The most dreaded words a salesperson can here are, “I need to talk it over with my accountant.”
Accountants have a reputation for breaking deals. Behind the scenes we are actually called ‘Deal Breakers’ as a derogatory term. But the name isn’t fair. What we really are doing is protecting our clients.
The investor or business owner already thought of all the things that can go right. Accountants throw cold water on the deal by examining the numbers. They don’t always stand up to the hype.Read More
During the 1980s and 90s I owned a lot of real estate. It started slow and exploded into a 176 building pain in the ass. To be fair, most of the investment properties we owned were either single family homes or duplexes. A few multi-family buildings, a boarding house and a storage facility rounded out the mix.
With so many properties running through my personal accounts and a partnership with dad and brother, I learned a few things along the way. One hundred seventy six buildings is a lot of buildings. Good thing I didn’t own all of them at the same time. Mistakes were sure to happen.
By the early 2000s the real estate empire was gone. I was burnt out and sick of working with tenants. Countless property managers helped us over the years, but it was not enough. Managing over a hundred units much of the time over a footprint covering most of NE Wisconsin took its toll. To complicate matters, I also ran my accounting practice with double the employees I have today (during tax season).
Starting slow was my greatest idea. It felt good to see the passive income filling the checkbook. Our teams of contractors allowed us to buy fixer-uppers and increase the property values significantly. Our best deal was the purchase of an upper-lower duplex in my hometown for $8,000. Hard not to make a profit on those.Read More
There are several ways to convince someone to speak at your event. Stephen Baughier used the most sure-fire method ever. Stephen noticed I wrote a blog post back in August listing some people I would like to meet someday. He checked two people on the list and found JD Roth open to attending. He then called me and said, “Hey, Keith. I saw on your blog you wanted to meet JD Roth. Well, he is speaking at Camp Mustache SE in January. We would love to have you speak as well and you can meet a man you admire.” How could I say no?
Picking a topic of discussion is something I allow the event organizer to decide. If they have no preference I choose something currently exciting to me. In this instance Stephen thought something about organizing your stuff in preparation for meeting your accountant/tax guy would be a good choice.
I grimaced. My organizational skills are not legend. However, I do keep a tight fist on in financial organization.Read More
The IRS has a complex formula in determining who to audit so secret even the government doesn’t know what it is. This secret is the subject of much debate and some even claim to know the formula. (They also have the secret formula to Coca Cola.)
In my neighborhood if you have an S corporation and get audited, I apologize. The lady who handles S corporation audits at the IRS around here was once an employee of mine. I take full responsibility for my limited role in training her. I am ashamed of my behavior.
But an IRS audit is not really an issue for most people. IRS audits are at all-time lows and do not look to be expanded much in the future. Most audits are not the dreaded visit to the IRS office or the auditor showing up at your place. Most audits are of the correspondence type, where they send you a letter. Correspondence audits are generally narrow in focus and are the result of a misplaced number or a mismatch on the tax return with information the IRS has.Read More
When someone in the local area makes the news for embezzlement it is not a matter of if they will show up at my office, it is a matter of when they show up. The same scenario plays out every time. Someone gets caught with her fingers in the cookie jar (usually for gambling) and charges are filed. The district attorney prosecutes the case. (Embezzlement cases make the news and the district attorney is a politician who can’t help getting on her knees to earn some votes.)
Most embezzlement cases end with a conviction, or more often, a plea agreement. The accused is eager to make a deal that keeps her out of prison. The DA and judge soil themselves with the familiar sentencing template. The defense attorney has no choice but to recommend her client goes along with the deal to stay out of jail.
I see the same agreements again and again. The prosecutor demands a brutal repayment plan to the victim, the judge rubber stamps the deals and the accused jumps up screaming, “I’ll take it!”Read More
I settled back with a good book on a quiet New Year’s Eve back in the early days of my accounting practice. Mrs. Accountant goes to bed early and was already tucked in. We rarely party or go out on New Year’s Eve. To us it is just another day.
My tax office back then was the remodeled basement so I was always close to work. Since the accounting part of my business was many years into the future, there wasn’t much to do around the holidays except enjoy some great reading. A few preparations for the upcoming tax season were as far as they could go.
Cable did not enter our house back then and network television did not interest me. The World Wide Web was just coming into existence and wasn’t a household phrase yet. Internet service was America Online accessed by dial-up. There were fewer distractions to drag a guy away from a good book in those days.Read More
A reader of The Wealthy Accountant recently offered me lunch. I have a weakness when it comes to food. Offer me a free meal and I am virtually a prostitute.
I accepted the offer of lunch for three reasons: 1. He is a local reader; 2. He asked nicely; 3. He wanted to discuss quitting his current job and starting a bookkeeping business as a side hustle. The last point is what got me. A local guy who wants to do bookkeeping is also a guy I might build a strategic alliance with to handle some of my bookkeeping work.
As we talked I shared stories like I do here. Eventually I got to a story I like to tell a lot, but failed to mention on this blog so far. I am not sure where to fit it in, but the story is so powerful it needs sharing. So I decided a story about making a list would be perfect for the Christmas holiday.Read More
Over a hundred years ago an Italian economist made a discovery while in his garden. Vilfredo Pareto noticed on a pleasant 1906 afternoon that 20% of the pea pods in his garden produced 80% of his pea production. His interest piqued, Pareto wanted to know if this 80/20 ratio applied to other areas, including business. In every place he looked the ratio held. 80% of results came from 20% of the inputs.
Today we call this the Pareto Principle or the 80/20 Principle. The ratio isn’t perfect, but more of an approximation, somewhere around 4 to 1 or 5 to 1. And it happens everywhere, not just in business or an Italian’s garden! Think about it. You wear 20% of your clothes 80% of the time; use 20% of your home or apartment 80% of the time; eat the same food 80% of the time.Read More