What to Expect from Your Accountant with Roger Knecht

Welcome everyone to the Insightful Podcast. I have another amazing guest with us today, Roger Knecht. He is the president of Universal Accounting. I've known Roger now for at least 5 years. I would say maybe closer to 10. He and I, while we've been here locally, I think we start— first started rubbing shoulders at ProfitCon out on the East Coast. So anyways, you guys are in for a treat. He knows his stuff. He's got a great organization. But Roger, why don't you start with a little bit of background? President of Universal Accounting. How did you come into that role and what, what should we know about you?

A great question. Well, first of all, it's kind of interesting. I'm not an accountant by trade, so my background happens to be in communications. So that's where my degree lies. And I say that to say that 20-plus years ago, I was introduced, introduced to Universal Accounting, and I started working with them in a consultative capacity, helping them actually as a school find their students, work with their individuals. And I was at the time helping place them. So I was technically taking their graduates and putting them into temporary and direct hire placements. And it was a phenomenal experience because I was taking their individuals and having success with my clientele, placing these people with certain skills, and it was working great. So through that, I became familiar with the school and was given an opportunity to basically work and help grow the business and had over the course of a number of years basically every position in the company. And in the end, the business, uh, needed the 3rd president. The 2nd one was about to retire, and through a process that he was very involved in, identified myself as being that 3rd individual. And so, I was given the opportunity to become the 3rd president of the company 10+ years ago.

That's awesome. Now, um, our company has used you guys. We've sent our accountants and bookkeepers through some of your certifications. Can you give us an idea of some of the stuff that you're doing at Universal Accounting?

Certainly. So as a school, clearly we have a variety of programs and courses. Principally, we focus on the accounting. So obviously we're working with accounting professionals, giving them training as it relates to bookkeeping, accounting, QuickBooks, tax, just a variety of things. The easiest way to understand it is we work specifically with the business owner of accounting firms, bookkeeping, accounting, tax businesses. And generally speaking, we work with the owner to train them on their business and at the same time train their staff. So we're giving them the certifications they need to be able to offer quality accounting services.

Now, that's great. Now, you and I were talking before we started recording this, and I know I get this question a lot, and I want all of my clients to know the answer to this question, which is, how do you know if you're hiring the right accountant? What should that process look like? Are there certain questions you should ask? Is there a checklist? Come to find out, you actually have written a book about this. So, tell us about this.

I have. Well, I'm going to— and I appreciate the question because it's one I regularly get. So, imagine yourself as a business owner, and I'm sure your listeners can relate to this. You're in a position where you're really good at what you do, that product or service that you as a company offer. And all of a sudden, you're in a position with your growth that you find yourself as a business owner interviewing for employment someone in your company to do something you have very little understanding of what it is they do. And so, here you are in this interview process, hoping you're asking the right questions, hoping that you're screening the right candidates, hopefully hoping that you're getting the right experience to offer them a position in your organization to actually take care of one of the biggest things that matters most, which is the cash, payroll, paying the bills, collecting the money. I mean, this is really a big deal. And so, as I spoke with business owners, I found that there was this underlying, I don't know what I'm paying for or getting, whether they are employing somebody W-2 internally or working with a firm externally. And at the end of the day, the business owner just said, look, you know, I pay the bills, I pay for the service, I understand I need it, but it's, it's at that point kind of like this necessary evil. I'm in business, I understand I gotta figure out what I owe in taxes. And it's just such a horrible way to look at the accounting profession and the accounting process as it relates to business, because these business owners, they want to do what they know and love— their product, their service— and they just want to be at business. But there's this element of being in business that they cannot neglect, and yet it's not their strength. Strength. So I then spoke with accounting professionals, and in talking to accounting professionals, I asked them, what is bookkeeping? What is accounting? What is tax planning? What is tax preparation? And I was curious how they would define each of those things. And what, what was sad— I literally mean sad— is I could not get a cohesive answer from the accounting profession. Every firm and individual had their own unique little twist or spin on what bookkeeping is, what accounting is, what tax planning is. And I was like, this is ridiculous. The Business owners don't know what they're paying for. The business or the accounting profession has this variation in what it is they're offering. And I said, I need to really help here and write a book. So, I wrote a book. It's called Your Strategic Accountant. It is written to the business owners to help them understand what it is they should be expecting from the accounting profession and more importantly, what it is they're paying for. And in turn, for the accounting professional, it also helps them articulate better what it is they do as it relates to what they should be doing, in my opinion. And so, this really is a book that I've gotten great feedback on. A lot of people just appreciate the clarity that it offers, especially from a business owner perspective. And it's something that I'm really pleased to have done. It, I think, addresses a very important need.

Yeah. So what is the solution? How do you get the business owners and basically the accountants on the same page? Is it as simple as explaining these are the words you need to use? Is it semantics or is there something more to it?

Oh, far more to it. So I've broken it down in the book into what I refer to as the 3 core services as it relates to accounting. And it's very, very simple. The 3 core services are made up of basically 6 things. So I hate to overwhelm, but here it is. The first one's accounting and bookkeeping, and it's distinguishing what's the difference between bookkeeping and accounting. What is that difference? And if I'm a business owner and I'm paying for bookkeeping, what should I expect? If I'm paying for accounting, what should I expect? The next is tax planning and preparation. There's a planning element and there's a preparation. There's the filing of the return, but there's also the advisory services you can do before then to ensure you're actually minimizing your tax liability. And then the third happens to be CFO and advisory services. There is a distinct difference between CFO advisory, fractional CFO type services, and accounting work. And so if you can, as a business owner, understand what's the difference between bookkeeping versus my CFO, that distinction really helps based on what you're expecting as to the work and the services that are being offered and also what you're paying for. So, if I'm paying a bookkeeper, I'm paying differently than I'm paying a CFO. And if I'm paying a tax preparer, I'm paying a tax preparer differently than I'm paying a tax advisor. And so, those distinctions really help in the conversation because where the disconnect comes is the business owner thinks they're paying for accounting services. But if you look at the engagement letter, if you look at the conversations, the accountant's been saying, I've been providing you bookkeeping services. And now there's a disconnect. I thought I paid for something. I'm not getting it. And so, we're just trying to help communicate better. And at the end of the day, I think it makes people happier. They're paying for what they're getting and getting what they're expecting and paying for.

That's interesting. In my book that recently came out, The 3.3 Rule, one of my chapters is on managing expectations with clients. And we've always felt like one of the most important things that we can do in the beginning with our clients is to make sure after the sales rep closes them, that when they have a conversation with the accountant, we actually just go over, hey, I want to make sure we're on the same page. You're signing up for these services. This is what that means to us. Does that match what you have going on? I'm wondering if in your research and your experience, Do you have a way for like business owners to think about forcing that conversation if it hasn't happened? Or is there a way you've seen where clients can help get their expectations managed in an effective way?

Well, I'm going to plug my book just to answer the question then, I guess. The answer is yes. The book was designed to actually help educate the business owner in very simple ways to understand how that conversation would literally happen. The business owner is going in, this is the need I have in my business. I specifically— I don't just need tax preparation. I need someone that can come in here and over the course of the year advise me as to strategies I can implement in my business to minimize my tax liability. And so, it's not that I'm intending to meet with you once a year, provide my forms, and trust that you're filing the return in a timely manner. I'm looking for advice and feedback. And so, if I go to the tax preparer and I say, I thought you were going to meet with me throughout the course of the year and advise me on these strategies, Clearly, there was a disconnect in the engagement. Nowhere in the engagement did I say I was going to meet with you throughout the year. Nowhere in the engagement does it explain that I'm meeting with you to strategize. Nowhere in there does it say I'm going to help you minimize tax liability. All I'm going to do is at the annual event, I'm going to take the forms you offer and I'm going to file the return per what happened, period. I'm not changing anything, doing anything, but it's going to be accurate and it's going to be timely. You're not going to pay any penalties. I'm just going to get it done right. And so, that communication, I'm enabling the business owner to ask the right questions to say, well, can we meet or is this something you offer as a service or do I need to be looking elsewhere for that? Because you can work with an advisor who doesn't do your return and you can work with a tax preparer that's not an advisor. I mean, these can be 2 distinct individuals, but at the same time, they can be a single person because it is a skill. It's a different service. And it's not unheard of to hear that the advisor isn't doing the return, but they could have somebody internally within their firm, Brad. doing it, let's say. But what we're talking about here is having the business owner aware of the vocabulary, the questions, the discussions, and when they're signing the engagement, realizing what those terms mean and what it is they're paying for.

Yeah, that makes sense. In my experience, I would just add to that, I have found if you ask one question to 10 CPAs, you likely get 15 different answers. You're going to— if you are going to use 2 different people for the tax prep versus the tax advisor, likely it's better if those are coming from the same umbrella firm because they're going to have a stronger likelihood of sharing the same philosophy.

Right.

A lot of times we've done in the past, we used to do just one-off consulting meetings and then the client would come back and say like, well, I told my tax preparer about this information and he said you can't do it for this reason and that. I'm like, look, I'm not in the business and you haven't paid me to educate your tax preparer that he's incorrect, you know? And it's like, if you want us to do that strategy, we're very comfortable with that strategy and we're confident that it follows tax code. And, you know, your guy who doesn't want to do S corps probably isn't the right accountant because he just wants to avoid something because it's new and challenging.

You know, I appreciate you bringing that up because I've actually spoken to a number of individuals that are in their minds Tax advisors, they no longer want to do tax preparation. They, they feel that's something that's behind them in their careers, and they feel like they want to be doing the advisory. And I, like you just said, they need to actually consider the client situation. The client is coming to you for the advice, yes, but at the end of the day, what's the advice for? Ultimately, it's the filing of the return. So, I'm hoping that you have some way to help me find— basically get across the finish line. So, all these people that are in the tax profession that get drawn to the advisory service, that's phenomenal, that's great. But internally, whether it's you or somebody on your staff, you've got to get the person over the finish line. And so, I agree with what you're trying to explain is it— there's kind of a hand-in-hand thing here. So, whether it's the same individual or the firm, I definitely advocate that.

Yeah, 100%, right? Advice is great, especially in tax consulting, but the actual execution of that that saves you the real money can only happen With the real filing.

And so, yeah. Imagine you go to a doctor and you need surgery and you sit down with the doctor and you have them look over the EKG, the, the blood results, the X-rays, everything else. And then you're like, okay, great. And Tom over here, he's going to be doing the surgery tomorrow. Why didn't I meet with Tom? Why didn't Tom look at all this stuff? He's going to open me up and figure this out as he goes. No, I wanted to meet with Tom. Dr. Tom is the one I wanted to be with this consult. So let's get the two on the table. You're going to be standing there with him, right? No, no, no. I do this and he does that. No, no, no, no, no. I want the person that's going to be involved with this through the end. So, that's kind of how I look at it.

Yeah, that's funny. I think across the board with advisors, we should probably be aware of that as well. It's like you walk into a doctor's office and you sit down and, you know, you're in the waiting room. You have to wait. That is why it's called the waiting room. There's nothing else you can do. And then they take you from that bigger room into a smaller room. Where you're sitting on a butcher, butcher piece of paper like you're a little meat. Sometimes you want to bring a sandwich and just wrap it up with you. And then, you know, you're waiting there too. So what did you do? You like lick all the tongue depressors, put them back in, wait for the doctor to show up. And then in this case, the doctor shows up. He's like, okay, here's the deal. Here's, here's some pills I think you can take to cure this. And you're like, I did a party trick. I have a nail sticking out of my hand. I want to stop the bleeding. Can we get the nail out? And come to find out, this— the clinic's name is Pills Solve Everything Clinic. You know, like, I think we need to be aware as any business owner, like, let's make sure we're going to someone who can actually solve our problem as opposed to someone looking at us as if they're always the hammer and we're the nail, right? If you go to a bankruptcy attorney for whatever reason, guess what they're going to suggest? that you file bankruptcy because that's how they make money. So, any advice on that? Maybe not just for finding good accountants, but in your experience with looking for advisors in general?

You know, it's kind of interesting that you bring up the analogy of the nail in the hand. You're right. If you go to a, let's say, a tax advisor, they're going to typically have certain strategies that they lean towards, certain things that they're familiar with. So, you do want to go with someone that has a little bit more of a breadth of knowledge that they can be fiduciary to the client. One of the things that we want to do is Maybe get second or third opinions. But the be-all end-all is you want to have somebody that you resonate with, somebody that makes sense to you, that when you're meeting with them, the communication style addresses your needs. And that's why I think a big component of it, it's not just price. What we're looking for is somebody that is customer sensitive and they're able to take the time to have that bedside manner that we're talking about here. Because at the end of the day, it's not just at the end, did I get the nail out? It's did they put in anything to numb it so it came out a little bit easier? Did I understand? that they're going to yank at that time. I didn't know they were going to yank right then. And so, all of a sudden, what we're dealing with here is a little bit more than just getting the nail out. There's a lot of things going on to make sure I've got my tetanus shot so I don't get something from the nail. And I mean, there's a lot of things going on here. So, from the tax analogy, I do believe that there's a lot of strategies and a lot of things that we can, as business owners, kind of lean towards. But we ultimately want to find somebody that is congruent with what our business mindset is— very conservative, very liberal, very aggressive. And then, you know, know, you're working with the right person.

Yeah, really good stuff. Um, okay, so as we wind down our time here together, Roger, the book is The Strategic Accountant. Yes.

Yes, it is.

Anything, anything else in the book? Because obviously the books cover a variety of topics and things. What else in the book would you say you talked about that is relevant for us to talk about here?

The thing that matters for the business owners that are your listeners right now, and perhaps even the accountants that are hearing this because they also are running their business, Is that the accounting profession isn't a liability to running the business. It's not this must-have, have-to-have because I'm in business. It is an asset. It can be a profit center. It can actually be a place where you can not only save but also make money. When you're working with a true accounting professional, they can be giving you information and ideas that will actually help not just with the net profit, the bottom line, but they can help you with total income, net revenue at the top, how you can actually be making more money and keeping more of the money. It kind of goes to profit first. first, the whole idea of eradicating entrepreneurial poverty. What is it that we can do as an accounting profession to enable the backbone of our economy, the small businesses, and in doing so, help them? Because as our clients grow, as accounting professionals help businesses grow, their business grows because typically, as the client gets bigger, the accounting needs expand and we're able to service those even more. So, it's a win-win. And so, what I try to ultimately lead with or end with in the book is that the accounting that you're thinking you just have to have and you avoid at all costs other than the must-haves is hurting your business. You're running your business blindly. You need to actually lean into the accounting, see what we can as a profession do to help you run your business more intelligently. You're making more informed business decisions that help with cash flow, help with profit, help you actually improve the EBITDA or the valuation of your business. The accounting profession, in my opinion, is essential to the success of the company. We just need to be seen as such, not just some quiet person that speaks only when spoken to. And if we can do that, give voice to the accounting profession, we're doing great. If the business owners see us as an asset to their success, we're doing great.

Excellent. Excellent. So, we have a link we'll put in the show notes so that you guys can purchase the book if you're interested.

It's for free, actually. I'll give it to you for free. It's an ebook. It's yours. Bam. For your listeners.

There you go. So take advantage of that, guys. Check out the link. Um, last question we'll ask and then we'll end. You have, you personally have a lot of experience in business. You've run a large organization. You've helped probably thousands, tens of thousands maybe of students get certified in different things.

Oh yeah.

I don't want to say what's the number one thing, because in my mind, depending on my life situation, the number one thing can change and be different. But of the top 10 things that in your mind you think you've learned And what's one thing you can share with us for all of our business owners? Just a life lesson from Roger.

Well, I'll keep it numbers-oriented. You know, running a business like this, there's a lot of emotional things that have to happen, employee issues you're dealing with, customer issues you're dealing with, and there can be a good deal of anxiety that can come into it. But when you can sit back and run the business by the numbers, It makes it a lot easier. The numbers bring the attention to what needs to happen. And oftentimes, they make clear the course of action where emotions may be drawing you one way or another, or help— maybe the emotions are slowing you down and the numbers help you make some more intentional, deliberate decisions. And so, running the business by the numbers has been very, very helpful. I mean, I've got a lot of insights. One, I'm a workaholic, so take personal time. No success outside of the home can compensate for failure in the home. So, you got to, you know, family first. I mean, I can throw a number of these at you, but definitely, I'll go with the theme of today being accounting. We'll go with numbers. Trust the numbers.

Yeah. Well, I can't disagree with that based on my love and passion for financial numbers as well. Roger, thank you so much for being with us. Again, everyone, his offer is— that's pretty good. You can't beat free. So check out the link, get, get your free book on Your Strategic Accountant. And again, thank you, Roger, for being here. Remember everyone, profit is a choice. Have the courage and wisdom to choose it.

And always remember, if it's about accounting, it's universal. Take care, guys.