Reader Case Study: Deciding When to Start Your Own Business




accountantSean is a CPA who sent me an email asking a list of questions about how I started my business, how I operate successfully, handle problems, and balance work and personal life. It is a common request from members of the accounting industry. They want to know how I pulled this stunt off. In the past I touched on the subject; today I will dig deep using Sean’s email to drive the narrative.

Even though this story is about my experiences in my business, most of what I do works for other business models with slight modifications. The hardest part for a professional earning good money is to jump into the unknown of private practice and the certain decrease in income as a business is started; the money comes later. There is also fear of the unknown. I will share how I managed these issues. This will sound different from what you hear from other people or the media. The only reason I can give for the dichotomy is 1 in 10 businesses survive the first five years. Since I am one of the survivors, my story will differ from the majority, 9 out of 10 crowd.

I will use Sean’s email as the guide. I will respond to each section and question separately. Before we start I want to emphasize that what I did twenty or thirty years ago will not work today! My company has evolved and continues to evolve. If you want to start your own business you must be willing to constantly change as our society and economy changes. The challenges never stop and it never gets easier. If you want a business because you think it is easier or for the money, stop right now, leave this page, and go enjoy an early start to your weekend. You start a business because you love the challenge! The money does come after a while, but there will also be days you work for love only because there is no money coming in.

Let’s get started:

Hi Keith,
I was turned on to your blog (like many others) by the mention in a MMM article. I was thrilled to learn of someone who was working in the accounting industry, was an entrepreneur, and had figured out a way to strike a balance with work and personal life. I have been reading your blog ever since.

Thank you, Sean. I am humbled.


I am a CPA that currently works for a small firm in western New York. I have often kicked around the idea of forming a practice of my own but I just don’t feel I have the experience to make the jump. You obviously had the courage to take that jump early on in your career. I know you have addressed many questions you receive via blog post and was wondering if you could share your experience regarding some of my thoughts/questions below:




There are a few issues to address in the email intro. I have worked in the accounting industry most of my adult life. I turned 18 in 1982. I had no idea what I wanted to do with my life. I graduated in June and the family farm when through bankruptcy in November the same year. Everything I knew was gone. 1982 is also the year the economy was really bad. The 2008 recession was nothing compared to 1982 in NE Wisconsin. In the county where I lived there were no employers even willing to give you an application. Why waste the paper; the answer is no.

I worked in my dad’s agricultural repair business (which I hated), but it was the only thing available and sitting on my ass all day was not an option. My dad hated paperwork so I got the job, which I liked. Other employees asked me to prepare their tax returns. Dad was new in his business so I worked for far less than minimum wage so the tax prep work was welcome income. “But son, you live here for free and get to eat my food. And think, some day this will all be yours!” “Great, dad. Just fucking great.”

My dad and I got along well, but my heart was not into the business. My brother is a different story. He runs the company today and I am happy for him. I, on the other hand, stepped into a silo with silo gas and was injured. It was my ticket out. The great news was I saved every penny I earned and dropped it into the MFS MIT fund; I later moved to American Funds where I invested in growth & income mutual funds. August 1982 the stock market started its historic rise. My minor nest egg grew into a possible early retirement. In other words, I got lucky. Sure, I saved like crazy so I created my luck, but the world at large was in love with Keith. Aaaaawe!

My courage in starting my tax practice had nothing to do with courage and more to do with rampant stupidity and stubbornness. From 1982 (this means I started tax work in the spring of 1983) to 1989 I worked very part-time as a tax guy. I had 50 or fewer clients on the side and they were all easy tax returns I could pound out in a few minutes. I also did them by hand back then. For the 1989 tax season (in the spring of 1990) I decided to go full-time. This is what I wanted to do, the career I wanted. I unzipped my fly and bought a computer for the business ($4,000 back then), a high speed printer (2-4 pages a minute back then and another $4,000), and opened my wallet to advertise.

Everybody needs a tax guy, I assumed. Dumbass! They might need a tax guy, but they don’t need me as their tax guy. On April 15th, 1990 I looked out my bay window and realized I had 48 clients, $3,000 in revenue, and $34,000 in expenses. I needed to get smart fast or this little fantasy world I live in was coming to an end. Good thing I already owned my home. Promoting my business is another post in the queue.

Next question:

When you started your own practice did you have a mentor to help guide you through the initial few years?




No, Sean, I did not. I was a stubborn ‘ol kraut too stupid to know what he was getting into. I had business in my blood so I knew working for someone else was out of the question. In high school I belonged to the Future Farmers of America (FFA). Back then we raised money by selling light bulbs. Yes, I was the number one sales guy the first two years. They pissed me off my junior year by insinuating I owed the school more sales because I was so good at it. I said “Fuck off” in the awesome polite way I have and refused to sell another light bulb.

Instead of light bulbs, I decided to start my first business. There was a company back then called Specialty Merchandise Corporation (SMC). They imported stuff which I could buy wholesale. I took my sales efforts on the road and sold all kinds of other stuff, but no light bulbs. The school was so pissed they called my dad in. It made no difference. I was a SMC salesman now; they knew where they could stick their light bulbs. Moral of the story: Don’t kick your star salesman in the nuts. He doesn’t need you; you need him.

I had no mentors, but I did have motivation. I knew my competition. My goal was to take my game to them. And I was dumb enough at the time to think I could pull that stunt off. I matured a bit since then. A bit.

When you were establishing yourself/your practice how did you educate yourself on different tax subjects?

Funny you should ask. I have alluded to my limited college education in the past. Just because I did not finish college did not mean I did not get an education. I studied non-stop. Back in those days the IRS had something called Package X. It contained just about every form known to man. Package X came in three huge plastic wrapped boxes. Coupled with Publication 17 and 334 (I hope I got that right) I had limited research materials available. I also paid for CCH. (Over a thousand bucks per year. Ouch!) CCH is a massive tax research publication. I had twenty feet of shelf space filled with tax books.

When I went full-time in 1990 I took an H&R Block training class. They wanted me to work for them. Fat chance. It was a good starter course, however.

I had no professional licenses at first, but I still attended 50-60 hours of continuing education (CE) classes per year. I wanted to get good and I went right to the source. I was determined to be the best so I invested in the one thing that would make a difference: education. Two years later I was an enrolled agent (EA), a licensed tax professional who is allowed to practice before the IRS. I could now represent clients in audits, et cetera. Only 30% of people pass the EA exam in any one year. I passed the first try. I used a self-study course from Thomas Tax Seminars (TTS). TTS is long gone; I am still here.

If you did not have a mentor (or even if you did) I am sure you experienced situations when you first began your practice where you felt you were in over your head. Perhaps a more convoluted tax situation or a client coming to you with what they believe to be a simple problem but is (from a tax perspective) a complete nightmare of issues. Or even a situation where you committed to doing tax work and realize you flat out have not experienced this situation with any of your other clients and simply do not know what to do. How have you learned to handle those situations?

Now we come to the crux of the situation, Sean. You are scared shitless to strike out on your own. Wanna know a secret. So was I. I still am. Fear is a damn good motivator. As the business owner you are the go-to guy. You make the call in tough tax situations.




If you think I was over my head when I started my business, you should see me now. Go back and re-read some of my posts on how the Mr. Money Mustache mention messed with my business good. Let me add some honesty here; I have put on a brave face for my audience. It was a hell of a learning experience. See, the lessons never stop coming rapid fire. And people suggest I should retire. Really? Where the hell am I going to get such excitement anywhere outside of business? Retire! Pftt!

As a tax professional, people will bring you the tough stuff; they can do the easy stuff themselves. Remember those CCH books lining my office walls. Well, when the going got tough I used them. Today you research online; the books are gone. There is no issue you can’t figure out. Find your niche and educate yourself. After thirty years I still run myself tight now and again. If you think you are a smart tax guy, wait a while; they will change the rules on you. Taxes always change! You are the professional! You need to do your research and come to a solution that is reasonable.

You are going to get some wrong. Clients will get pissed, the IRS will change rules after the fact, and you get the blowback. Welcome to my world, Sean. It’s a fucking party all day long. And people ask why I drink. Geesh!

Truth is, you must always keep learning. CPAs need 40 hours of CE per year minimum. I am not a minimum kind of guy. I take far more training than is required. That is why I am good (if I can act conceited for just one moment). I got good because I took the impossible cases and fixed them. I got good because I had my head handed to me a time or three, as well. You will learn more from your failures than your successes. There is no shortcut. Sorry, Sean.

Are there other influences or accounting professionals in the industry that you follow?

Yes. I have no pride to stroke. I talk with my peers and have worked with them. My client comes first! My pride does not even get a showing. I talk and I ask. There are some local accountants I admire because they do great work. For some reason I don’t get many of their clients. Go figure. I also like certain training programs better than others. Tax Insight is one I attend every year. Phil Harris is a dry speaker, but also one of the smartest tax guys I have ever met. I bring plenty of water and listen close.

Some of your greatest mentors will come from crazy places. Brandon over at the Mad Fientist has written several tax posts. He is not a tax professional, but is a fucking genius when he writes on tax issues. He researches the shit out of the subject, just like tax professionals should, and explains it perfectly to his audience. I’ll let you in on a secret. I am still working through one of his tax posts and trying to figure out how to apply it in the real world. He already does it so this dumb tax guy will one day catch up with Brandon, a non tax professional, and will surreptitiously bring up the subject, picking Bandon’s mind. I gotta learn how to do this. It is too juicy for my clients!

Read a lot, Sean. Every part of every day is part of your education. Stretch yourself with tough cases. It is the only way to learn.

Have you developed any techniques for handling disgruntled clients when a mistake is made or there is an oversight?

There are clients from hell, no doubt. If we made the mistake, we make it right. Sometimes that means covering an IRS penalty. It is rare, as it should be, but it happens.

The big issue is when a client swears they told us something, but didn’t. We have had clients modify documents to try to place blame on us. Some people are dicks. Today we scan and keep everything. It ended most problems.

Some clients are unhappy no matter what you do. We ask them to leave. I always try to be polite. I even suggest, if they are interested, an accounting firm I feel would be a better fit for them. I try hard, ahem, not to be a dick, though sometimes I can be a real cock.

There are also clients who are too needy. They will be on the phone daily. Do yourself a favor; move’em along. No one client is worth it. No amount of money is worth the grief. I have no problem with questions, but when it becomes virtual harassment I lose interest instantly. My life is too important for that kind of crap.

I would really enjoy hearing your thoughts on the aforementioned questions. I know I have asked a lot, but I think there are many readers out there who would benefit from learning about your experience.

picardwiningWell, Sean, I hope you enjoyed what I shared today. I could go on for hours. There are so many things I could share and I do in this blog. It will never fit in one neat package; business is not that neat and clean. You will have days, if you strike out on your own. My number one piece of advice: keep learning. Even if a class does not provide CE, still take it if it interests you. Learn. It is what makes you really good and separates you from the competition.

And remember what Captain Picard said, “There is nothing like sitting in the captain’s chair.




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Keith Schroeder

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