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
Mrs. Accountant and I recently went on a business trip. Like most business trips we invested time, but no money. The trip was better than free; we came home with more money than we started with and did nothing crazy like house-sitting or couch surfing. We enjoyed meals at excellent restaurants and slept in 3 and 4 star hotels every night. We drove in this instance because we like seeing the sites as we go. In all it took three weeks to complete the business trip. It was a great time for Mrs. Accountant and me to spend quality time together without interruption.
There are a million ways to travel for free. Many people in early retirement dream of doing so. But what about the rest of us? You might not be retired. And then there is the unique breed of animal called the business owner. I fall into the last group.Read More
By this time I am mildly qualified to intelligently explain how to increase blog traffic. My online writing goes back to the AOL days in the 90s and grew over the years. The Wealthy Accountant is my most popular blog, but I have two fantasy fiction blogs pulling around 4 million page views a year, an astounding number for online fiction. The Wealthy Accountant numbers are lower, but the traffic is higher quality; in other words, Google, advertisers, and readers like it more. This blog now boasts 40,000 page views per month with a strong growing trend line. There are a few tricks I learned over the years to accelerate blog traffic. I am no expert on the subject and there are many with greater skills at increasing blog traffic. My experiences, however, should provide a solid framework to take a blog from zero to a million page views in a year.Read More
Life in the accounting business can be difficult at times. Clients are as close to friends as you can get without actually being friends. You know all the details of their private lives. I know a divorce is imminent many times before the spouse does. I get details on illnesses in the family. I have to. Part of the tax preparation process is to know your client. When you ask about medical expenses you get the details too. In Wisconsin we have a deduction for certain private school tuition. When I ask about the kids I get the low-down on little Billy. And I don’t mind one bit. I care about my clients so I listen and interact. The line between client and friend is thin indeed.
That is why it bothers me when I can’t communicate a message to a client. Try as I may, some clients could care less about their taxes. They are willing to overpay their taxes to get out of all the reporting. They don’t understand the amount of money left on the table.
A few weeks ago I emailed a client reminding them to verify their retirement contributions and to provide a log for business miles and business overnight stays. To be honest, I didn’t expect a response. They are awesome clients and I love’em to death, but they just don’t engage at the level I would like and it bothers me because it is costing them dearly.Read More
Starting a business is an act of love and courage. Enjoying a task soon becomes a business. You might start working out of the home or buy a small store front. The previous hobby now commands more of your precious time. A business is about more than making money. Small business owners love the work they do and get paid to do it. Awesome! Then reality sets in.
When I was a sophomore in high school I fell in love with the stock market crash of 1929. The teacher said economists don’t know what really caused the crash. The Smoot-Hawley Tariff was probably the trigger but many other events also played a role. I could not let it go. Every book in the school and public library in my small town was in my paw, devoured for any tidbit of information on why things went so wrong in 1929. I never found a definitive answer, but I did learn a lot about economics.Read More
Business ownership is the fastest way to significant net worth and financial independence (FI). It is possible to grow your net worth $2 or more for every dollar you increase your revenue. This is before investment gains! By understanding the accounting behind business valuation, anyone can accumulate a seven figure net worth in as few as five years which can be turned liquid and invested in income producing assets allowing for early retirement.
Building a massive net worth is more difficult, if not impossible, with earned income only. Mega-wealthy people like Warren Buffett and Bill Gates know wealth is created from multiplier effects. Buffett grew Berkshire Hathaway by investing in other successful companies and insurance. Bill Gates grew Microsoft into a world leading software company. In each case the majority of the wealth created, around twenty times the profit level, came from multipliers. Only about 5% of their wealth came from actual profits!Read More