The Achieve Podcast - Lahari Neelapareddy (TaxHero & LN Accounting Advisor)

Welcome to another episode of the Achieve Podcast, the show where we highlight leaders, creators, and entrepreneurs, those who are building meaningful businesses, shaping their industries, and having an impact in their region. I'm Taylor Baker Baker, your host, and excited today to be joined by Lahari Nilaparhedi. I think I said that okay. Yeah, I apologize. Yeah, no, you're good. And then founder and CEO of Tax Hero and LN Accounting Advisor. And you can find them at taxhero.net and lnaccountingadvisor.com. Well, Lahari, thank you for joining us today. I appreciate you coming on.

Awesome. I'm glad to be here.

And so for those getting to know you a little bit, give us the backstory with these two organizations you got going. How did you get into this space?

Yeah, so my background is I graduated with an accounting degree, did like the formal path where I Recruited for a public accounting firm, did audit for a bit, and then moved kind of into the advisory services at Deloitte. I realized there that I loved kind of what I did, which is like advising clients and helping them, you know, through IPOs, mergers, acquisitions. But I realized I didn't like who I was doing it for, and I didn't really like the work culture that Big Four brought of grinding way too hard for no to little recognition, um, and no to little value, it felt like. Um, so I started my accounting firm, um, back in 2018, um, with the mission of providing a lot more work-life balance and doing something that created value for clients, which is why I started working with startups. And so when I first started, um, I kind of didn't know what I was doing, obviously. I thought like accounting, or, you know, met tax really but I quickly realized that there was a lot more to the landscape with advisory, CFO services, controllers. So we started working with CPG and e-commerce brands, and at that time it was booming. It was before COVID so it was still kind of like getting out there and the industry was still booming. 2020 obviously made it grow a lot more, and now we see a lot more e-com and CPG brands as well, especially e-com. Right, um, especially in 2020. So, uh, that's how I started my, my accounting firm. I quickly realized in 2021 that, you know, sales tax was a problem for our clients, and it was a specific niche that a lot of accountants and tax accountants even didn't really know about, and it was ever-changing. So that's when I started Tax Hero. I realized that there wasn't really a solution out there that combined the tech with the service. There was really only like tech firms like Avalara and TaxJar, but they didn't really do a good job of the service. It just kept coming back to like the founders as an issue or accountants. Um, and so I decided to kind of create a solution that combined the tech component with the service component. So it took it off of like founders' and accountants' plates completely. So Taxzero is an all-inclusive, full-stack sales tax solution for e-commerce and CPG brands right now. That's awesome.

Wow, that's impressive. And how big is the team, the organization now?

Yeah, so both of the teams, both of the companies. So service is a little bit harder. It kind of grew a little gradually, obviously. You know, we learned a lot of lessons along the way and so we had a lot of employees at times and then we, you know, you know, drop down to employees to clean up kind of our processes and stuff. And so both the firms right now actually have 15 employees.

Okay, wow. And what would you say is driving growth for you guys right now?

So for our accounting firm, now that we've been there for a while, it's a lot of it is referrals. Is, um, not just referrals from our current clients, which is a huge thing for us as well, but like referrals even through my network of other even CFO firms that are out there, even maybe other accounting firms. We've kind of established, you know, um, expertise within our niche and also kind of, uh, you know, people know us now. And so we get referrals even from other applications, um, other tech softwares that clients might use. Um, so it's kind of from all different places, but it's mainly through referrals. For Tax Hero, it's also kind of the same. So my pilot clients were my accounting firm clients because I was testing out, you know, obviously the service and the software. Um, and now we've kind of grown past just referrals, but now we have partners that we have, uh, like other accounting firms that trust us and have tried us out and are bringing new clients on. But also even surprisingly, search engines is a big thing. Not just like Google and, um, you know, not just Google search engines, but like basically ChatGPT and Claude have recommended us as well. So we see, we're seeing a lot more, which is a lot different, right? This year we're seeing a lot more people coming through, searching us there and finding us and coming and signing up with us.

Yeah, yeah. It's changing so much. AI is changing so much of that, and we'll get into that later in the conversation. So looking back for you, what turning points would you say have had the greatest impact on how you think about and run the organizations?

Yeah. So I think for my accounting firm, I learned the most because obviously it was my first business. I didn't really know what I was doing when I started my practice. Um, one big thing was back in 2020, I was grinding like no other. We were one of the highest revenue years. Obviously a lot of things happened like SBA, PPP loans, all this stuff. Um, and we're growing so much that I didn't know what to do, and I started throwing people at the problem. Okay, so I started hiring a lot to like have, you know, hiring, you know, people that I thought were you know, going to change the business, right? Going to come in, build processes out and do a lot of things. And that was like the biggest mistake I think that I made because I realized that people can't really solve like the problems. You kind of have to dig into your business and fix the processes yourself sometimes to be able to kind of keep growing and solve, you know, and solve the problems that you might need. And I know some people say this, like, you know, more people, more problems, right? Um, and in some ways that is true, right? If you find the right individual, maybe they will come in and, you know, help you with the processes. But to find that key person takes time. And I think I rushed through the hiring process a little bit to try to find just like people to, you know, kind of meet the demand that we were having during that time. Um, and I realized like, oh wow, this is, you know, I either didn't really tell people how, you know, I wouldn't say stressful, but like, you know, we are in a client-driven, client management industry. So you're dealing with multiple clients and it takes a certain type of personality to be able to do that. And someone that enjoys kind of like not working on the same thing, you know, working with diverse, you know, problems that come at you at different times. And so I think that's the biggest mistake I made, which I changed the business from there. We, you know, people kind of left on their own accord. We kind of turned out clients that maybe weren't a good fit that I just brought on just to, you know, because they wanted to sign up with us. And so we cleaned out the business in 2021, 2022 and focused on processes. And so like now it's about growing sustainably versus just growth.

Yeah, that's a key differentiator, but it's huge.

So yes.

Good leadership there. So for you, as you're looking at the business as they're growing, what would you say is working well to attract and retain good clients?

Yeah, one thing that we never gave up in both my businesses, I'm very much about this, is like good quality is a huge thing. So like we have employees that have joined us and we're like, hey, you know, worked at other accounting firms and even say like, I'm not used to giving this much good quality. And like, you know, looking at things in a, you know, very detailed way like Urfirm does, but we do pride ourselves in like never changing the quality and giving up that, you know, and so, and both of my accounting, our accounting firm and Tax Hero is all about that. Like obviously Tax Hero, we're working with states, we have to be detail-oriented, we have to be accurate. So we utilize your tech, but we always make sure there's some human oversight even there. Right? And to make sure that, like, things are not getting messed up because of anything that we have done, right? So, or our tech has done. So I think that's a big thing and that's what our clients really like about us. And so, like, we have a lot of clients that have been with me since like 2018, 2019 when I first started my accounting firm and that have grown tremendously through this time and have still stuck with us because of that.

Wow, that's impressive. So when it comes to your sales and marketing, your outreach, your messaging program, where do you still feel like there's opportunity or money on the table?

Yeah, I think we could do a lot more with our accounting firm in terms of sales and marketing. I think it's been a little tough because now we're just like relying on referrals and, you know, so it's not as consistent, right? There are some months where you're like, oh my God, there's so many clients that were— that want to sign up with us, but we only have bandwidth for 1 or 2, right? And so then it kind of is like great that month, but then there might be slow months. And so like that, building that consistent like pipeline is kind of hard for accounting for us, which is a huge, huge, huge growth opportunity. We've tried different things, but they're, you know, the marketing landscape changes so much that it's been hard for us to keep up with or figure out like that hasn't been as much priority as like the other stuff that we're trying to tackle in the firm, which it should. So that's been kind of like a huge challenge there for us.

That makes a lot of sense. There's been so much change and a lot of that due to AI and automation. Where have you guys found ways internally to utilize a lot of these tools that are coming out?

Yeah, so one good thing is like we're very tech-focused from the very beginning. We work with the industry with a lot of data in general, like e-commerce and CPG brands have so much data. So like from day one, we're a remote firm. We utilize a lot of tech. From day one to be able to, you know, even have employees across the world, um, you know, all that stuff. I think we have used bots even like, you know, 4 or 5 years like ago to try to do some of like automate some of the accounting work. Um, obviously it's changed so much even now. Like what we've done before is not the same as like what is happening right now. I think that's been the hardest challenge is like keeping up with the changes because It changes every 2, 3 months. Like, obviously there has been a huge change in the recent months that it's kind of hard for our team are not like tech people. And obviously now you don't need to be full-on tech person to automate, right? Which is kind of a great thing. Um, but you need to have that like mindset of like trying, knowing what you're doing to automate it. Um, and so like that's been a little bit of a challenge for us too, is like finding people within our firm And making the time more than it's like finding people in the firm, like for the team to have enough time to be able to figure out what do they need to automate, how can they do it, learning these new tools and being able to like incorporate it into our workflows.

Yeah, so true, so true. It's like a fire hose, always new and updated.

Yes, like coming, yes, yeah. There's so many things you can do, right? So it's like, ah, it's like kind of like a lot of noise and like trying to be like, okay, What is actually need to be done? What are some like low-hanging fruits that we can do that's like easy enough for us to like automate, you know?

Yeah. Prioritize that list.

Yes.

So, so when you think about the trajectory of the business, if you had to pick one constraint to focus on and solve over the next 90 days, what would it be?

Yeah. And so that's what we're kind of working on right now is like utilizing— so much has updates have happened with AI, right? And even with the tools that we use, they've made like significant updates and a lot of things overlap. So we're trying to kind of clean out the noise within the next 90 days ourselves and figure out like what in our tools can we utilize and automate and what, you know, tasks and processes do we not need to do anymore and potentially not hire anymore. Like we might never hire a staff bookkeeper again because we can automate those things. And that's our goal. Like even our existing team, we want them to move up to, you know, senior accountants and not really do staff-level work as much. So I think over the next 90 days we're trying to figure out like how we can automate the, like the lower-level tasks and what tools we can use currently that we already pay for to be able to do that. And then what other tools do we think we need to bring on and kind of evaluate?

Yeah. So you're not paying for bloat.

Yes. Yeah. Because these tools are expensive, right? So it kind of comes in. You probably heard it from so many people now is like, okay, sometimes it is cheaper to have somebody do this task versus automating it because we're paying so much for this tool. So it's kind of like figuring out that cost and bettering our margins is what we're trying to do over the next 90 days.

Yeah, that makes a lot of sense. So, Laurie, looking at your own journey, the wins, the mistakes, what lessons stand out to you and which ones do you feel like maybe took longer to learn than they could have?

Yeah, I think it's always, you know, like I said, don't throw people at the problem. Like, just try to figure out what the true problem is and see if, like, there's a process you can put in before hiring. I think now if I were to go back and, you know, I got the chance to kind of restart with a second business, right? So I took all my lessons I learned from my first one and kind of incorporated in my second. But I always say hire from higher, from top down sometimes, you know, I always, you know, for my accounting firm, I hired the lowest level and it meant I was so involved in the business and I was like training that person and teaching every single thing. For Tax Hero, we didn't do that. We kind of hired higher level so they can build out their team and it takes it like the pressure off of the founder or the co-founder, whoever's kind of doing it. So that they can kind of build, you know, their team out. So I would say that's a huge thing. And I would say one thing that, you know, I've always been good at and I think that has actually served me well in these two businesses is like you have to pivot, you have to learn to pivot. You can't be stuck in your ways of like wanting to do things. Like since I started my business, there was COVID, there's, you know, this AI stuff. There's so much that happened, you know, and it's all about pivoting and pivoting quickly. To kind of, you know, get your business where you need it to be. So never be afraid to, you know, pivot or change, right?

Yeah. Yeah, that's so true. And that's such good word of wisdom right there because life has been changing faster and faster than it ever has.

Yes. Yeah.

So, wow. So last question. When you think about the next stages of the business, what are you most excited about?

I am really excited about all the, you know, AI changes that are there. Like, I think that a lot of people think like, oh, accounting and finance is especially, right? Like, if you look at a lot of, you know, polls and all this stuff, it's like, what jobs are going to go away? And accounting and finance is always at the top. But one thing that I always tell my team, or even like other people, is like, yes, part of our boring stuff that we do is gonna go away, but there's a lot of stuff that like AI can't take away. Like, even with Tax Year, I say like why it's a successful business, why we need it, is like, it's— it is about the tech. And like, as much as we can automate but you can never take away the human oversight. Like tech is going to make mistakes. It's going to crash at times. What are you going to do at that time? Right. And so it's always about having that human oversight. So I'm excited to see like the boring stuff that nobody wants to do go away with the tech, right? And have maybe the more fun stuff like having conversations with clients. Maybe that's going to increase more than it has been because people have been spending more time in the books or stuff like that, right? So I am excited about the change and that's coming with like AI technology and stuff like that.

So that's awesome. That is so true. And that's such a good way to put it. So any final words for our listeners, for those on a similar journey?

Yeah, no, I still say keep grinding through. I think keep learning. I think that's what's cool about being an entrepreneur in general and owning a business is like, like we never stop learning and it never— there's never a dull moment. As soon as you think you figured something out, something changes, right? So I think it's always like, keep, keep going and keep persevering because I like it. You know, there will— it will come to fruit, basically. So I do think that, you know, it's an important lesson for everyone to have is like, keep, keep, keep going through.

So that's awesome. So for those who want to learn more, LinkedIn, they can go to as well as taxhero.net. Lnaccountingadvisor.com, anywhere else you want to send them.

Yeah, no, I think those are great places. My LinkedIn is always open. Both my websites are out there, so you guys can always find me there as well. Shoot me a message.

Thank you so much. And thank you to our sponsors of today's episode as well. Achieve Fractional, which provides fractional executive leadership for growing businesses. And if you enjoyed the episode, reach out. If you have questions about your tax services, about the tools that could be automated, Reach out to Lahari and the team and they will get you set up, kind of give you that guidance that you're looking for. So reach out and we'll see you in the next episode of the Chi Podcast.