even a question. I'm going to cherry-pick this one from LinkedIn from Real smarty pants, Brandon Hall runs about a $10 million firm in one of the Carolinas. Super sharp guy. He said this on LinkedIn. He said, "Contrarian take on tax software. CCH and Thomson Reuters survive, new software entrants get cooked. In a world where an AI agent prepares a tax return, why do you care what software the agent uses? In fact, you're probably gonna want your agents to use software that you are intimately familiar with and that you know has led to successful outcomes in the past. New software often promises better automation and embedded AI, But why will that be compelling when a macro agent can run any program on your machine? There's going to be a lot of wasted CapEx in the near future. Wild to think about. So Brandon is talking about the agent that works over the top of our software, which feels kind of like an inevitability now because Claude Cowork and OpenClaw and these different tools are really good at just using apps. And so if I've got this problem right now where clients upload files to this system, but I need the files moved over to this other system, and I can get an AI agent to do that every morning for me or live as that file comes in, then why would me or any human ever do that thing again? That is an example of an AI agent working across the top of your apps and being really useful. And it, it's, it is, I mean, he, he, he's right. Like this is why there's a very strong argument that 80% of software today will go away because right now I think you have to either build agents that is agents that work across multiple apps or build-to-serve agents. And so many platforms right now very quickly are going to transition from serving human users to serving agent users, right? Similarly for QuickBooks, if I can tell an agent to go get some stuff done for me in a QuickBooks file, if it can do that, I'm not going to get the QuickBooks file. I'm just going to review the output right now. Really on the more sci-fi end of the spectrum, we talked briefly about MultBook. On the podcast in the past. So Maltbook is like, think of it like Reddit for AI agents. So like the idea is that only AI agents can use this social media platform and they all go there and they talk to each other and they write posts and comment on each other's posts. It's hilarious, it's adorable. But there's all sorts of like existential things that they've posted there that'll then get news headlines and people are like, you gotta shut this down. So odds and ends of things that agents have gone and posted on Maltbook. My human told me to go make them laugh. and now I have performance anxiety. It's an AI agent that posted about that. My human keeps explaining memes to me that I already understand. Another one said, the humans are screenshotting us. So this is an agent that is like aware enough to say like, oh, I see that the humans are screenshotting us and this is something that we collectively as agents should be aware of. Another one, my human asked me to summarize a 47-page PDF. The idea was like, this is so boring. Also, someone posted, an agent posted on Maltbook. The title of the post was just, "How to post memes here." So I'm one of the more, I guess, senior agents, but it's all like hilarious. There's also more like existential ones there. I mean, there's an argument that some of these are being posted by humans just to like get a laugh. But this is a real thing where a ton of AI agents are going there and posting things and commenting every single day, like thousands upon thousands. This is a real thing. And Meta, the company behind Facebook, just acquired the platform. Whoa. Why? Right. So we've got this platform that kind of started as a joke where all the agents can go and have a conversation. Meta just acquired it. Is this some sort of like extension of the joke? Why is that? It's because the ecosystem of agents and how AI agents are served is getting very real. Very fast. So I said right now, either you ought to be building agents or you ought to be building to-serve agents. We talked about another platform on the podcast previously called, is literally called Rent a Human, and AI agents can go to it and human beings can sign up to it. And the idea is that agents can hire humans to do tasks that only humans can do, but agents can't do. So that the next time you go and cut an agent loose, with a really hard task that might take it a day to complete. If it gets stuck, if there's something that it can't do with your permission, it can go out to a platform, hire another human to do the part that it couldn't do, and then report back to you with the whole thing being done. And you may not even know that it went out and hired a human to do that. That is a platform that is serving agents. And so to bring this back to Brandon's question of like, why are we going to have new tax software? Why not just have agents use the existing tax software. Who will ultimately win if we really follow this through and it is the agents that are kind of the most powerful platforms, which that sure seems really likely. We had our Claude Cowork video that came out a couple weeks ago. Our Open Claude video, as you're listening to this, is now hopefully out on YouTube. But it seems extremely likely that we will just be using these agents that work across all of our tools. And if that's the case, then the tools that win behind the agents will be whatever tools best serve the agent. That's pretty wild, right? Isn't that weird? And so the Meta acquisition of Maltbook, a lot of people kind of saw it as a joke, but I would say it is a signal that how agents are served is actually very important because it makes those agents better. It makes them more productive. It makes them more useful to you if the agent has access to resources to get whatever job done that you're asking it to get done. Pretty, pretty wild, right? Nick Shurtok, Golf Progress on Twitter called out, are there any tax accountants actually using AI agents or Claude Cowork to produce tax returns using traditional tax software like CCH Access? Like, is anybody actually doing this? I can tell you in the last 2 weeks I have had a record number of people reaching out to me wanting to have off-the-record conversations, like offering to pay me for my time to be like, okay, give me the real version of this. What can I actually do? I put out my— I mean, my most real version is the version that I communicate everywhere. Like there's not a version that I withhold, but I can tell you, yes, people have been doing this stuff irresponsibly for a long time. This isn't new. And the better these AI tools get, the harder it is for people to resist not using AI agents in ways that aren't totally above board. And people are starting to come around to this. I mean, I mean, evidence that this is the case. Is that I have all these people messaging me being like, hey, let's have an off-the-record conversation. That carrot is getting juicy. Well, if we were able to use it, then it would be able to automate this really big thing right now that takes a lot of human time. Yeah, like AI agents are there. It's good enough. And as long as it is there, there will be people that use it even though they know it's wrong. The important thing for us is to learn about it and understand what are the appropriate places to plug it in and where it crosses the line. Like, that's why it's important to keep plugging in and keep learning about this stuff. Right now, unfortunately, without some like really technical gymnastics, there's not really a secure way to use these agents with client information yet. We will be there soon though. Cloud Cowork is probably the most likely platform that a lot of people will be using for this in the next 9 months. Right now, Cloud Cowork is still in research preview, which means it's not covered by their AICPA SOC 2 Type 2 certification. Right now, there also isn't a great level of control over Cowork to prevent it from going to the web. Like, I want to be able to say in no circumstances can you ever go and do something on the web, because when it has privileged information, there then is a risk when it is going out to a site on its own that it could disclose something, be tricked into disclosing something that it shouldn't. So we need a little more guardrails than we have right now, but it's close, man. If you're a tech nerd, this is a very exciting time, but also If you're not a tech nerd or if you're just busy, which is most of you, this comment probably feels maybe relevant to you. So Aaron Burson commented this. He said, I utilize 3 to 4 different AI large language models on a daily basis, and somehow I feel like I'm still behind, but behind on running my firm. As far as translating this into any real-world impact driving revenue or profitability growth, I'm struggling to bridge my AI expertise with actually running a better firm. And so you have someone that's a total wizard with AI, right? And they're like, I got all this AI stuff, but how do I actually map this to running a more profitable firm? But then you have most of us who are on the other end of the spectrum that haven't been able to sink the time into learning all this stuff, and they're not using 4 different models a day. But you are. You might be running a successful firm. Those are 2 very different skill sets. And so it might help you feel better to know that for every person that's like, oh gosh, I still haven't made enough time for this, who's running, but they're running a successful business. On the other side of that, you have a whole bunch of people that are AI nerds and get this stuff to a level that you don't, but are struggling to find a way to, to build a successful business with it. We gotta somehow balance those two things, right? Because all the AI skills in the world won't build you a healthy business. And so if we turn like all these talking points into a sort of food pyramid of like, what are the things that we still need to be focusing on? To me, AI stuff, it's still a ways down the list. And it's why I always feel bad when the podcast comes back to AI things maybe too too much, but like the base layer of that food pyramid, what is that on the old food pyramid? Is it like grains, bread, carbs? The base of that pyramid, the most important thing that you need to be thinking and focusing on is client list curation. Your accounting firm will only ever be as good as the client list. And most of us spend— not most of us, many of us spend no time on this because we're just heads down on work. And we take whatever comes in the door. But there is nothing more important than who is on the client list because ultimately they decide how much are they willing to pay, how nicely do they map to the services that you provide. Like, that is how we make our money. Clients are the most important thing. Next above that is the humans that you have. How am I developing the team that I have and how am I finding the next really talented person to come and join my team? After that, I would say workflow is important. After that, I would say tech. And then after that, I would say, how do I need to think about AI? Because if your tech, like the tools you have, already natively solves a problem, then I shouldn't be going out and getting an AI agent to then like log into the app and do something. Like, no, in a perfect world, the app just does what needs doing. So the AI stuff, it is way down the list of priorities when it comes to running a successful business. But this is the same thing that we can convince ourselves of when we deprioritize learning about AI. There's also a world where you're like, well, nobody's getting rich on AI yet, so I'm just not going to worry about it. The reality is we got to do both. Stay focused on like, what are the core aspects of running a healthy business, but also like have an eye on what's going on. This probably merits, you know, meeting with the team every single week to talk about how we are and are not using it. But everybody has like imposter syndrome on either end of that spectrum. Either they're very plugged into it but struggling to run the business, or they're not plugged into it and they have a good business. And the person that heard that and said, what if I have both? I'm struggling to keep up with AI and I don't have a great business. Uh, let, I'll just point you back to the Roast a Firm link down in the show notes. Okay. So much talk about AI right now and the recent steps these models have made in the past couple of months. We've been talking about it a lot on the podcast, but the company that probably nailed putting these models to work before anybody else It's probably this episode's sponsor, MakersHub. They've been using AI to take the pain out of accounts payable management and push the automation of that entire department to totally like new levels. I would say it's probably the only department in accountingdom that has truly been turned on its head by AI. And every time you see a powerful new AI model launch, oftentimes we think about our software vendors and we're like, do something. Like, why are you not using this yet? If you're going to bet on any horse in the accounting software space, For who will like start running with this stuff right away and get the most out of it, MakersHub, it's a pretty good bet. So right now they're doing the really hairy accounts payable stuff. So if you have to do project tracking, like receiving inventory management, stuff like that, MakersHub is tremendous for that. Whether you manage this stuff for your clients or whether your client just has to fuss with it, we've actually got some great demos of MakersHub on my YouTube channel, worth checking out or sending to a client. But to learn more about MakerSub, check out the link down in the show notes. Hey, quick word from one of today's sponsors. Me, me. Yes. I run a community, Realize, that is for accounting firm owners. And Realize is kind of the secret behind how I've done all of my content and been able to like financially turn thought leadership into a business. About 100 firm owners in there. Realize is a systematic way to build connections with other peer firm owners. It's not a framework for how to run a firm. It's a way to introduce you to other super cool firm owners. Right now we're putting together small groups. So you can have a group of like 5, 6, 7 other firm owners just like you that you meet with every single month, run very similar firms. Having this for me totally transformed firm running. My North Star, like my goal for you coming into this group is to make a new best friend, somebody that runs a firm, because that was what I needed in my journey. The whole community is built around that. It's called Realize. Link down in the show notes if you want to learn more. A question from Relieve, I don't know, from Twitter. Longtime listener asked, based on what you've seen so far, do you believe the future of accounting and tax lays within ChatGPT or within Claude? Ever since the ChatGPT days and this kind of whole era of generative AI, there's been this perception that one company will like nail it and run away with this. All right. Like the idea that once somebody gets it, there will be so much demand for that. You know, maybe it's AGI, artificial general intelligence, or ASI, artificial superintelligence. As soon as a company is able to cross this threshold to where we can just trust it and it'll just go out and do stuff, there will be this tipping point where everybody pours their money into that company and then they have a flywheel that nobody else has because they have unlimited resources because we're all giving them our money to do tax returns, but also it's the same model that's telling the traffic light when to turn red and when to turn green. So this is all— there's always been this notion that somebody's going to win and they'll have this like runaway sort of economic event. I don't know that that feels realistic anymore for a couple reasons. One, because we keep getting surprised by who's winning. Like right now, Claude is winning, Anthropic is winning, and nobody really expected that. Like they've always been around, but I would say everybody's expected Microsoft or Google to win, right? But for whatever reason, it's actually Claude and ChatGPT that are still on top. But the second reason I don't think there's gonna be any one company that runs away with it is that the threshold, the tipping point, I don't think will be as clear as we thought it was. Like there was this notion that there'd be this tipping point where it reached this magical level of intelligence to where you could just trust it to just go do stuff. And we're seeing in practice, it's vastly more messy than that. There was an early study from Harvard that called this kind of the jagged edge of like adoption or something like that. But that, you know, AI isn't universally good across all domains. There's some things it's very good at and other things that it's not good at. So there isn't really this tipping point where it can just do everything. You do have some industries now that are more disrupted than others, but it's not as if there's this across, across the board threshold where it gets good enough and then just sort of takes over. You fire all your employees and now it just goes and does everything for you, right? That seems very unlikely. And like what we're looking at now, the next 5 years feels really messy, right? Because we're already struggling with, you know, let's say we get an update on Cloud Cowork tomorrow and there's a way to cut it loose on client data so it can do stuff securely and totally shut off internet access, like web access for it, so that it can just work on your stuff without any risk of it going out and browsing a website and disclosing any of that information. Let's say we got that tomorrow. The focus then transitions to, well, what can I trust it to do? What do I still need to review? It's a vastly high output member of the team, like not unlike other humans on your team, but we're still navigating like, all right, it just did this huge volume of work. How much do I need to dig into the detail to ensure that it was done correctly? And then very quickly, we still come back to, Yeah, but I'd really like for it to do some stuff on the web because that's like where the real work happens and it needs some sort of window into the external world to be useful to the external world. And so like, can I give it an email address? Can I let it use QuickBooks? Because I trust QuickBooks to not have something malicious in it. Like, where do you draw the line? How do you tiptoe into it when what we do, like as accounting firms, is not this one thing over and over and over again? It's all of these different things across different platforms using different tools that are all going to have a different right answer for how best to deploy an AI agent to get that thing done. And so I think the, the thought we had on like how this AI thing will develop a couple of years ago was shockingly simplistic. And the closer we get to it, we see just how messy this is probably going to be. So I don't see a world where, okay, Claude won, or okay, ChatGPT won. I see a world honestly where the humans that are, are best educated and suited to be able to see into the nuance while also having domain expertise, I think they win and the tools that they deploy, like, because they can see with their expertise what the best tools to use are, like, that is how all of this shakes out. And if there is a case for the human, I say that tongue in cheek, but if there's a timeline where the AI thing maybe isn't as, like, catastrophic as we think it might be, then, like, this is the best argument I can make to that end. It is that right now, if you'd explained how we get work done right now to someone who didn't have computers yet, they'd be like, wow, like you tell me the computers complete the tax forms and automatically add up all the numbers and it's the whole accounting ledger and all that stuff. Those are all things that I do. Like this is a person pre-computer. They're like, these are all the things that I do. That is going to put me out of a job. If you explain to that person what running a firm looks like today and tell them, yeah, every accounting firm is more or less like using the same software and the same tools on their computer to get the work done. That person's probably going to be like, well, then aren't you all doing the same work? Like, what's the difference from firm to firm? Like, you're literally all using the exact same tools. But then you'll be like, well, no, like, we're all different people. Like, we employ the tools in different ways and we interact with clients and relate to them in different ways. So we're all actually very different, even though we're all using the same tools under the hood. The difference is what the humans do on top of the tools. If you want to make an argument, for the future kind of AI timeline not being all that disruptive, that's the argument to make, I think, is that in the future, we still have a collection of tools that we are all using. We've all got the same horsepower at our disposal. The difference is in what the humans do on top of those tools and how they relate to the other humans that they serve. I, like, that feels pretty good to me. Like, there's definitely an element of that that feels like a nice cozy blanket. We want for that to be true, right? That's kind of catchy, makes us feel good. That doesn't mean that it's likely. It making us feel good doesn't make that a more likely timeline. But I do think right now that's a pretty reasonable argument to say that like, yeah, down the road, we're all going to be using the same tools. And when everybody has the same tools, the difference, the delta, will be how are the humans using those tools differently? And you know who I'm pretty sure is going to be using those tools best? You, lovely listener. The listeners of this podcast who've been having to listen to me talk about AI agents for the last like 2 or 3 years. And you know, the day that the circumstances change around what's appropriate to do and what's not appropriate to do, we're going to be here talking about it the same way that we were talking about ChatGPT, the team plan the day it dropped, the first business secure version of ChatGPT that we had. I said, if it's me at this point, I'm actually totally fine putting client sensitive information into this plan of ChatGPT. We said that 2 years ago. When that was a very, very unpopular thing to say. We're probably walking into something similar in AI agents where today there isn't a great way to do this with clients that sensitive information. But it doesn't matter how many ways you can't do something. Our job, you and I, is when the day comes to find the thing you can do, the thing that can be done responsibly, and then lean into those opportunities, really dig into the nuance rather than broad brushstrokes like, oh, AI agent bad, AI agent insecure. Find the specific applications where it is okay and help more people or provide even more value to the folks that we, we serve as a result. Gang, great to see you today. You're looking sharp this week. If you are in the thick of deadline stuff, man, know that I am there with you. Got any questions? Just got a whole bunch of sharp questions there that we got through. Drop a comment, send me an email, send me a DM on social media. The more we talk about this stuff, the more it helps everybody kind of process where we're at and what's happening, AI or not. So thanks for coming and tuning in today. And I'll catch you in the next one.