Using Your Tax Practice to Build Wealth

Guys, I’ve told my horror story before with S-Corp clients and how do you know what reasonable comp is? My horror story is when they went after that CPA who was a friend of mine for $125,000 arguing that he knew and that he knew better and that he should have made sure his clients took reasonable comp. I’m a huge fan of RC Reports. RC Reports, it’s about $1,400 a year.

We’re charging the S-Corps that come to us under audit $750 a piece. We’ll probably make between $10,000 and $20,000 with RC Reports. But if you have S-Corp or C-Corp clients, they have to each year get a report and the report is as simple as possible.

RC Reports has a huge database of businesses. It will give you a report that you can rely on. And so far, to date, when we produce that report, not a single auditor has challenged it.

The critical thing right now is for your clients to get that report to support the number they’re taking on the return that you’re taking on that return that you’re signing. Best way to do it, RC Reports. Go check it out.

You can find them. It’s trn.rcreports.com. Again, trn.rcreports.com. Go there, you’ll save $100. It will change your practice, we create an annuity stream for you and bulletproof your client’s corporate returns.

The Tax Rep Podcast is now proudly partnered with Nice Job, the experts in reputation marketing. Reviews are so important for attracting new clients. Before Nice Job, I would ask people to leave reviews, but they would usually forget and I didn’t have a way to stay on top and remember to follow up with them.

That’s where Nice Job comes in. Their smart follow-up campaign recognizes who hasn’t left a review yet and automatically sends carefully timed reminders that can increase your chances of getting a review by 300%. I tried Nice Job for Tax Rep and it’s been a game changer.

We added 33 five-star reviews in our first month and our Google business profile is like a magnet for new customers. You can try Nice Job for free for 14 days and get 50% off your first three months by visiting nicejob.grsm.io slash taxrep. nicejob.grsm.io slash taxrep.

I’m going to put a link in the description of the podcast. Try it. It will be a game changer for your business as well.

How do I manage my tax rep practice? How do I get transcripts? How do I track what is going on with the IRS with every single one of my client cases? How do we complete the offer forms, the powers of attorney, everything? We use Tax Help Software. Tax Help Software is the cornerstone of our practice. We use it for its intelligent ordering.

Every single night, it will update the transcripts on our clients so we will see things happen long before those letters even go to the mail. We can then react. We can let the client know.

We can get all the transcripts we need to determine what our client’s best options are, when is the debt going to expire, and we can fill in all of the IRS forms and get them filed accurately, the analysis done correctly. If you’re interested in giving it a test, go to taxhelpsoftware.com, use promo code TAXREPTRIAL, all one word, all caps. You will get a free two-week trial.

Again, that’s taxhelpsoftware.com, TAXREPTRIAL, all caps for a free two-week trial. If you love it and want to buy it, use TAXREPTEN, capital, all caps, T-A-X-R-E-P-1-0, TAXREPTEN, all caps, one word, you’ll save 10% on your purchase. It will be the engine that runs your tax rep practice just like it’s what we use for ours.

Hey, everyone. Welcome back to the Tax Rep Network podcast. I’m Eric Green.

I’m joined today by Chase Insogna, who has Chase Insogna’s CPA down in Texas. What I wanted to talk about, and I’ll let Chase introduce himself, but what I wanted to talk about is Chase’s approach to helping, well, first of all, himself, but also helping his clients not just take care of their tax and their compliance and that stuff, but actually build wealth, which really is, we’ve been doing a lot more on advisory being, as a tax pro, going from just doing compliance work to understanding you have skills that are valuable, and if you can get the clients to a place where they will let you work with them properly, you charge better, you make more money. It’s way more interesting work than just knocking out a return, which is really like a postmortem.

Chase, thanks for taking the time and welcome. Can you let our audience know what was your journey like getting here? Yeah. Thank you, Eric, for having me.

My journey, I graduated, went into corporate accounting. I never was in the big four, but I went into corporate accounting. I did that for a number of years, but I was always entrepreneurial, even in college.

I helped quit books then, and then once I graduated, I was always helping a small client here and there, too. After work, I’d work nine hours and then go drive to their location, do some bookkeeping and taxes. I always wanted to own my own business.

I just never knew what it was until I eventually got my CPA license, and then I had purchased a bookkeeping practice, which I don’t ever recommend doing, but I did that, and that’s kind of how I kickstarted. Basically started from the ground up and just kind of built it to where it is today with Insani CPA. We have a team of 22 people here currently, so it’s not me doing all the work.

I don’t do taxes anymore other than my own. I don’t do daily bookkeeping transaction work. I’m more focused on the business and kind of advising clients at a high level, whether it’s coaching them on their business, just how the industry itself, because I like to keep up with it, whether it’s investments and having that discussion, or real estate.

I do all those things myself, manage my own portfolio, have 15 rentals, so a lot of different directions, a lot of different clients. I keep it at a high level kind of for my conversations, and then the team does all the rest of the work for me. But our ultimate goal here is to help clients and educate them, and just be a resource, and communicate on a timely basis is what we promote here.

So instead of just pushing out a tax return, like you said, a lot of times we’re communicating to them what obviously they should have done last year, and what they should be doing this year, restructuring, or even just setting up an LLC to become an S-corp, to potentially avoid unnecessary payroll taxes on their income, self-employed income, or they have a large portfolio, or they’ve got income that they need to restructure, and recommending an estate attorney. My team, they’re very diligent about adding value that way, even if we’re just doing tax-only work. And then as far as daily accounting, we have several hundreds of clients we work with monthly, and those clients we’re more diligently checking in on a weekly, monthly, quarterly, semi-annual basis, where we’re coaching, advising them about their business, about their personal life, and their financial transactions.

We at least like to be in the conversation, just reach out to us when you’ve got something going on, and happy to help here. So that’s how we approach things. Yeah, well, there’s a lot to unpack there, but one of the interesting things, I think, is you figured out pretty early, it sounds like early on, to move from being the doer to owning a business.

And that’s one of the interesting things, is how many self-employed, for those of you listening to this, I have air quotes, that you’re self-employed, but you don’t own a business. You own a business, I own a business, I have other people doing the work. I mean, I do some work, but I do the work that I want, and most of my work is spent on my business, marketing, client relationships, administrative.

And because I do want to get into wealth building, to me, in my mind, that’s actually step number one, is to go from being self-employed to owning a business. And was that something you just knew, like when you went out on your own, I have to get people, I need to work on my business, or is it something you kind of found as you were grinding away? It’s a good question, and it’s something I started from the very beginning, because I didn’t, I saw the industry, I mean, we’ve been in business 12 years, so I saw it back then, that they’re aging and dying and retiring. A lot of these CPAs in the industry, they die at their desk, doing a return, I didn’t want to be that way.

And I wanted to build a business, and I didn’t want to have to be beholding to my desk 24 hours a day and be working. So I structured it differently, we have a large tech stack and built it that way. We were remote before remote was a thing, before the pandemic.

So when that came, we actually increased our business, because we had the tech stack to do it already. But yeah, that is the first step. I mean, you have to, you’re either building a lifestyle business, or you’re building a business to be sustainable without you.

And those are really the two tracks kind of in the industry here, and teach their own. Some people just want some clients, and they just want to go to work every day. And I talked to a lot of the people at conferences and try to get their mindset, and they just like working.

They don’t want to do anything else in their life, they just enjoy what they do, which is, again, teach their own. I’m not judging any of your choices. But for me, my choice was, I didn’t want to be stuck at a desk my whole life.

I knew that wouldn’t be year one or five. But now we’re in year 12, and we continue to grow in the right direction, added the org chart. And I continue to push stuff off my plate into more roles as we continue expanding.

And that’s what allows me, and recognized, allows me to build wealth, to answer your second question. Because once you find that strong, number two, number three, four or five person to be able to facilitate the work that you’ve been doing, and have to trust those people to do the work the right way. That’s another big thing.

These people I talked to, they don’t trust people that they can do it better than themselves. So you have to own that there’s going to be mistakes. You have to learn from them and move forward.

But you have to put your trust in a team. And everybody here knows that it’s team first and customer second. Because finding qualified talent is a struggle, as everyone on this call knows.

And so I’m taking care of my team and making sure they want to work here and make sure they’re motivated. So we have a no asshole policy. Clients are one or become one.

We just don’t work with them anymore because it’s not worth my team not wanting to pick up the phone and not wanting to work here because that one client is just ruining their day or month. But in order to get to that wealth building phase, it wasn’t year five. It wasn’t year three for me.

Now it’s starting to accumulate as we are starting to expand the org chart. And it just kind of grows from there. So that’s what I’ve experienced.

No, and what you’re describing is kind of the conundrum laid out in like the e-myth. I don’t know if you ever read it, but they talk about that where the artist now wants to go and become a business. And you have to accept that not everyone is going to be the exact artist that you are.

And so there is some of that where you accept that you have a team. They may not do everything exactly the way all the time that you wanted them to. There will be mistakes and you kind of grow from that.

But if you can embrace that, you now can actually build a business versus no one can do it as well as I do. I have to sit here and I have to do everything because if that’s the case, you will never have a business. You have a glorified job.

And there are there are some folks who would just rather go in and sit and do their returns and they’re happy. I think. At least they claim it.

And also,  it comes down to charging,  what you’re worth. I mean, I’m at the conferences. They talk about this all the time.

So I know it’s a problem in the industry.  a lot of people are just, oh, I can never charge that much. But,  my perspective is and I even educate my team about this annually.

When we’re looking at updating our pricing,  our costs are going up. Clients cost seem to go up. And if you don’t raise your prices,  I learned very early on, if you don’t raise it every year or at least every other year and you wait five plus years and try to do this big increase, a client’s going to recognize, whoa,  you went from X to Y in one year.

But if you just,  very small every year, increase the fees as your costs are increasing. It’s more manageable for customers to,  psychologically understand why you’re increasing it. So.

And you’ve also trained them. I mean,  in many ways, and I’ve had this topic come up before in the podcast, we train our clients on what to expect from us. If they expect that you’re not going to increase, if they expect that you will fall on your sword that you will go out and you’ll drive to their house,  you start to train them to be that way.

And that is what they expect. Breaking that can be difficult. Like you said, there are a lot of people that are afraid.

Well, if I raise prices, they’ll leave. I have to tell you, it’s a pain to leave your account to go to another account. So, no, I mean, like you, Chase, in my world, prices go up every year.

The rent goes up. Coffee goes up. My staff like ridiculously wants raises.

I don’t know why. The supplies go up. Our fees go up.

We’re actually doing a price increase April 1st,  and notices will go out. I don’t think any clients are going to bail, right? Because we have a relationship. They seem to be happy.

But no, that’s. But how hard was it for you to do that? Well, you bought this bookkeeping business, which I, by the way, I happen to agree. Buying a practice is tough because you’re also buying every all the bad habits.

I bought an accounting practice for the friend of mine 23 years ago. We didn’t think about that. We happened to buy it from a guy who was a motorcycle enthusiast.

And the reason I bring that up, he wanted to go out on his bike. He would visit every one of his clients. Well, we’re not.

We weren’t motorcycle enthusiasts. We weren’t going out visiting. And that first year he had died and we bought the practice from the estate.

Another big issue. And that first year was brutal because we had clients like, well, aren’t you coming here? No. And so eventually I said, look, we can.

Do you want me to bill you for it? We did lose a few people, not as many as I thought we would. But no, but when you bought the practice, how much of a struggle was it for you to get from what you bought to sort of your vision and where you are now? But first, did many of those clients stay or did you find that they fell by the wayside over time? Fell by the wayside. I mean, what my experience was and what I see with other people and why I’ve never bought since is 50% of those people are going shopping in the first year because when it’s a small one person shop like that, they’ve been working with that person.

And now the conversation has changed. So they’re like, well, maybe I should go see if there’s something else out there. But 50% are going shopping anyway.

25% probably in the second and third year. And then maybe you keep 25% and then naturally those fall off in year three through five and you keep whatever’s left. So if you’re going to buy something, structure it where you’re earning the revenues and paying a revenue over time, over three to five years or something.

I mean, that’s how I think it should be structured. If I ever did it again, I would never just buy something up front because that relationship was with that one person. And now you’re changing the dynamic.

You’re changing the culture. You’re changing the business process. And they’re like, this is too much for me.

I’ll just go find somebody else. Well, and today there’s such a need. I don’t think you have to.

I think you can get out in the market and find almost all the clients you need. Years ago, I think 20 something years ago, buying was a real. I mean, there are all kinds of brokers who are professional running around.

I don’t see that much anymore. I think there’s such a glut of people that need help. I would not recommend buying for everything we just laid out.

Plus, I don’t think you need to. I think if you want to really build a practice, you can be diligent about marketing yourself. You’ll find the clients.

Which is why I don’t have a problem coming on this podcast and talking about my business with all your other listeners, because I’m not competing against somebody in North Carolina, for example, and their clientele. I mean, I’m in Austin. There’s enough business to go around.

 back to building a business and kind of the building wealth, Forbes estimates 85% of businesses never sell. So my philosophy has always been, and what we communicate to our clients, is we don’t want to get, I personally don’t want to get to the end of the rope and then hope that somebody writes me a check so I can then retire. My philosophy has always been, put something away annually.

We tell our clients, is it $500? Is it Maxiana IRA at least annually or Maxiana 401k? Whatever that looks like, just do something annually to contribute along the way. So at the end of that rope, I don’t really care because now I have, my goal is to have a bucket to retire in. If the business sells, great.

My employees want to buy it, great. If it dissolves, don’t care. It would be nice to have another check, but I don’t want to be beholden to somebody hoping to buy it from me, which is what is happening right now in the industry.

A lot of these M&A firms are buying these small shops and they’re already one foot out the door and they sell it to a larger shop. And I can tell you 100%, half their clients are looking around because they’re calling me. They’re like, hey, my guy sold to a larger firm and I was with them last year, but it’s just different.

And they’re not communicating. Their prices are too high. They’re already shopping.

So no reason to buy anything. And then from there, I was at the State Society CPE last week or last month in Texas at their event. And one of the HR ladies mentioned that statistically 300,000 CPAs have left the profession in the last two years, 17%.

And over the next 15 years, they estimate 75% of all licensed CPAs will leave the profession because I don’t know if you’ve interviewed anyone lately that’s under 30, but they’re not wanting to work 60, 70-hour weeks in tax season even if it’s only eight weeks a year. Mental health and work-life balance is more important. So become a CPA.

And I’ve even interviewed people that told me they quit their full-time job at a firm because it was too much to study for the CPA exam and work 40 hours at the same time. I did it. Everybody else in my age did it and before me did it, but apparently it’s too much these days.

So that’s kind of the mindset of where people are going is why the CPA and the industry is worried about getting people in the profession. So to that point, and to your point, there’s no competition between firms. We all have enough work to do.

There’s going to be more work to do than there is more firms in the next decade, in my opinion. And so to each their own how they want to build their business, but charge for what you’re worth because that expertise is going away and clients need to recognize it’s a limited resource and if you don’t want to pay for it and pay for the expertise, then go use TurboTax. Well, and I think that’s what you’re going to find.

I mean, we did a panel. We run the New England Rep Conference. We did a panel in 19 where I had the chief operating officers for five of the very large regional accounting firms, like 500, 700 accountants in the Northeast.

Eisner, Ampersand, Cooperman, Markham, Witham, and I mind blanking on the other one, doesn’t matter. And they all said the same thing. At that point, they’d already automated all of their 1040.

Because remember, they have the audit, they have the business. No human being was doing 1040s anymore. The business returns and the individuals were all automated.

I think more and more what I’m seeing is the thought leaders are all getting into advisory. They’ll do the return, but they are really doing, they’re an advisor. And I think we’re going to see the industry just go that way.

A lot of people are going to go to H&R Block. I just have a W-2, I want my return done. Or if the IRS ever gets their act together, free file.

They already got the info. Let me just go in, confirm, hit submit and send me my check, right? Yeah, for any income level too. W-2 and a mortgage just do free file.

Yeah. And then if you’re a business person, you’re going to be in shock because you’re going to find that only people that will work with you are if you’re going to be an advisory client. Like yourself, we’re not doing a $500 or $700 return.

We’re doing a $15,000 to $20,000 engagement in a relationship. We’re going to do advisory. We’ll consult with you.

We’ll help you plan. Yeah, we’ll get the return done too. Yeah, we might get your books done too.

But this idea, I think net, net, the industry will not look the way it does now. And it’s vaporizing, as you pointed out, very quickly. But again, if you’re listening to this, if you have a CPA or an EA, there’s opportunity here, right? You can move into, I mean, no offense, Chase.

I mean, I do a lot of training for lawyers. It’s not rocket science. You got the skills.

I think it’s more of a mindset and your approach to how you deal with the clients. But I think that’s what people are going to have to do. But a lot of the professions is going to retire out.

I mean, I speak at conferences. I am 53. I’m one of the younger people in the room.

If you’re watching this on video, I’m definitely one of the younger ones in the room too. Yeah, no, I mean, you don’t have it. If not the youngest.

A lot of college kids aren’t going into being accountants. Who’d want to? You have to do a fifth year. You got to take a CPA exam.

Why not go into finance, go to Wall Street, make double the money? Yeah, most of the younger ones in the profession, I noticed at conferences or in places, things that go is they’re just in corporate accounting or in government. They just have a W-2 job. They’re not interested in having a firm and having all the nuances that come with running a business.

They just don’t want that overhead. So again, there may be CPAs out there, but they’re not hanging up their shingle like they were in the past and getting their own book of business. Right.

So to each of us that already have a business, I think it’s unlimited opportunity in the next decade or more for who’s out here already and working with clients and building their own firm. I agree. Well, listen, thank you for taking the time.

This has been great. If anyone wants to get a hold of you, how do they find you? Yeah, thanks for having me, Eric. Yeah, we’re at infonycpa, I-N-S-O-G-N-A, cpa.com. And feel free to reach out if you have any questions, happy to help or question about your firm, always available to help the industry too.

And like I said, I’m at the conferences and I like to hear from others and just network and see how we can help each other. All right, well, thank you. And thank everyone for listening and see you next week on the podcast.