618 Accounting Firms: Stop Taking New Clients. Watch This First. [How to know when you’re digging yourself a deeper hole]

The greatest asset in your accounting firm is your client list. It's truly where the money comes from. The quality of the people on that list will dictate the success, the profitability of your firm. But we often don't treat it as the precious little, little golden goose that it is. How do we ensure that this list of clients is the highest quality that it can be? How do we avoid the riffraff that sometimes will pull that client list down? Today, I'm going to walk you through the 6 biggest traps when it comes to curating that client list to be something that, that you are excited to get out of bed and serve every day. Also on today's episode, how to raise prices on clients that you don't like. I'm going to give you a tactical breakdown. Whether it's still worth building an AI prompt library. Are AI prompts, is that still a really important thing? How to partner with other accounting firms to provide support to your clients on the stuff you don't want to do, like sales tax or payroll, gross stuff like that. And my thoughts on Claude's connector. Mm-hmm. With QuickBooks Online. My friends, come on in, we're gonna have some fun today. My firm's on fire. I'm all burned out. Clients are calling, I'm pulling my hair out. Welcome to the Dirty Dozen. How do you do, fellow accountants? My name is Jason Staats. Welcome along to the Jason on Firms podcast where we talk all things accounting firm running. That weird intro you just heard or saw, it is the Dirty Dozen. We are coming to the end of a series of the 12 biggest sort of macro pains for accounting firms as sourced from over 1,000 accountants that came out to my live events last year. Today it is the pain of how we get to the point of serving a more specific client, a more profitable type of client. I'm not even going to use the word niching, but how do we double down on the client that we know is best for our accounting firm. A lot of bodies alongside this road where you just couldn't fully commit to what you were pretty sure was just going to be a better version of your firm. If we could simply commit to this, this type of client. Let me walk you through very tactically the 6 most common traps I see here. These are things that were actually sourced from real accounting firms when I was on tour. I give you some practical tips for, for how to avoid this really, really common trap. Number 1, first trap here is the concentration risk fear. The whole kind of idea in the abstract that if I try to get more specific and if I, if I just start serving this very specific type of client, that increases the risk to my firm. What if, what, you know, if I'm serving dinosaurs and then an asteroid comes and hits the Earth, then who will I work with next? Maybe the most common, like, real-life example I hear of this— not, not to say that that's not real life and that didn't happen, so, so sad, the dinosaur thing, I mean— but maybe the most common real-life example I hear of this is people who are like, well, during COVID all the restaurants got shut down. What if I was only working with restaurants? I could tell you what I was doing during COVID I had built a niche around dental practices until one day somebody said, "So sorry, you all have to close your dental practices all at the same time." And you wanna know the really novel thing I was doing at this time? Charging a percentage of collections. Those collections, they stopped real fast. Now, dental clinics came back, teeth gonna teeth, restaurants came back, people still need to eat. But to me, this is an example of a fear where you have to actually like follow this through all the way. Like the more ambiguous it is, the more scary it is. But when you actually process this, I don't think it's as big of a concern as we think it is. Because in reality, when you are niching down, and I'll use my dental niche as an example, when you're outside of it, you're like, dental, I got a few dental, dental clients. This is really easy work to do. They got money to pay. Let's do dental. But once you get into dental, you're like, oh, there's actually a whole bunch of other things within this from these DSO rollups, like private equities rolling up all these firms. We can go after that. You've got, Dental labs, you've got dental supply companies, you've got specialty dental, periodontist, endodontist, orthodontist. Once you get into that space, you find all of these much more specific versions that you'll find are even juicier. I've shared this story before on the podcast of a guy I met at a live event last year who was having this existential crisis because they had just niched down into legal and done this whole rebrand for their entire firm around legal. And he is like, we just went live with the rebrand and now we're seeing like 3 sub-niches within legal. Mm-hmm. That are even more juicy, and we're struggling to decide, like, all 3 of these are really exciting. Where do we go next? And he's like, do I need to do another rebrand? And I'm like, I don't even know what to tell you. Like, what a privileged problem to have. But you got to know, you got to understand, the deeper into a niche you get, the more nuance you find. And in the exceptionally unlikely event that something did happen to this entire space, not just the people you're working with, but the whole ecosystem inside of this space, where are all of those people going to go? They're probably all going on to something else. And ultimately what you have, the asset then, is the relationships and you probably end up following some of those folks. This is what makes the dinosaur thing maybe not the best metaphor. But if you zoom out a bit, I think maybe the bigger lesson here is what are you building? Are you building the business as the asset or is the most valuable asset actually you on the other side of this, your ability to build a specialized business? Yeah. Like you won't get this right on the first try. You just won't. Like you will try different things and this space, you may, once you get more into it, you're like, oh, I actually hate working with emergency room docs 'cause they're kind of maniacs. In the process of, of doing these things, you will, somebody who's thinking about doing ER docs just like stood up straight on their stationary bicycle. Crap, I just bought ercpa.com. In all likelihood, you're not gonna get it right on the first try, but in the process of building this and finding and, and learning like what are the things to look for, you, you get better at this and this is an incredibly valuable skill to have. But if you don't go down this path, you don't, you don't learn. You don't learn how to find a really expensive, specific problem that you can solve, a really rare problem that you can solve so that they can't run to the person across the street to get the same solution for cheaper. And all of this kind of blows past the consideration, what's, what if you don't do this? If you're scared of doing it, what's the, what's the reality of not doing it? Is there risk in that? I would say with AI, there's more risk now to generalist firms than there's ever been because what is the AI stuff good at first? The general stuff. It is worth thinking through this concentration risk fear. There's aspects of it that are real, but I would argue that is still the better path to go down because of the very real downsides to remaining a generalist. Second trap here, the commitment gap. You've now named who you want to work with, but you're still taking anybody that walks through the door. We have this scarcity mindset of what if nobody else comes? Most of us, I can tell you this, like, look around you. How are things going? How's the firm going? Do you need more? Folks who are still starting out, you got to say yes. Like, you will say more yeses at that stage than you will any other stage in running an accounting firm because you're trying to put food on the table. And that's totally fine. When you're starting out, don't get too concerned with the people you bring on the bus today being forever clients because they just won't be. Like, unless you are going niche from day one and you've got a growth strategy that's working there, in all likelihood, the first people who come and work with you are not not gonna be the type of people you're gonna have on the bus forever, and that's totally fine. But for everyone else who's got there, and it surprises people usually how quickly they get there, they're being, they've got plenty to do. Do we really need to be that afraid that no one else is gonna walk in the door? As unlikely as that is, even if that did come to pass, that's still information. That's feedback on, is this the right space to get into? Are my efforts of getting in front of these people actually effective? Most of us are so far beyond what we would have thought. I mean, you think back 5, 10 years, and if that person could look at you now, most of us are so far beyond what we thought normal would become. It's worth considering, when am I gonna outgrow that scarcity mindset that's maybe still holding me back? I will say another enemy here is oftentimes we are like clinging to some idea of what we need to build for someone else to impress somebody else. Maybe it's that, uh, person in your professional past that you're like, well, I'm gonna, I'm gonna, I'm gonna really show them. Man, you can, you can waste your whole life trying to do something to impress somebody that doesn't give a hoot about you. And oftentimes the people that pay the price for that are the people who, who do give a hoot about you. What a way to go through life trying to prove a point to someone that doesn't care at the expense of the people who do care. Welcome to Accounting Therapy. Operators are standing by. Number is 1516-980-4968. If you want to call and just have a good cry. Last thought here, it really helps if you can hang out with people that are trying to do the same. They're trying to build a more specific client list. The more you surround yourself with the people for whom that is normal and who are trying to do that or have already done that, the more that normal is just absorbed by your subconscious. Third trap here is the big money client problem. The idea that anyone that's got a big enough checkbook is allowed on the bus. This is literally the filter for many firms, is if they can pay the bill. So they're allowed to be a client. I talk a lot about the idea of being able to walk past the $100 bill on the sidewalk. These little, like, frivolous projects where you're like, yeah, but if we did that, we'd make $100. Like, you're getting so big for your bridges, buddy. You're really going to walk by that $100 bill on the sidewalk? And it's like, yes, like you have to walk by that stuff to have the time and the space for the better stuff. This is like walking past the $10,000 bill on the sidewalk. There is a client on the other end of the spectrum that's also a problem. Where they buy you, they buy their ability to get on the client list. And you're like, well, it's so profitable, we may as well do it. And that is, I mean, that is an interesting signal. Why are they willing to cut such a big check? I, the first example I probably had of this was getting into like dental groups, like dental DSOs. They had unlimited money to pay us for those services. And it is worth like hitting pause and being like, why are they willing to pay so much more than the other people that I work with? Usually it stems from, you solving a very specific and costly pain for them. And there must not be other solution providers out there willing to do it for cheaper. So that is a signal worth listening to. But ultimately, if you've decided to do something else, you got to draw a line somewhere. Can you be bought? Are you the type of person that can be bought? If the qualifier for getting on the client list is simply having money, then the answer right now is yes. And I suspect you don't want it to be. Trap number 4. How do you like this name? The curation hesitation. Okay. And you accumulate more clients and you just never stop accumulating them. A lot of reasons we do this. Maybe we are, you know, nervous or afraid of having the hard conversation. I think in small firms, most of the time there's this over-personalization of the client relationship. I will hear things like, well, I'm going to bump into that person at the grocery store, at soccer practice. That's going to be so uncomfortable if I fire them. If you're feeling that, things have gotten way too personal. Like, we run an accounting firm and we are doing accounting and tax services for a business. They do their business services for other people too. Either they're aligned with where you're trying to go or they're not. And you can have this conversation and frame it as like, hey, we're going this direction. And I'm sorry to say, like, you're just— you're not a fit for that direction that we're trying to go. But, you know, I'm still rooting for you and still would love to sit next to you in a camping chair for 6 hours on Saturday at soccer. If you're feeling those sort of emotional pangs, like we've, we've taken this thing to a place where it's like no longer a business relationship and we got to somehow reel that back in. Helpful thing here is just having a formalized renewal process with your clients where every 12 months, like, we're going to reassess, do we still want to work with you and do you still want to work with us? A lot of times the, the sidestepping of that into this engagement that is just like this rolling in perpetuity thing. that makes the firing this big, scary ta-da moment. Whereas if you have a formal 12-month re-engagement process, then each 12 months you're assessing who do we want on the list and who are we going to hopefully move on to another firm for whom they'd be a great client. We've had Chad Davis on the podcast before. Chad Davis, Canadian Treasure. At one stage, they had to totally revamp their firm. They had a team of like over 100 people and ultimately got into a bunch of underpriced engagements. And there was a period of time where Chad was, was basically having conversations with every single client to reprice every single engagement. This is 100+ engagements over the course of like a month or two. Imagine having to clean house, going through your whole client list like that, how much pain and suffering and discomfort that is. There are levels to the discomfort, and the more we're willing to do the uncomfortable things, the easier life becomes. And when it comes to cutting clients, like a small amount of change can actually make a really big difference. A few of the really irritating stinkers, cutting bait with them can make a world of difference in the overall vibe of the firm. Trap number 5 here is the big fish versus the minnow problem. You keep landing small clients, but you want the big ones. This is an issue in a lot of spaces, and it's— this is actually worth considering when you are trying to specialize. Are there enough big fish in there to make it worth your while? And so if you're going to niche into, say, creators or Twitch streamers or something like that, the normal distribution of those folks really heavily leans on the small side. And so those are gonna be the people that are easiest to find. And the vast majority of folks that come in the door will be those people. And you gotta decide whether it's worth supporting them or not. If you go too far down market, that can be, uh, there's a lot of those spaces where the people don't have much money to pay for good help or are unwilling to pay much money for good help, but they need a lot. The nature of what they do might be pretty complex. This is the way most spaces are. You just gotta make sure that there's a premium level to this and there's enough of those folks to keep you busy. And it doesn't It doesn't take many. Like when you are getting very specific in who you serve, it really doesn't take very many people in a space. They just need to be able to find you. It's never been easier than now to go micro niche. I mean, you think back to pre-internet building an accounting firm, holy shamoly, that must have been challenging to get people to find you. Like you are just hobnobbing at local events and that's literally it. You're, I mean, you're not taking a covered wagon to the other side of the country to find more dental clients. I mean, the, the easiest way to reach people is the internet is, you know, going to, going to kind of big industry events around the country because people are now much more willing to have a relationship with a remote advisor. But I would say the average client list, the makeup of that list has not changed since the pre-internet era. People still build their client lists the same way we did when the only reach we had was in our local community. It's never been easier than, than it is now. To go micro, micro niche because you've got these platforms that can help us find those folks that have algorithms that are very good at surfacing small creators in that thing that you are super into. So it doesn't take very many people in a space to be able to build a really cool firm around those folks. But as long as there are people kind of at the, the early stage of building that type of business, consider even if you're not going to work with them directly, if there is resources you can develop them to, for them to be useful. This is a lesson I learned in a bunch of different contexts in my accounting firm, that the more generous you can be in giving away free resources, the more permission you have to go really premium and exclusive on the paid offerings. So if you're working in an industry where there's a bunch of folks maybe below the threshold of what you're willing to take on, that doesn't mean that you can't still be helpful to them in a one-to-many context. I would actually argue doing so and the goodwill that comes from doing so gives you more permission to go premium. On the folks that are above that line. As I read this ad, I am feasting my eyes upon talented accountants that you could literally, literally book an interview with right now. Like Ruru, a CPA, a tax pro, $3,500 a month. He's got experience with CCH Access, bless your heart, CCH Engagement, QuickBooks Online. Gang, he is one of many accounting pros that you can peruse at the cloudaccounting.com Staffing portal. We'll link it down in the show notes. It is a veritable smorgasbord of accounting talent, folks that they have pre-vetted where you can go in, you can see, see their experience. You can literally see an intro video that they've recorded and you can book an interview with them without ever even having to hop on a call with Cloud Accountant Staffing. Amazing. We got tax pros, bookkeepers, auditors, executive assistants. Oh my gosh. I got a lot of people in here right now. 45 candidates. because I know you need that next dream hire. You really do. What do you got to lose? Okay, go check out the portal, book an interview. Feels like a win-win, right? You're only going to move forward if you find somebody you love. Cloud Accountant Staffing, run by folks that used to run an accounting firm. They make it as easy as possible for you. To learn more, check out the link down in the show notes. Are you still running your accounting firm on a spreadsheet? Puh, don't do that, man. That's gross. Financial Sense, it is the practice management system for for small and growing teams. Think 20 employees and under. It is everything you need to get your work done all in one place. And they've been shipping some cool stuff lately, like built-in month-end close automation, this deep integration into the accounting ledger to actually pull all the transactions in platform and do that sort of quality assurance pass from inside a financial sense. Now, they also recently launched a campaign called Proudly Small. Because being small isn't something to apologize for. It's something to be proud of. And just to be clear, we are talking about your accounting firm. Wouldn't it be nice to have a tool that's actually built for small firms? It's actually a very common complaint right now is tools are increasing in cost. They won't come down to support firms beyond like a certain number of clients. Financial Cents, they are built for you. Plus, if you use code JASON10, it will make the price of Financial Sense even smaller for your small firm. You'll get 10% off the annual team or scale plans with 2 or more users. I'll put the link to claim that, uh, down in the show notes. Check that out. See if Financial Sense might be for you. Last trap here is the machine can't service the client. You serve a, a specific type of person, but your team, the rest of the machine, maybe isn't suited to also be able to serve that type of person. And this is a, a problem obviously for folks who, who are building teams and, and outgrowing themselves a bit. But the people who are great for you are not necessarily going to be the people who are great for the people who work for you. A symptom of this is all of your clients always ping-ponging back to you when you try to push them to your staff. Where you want to get ultimately is how are clients coming in the door, like never even having a conversation with me? I could be the face of the brand potentially externally, but how can we get them in the door and service them and keep them happy without them even having to see you? I've shared before, like my foray into working with software agencies because I've got a bit of a software background and those were fun people for me to talk to. They make great money. So it was a great, like, niche to get into. The trouble was nobody else on my team had that interest or that expertise. And so as soon as I would try to move that client on, it would come straight back. And this was happening at a time when I was in the process of getting out of client work altogether. And so as great and profitable and premium as that space was for the machine that I had at the time, that just wasn't a good option for our firm. And there's a lot of things that go into this, like the whole point of trying to serve a more specific client is one, it's, it's actually easier to find that specific type of client when you're only speaking to one type of person, but also the servicing of the client becomes much easier because you are taking them through a more consistent process rather than you doing one client of every single industry. You're now doing 100 clients in a single industry. The goal being, how do you walk them through a consistent transformation? Because you understand what they do so well and you've seen so many examples of this, it's much easier to systematize exactly what you do for them. Which makes it easier to distill your essence and your wisdom into something that the team can execute on your behalf. Now it still takes the work of, of building those systems and the more systematized it is, the more enabled your team will be and the smarter they will look to your clients. And then, and then the cherry on top after that really is, can you find a consistent pipeline of staff who are also into this domain? Once you've got a system to serve these people, if you can then pull in folks onto your team who share this passion, maybe you work with veterinary clinics or beekeepers or taxidermists. This becomes a really interesting hiring advantage for you because if you can source accountants who are also into this stuff, I mean, you're one of one for those potential candidates to join your firm. But that energy, they will bring that energy to the client relationship when they share this same passion. And now you've got a team of people who are rallied around a common interest, working with clients who also share this interest and clients. Oh my gosh. If you compare that to the average run-of-the-mill accounting firm that a client goes to, where it's just this generalist firm and they're like, you ever done any beekeepers before? And they're like, nah, but we can figure it out. It's all the same. That, I mean, if we flip the script for red flags for clients when they are interviewing potential accounting firms to work with, the accounting firm saying it's all the same, big time red flag. It's not to say that that's not correct. Like a lot of things, they are the same. You don't know what's different about it until you're into it, until you, you're into that and you see the nuance of it. And even if the work actually is the same, having the language to be able to communicate intelligently with a person from that space and understand what their specific problems are and the challenges that the industry is facing, that's just a much higher level relationship that you have with the client than if you have that understanding. Talking with someone at an event recently who serves, uh, like, uh, pharmacies, and there's all sorts of industry issues going on, and they very quickly got into who was the shared enemy in that space. And they just start railing on like how hard this is for pharmacists and what this problem is right now. If a client can hear that from you, that you have a shared enemy, they will absolutely eat out of your hand. I had this in dental where some of the Oregon clinics were getting squeezed by this sort of specific Medicare thing. Like if you can find a common enemy to rally around, oh my gosh, clients will absolutely adore you. This is, I would say, the most important job of a leader in an accounting firm is to protect the client list. How do we put even better people in at the top and remove the folks that are no longer a great fit at the bottom? That is the cycle of life inside of an accounting firm. And honestly, it should never stop. Like, it should always be evolving. And that will mean that the people that maybe gave you your first dollars, like, they will not be a fit forever. But the trade-off of, of doing this and being able to have those hard conversations is a more profitable, more calm business, a better place to work for your team, and better outcomes for the people that you help. I want it for you. Okay? You can do it. Any other tips you'd share to this end? Pop that stuff down in the comments. We got to throw to the next segment because I just heard the mailman get here. Mailbag! Mailbag! Mailbag! This segment is called Mailbag. Questions are submitted via YouTube comments, via social media DMs. People email me. That phone number I shared earlier, shoot me a text, 1516-980-4968. First question: Would you raise prices 25 to 30% per year on a client that you don't particularly care to keep until they leave? Or give them notice about terminating services sooner than that. The old, I don't like you $20 much, but I kind of like you $40 much. Here's what you need to hear is as long as that client is on the client list, they are keeping you from something better. If you're at a stage in running your firm where you got to put food on the table, that is what it is. You are going to sell your body to whoever will pay you to do accounting work for them. But most people hit their ceiling, hit capacity faster than they expect. And at that point, the entire game changes. It becomes about curation. About who are the best people to serve, who's best aligned with my team and the machine that I'm trying to build. And if you reach the point with a client where you're like, I don't want you to be here anymore, let's not fool ourselves into thinking that that client is getting your best. In fact, there's a lot of risk that comes from continuing to serve that client. Speaking from experience, most of our like bad Google reviews came from people who are like, yeah, we didn't like them to begin with. And in hindsight, like probably should have dropped those folks. Now there's, there are tactical considerations here when maybe you've got a whole block of your client list that you need to increase prices on. In practice, the best way to approach this is if they're just total jerks or like not aligned with your firm at all, cut them loose, get rid of them. Okay. But an entirely different problem is I got this whole swath of my client list that's underpriced. What do I do now? I can't let them all go. If I increase prices a bunch, I'm not sure how many will leave. So I'm not sure where to set that price increase threshold. Here's what you do. This is the power of annual renewals and giving clients a price upfront. You send out a proposal, an engagement letter says, here's your price for the work this year. You factor in some sort of price increase. And in this case, we're talking about a pretty aggressive, substantial price increase that's required, right? You don't send 100% of those out at once. That is a total YOLO. You have no idea how it's going to go. And the worst thing that can happen here is you're like, I need to cut my client list like 30%. So I'm just going to double all my prices and hope people leave. And then they don't. And now you are charging people way more money and they're going to get way less service because you're now way overcapacity. So the best way to navigate this is think about like splitting your client list into 5 and sending out these proposals 20% at a time. Start with the people you most want to keep or you think are most likely to say yes. Send out the first 20%. Did any of them leave? No. Then the price probably isn't high enough. The next 20%, they get a higher price. And you take it 20% at a time, adjusting accordingly. By the time you get to the last 20% or even the last 40%, you know how many people have left already and have a much better idea of should I just cut this last 20%? Because if everybody else said yes to a more premium price, the firm is probably making the same money, if not more money now. You don't need that last 20%. In fact, that last 20% will stand in the way of you doing a great job for the other 80%. So there's tactical ways to navigate this. But if you've got somebody that you don't want to work with, Brother, why are you still working with them? This is the dream. You've got all the agency in the world. You can finally control this. Get them out of there. Next up. Hey, next up. Just discovered your YouTube videos and podcast and love your content. Bless. Welcome along. Welcome to the crew. I was watching an AI in Accounting webinar this week and the presenter was talking about his prompt library and how important/useful it is to have a good prompt library. I was wondering, would you say a prompt library is still important with things like agents and skills now available? Can you break down the difference between a prompt agent One question at a time, please. Prompt libraries. You know what? I think there's a lot of prompt librarians out there who use prompt libraries as like a lead magnet or a thing that people can pay them for, or as a reason to like sign up for their paid thing. I'm not saying everybody's this way, but this is the most common place that I still see prompt libraries. I've never been a huge prompt guy. This is like, you know, somebody going in for an interview and you give them advice on the interview and you give them a couple of sentences to say. That feels like a band-aid for a bigger problem. For sure, for like, like one-off prompts, like go do this thing. Maybe a really cool written prompt is useful. But the bigger thing is to build the skill of just being able to get stuff out of AI. And for that reason, I've never really been a big prompt guy. But the difference between a prompt, an agent, and a skill, a prompt is just like a block of text asking an AI to go do a thing. An agent, people will, people debate like what is actually an AI agent. Generally an AI agent is something that has more autonomy to go out and solve a problem. And kind of work on that problem until it is solved and then come back with a solution. A skill is a specific Claude feature. Skills are like saved workflows. You could tell Claude after it does a job for you, now save this as a skill, and then the next time you need it to do the same job, you can actually summon that skill. It's basically writing itself an SOP, like all the shortcuts to get that job done. AI hasn't quite replaced accountants yet, but if there is a part of accounting that is in an endangered state. It is accounts payable. It is the AP department. And the company that I think is taking AI the farthest right now, specifically inside of AP, it is Maker's Hub. They have taken automated extraction from invoices and receipts farther than I've ever seen anybody take it, but have followed that through all the way to like complex approval processes. You know, like, uh, when you need a delineator that is more than is bill over X dollars or under Y dollars. When there's a little more complexity to it than that, MakerSub's got you covered. They handle payments as well. They're doing foreign exchange stuff. They are doing Canada stuff. It is an elegant solution to a problem that I think we all wish didn't exist in the first place. When you have ugly bill pay needs, be it from project tracking, inventory management, whatever that is, and the normal tools, they're just not cutting it, not getting the job done. MakersHub, worth checking out. Put an AI to work on the most hairy accounts payable workflows. Learn more about MakersHub, check out the link down in the show notes. Hey, if you're done licking your wounds from tax season, if you run more than a few hundred 1040s a year, you gotta look at this episode sponsor, Sorban. One of my leaders in tax workflow automation can save you a tremendous amount of time right now, specifically on the intake part of 1040 workflows, but they're also working on connecting to your tax software automatically, like pushing data in there. They're working on automating the delivery of the tax return, but this is like the fastest growing category in tax tech. If you're a US tax firm, you absolutely need to have a good tax workflow solution nailed down. We did about 1,800 1040s a year in my accounting firm. This would have saved us so much chasing clients for documents and just tedious organizing of all these PDFs. Yeah. Yes. Oh my gosh. Can't say enough about SoreMan. We actually did a full demo of their platform on my YouTube channel not so long ago if you wanna see it. But to learn more about SoreMan, check out the link down in the show notes. There's a new version of this that is more interesting. I talked about on the podcast a little bit the other day called Goals. This is really the more technical, but like best way to prompt an AI right now. It's currently only available in Claude Code. It is giving the AI a goal that it has to work to until that thing is finished. And for some workflows, this can feel kind of abstract. Like how do I make a goal for a thing that maybe doesn't have this like deterministic outcome. There are ways to do this. You have to kind of like manufacture this framework for the AI. But to give you a really practical example, if I give an AI a list of 100 checklist items to go through, it'll kind of sort of do it, but it'll like speedrun through it 'cause it's gonna take a long time. As opposed to giving it the goal of thoughtfully going through this 100-item checklist one at a time, you know, writing up 3 pages of notes on every single checklist item and then giving you like a one-sentence summary of the result of that item and continuing doing that until it's done it for all 100 items. Framing that same thing as a goal will actually open up the amount of effort and time that AI will put into completing that task for you rather than kind of like guessing and spitballing how much it should work on that thing. Yeah. This is much harder than just writing a prompt because the quality of your goal matters. Like there's this sort of different assessment agent that after every turn the AI takes is like, has this goal been met yet? Has this goal been met yet? So it's very much a skill to writing goals that are effective and taking more open-ended things like reviewing a tax return and like, how do you turn that into a goal that has like a really clear answer? But this is sort of the new version of, of prompting AI and is interesting because an AI could work on that thing for 10 minutes or, or 10 hours and is more leaving it up to the AI for how to reach that goal. We're gonna do some more content around this because it's, it's abstract. It's still something that I'm kind of getting up to speed with, but people are, I've taken this to the level of like, you know, my job is to basically take the things I do in my job and write them into a series of goals so that the AI can work towards the things I'm trying to do in my job. This, this is more the thing to be looking out for right now is goals. What's the strongest AI use case you've heard of so far across large platforms or clients, e.g., Basis or Flowcast. So these are, uh, platforms serving more like the mid-market. And then where are we headed in 10+ years? I don't, I don't know. 10+ years, I will be headed into my, into my 50s. My body hurts so much right now, I don't want to know how my body's going to feel in 10 years. Okay, strongest use cases. The most interesting stuff is still centered on really high-volume use cases, and this is the way automation has always been. The most exciting stuff is when you have an entire floor of people working on processing one type of document and then you figure out how to automate that thing. That is the most exciting, most valuable automation. It's also the most exposed workforce when the thing that you do, your job, is doing this one thing all day long. The reason why we are fairly protected in the grand scheme of things, people that work in accounting firms, is we do such a myriad of different tasks. You're not sitting there processing bills all day in all likelihood. And so any one of those things being automated like that is not a huge percentage of what makes up your job. So the stuff people are most excited about, it's still, especially in mid-market and enterprise, it is the automation of, of hard things that you have an entire team of people working on. Not super relevant to small accounting firms though. There was an interesting article from Satya Nadella, the, the Microsoft CEO recently about what is a company when AI can just do stuff? What does a company become? Because so much of what companies are right now are the effort that goes into producing the thing. This is definitely the case in accounting firms. And right now you have to almost assume that AI compressing the doing of the work to almost nothing. Like in the next 5 to 10 years, that will probably be the case across almost all knowledge work. In which case, then what is a company when we have, you know, an unlimited lever to get as many tax returns, as many month-end closes out the door as you can, literally you yourself? And this is where we're headed. What does that company become? The company then becomes about the quality of how it instructs the tool to do that thing a very specific way through a specific lens. And then the loop of how those instructions are refined. So you're building a process for a specific type of person, a specific problem, and then continuing to refine that process because the process itself can be scaled to any level. I've been, I really been harping on accountants as it comes to checklists right now, where when I came into the profession, I feel like checklists were this big, very, very common thing. These days you really don't see checklists anywhere. Because humans are very bad at painstakingly going through a checklist and actually giving thought to every item. But AI now, I mean, anything you can document, any instructions you can write down and clearly set parameters around, AI can now deploy at any scale, frankly, at next to no cost in our use case. Think about just how powerful that makes one capable person. A couple years ago, we did an episode that was like, who's gonna build the first single person, you know, $10 million accounting firm or something like that. Is that possible in an age of AI? You can absolutely see this now, right? And so what does a company become when everything is compressed? The doing of the work is compressed and handled by agents. It becomes the documentation and your taste. Oh, so actually so much of it is taste. Yet another argument for specialization and having something to say when you're a generalist right now, if you're gonna make your first YouTube video right When you're a generalist, it is extremely hard to make a YouTube video that is useful for everyone. I mean, it's virtually impossible. But the more specific you get in who you're speaking to, the easier it is to make something useful. Oh my gosh, you made the first QuickBooks guide for hairdressers, for ant farm salespeople. It's much easier and much more durable to build a business that's solving a very specific problem, right? The more general the problem we're trying to solve, the harder that's gonna be to build. I work as a cross-border tax specialist. Boy, I work as a cross-border tax specialist preparing US tax returns at a mid-sized Canadian accounting firm. Been doing this for like 5 years and really enjoy tax, but what I most love is process improvement. The things that get me excited every day are finding ways to improve our carbon workflow, our work papers, so many spreadsheets and cross-border work. I'd love to pivot my career to focus on process improvement, but that's such a niche. Seems like most firms don't have that as a full-time position, or if they do, you need an IT background. I'm not an entrepreneur at all. You probably can't relate. I can't imagine trying to turn myself into a consultant for different firms to hire me. Any advice on what my next steps should be? You're at a midsize accounting firm and you don't believe firms will hire people for process improvement. So usually by the time a firm's sitting around 20 people, they're starting to think about like, what would like an ops manager, COO, something like that look like? By 40 people, they're like, whoa, we really need somebody to just work on our processes. So this is a pretty common thing inside of an accounting firm. Firm. I don't know, like, if you're looking for something specific to cross-border tax, that is for sure more specific. But I mean, anyone over 50 employees that's listening to this is raising their hand of like they either need this or they have this. So those firms exist out there. I don't know, get in touch. Like, if you're looking for a firm that does this, like this— I'm a co-owner of a staffing company now, which I'm, by the way, so excited about, uh, Cloud Account Staffing. The number of people that have gotten in touch that are like, please help me find a better accounting firm like is now in the hundreds, pushing 300 manager-level people that are like, hey, can you, can you help me actually find a better, more progressive firm? Love that. Entire reason that I went in on getting involved in a staffing company. I— this is like, in my mind, one of the, if not the most life-changing thing we— I can enable with this platform. Just getting people into better jobs. And for all the firms out there who are like, goodness sakes, where am I gonna find my next human? Wouldn't it be amazing to hire somebody as you listen to this podcast, who is also listening to this podcast and wants to go to a better firm. Talk about just about the coolest staffing company you could imagine. All right, 2 more. What are your recommendations for a sales tax app for e-commerce clients selling direct to consumers from their website? Something not super complicated or too complex. Oh, okay. It should be easy. Just a, just a, just an easy little app to make sales tax trivial. I did not see sales tax addressed on the app recommendation that you created. It's because sales tax sucks, man. So these are e-commerce sellers. Stripe has some built-in sales tax stuff. They acquired TaxJar. I myself, as far as sales tax solutions go, I've never been a TaxJar guy, never been an Avalara guy. The reality of using those tools is like, yeah, I mean, this would be helpful for like my mom to do sales tax stuff like 50% correct. But when you are in it for the love of the craft and you actually know enough to know when something isn't wrong and you're not willing to ship something that's wrong, it's very hard to use those tools. If you disagree with that, let me know. Some of the new agey sales tax companies, Anrok, A-N-R-O-K, their platform started from like, hey, you just connect us to QuickBooks and in the invoicing it will like detect, and this is actually built for more software sales companies, it will detect whether or not you have sales tax obligations. TaxWire is another one that's growing. If I can give you my honest recommendation here, if you, if you like are not comfortable with the sales tax stuff and want help with it, with it, pull in a firm that only does this. I may have shared this in our Miami tour stop. There was someone there who was like, we're all sitting in a circle talking beforehand and there was someone, people were sharing different types of work they did. And one person was like, we only do sales tax. And everybody's jaws just, their chins hit the floor. You only do sales tax? First reaction is gross. Second reaction is what's wrong with you? Third reaction is, can I get your business? Card. There are people out there who do this stuff. There is someone with the weird thing they're into that will fill all the holes and the stuff you don't want to do. That wasn't the right way to say that. But when I ran my firm, we had a gal who like took so much joy in calling people and telling them they needed to pay their invoice. I'm like, why do you like this? Like, what is— what's the matter with you? But she loved it. She was like, yeah, no, I loved it. I'm like, great. You knock yourself out, man. Pay attention Like if you're trying to build partnerships with other accounting firms, don't do it all the other accounting firms do. Do the crap they don't want to do. There's a lot of payroll practices out there too. When I ran my firm, we had a partnership with a local payroll practice and that was great because all our clients wanted us to do payroll. We didn't want to touch it. The business model for building a high-volume payroll practice, very different than building a CAS practice or a tax practice. And so we could send that work to them. They did a great job until the owner sold and it all went to crap. Trap, but I would really recommend you to find a firm who, uh, specializes in this stuff. There's different ways that you can present that collaboration to your clients as well. And some people do this in a way that looks like fully integrated, like it's literally part of the fixed monthly fee, and that, um, that other firm is, is servicing the work or maybe even white labeling the work. I absolutely don't think you have to. At the end of the day, all the client wants is the job to be done correctly and to not have to go and talk to too many people. The fact that your client is asking you to do that thing does not mean that you should go into the business of doing that thing. That is a big time trap. As soon as you do, there will be yet another thing that they ask you to do. You gotta stick within the lane that you know you wanna be operating within rather than being taken on a ride here or there with whatever the client asks for that week, right? Hey, I know you love Cloud Cowork as much as I do, but have you heard the news about Canopy Coworker? Subtle Well, it's a new AI assistant they launched inside of Canopy, one of this episode's sponsors. Canopy, a practice management system that is a feature nerd's dream. They're trying to cover as much of everything you need in an accounting firm in a single place. But as we talk about on this podcast often, it is much easier to roll out an AI agent inside of a closed system than it is to roll out an AI agent that works across like all of my systems, right? That's the trade-off. I want the AI that works across all my systems, but we're struggling now with like, what's the most secure way to do that? The AI agent that works inside my all-in-one system? Buddy, that is easy. Flip the switch, count me in. Strap in, buckle up, I want it. Canopy is so convinced that you're going to love what they got to show you, they're going to cut you a check for 75 big ones. They'll give you a $75 gift card. Gift card to Bed Bath Beyond. What's that? Okay, I'm not sure where the gift card is for, but if you book a demo demo with Canopy via getcanopy.com/jason. I'll put that link down in the show notes. They give you a $75 gift card just for coming and, and demo it. Do it. What do you got to lose? Hey, real quick. I want to invite you to my super excellent weekly newsletter. My newsletter was like the start of my thought leadership journey. It's where I try to collect what I think are the most important things for you to see every single week, sent to you every Wednesday morning. Make sure you don't miss any of the good stuff, right? Increasingly, we're also building into that some like of the best evergreen thought leadership I've ever done. Kind of make that like the most action-packed, highest quality email you get to your inbox each week. Because listen, we're all busy, all right? You're not gonna see every single little thing that I put out. Goodness sakes, there's just too much. Mm. If you're not on my newsletter yet, check that out. JasononFirms.com, or I'll put a link to it down in the show notes. Last question. What do you think of the Claude and QBO integration? So this one's been around for a while. Intuit launched a connector with Claude, which means "Yay, I can connect my Cloud Cowork and do all sorts of stuff in my QuickBooks file." And oh my gosh, isn't that just the best of both worlds? My two favorite tools working together in perfect harmony. It's not quite. It's not the— as it exists right now, the QBO integration is not really helpful for what we do. Intuit primarily builds stuff for normies, not for accountants. This is the same reason they're like Intuit Assist AI assistant is just not useful for us. It wasn't built for you. It was built for the small business owner. And that the MCP, this connector, is the same thing. Right now you can only connect it to a single client. Like it connects at the company file level. It doesn't connect at the accountant QBOA level where you've got all of your clients connected. So it's really not that useful for what we do. But did you know that you, my friend, have the power to build your own connector to QuickBooks? What? You're going to encounter a bunch of situations like this where you're like, like I'm excited there's a cloud connector to do this thing, but it doesn't actually do the things that I need it to do. This QuickBooks integration, to my knowledge, all it is is read-only as well, this cloud connection, which means you can read some limited stuff from the file. But what if I want to write stuff to the file? What if I want to push stuff to the file? Wouldn't that be fun to chuck a bill in the cloud and be like, hey, go put this in my QuickBooks. That's a thing that should be possible, but is not possible to my knowledge with the current QuickBooks Online integration. Now QuickBooks has an API, and this is the way that software tools will read and write data to QuickBooks, like third-party tools, the way they integrate with QuickBooks. You can use that API and through the powers granted to us by Claude, you can build your own MCP, your own connector to any other app that you use. And behind the scenes, that connector can use the API. Any API that you can get access to, you can build your own connector to sit on top of the company's API. And I'm saying so many letters and words that you don't understand right now that I want you to bring to Claude and be like, hey, how could we build an MCP, a connector, to, uh, integrate with this other app using their API? Basically means you can build your own Claude connector for anything that their API supports. Now that may not be everything. A lot of companies have really like limited APIs where that tool may do 100 things, but the API may only support like, you know, one thing. But to the degree that the API will allow for it, you can build a connector that can do anything the API allows for. And most interesting for me with QuickBooks is like actually being able to like post transactions, post journal entries, pull reports. Like all that stuff is supported by the API. Wouldn't it be cool to be able to do that stuff in Claude? Even more interesting, wouldn't it be able to do that, be cool to do that stuff across a whole bunch of your clients in QuickBooks rather than only being able to connect to a single QuickBooks file? At a time. The quality of the cloud connectors that companies put out is becoming really, really important. The cloud connector that is read-only, that will just let me see information inside the platform, honestly, like, that's table stakes. The much better connector is the one that will let me, like, write to the platform and actually do stuff in the platform. But software companies are nervous about this because there will be a day when your cloud can, like, come in and, like, do the stuff in the platform, and that may remove 80% of the times that you log into that platform. Yeah. And I think in the process of doing that, we probably value that thing a little bit less. And if there's anybody that's really at risk of this right now, it's Intuit, it's QuickBooks. Those subscriptions keep going up and up, and now you're paying $85 a month for this ledger that can do a bunch of things. But you can also see a world where when you have a really good MCP connector to QuickBooks, Claude could also do a lot of the ongoing work inside of QuickBooks. Yeah. And when we get to that point where Claude is capable of like going in and doing that stuff and it removes 80% of the logins that you make to QuickBooks, that ransom you're paying for QuickBooks starts feeling all the more expensive, right? This is why you have other entrants into the market like doing cool innovative stuff around the accounting ledger, like Kick launching an MCP that is both read-write. Kick is like an AI accounting ledger and Claude can actually like go into the platform and do stuff, like do work. There's an opportunity for new entrants into the space where the incumbent is afraid of the platform being devalued by opening it up. I don't know if you, if you saw my video a couple weeks back on how to replace QuickBooks with Claude, you know, like for simple accounting files, that's completely doable right now. Like Claude can do the accounting file. We used to have these files at my firm that were like the once a year files that we would update for a client or the very simple things. And we would just do 'em in QuickBooks Desktop. We had all these QBD files that were just these itty bitty little trivial things. We would update them infrequently. And the beauty of that was it didn't cost anything. Thing, because we were using QuickBooks Desktop for it, right? Those files, you don't want to pay another subscription for those files. But those simple files, Claude is 100% capable of doing itself now. Like, it's so good. So you've got the incumbents that are— have been trying to go upmarket the last 5 years and are worried about AI eating into their market share. You've got new entrants to the space that are like, we gotta somehow topple the giant, and so we're gonna let AI use our platform and the economics of what our platform is then worth, like maybe that changes a little bit. And then you've got the ragtag scrappers, the real ones who are like, I might be able to just raw dog this with, with Claude. I just watched this video that Jason made where Claude just did this 7,000 transaction accounting file in like 8 minutes. And then it gave me a little like database export file. This might be good enough. Anyways, what do I think of the Claude and QBO integration? It's fine. It's not really made for us and it probably never will be because Intuit first and foremost serves serves the business owner, not the accountant. But know that you can make your own connection. And these connections are like totally reshaping the accounting firm software landscape. They really are. The, the, the big forcing function right now is you have AI agents that are good enough to log in and use all these tools. And if you, if you've tuned into kind of my security recommendations around cloud usage, I don't recommend that we let Claude use the web yet. This is kind of the riskiest way to cut an agent loose for you, which is a bummer. because it being able to do stuff in apps, that is very exciting. But the reality for these software companies is if an AI agent can use your software, you may as well give us a good connector so that the agent doesn't have to log into the software and bang around and very inefficiently grab stuff. Creating a connector for Claude is a much more efficient way of doing the same thing. And those software vendors, they don't want 90% of the page loads on their platform to be from bots and not from humans. We actually just a couple weeks ago, I think it was Cloudflare that said there's now more bot users navigating the web than human users. And that will never go back to how it was before. I mean, I've been telling you on the podcast for years, we are nearing the day where there are more bot users of the tools that we use than human users. And so will software companies optimize for the bots or will they optimize for the humans? Will they block that entirely? That'll be a big risky thing to do, right? When people like you and I are like, actually, I would love to be able to use bots where I can to just automate the doing of the work so I don't have to log into the system. Brands are having to start like facing this question, this hard question head on right now. And I honestly don't think it's a sustainable response to say we won't open up. And the brands that are probably most at risk of this are the ones that historically have refused to integrate with third-party stuff. You look at, you know, the TaxDomes of the world who are like, our position is— is what people really want is the best all-in-one platform. Like they don't wanna hop around to all this different stuff. And that's totally true. Like people do want that. The reality is it's really hard to build the best version of every single thing, right? And so that's a bet that like, if I give you the 80% version in an all-in-one, like that's actually the best, most complete platform for you. And that's for that rationale. Like they haven't had an API, there haven't really been a lot of external ways to integrate. You can do some stuff with like Zapier here, but it's, it's pretty limited. So platforms like that, will they ultimately have to open up? Because if they don't, their users will just send agents into the platform to automate things for them. And that's, that honestly, that's not good for anybody. That's not good for the software company having to serve a bunch of bot users. And it's not good for people like you and I, where that is like the least efficient way to get information out of a system is to have an agent actually log into it as if it's a human to do that work. And it's frankly also risky. Like we talk about prompt injection and, and agents on the web getting tricked into disclosing something that they shouldn't disclose. So the much more secure way to work with a platform is via a connector, via an MCP connection, rather than being like, okay, robot, go log into this website and go bang around in there and try to get this thing done for me. You know what's wild? That I sold my firm back to my partner 2 months after ChatGPT came out. And my, like, my content, if you followed from the beginning, it started as like automation content for accounting firms. Like, Zapier and Airtable and stuff like that. And it feels like ever so long ago, but for like a tech-forward sort of like nerdy accounting firm thought leadership, uh, angle to find traction in the world, of all the times for that to happen, 2 months after ChatGPT came out. Are you kidding me? Like we'd already had the whole succession plan. I was already planning on being out of the firm before ChatGPT was a twinkle in any of our eyes. But talk about serendipity. Was this all meant to be. Sam Altman would kick off the end of the world, end of times, Terminator. I would leave my firm to, um, help us use said robots to do accounting work so that we'd one day be here together hanging out, vibing. Gang, appreciate you being here hanging out. I'm about to hit the road next week for the last week of my 20-city tour. I'm gonna be in Salt Lake City, Seattle, Portland, San Francisco, and Irvine. Uh, I think I will have met probably 1,600 to 1,700 of you by the end of the tour. And it warms the cockles of my little heart that so many of you came out to the tour this year. I mean, most of the room is podcast listeners. So great to meet you. So fun to see you all meeting each other too and making cool connections and solving each other's problems. It's just super fun to see the little kind of community this has grown into. Ready to be done with the tour. I need a nap, but also excited for the next version of tour. Going out, seeing y'all in the wild, it's super, super fun. But enough feel-goodery. Hey, thanks for being here today. Got any questions? Pop that stuff down in the comments. Let's do this again soon, huh? Sound good? All right.