techtips – MSATP

By Jonathan Rivlin for MSATP

This post will focus on the exciting world of sales taxes — we’ll leave their oft-forgotten friend use tax for another post.

NOTE: This post was written before the US Supreme Court’s Wayfair decision; as of now, Quill is still the law of the land. And that land includes some 10,000 taxing jurisdictions!

It’s not that we don’t want to comply, it’s just that with the lack of uniformity in what is taxable, what the rate is, what the frequency of measurement is, whether it’s cash or accrual, what type of registration is required, and how payment is to be made (electronic or paper), AND whatever you think you know today will be obsolete tomorrow, compliance is, in a word, difficult.

When your humble Tech Tips was entering the profession in the 90’s, this was not an issue. Our retail clients didn’t have to worry about nexus with other states. Nexus back then was a hair product. (Yes, I know that product is spelled “Nexxus,” but you get the point.)

So, sales tax: don’t worry, there’s an app for that.

Both QBO and Xero (See prior post on Xero) have sales tax modules built into them, but that’s not enough. These ledger based modules will help you calculate which sales are sales taxable, what rates apply (provided you know what rates to use), and what jurisdictions to remit to, provided that you know this and manually update it yourself.

As limited as this is, it is a mandatory first step.

Now, having gotten that groundwork set out, we can look at some purpose built sales tax apps that can snap into your cloud based ledger.

We’ll look at two: Avalara and TaxJar.

Avalara and Intuit seem to be kindred spirits. Avalara does not publish rates on its website — instead, would-be clients are instructed to contact them for a quote. In this modern age, this is where the decision should stop. This tactic may have worked prior to the Cloud, but in today’s environment it has the veneer of something less than trustworthy.

TaxJar and Xero also seem to be kindred spirits. TaxJar and Xero are native to the Cloud — they were built for the modern way of transacting and computing. Both TaxJar and Xero publish their rates on their website: you know what you’re getting when you pay. You can sign up yourself, on your time, without hassle or the pleasant experience of being upsold.

Both TaxJar and Avalara will calculate your sales tax and assist with filings and registrations. Both sites offer state registration services for varying price levels. Both sites offer a resource library that appears to be available to the public without charge, which is very helpful! There’s a certain commoditization at work here.

Our decision was to use TaxJar, and here’s why:

1) Pricing was transparent (See above and also the previous article on Xero)
2) The “partner agreement” didn’t require us to violate the AICPA’s code of professional ethics. Let’s elaborate on this:

The new way of doing business involves the accounting firm establishing a relationship with a given app provider, be it Xero or Intuit, TaxJar or Avalara, or what have you. These companies offer (often require) some level of training to ensure that each accounting partner knows how to use their system. This is a little patronizing, but it is important.

These apps also have different partner levels (bronze, silver, gold, platinum, etc) based on the number of clients a given firm puts on a specific app. Discounts on per client monthly fees can be had once certain benchmarks are hit. These apps also have agreements that firms need to adhere to.

And then we come to Avalara’s partner agreement.

Avalara’s partner agreement required us to create and submit a marketing plan to Avalara for review, and they would punish us if we failed to meet the benchmarks set out in our plan. Avalara in a sense was inserting themselves into our business and making us responsible for growing their business. No other app does this! When I took issue with this to the sales rep that we contacted, I was told that it wasn’t really enforced and no other accounting firms had ever questioned it; they just sign up, and couldn’t I just sign up already? Why was I bothering her with my questions? (Us CPAs and our questions…)

I realize that not all readers of this column are CPAs, but for those readers that are CPAs, and for any other practitioner that is governed by some regulatory body (attorneys, EA’s, licensed tax preparers, etc), we are governed by a code of professional conduct that requires us to remain in compliance and good stead with any contracts we enter into.

In the 90’s and Aught’s, this meant that we had to be honest about how many user licenses we needed to disclose to Intuit; that we couldn’t use the same copy of Office for all of our work stations. Not that anyone has ever done that — by the way, doing something like this is a felony, and it’s also grounds for being thrown out of the profession.

So, back to Avalara and their partner agreement: If you want to keep your license to practice (and I know that’s a tough call after the new tax law), I would strongly suggest not obligating yourself to an overly invasive, difficult-to-comply-with software license agreement.

I can’t tell you what to do. What I can provide are some alternative perspectives for a given situation, or as Obi Wan Kenobi would say, “…a certain point of view.”

There are surprisingly few absolute right or wrong, yes or no decisions. For us, it comes down to who we want to spend our time with. What do we value as a firm? How would we want to be treated? How do our clients want to be treated? Our firm’s answers to these questions may differ from yours and that’s okay — just be clear about what your answers are and how you arrived at them.

For us, we value transparency, low-pressure sales, well-designed U/X (user interface), passion for their specialty bordering on geekiness, fantastic tech support, and an open attitude where we are treated like partners and not as marks to be milked for add on sales and hidden fees.

That’s why we chose TaxJar over Avalara, Xero over QBO, Gusto over ADP/Paychex, and more apps that we’ll detail in subsequent posts.

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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!

By Jonathan Rivlin for MSATP

In November of 2016, with the launch of my new practice, we made the decision to support a new accounting platform, Xero. I’ve been a CPA for 20 years and I’ve worked in the industry since I was 16. For me to say that I don’t support or use QuickBooks is not a small thing.

Loosely quoting Brad Pitt’s character from the movie, “Mr. & Mrs. Smith”, “I suppose at the end, you remember the beginning.” Welp; let’s take a look back in the day!

Remember when Intuit launched QuickBooks with that campaign that encouraged clients to “fire their accountants”? And many of them actually did. And then they came back — with IRS and Comptroller’s notices aplenty.

We took (some of) them back, with a charge for cleaning up their self inflicted messes.

Really — whose genius idea was it to come up with “Opening Balance Equity”? I don’t recall seeing that on the CPA exam or in any text book.

I remember getting into QuickBooks desktop with their 1998 version. Coming off paper and DOS based systems, this was a step…sideways. There wasn’t anything intuitive about QuickBooks. All pith aside, by the time the mid aughts came around, I was rocking through QuickBooks desktop and able to button up even a messy year end in short order. I was a happy accountant.

I would recommend QuickBooks to my clients and was shocked – SHOCKED – when they told me how much they hated it.

And life continued until we got to the mid-teens and suddenly the rumors of these new fangled cloud apps became such that I could no longer ignore them. In fact, it cost me a client for trying to keep my head out of the clouds.

I can’t state this strongly enough – if we are going to survive, we have to get into the cloud.

I have yet to meet an accountant that likes QuickBooks Online (a/k/a QBO). So if you’re thinking cloud accounting = QBO, think again!

I was taught that you can’t raise yourself up by putting someone down, and I don’t mean to make this post about all the ways Intuit and QBO have treated us practitioners poorly; but I wanted to make sure that you, my esteemed colleagues, know how and why we decided to become a Xero firm.

Xero is a cloud based general ledger program from an upstart scrappy company based out of New Zealand. One might question how it’s possible for a non-US company to have any relevance to our systems – but think about it; we were (at different points in history) colonies of the UK; we have the same legal framework and language.

Xero presents a clean interface that is refreshing in its ease of use and merciful on your eyes. Don’t dismiss this; whatever system you’re using, you’re going to be staring at a screen, might as well choose the one that doesn’t cause unnecessary fatigue.

Xero truly is intuitive. Most tasks can be figured out on the fly, though there is a wealth of support articles and videos – both company produced and from fellow users around the globe. They even have training courses so one can be come certified in Xero. And unlike Intuit, they don’t charge for the privilege of getting this certification.

Xero’s pricing structure is as clean as it’s interface. There are a few different levels — you pick the one that’s right for you. Everything is clear up front.

As an aside, I’ve had clients tell me that they changed to QBO and were all proud of how they did it themselves. (Groan.) They mentioned that they signed up for the cheapest version. In looking into their books and fixing their inevitable messes, I found that at some point they had up-sold themselves to a higher subscription level. When I took this to them, they were incredulous until I showed them, in their own general ledger, the charges from Intuit that were well in excess of what they thought they were paying. (QBO’s interface is a mine field for the hidden upsell.)

This prompted a trip into call center hell – press 666 to speak to a concerned customer care demon – I mean person. If only we could bill these large corporations for the time spent on hold…

The point of that aside was to illustrate the difference between Intuit and Xero’s business model. Intuit is always looking for the upsell and is aggressive about selling us more and more – whether we need it or not. Xero provides a service, is damn good at it, and is up front about the cost.

Xero’s tech support is amazing! They are fast, friendly, not trying to sell you something, and they work with you to resolve whatever issue you have. Most support tickets are resolved via email – even on weekends!

Xero offers a mobile app where you can take pictures of your receipts and enter transactions on the fly. QBO offers something similar, but with Xero, it’s just easier.

Xero works with many, many apps that enhance different parts of the accounting system. QBO does this too, but with Xero, it’s just easier.

Xero links with your bank and credit card accounts to pull data into the system. The idea of performing a monthly bank reconciliation is a thing of the past. Now we reconcile daily, and it’s easy. There’s no messes to clean up because we catch issues before they get out of hand. It’s true that QBO and QB also work with bank feeds. But with Xero, it’s just easier.

At our practice, we have a “Tech Stack” (how’s that for a new bit of jargon?) that includes Xero as the center. From there we use Gusto for payroll (ADP and Paychex’ treatment of us has been similar to Intuit, but that’s for another column), Bill.com for payables, Hubdoc for document management, and Expensify for managing corporate credit cards and employee expenses. We can also plug custom apps into this cloud based environment to suit each client.

Got a client that is an auto mechanic and needs a way of matching their customer invoices with their parts and supplies bills? There’s an app for that and it plugs into Xero and takes the pain out of bookkeeping.

Now, let’s take the rose colored glasses off.

Very few things in life are purely perfect. Except for bubbles. My 4 year old loses her mind whenever she sees bubbles. Cloud based accounting apps are not bubbles.

There is a learning curve. Yes, Xero is intuitive and easy to learn, but you still have to commit to learning it. For those of us who have been doing things the Intuit way for so long, you will need to accept that there are other (and better) ways about plying our trade.

When learning something new, you – and your staff and your clients – will inevitably hit a wall. Our first instinct in these situations is to blame the software. Don’t. It’s all user error. Meaning, it’s on us. In the beginning, if something “wouldn’t work,” I would rant and rave and my brother (it’s a family practice) would roll his eyes at me.

I had to learn that if, after a minute or two, something didn’t work the way I was expecting, to either search for a help article or submit a ticket – to trust the system as it were. I can’t tell you what a relief that is! How many times have you had issues with QB or QBO and had to go through all sorts of hoops, spending untold hours on hold, (and pay) for tech support? With Xero, I know that whatever issues will arise, I’ve got a team of people that can help me – without trying to sell me something.

We’re almost through our second full year on Xero. I can’t believe I resisted changing for so long; I wish I did it sooner.

Now if Xero could come up with a cloud based tax prep app…

The MSATP is committed to leadership in the cloud technology arena. To that end, we’re working with Xero, Futrli, and other app providers to give our members specialized training and opportunities to learn more about these apps. Check out our upcoming Facebook Live chat with our Xero hero Syed Haque on 9/6/18 @ 09:00.

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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!

Tag: techtips

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By Jonathan Rivlin for MSATP