Category: Acct/Tax TechTips

By Jonathan Rivlin, CPA

Greetings from the zombypocalypse, my fellow practitioners!

In this latest installment of TechTips, we’re going to cover an app called PracticeProtect. The reason for this is that with the rise of distributive working, aka working from home (WFH), an acronym that I didn’t know existed until a couple weeks ago, there’s a need to secure our systems.

It was hard enough to keep an office based system secure, how does a business owner secure multiple workstations in multiple locations?

Enter PracticeProtect.

This company is based in Australia and serves accounting firms worldwide.

The software acts as a collecting point for all firm staff to access the various apps used by the business. Each user’s identity and IP address are verified and stored within PracticeProtect during the setup phase. If someone has stolen or compromised a remote staff member’s computer, PracticeProtect will detect this before the would be hacker even gets to the screen where they enter a password. And if for some reason, they get that far, they’ll still need to have a 2FA code – if the remote staff member doesn’t have a static IP address.

PracticeProtect also allows the administrator to set geofencing and timefencing rules. No, this isn’t about processing stolen goods or a genteel sport. These terms refer to limiting the time and place from where logins can proceed.

Geofencing means that one can lock out every country other than the US, and if using remote employees, the country where that remote employee works from. Timefencing means you can set the hours from which logins are allowed.

The admin portal shows a global map of where (and when) all logins are made, noting date and time stamps.

They also provide a layer of security around Office365 and Outlook.

There is a limitation regarding banks. PracticeProtect can capture and store such bank login info, but because banks have their own security protocols, it’s not possible for anyone piece of software to provide auto-login support for all banks. We’ll discuss this further in a moment.

Aside from the enhanced security, there is an efficiency to be gained from using this application, even when compared to password managers. Once configured, your staff will login to PracticeProtect and then when they need to access the various apps used by the business, it’s a simple matter of a mouse click.

Also, if you need to terminate a staff member, you simply disable their access to PracticeProtect and they are then locked out of being able to access the other apps (Xero, Gusto, etc).

OK — on banks: The banking system in this country is, charitably, antiquated. I’ve had an opportunity to network with our professional counterparts from Australia and frankly, we are behind the times. The robustness of bank feeds, the virtual elimination of paper checks, and enhanced security on their transactions is something we should demand here. In our country, we face a patchwork of security protocols and ever changing standards.

Because our banking system is all over the place, some of the better features of PracticeProtect aren’t applicable. With that said, once a login credential is stored in PracticeProtect, it’s safer and more efficient to login to a bank from within PracticeProtect.

You might be saying to yourself, “Why do I need this when I already have a password manager?”

PracticeProtect is more robust than a password manager. It provides a date and timestamp of every login, every action, by user, on the system. If you need to login to a client bank account, and that account gets hacked, PracticeProtect can give you the wherewithal to prove that it wasn’t your fault.

Additionally, the customer and tech support provided by the company are top notch. They are responsive and personable.

The more people are going to WFH, the more a solution like PracticeProtect is needed.

Statistically speaking, a good number of us are going to either experience a hacking directly, or have to help a client through a hacking. Protect your firm and your clients with this app. Learn more here.

By Bob Jennings, CPA, EA, CFP® of TaxSpeaker

Many employees incur job related expenses such as mileage, travel, entertainment, dues, licenses, supplies, office equipment, etc. An employee whose employer requires the employee to provide for and pay for such expenses essentially makes the employee pay income and social security tax on the expenses.

Because employee miscellaneous itemized deductions are no longer deductible on a Federal return under the 2017 Tax Cuts and Jobs Act, these are the worst expenses an employee can incur, and the employee must push strongly for an accountable expense plan (or direct employer payment) of these expenses.

Many employers do not recognize the cost to the employee and also do not recognize the savings they could obtain by establishing an accountable expense plan. Accountable plans should be used by most employers for reimbursing auto expenses, travel, licenses, dues, and meals & entertainment. An accountable plan is an allowance or reimbursement policy (not necessarily a written plan) under which amounts are nontaxable to the recipient if the following requirements are met:

• There must be a business connection to the expenditure.
• There must be adequate accounting by the recipient within a reasonable period of time. (Usually 60 days) (advances must be made no more than 30 days before the expense)
• Excess reimbursements or advances must be returned within a reasonable period of time. (120 days) IRC §62(c); Reg. §1.62-2.

Without an accountable plan in place all employee expenses fall under the miscellaneous expense non-deductible rule, and any cash payments by the employer to the employee are taxed as wage income. With an accountable plan, any amounts reimbursed to the employee are not reportable to the employee nor deductible by the employee. The TaxSpeaker USB Drive includes an example accountable plan.

By Jonathan Rivlin, CPA

We’re going to kick this post off with a confession:  I don’t like eFiling. In fact, I hate eFiling. In the early aughts, when this new system was forced upon our profession, I thought it would be a great thing for our clients. And in some respects it is. But the bulk of the benefit has insured to the government – which isn’t inherently bad, but surely we should get some sort of share of that benefit. Instead we have gotten a brand new vector of audit exposure, a host of legal responsibilities, and the maddening reality that our tax season doesn’t end after the filing deadline.

I don’t just write advice posts, I’m an avid consumer of other practitioners’ posts – and referring to himself in the third person – try it, it’s empowering!  There have been many posts on boosting our staff morale by suggesting that we close our offices on the day after the filing deadline.

Well, if you’re an eFiler (which is all of us), you can’t close your office the day after a filing deadline.  There will always be a few returns that get rejected from the eFiling system. Some are administrative, a transposed SSN. Others are due to ID fraud or an ex spouse violating a dependency claim agreement (which will still be relevant even without dependency exemptions – so much for a simplified Code). 

The point here is that prior to eFiling, we would prepare the return, deliver said return to  our client, along with our invoice, and send them on their way to the USPS – done and done; we did our job and got paid. 

Now, we prepare the return, deliver it to the client, wait with baited breath for the client to execute the eFile release form(s) (some states like MD have their own form, other states will accept the federal release form – it’s a patchwork – see the post on Sales Tax apps), then we wait for the USPS to send the signed forms back to us, then we can eFile the returns, then we have to wait for the eFile to complete, then we have to send the confirmation letters to the client – each step along this tortured path presents a point of failure.

Also with eFile, we HAVE to submit that return within 3 days of receiving an executed release form, regardless of whether the client has paid us or not.

And so we suffered.

Then we got the idea of sending the tax return through email as a PDF (NEVER DO THIS AGAIN – read on for why…)

Then, we improved on that by making two PDFs, one for the tax return and one for the eFile Release Forms; one the client looks at, the other the client ignores and conveniently forgets they have when they’re applying for a mortgage and ask you to (drop everything and)  send them a copy of their return.  Guess which is which.

Then, with the first rumors of ID theft, we began adding passwords to those PDFs and/or hashing out the SSNs.  Then the software providers and IRS couldn’t agree on what forms needed a hashed out SSN so the hashing was ditched.

Let’s take a moment to delve deeper into the password enabled PDF.

Perhaps your tax software allows you to add such a thing to your PDFs.  Usually this is some algorithmic approach such as “last 4 of SSN + 5 digit zip”.  Perhaps you purchased Adobe and are able to create your own passwords.  All is good for emailing right?  Nope. 

As per the Oracle of Indiana Bob Jennings, a fraudster can download a program – for $30 – whose sole purpose is to strip passwords from PDFs.  As the late Robin Williams once quipped, “…It’s like handling toxic waste with an oven mitt…” As Dr. Evil once quipped, “…just one calorie, not quite evil enough…”  (I like cinema if you couldn’t tell by now.)

There’s another issue here. Let’s say you send your password enhanced PDF via email to your client.  Your client then signs the doc and makes a new PDF to send back to you.  What happened to the password?  If it’s a new PDF, there is no password!

Take a moment and visualize this scenario: You send your password equipped PDF to your client. Your client is not that tech savvy and has poor security and surfing hygiene. They have malware on their computer; they have no idea about this, they’re just annoyed at how slow their computer is. They download the PDF, enter the password, sign the PDF and re-save it and send it back to you. That now unsecured PDF is intercepted in the interwebs.

Try explaining how you’re not culpable to a plaintiff’s attorney. Try reasoning with your malpractice carrier provided attorney why you shouldn’t settle. 

OR – you can start using digital signature providers.

One of the few things that Intuit does well is how they added eSignatures to Lacerte. With a few mouse clicks, you can “assemble” and deliver the tax return to your client. Your client can “read” and sign the tax return FROM THEIR PHONE, and all of this can be done within minutes! 

But this costs money you say. Yes; yes it does – this is Intuit after all; everything costs money. 

You know what else costs money? Envelopes, postage, paper, toner, prints in excess of your copier’s monthly base allotment – and TIME. Staff time, your time; time is money.

Buy back your time and save on all that administrative crazy by using the eSignatures feature in your tax software.

I use Lacerte, but I’m sure this process is similar in other software packages. Once you complete the return, there’s (in Lacerte) a button on the client overview tab to initiate the digital signature process.  Clicking this button will bring up a pop-up. If you’ve already entered the taxpayer and spouses’ email addresses, they’ll be populated in the pop-up. Select the number of days you want the digital signature email to remain active and how many days in between reminders, then hit send. Intuit bills you for usage on your monthly REP statements. You can also purchase in bulk for price point savings.

That’s it!  Seriously, that’s it. There’s nothing to print out – no more queues for assembly. No more administrative overhead. You finish the return, click a few buttons and the return is both assembled (converted to PDF) and delivered (via a secure medium).

Let that sink in.

There are also digital signature solutions in non-tax software based apps. Our secure portal will be adding digital signatures soon. And TaxCaddy offers digital signatures. In our firm, we used TaxCaddy and Lacerte’s digital signatures. TaxCaddy’s solution is half the price as Lacerte’s – because of course it is. However, Lacerte’s solution is more efficient to use. In practice, we used TaxCaddy during the earlier parts of tax season, resorting to Lacerte during the last couple of weeks of the season.

I can’t stress this enough: Digital signatures is literally the least tech savvy thing you can do. If you’re hesitant about switching to the cloud, that’s one thing, but not using digital signatures is not a defensible position.

And unfortunately, there really isn’t a middle ground.  If you’re going to deliver the tax return via an electronic medium, you are committing malpractice by using email as that medium. If you don’t want to use digital means, then go back to paper and snail mail.  Some of your clients won’t care; they may even prefer it! But there’s one constituency that will care – the younger practitioner that you’ll want to buy you out if you ever want to retire. 

By Jonathan Rivlin, CPA

Everyone seems to love a good tech prognosticator.  The web is chock full of breathless articles touting how great things will be in 2, 5, 10, 20, 50 years from now – better living through technology.  Does anyone ever go back and read some of those predictions from years past?

I remember how the 90’s were supposed to be when we went paperless.  We even got the Electronic Signatures in Global and National Commerce Act (ESIGN – ahh the government and their acronyms) –  though this came in mid 2000.

It was a brave new world back in the 90’s.  My cathode ray tube based monitor bathed me and my 13 column paper in a sickly glow while the cooling fan from my 33 Mhz tower blazed away like a jet engine.  (As an aside, why did computers back then come with a “speed boost” button; who would ever choose for their computer to run slow?)

In all seriousness, we may never be 100% paperless, but with the tech we’ll be profiling in this column, we can get pretty darn close.  But that’s not the main reason for considering this particular tech.

In this column, we’ll be profiling 2 apps called “SurePrep” and “TaxCaddy”.

SurePrep offers a suite of tools for tax return preparation, among other things.  Together with their client facing app called “TaxCaddy”, we preparers can dispense with sending out those bulky tax organizers (that – if they come back at all – are never filled out, or even opened).

Clients download TaxCaddy to their smart phone or other device.  They can then either drag and drop PDFs (and a few other file types) from the computer direct to their TaxCaddy profile, or they can snap a picture with their mobile device.

As with my previous column on Xero (if you haven’t signed up yet, you’re missing out!), we can’t talk about SurePrep and TaxCaddy without mentioning Intuit and their related offering, Intuit Link.

We used the Link for the 2017 tax season.  Our clients HATED it.  We HATED it.  It seemed designed to cause us to make mistakes.  I remember distinctly one return from a client that insisted on using paper that year.  He actually requested a full organizer print out bless his heart.  When I worked through his tax organizer and matched them up with the various W-2’s, 1099’s, etc, I actually cried because it was painfully apparent just how difficult Intuit Link was to deal with – from the client’s side through to the reviewer’s side.

After tax season 2017 came mercifully to a close, we researched other options.  That’s when we discovered SurePrep and TaxCaddy.

We rolled this out for the 2018 tax season and it was a much better experience – for us and our clients.

Internally, we used SurePrep to replace our paper workpapers.  SurePrep made documentation and annotation easier.  AND, the killer feature here is that when the client uploads their docs through TaxCaddy, those docs get converted into an image that can then be seemlessly entered into your tax software.

Let me say this again – you don’t have to enter your clients’ W-2’s and 1099’s.  The client takes a picture, it goes into the TaxCaddy/SurePrep app, and then you click a button and it goes into your tax software.

As in my previous column on Xero (seriously, sign up for it and get your life back!), you can’t walk into the future with rose colored glasses.  Nothing is perfect; there is a learning curve.

But I will tell you this:  I had some returns that would easily take me 8+ hours to work through.  With this new software, it took me 3 hours.  In tax seasons past, we’d hire a seasonal person to help us with data entry; we didn’t need to do that this year.  The software isn’t cheap, but dollar for dollar it costs less than a staff and it doesn’t get tired or make mistakes*.

I don’t want to oversell you here; you’ll still need to check that the data comes through to your tax software correctly.  But any errors we discovered were on the Intuit side (we use Lacerte in our firm).  Even with that said, the data bridge not only saves time, it saves your body; less eye strain, wrist strain, finger strain – over the course of a brutal tax season, this adds up!

Review is easier too; all the source docs and preparer’s notes are in one place.  The reviewer can focus on theory and less on data.

Completion and delivery of the return is easier too.  No more print, assembly, and a call for pickup or mailing.  You make a PDF of the return and post it to the client’s TaxCaddy profile.  Our secure portal gets two files, the final return PDF and the SurePrep file as a PDF.  Think about what is missing here:  envelopes, toner, postage, admin staff time, paper – headache.

The financial case for these apps, SurePrep/TaxCaddy, Xero, and the like are that they allow small firms (which many taxpayers prefer) to punch above their weight.  We are a small firm, but we can handle a lot more work – a lot more complex work – without exploding our staff and overhead – just by using these apps.

By Jonathan Rivlin

Payroll.  Just the word alone can make any accountant cringe.  Except for rookies fresh out of school.  So innocent.  So naive.  I would hope this is no longer the case, but your humble Tech Tips never had any exposure to payroll, or sales tax for that matter, in school.  For something so intrinsic to our society, it’s not well covered in academia.

Early in my career, I learned the finer points of payroll in an apprentice-like manner.  Ever the technologist, I built my first payroll “module” in Excel ’95.  As that old School House Rock song went, “Mother necessity” was my muse.  Or laziness.  I got tired of typing – yes, actually typing on a typewriter all the various paystubs for our client’s employees.  So, I figured out how to create this in Excel.  And, using a dot matrix tractor style continuous feed printer (yes, they still make and sell these), my run of paystubs would look some what professional.

By the end of the 90’s, we had referred most of our payroll work out to the 8000 pound gorilla, ADPaychex.  Their company reps would “make the rounds” delivering US Master Tax Guide round about December and a basket of junk food in early April.  How lovely of them.

This arrangement never sat well with Tech Tips.  Noting that these firms started as smaller CPA firms that once did tax work, the question always loomed in the back of my mind:  What’s keeping them from resuming their tax practices on top of their payroll side?  And yet, it really was a matter of economics.  The clients couldn’t be trusted to do their own payroll; the stakes were just too high, and small firms just couldn’t devote the resources to make this time sensitive operation profitable.

We kept a few payroll projects for long time clients but refused any new payroll engagements – for a time.

And then, we took on a new client as a close referral whose CPA (that we’d be replacing) was farther ahead of us on the cloud tech implementation curve.  She had setup bank feeds (Oh so promissing, and yet so disappointing) in the client’s QB Desktop file and created a cloud based payroll practice.  One of the ADPaychex firms (remaining “nameless” for this post) had created a wholesale part of their web based payroll system.  We could sign on as an accounting partner and then onboard our clients as we saw fit.

This was 2012 and it seemed like a win.  Though the system was clunky and annoying to use, once it was setup and the learning curve attained, we were able to offer payroll under our own firm’s umbrella without having to deal with filings or tax deposits.

Payroll then, was the part of the industry that got us into the cloud; we just didn’t have the presence of mind to think of it that way back then.  Think about this; this was only 5.5 years ago, but things really have changed that much in this short a time.

Things went along; we added some more clients to the platform.  And then, it went bad – operatically bad.  This part of the story will be visited in another post; want to keep this particular post focused on payroll solutions.  But suffice to say, this story touches on so many challenges that we face:  managing clients, managing technology, setting expectations, not getting sued…

To say that ADPaychex screwed up is an understatement.  The client left the practice, my stomach almost ate a whole through itself, and our malpractice carrier took things up to 11.  As an accountant, I strive to be accountable; and I don’t mean to come across as if I’m shirking that responsibility, but in going over this issue (over and over) in my head; we really did everything we could to prevent this slow rolling train wreck of a dumpster fire.

The client wanted to cancel a payroll.  We called our dedicated rep at ADPaychex.  Cancellation confirmed – and double checked.  Of course the payroll went through as if we hadn’t cancelled it.  The client freaked and called their bank and told them to block the transaction.  I received frantic text messages.  I called my dedicated rep to find out what was going on.  “Nothing; there’s no payroll today sir.”  Clearly the large beast of this particular national payroll processor wasn’t setup properly for the cloud.  It goes on and on, like a case of poison ivy…that got infected…that turned gangrenous.

I would have loved to have gotten rid of all the payroll work after that “incident.”  But the reality is that we practitioners need to offer this service.

So we looked at options.  I even created a beefed up version of my earlier payroll module in Excel (’16 this time) – was preparing to go full manual.  Then we found a company called Gusto.

Like Xero, and Bill.com, and Futrli, and all, this company has a clean easy to use interface.  There are trainings (though nothing counting towards CPE), an accounting partners program, a dedicated rep, fanatic customer support, and the pricing structure is transparent and lower cost than the national players.

We transitioned our clients off of the other platform and onto Gusto in short order – they provided special tech support for this.  They even included a free account for our firm’s payroll.

Getting ADPaychex to stop charging us has been another frustration…

Setup on Gusto is simple; the employee (and contractor) gets invited to create their own profile on Gusto and they complete their own W-4 and I-9 through the site.  Gusto makes employee onboarding effortless.  They handle paystub delivery, direct deposit, eFiling returns, tax payments, and they address any notices.  They offer discounts once a certain level of clients are put on the platform.

Gusto syncs with Xero (and QBO).  You can map the various payroll elements to specific accounts and tracking categories (and QB classes).  Every time you run a payroll, it automatically appears in Xero.  When the payroll transactions clear the bank, reconciliation is a breeze. 

Now we have to take off the rose colored glasses.  Gusto is great; it’s the way of the future.  But there are a few cons to be aware of.  Gusto only prepares direct deposit paychecks.  If you want to cut a paper check, you need to prepare that net check manually – one could use Bill.com to deliver the check.  (Gusto will still prepare and deliver the paystub and send the payroll tax electronically.)

Also, and this shouldn’t be the deal killer you may think it is, Gusto has a 4 business day lead time.  Meaning that if you have a paydate on a Friday, you need to submit it by Monday.  After 90 days, some businesses can qualify for a 2 day lead time.

I’ll admit that ADPaychex wins on this one count with a 1 day lead time, but for us anyway, making the change was worth it.  And forcing the client to stay on top of their payroll info (hours worked, any new hires/terminations, bonuses, etc) to meet the earlier timeframe has actually helped in other areas of accounting practice.  It’s like putting the client on notice to keep their payroll records in a certain way by a certain time filtered into other parts of their business.

On those occassions where we had questions, Gusto tech support was available, almost instantly, and worked to manage our issue until resolution.  They offer live chat through their website, email, and phone support.

We occassionally still get sales calls from our old ADPaychex reps.  After choking on my rage, I politely decline “my current complementary edition of the US Master Tax Guide” (You do know that stuff’s available on the internet now, right?) 

We’ll be onboarding two more clients to Gusto over the next few months.  Costs less, easier to use, better support, syncs to the cloud, and they offer other HR solutions.  It’s a no brainer.

We’d like to hear from you! Please submit your own tech tips to us at techtips@msatp.org! We will award a free subscription to The Tax Book to the person who submits the best tip.

Thanks, and catch you next time!

TT

By Jonathan Rivlin

In today’s post we’re going to cover the last part of the data management chain: Getting that data out. Hubdoc, Bill.com, Gusto, bank feeds – all deal with data going in, and Xero manages that data once in the system. But how can we get that data out again?

Historically, as a 20 year QuickBooks user, I had my go to reports that I’d create for all my clients – being sure to add, “These statements have not been subject to an audit, review, or compilation, and no assurance is provided” as a footer on each statement. True that irritated the client, but they never figured out how to remove them!

Xero also offers a similar reporting feature. In some ways, Xero’s reporting feature is cooler and has more bells and whistles than QuickBooks. But, I do respect the simplicity of QuickBooks’ reporting.

But this post is about a specialized reporting app that integrates with Xero called, “Futrli”

Maybe this is a generational thing, but I don’t get what today’s folks have against vowels.

Anyway, let’s get into the details with Futrli.

It’s a cloud based app coming to us from across the pond in the UK. The app, as discussed above, integrates with Xero. Futrli pulls data in real time and presents that data in a fashion that is customized to each client’s unqiue concerns.

Before continuing with the details, I can’t emphasize this enough: The cloud, every article you’ve ever read about it, is all about this one item concept: We’re not bookkeepers or tax preparers anymore; we’re high level trusted advisors. The ability to deliver real time, meaningful insights into our clients’ business, as through Futrli, is what the cloud is all about.

We love all the apps in our tech stack, but when it comes to Futrli – it can’t be overstated – the entire purpose of the cloud is borne out in apps like Futrli.

For those practitioners who want to offer additional services, for those who want to strengthen their business if they are under threat due to changes in the tax rules and/or practice requirements, an app like Futrli is what you’re looking for. While it certainly works faster and more efficient if your client’s accounting is in the cloud, Futrli can work with your client’s data even if they are not in the cloud. You just need to distill the client’s data down to a *.CSV format and upload it to Futrli (We’ll cover *.CSV in a future posting.)

Before we added Futrli to our firm’s tech stack, I thought that such dedicated reporting apps were something like “icing on a cake”; the native reports in the general ledger system should be enough; even the customizable reports in Xero. After looking into Futrli, I realized that this is not an accurate comparison. Futrli (and any reporting app really) is not some dispensable fluff that’s “nice to have”; it’s a critical piece – THE critical piece of your tech offering. It is a business model. It is a means to provide real world, real time, meaningful insights to our clients that can help them steer their ship.

A more accurate comparison would be to this quote from the Russian navigator out of the movie, “The Hunt for Red October” when he boasted, “If I had a stop watch and a map, I could fly through the alps in a plane with no windows.” We are the navigator and Futrli is the stopwatch and the map.

Our clients look to us as advisors; not just tax preparers. We can customize the reports on Futrli to give our clients insights into their business that they wouldn’t even know to look for and previously were out of our reach to offer.

True, there are other reporting apps out there, and many have been around for a while – but we chose this company because they make it easy – both to use the app and to do business with them.

For training, they require accounting partners to go through a series of modules that take about 10 hours to complete – though I was able to work through it in about 8 1/2 hours.

They also have a program where for a onetime setup fee, your firm can put its own branding on the reports. That way, your client associates you with the amazing business intel you’re giving them. If you were so inclined, you could build an entire practice solely on advisory services using Futrli as your backbone.

Futrli comes with some pre-made templates – or we can customize our own with their in-app report builder. Once the templates are set, they can be easily applied to all the clients you bring on to this platform. In other words, you invest a little time on setup and learning curve in the beginning and then you leverage those efficiencies with each new client.

You can set the system to track any list of financial or non-financial items – provided that the data is collected and entered into the system. This makes the setup and integration – and training of staff and clients – critical to making Futrli work. The information that comes out is only as good as the data that goes in.

If you have staff or clients that have multiple vendors for say, Wells Fargo Bank NA, WF Bank, Wells Fargo, Bank, they need to stop being so sloppy – yesterday.

Part and parcel to adopting this, or really any cloud app is for the firm to adopt a series of naming conventions and then rigidly enforce it. This isn’t just a requirement of the cloud; it’s something we should have been doing all along.

Finally, once you get the visuals and graphics set, the KPI’s (Key Performance Indicators) that your client cares about configured, and the reporting templates implemented, then it’s time to print and deliver your professional looking reports – with your logo on them (and that AR-C Section 70 compliant legend) to your client.

How often have you put a report out there you put so much time and effort into but felt it was missing something to make it “pop”? Futrli’s reports look professional and eye catching, and thanks to our diligence, their content is useful. These are reports that will actually get read and used.

Putting all that work into the various other parts of the cloud ecosystem and neglecting the reporting side is like eating a steamed crab without any Old Bay – why would anyone do that?

Check out Futrli and make your practice indispensable!

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We’d like to hear from you! Please submit your own tech tips to us at techtips@msatp.org! We will award a free subscription to The Tax Book to the person who submits the best tip.

Thanks, and catch you next time!

TT

By Jonathan Rivlin

It’s been said that when your only tool is a hammer, every problem looks like a nail. For decades we shoehorned our clients into whatever accounting system (usually QuickBooks desktop) we had.

Our clients are like little snowflakes; each uniquely different and equally complex. Yet somehow we expected to fit these oddly shaped pegs into the “round hole” of QB.

By now, we’ve covered the parts of the cloud that should be in most clients’ tech stack. The true power and potential of this new way of doing business is that there are so many apps out there, and new ones are coming out all the time, that you no longer have to jam a client into something that doesn’t quite fit.

In this post, we’ll take a high-level summary of a couple of industry-specific apps: Clio & Workshop

For those clients that are auto mechanics, there’s an app based out of Australia called “Workshop”. Workshop bridges both the receivables and payables function in a single interface. (No this doesn’t violate internal control because policies can be set and enforced by both us and our client’s managers).

As an aside, two principals of working in the cloud are that every user’s action is logged and documented and that nothing gets deleted. Ever.

Workshop starts by helping the auto shop generate an invoice for the client. From that invoice, the app pulls sales price, parts codes, and sets up whether a particular item on the invoice is subject to sales tax all from a centrally maintained data file.

Once the estimate is confirmed and work is authorized, the invoice forms the basis for the parts order – flowing to the payables side. (In today’s Just In Time environment, the client doesn’t really hold an inventory anymore.)

As the client pays the invoice upon completion of the job, the payment gets recorded into Workshop – and all flow seamlessly into Xero; where it waits for the bank feed to pick up the deposit to complete the cycle. And when the bill comes in from the vendor, the parts ordered for this given job can be tagged and matched to the bill and closed out with a vendor payment (via Bill.com of course!)

This app is billed at about $50-60/month as a flat fee.

On the law firm side, there’s an app called “Clio”. Clio was created specifically for attorneys. It functions as a CRM and matters management app. Your law firm clients can enter their clients into Clio, along with their specific matters, and all sync to Xero seamlessly.

Clio (the version that includes syncing) is billed at $59/mo / user. This can get expensive for larger firms, but considering the range of features you get, it’s a compelling argument.

Clio syncs with an escrow specific app called “Trustbooks” – an app specifically and solely focused on managing compliance for IOLTA accounts. (We’ll go deeper into Trustbooks in a future post). Clio also syncs with Xero.

Now, when your attorney clients incur expenses on contingency, you can use Clio to track when they become deductible versus when they still need to be accrued. When clients receive funds on trust into their escrow accounts, an additional layer of compliance can be maintained – something that just isn’t possible with a generalized general ledger (that would be both QuickBooks and Xero – the difference is that Xero doesn’t pretend to be all things to all parties).

There are other apps, some of which we’ll detail in their own posts (specifically for contractors and builders). Further, the apps we’re using today aren’t necessarily the apps we’ll be using 5 years from now. While I hope we don’t have to change every app every year, the reality is that we need to embrace change as our constant. Dynamism and adaptability is our fixed north star.

The key take away from this particular post, after going through all the other parts of our tech stack, is that we should be proactive in looking for – actually seeking out – apps specifically tailored to our clients’ unique businesses. Let’s be the advisor that our clients expect us to be.

We’d like to hear from you! Please submit your own tech tips to us! We will award a free subscription to The Tax Book to the person who submits the best tip. Please submit your tips to this email address: techtips@msatp.org

Thanks, and catch you next time!

TT

By Jonathan Rivlin

Have you ever worked up a client’s QB file (the modern equivalent to the “bag of receipts”) and prepared their Schedule C and 1040 only for the client to suddenly remember all the other business expenses that they paid out of pocket? Nothing like seeing the tax due line to jog a weary sole proprietor’s memory.

We, of course, approach all such matters with a dose of professional skepticism; show me the receipts we say. Blank stares we receive back. I can get you bank statements they eventually say. That’s not enough we reply; we need both the statement and the receipt. But why, they say. Because the IRS said so – stop asking and just do it! (I’ve been doing this way too long.)

Contrary to what a revenue agent would have us believe, the clients aren’t being duplicitous; they’re just busy running their businesses. Over the years, we’ve coached our clients on what receipts to save, but it’s still a difficult matter of sorting and summarizing (and charging them for this). It’s soul-crushing work.

And now into that let’s talk mileage. Yes, client, I know your mileage is similar to last year, but I need you to tell me the actual numbers. No, I can’t just use last year’s. Yes client, but the numbers you just stated both end in “000”, that seems like a convenient coincidence. No client, I can’t just tell you what the number is. Sighhh. Yes, client, you also need to tell me the total miles driven; I need both total miles and total business miles. Yes, I told you this, every single year since we started working together. No client, it’s not a new thing…(I’ve been doing this way too long.)

Suffer no more! Better living through technology!

This post will focus on an app called “Expensify”.

Expensify syncs with both Bill.com and Xero (and QBO).

Like Bill.com you can set up multiple users and limit their permissions by role. Employees take pictures of their receipts on the fly using the Expensify smartphone app. Mileage is tracked automatically through the app as well! For those clients that reimburse their employees for expenses, Expensify sends all this data to Bill.com for payment. For those clients that provide their employees with a corporate card, the expenses flow straight into Xero.

Tech Tips has a client where employee expense reimbursements was a large part of their operations. Managing the paperwork, sorting, summarizing, cutting checks was, putting it mildly, laborious. The employees hated keeping all the paper receipts. The managers hated going through and approving all the reports. And they all hated us for taking so much time to triple check everything and prepare the reimbursement payments.

Excel helped, partially. But, Expensify coupled with Bill.com and Xero took a beast of an operation and shrunk it down to a 5-minute breeze.

Now, we are freed up to focus on the numbers themselves and their meaning to the overall business. And, we can breathe a little easier knowing that this framework provides an additional formality and internal control to a small business that would otherwise not have adequate internal control.

For me, the aha moment came when I wanted to spot check some of the reports in Expensify. There they were, perfect images of receipts, neatly organized and linked to their respective reports – which themselves were marked as reviewed/approved by the client’s managers; and then following this thread to Xero clinched the deal.

Now, you may say that your clients don’t need this particular bell and whistle. But, they do. Even for those clients that are shareholder/single employees of S Corps with simple ledgers. The Expensify workflow frees up their need to save all that paper, and formalizes the reimbursement process, and makes accounting so much easier. Using this setup; Expensify – Bill.com – Xero should make the dreaded hunt for out of pocket expenses a thing of the past.

One caveat with all this. Expensify uses its own terminology. We create “policies” in our client’s profiles on the app. This is not the same as an “Accountable Plan” under the IRC. You still need to have your client create (download a template for free from the interweb) such a plan document.

By this point in our cycle through the cloud, I hope that you’re starting to get more comfortable with and, dare I say, excited about this new tech.

We’ve had a rough time as practitioners as regulation has gotten stricter over the past several decades. It seems now that the technology has finally given us the tools we need to make our lives and our client’s businesses better.

We’d like to hear from you! Please submit your own tech tips to us! We will award a free subscription to The Tax Book to the person who submits the best tip. Please submit your tips to this email address: techtips@msatp.org

Thanks, and catch you next time!

TT

By Jonathan Rivlin

In our continuing series on apps, we’re now going to turn our attention to document management.

Have you ever had the joyful experience of asking your clients for bank and credit card statements? Let’s be brutally honest here: it’s been my experience that such requests often cover multiple years. For clients with multiple bank and credit card accounts we can be talking about quite a few PDFs if you’re lucky; usually it’s reams of paper.

And then there’s that additional joy of having to ask for copies of cancelled checks, or check stubs (many companies still have paper checks). Sometimes you need to ask your client (I’m sure they’d say pester: CPA = Certified Pain in the Ascot) for additional documents, invoices, receipts, etc. The key here, which was not as apparent in the analog age, is that we need a uniform and efficient method of capturing data. If we’re moving away from “bookkeeping” towards “data science,” then the data capture portion of this cycle is mission critical.

We started this series on apps with Xero. Think of Xero as the hub of a wheel. Hubdoc is an app that should be the first spoke on that wheel.

Hubdoc is an app that integrates with Xero specifically designed for capturing bank and credit card statements — including check images — bills and receipts, auto sorts those bills, in real time, with OCR and assists with internal control.

Hubdoc is one of the apps that finally puts internal control into the hands of our small business clients. Take a moment and let that sink in.

In the same vein as in Jerry Maguire’s “You Had Me At Hello,” Hubdoc Had Me At Check Images. Internal control is the icing on the cake.

The key here is automation, a concept that is one of the primary drivers of the Cloud way of accounting. Automation in Hubdoc is accomplished when your client provides their login credentials (without needing to disclose them to you) during the setup phase and that’s it. They never need to enter them again, unless they change their password. AND, you never need to ask your client for statements, cancelled checks, and other items again. Talk about a time saver.

If Xero is the center for how you manage your clients’ data, Hubdoc is the means for how you collect that data. You can’t have one without the other.

Peanut butter and chocolate, steak and potatoes, steamed crabs and old bay (I was hungry when I wrote this post), and Xero and Hubdoc — the cloud based AI equipped general ledger app and the automated secure data gathering app.

Future posts will feature additional apps to snap into our cloud based framework.

Remember the point of all these apps isn’t to make our lives more complex — these apps make our lives easier! It’s a different way of thinking.

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We’d like to hear from you! Please submit your own tech tips to us at techtips@msatp.org! We will award a free subscription to The Tax Book to the person who submits the best tip.

Thanks, and catch you next time!

TT

By Jonathan Rivlin

The funny thing about aging is how non sequiturs trigger associations that link to long dormant memories. I recently saw a picture of  and that took me back to the summer of 1991 when he appeared in the movie “Doc Hollywood” staring Michael J. Fox and Julie Warner.

In that movie, Michael J. Fox played a young doctor, saddled with student loans, who was on his way to Beverly Hills to join a large medical practice and presumably a life of fast cars and serial marriages (not that we judge). On his way out to Beverly Hills, he had an accident in a small town in South Carolina (how he intended to get to Beverly Hills from Washington DC via South Carolina was never explained). As part of his punishment for the accident, he had to perform community service hours at the local hospital.

This movie isn’t a perfect analogy for our profession, but until we get a movie based on accounting and tax prep, we’ll have to make do with this one (and I’m not counting the recent Ben Affleck vehicle “The Accountant” — don’t get me started).

Many members of the MSATP work for, or own, small practices. In many cases, they are their entire practice. That’s how I started — I was my own admin, junior, senior, manager, and partner.  There’s an old saw that small firms can’t compete with large firms in terms of billable hours, salary packages, etc. 

I don’t buy that.

Many taxpayers specifically seek out small firms because they want a relationship with a trusted advisor. They don’t want to be pawned off to a rookie charged at hourly rates that will make you blush. Clients may not know the latest tax rules, but they aren’t stupid: they know that they are subsidizing that rookie’s training on their own dime. 

Over the course of the movie, Michael J. Fox’s character learned the value of that trusted relationship and, spoiler alert, eventually eschewed the big salaried job and moved back to the small town.

I’ve written many columns on technology. Our profession needs to embrace the coming innovations if we want to survive, but there will always be that need for a real human interaction — the kind that only comes from a small firm.

To that end, I say don’t worry about the large firms. Celebrate the aspects about small firms that your clients appreciate. We are that calm, steady hand guiding them through these rocky waters!

Now for the other side of our business: staff.

Large firms offer signing bonuses, take home laptops, casual Fridays, retirement plans, PTO, and happy hours. It’s a lot of flash and I’ll admit that I fell for it as a college graduate.

I lasted sixteen weeks to the day at that big firm. I hated every. Single. Second.

Small firms can offer something that large firms simply can’t offer:

1. Variety – we can assign different types of projects from excel analysis to tax return prep to correspondence work to payroll and systems management. Compare this to the large firms where you spend time working on a single issue. Is there anything worse than being a FASB 133 expert?
2. Impact – The work we do matters in the lives of our clients, and in our communities. Compare this to a large firm where one can spend way too many hours making one person just a half a percent wealthier, not that they’ll notice, and certainly not that they’d say, “Thank you.”
3. Client contact – We enable our team to interact directly with the client. This single thing goes a long way towards building confidence and competence. Compare this to large firms that shunt their juniors off to the conference room, bull pen, or cube farm while the partners manage the client contact offsite (FYI – those golf club outings and martini lunches won’t be deductible any more…).
4. Succession – The best person to purchase your practice is the staff member(s) that you’ve spent 5-10 years training.Compare this to large firms where some small % of new hires actually make it to the rarified partner level; it’s almost like a lottery.
5. True Entrepreneurship – Clients expect us to be all things to them.  In the movie Doc Hollywood, Michael J. Fox’s character would read letters that his patients received. Not saying that our clients are illiterate like the characters in that movie — rather, I’m saying that we do more than provide financial statements and tax returns.  I’ve engaged in projects well outside the realm of traditional accounting and I see that becoming the norm over the next 5, 10, 20 years out. Compare this to large firms and ask yourself this question: Even if one makes partner at a large firm, do they really know what it’s like to run a business? In our world, running a small business isn’t for the faint of heart. We are our own marketing, admin, compliance, HR, and production team.
6. True work flexibility – The large firm states that junior staff only need to hit 35 billable hours a week.  Sounds great to a college graduate who has no clue what that entails.  The reality is it takes a bit more hours that aren’t billable to get those 35 billable hours.
7. In our practice, with enough notice, we can accommodate our staff’s schedules. We work to live, not the other way around. While there are the inevitable periods of overtime — thanks Congress — we realize that our staff needs to have a balanced life, and we can offer that.

It’s true that working in a small firm is not for everyone — there will be those that are better suited for life in a big firm. But there are other people who will do better in a small firm with us. Make it a point to find them and tell them!

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We’d like to hear from you! Please submit your own tech tips to us at techtips@msatp.org! We will award a free subscription to The Tax Book to the person who submits the best tip.

Thanks, and catch you next time!

TT