Tackling the Tax Deadline Madness

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Hector Garcia: Welcome to the unofficial QuickBooks accountants podcast. I am joined by my good friend Alicia Katz Pollock, the original, the one and only Qbo Rockstar CEO and founder of Royal White Solutions.

Alicia Katz Pollock: And I have the privilege of collaborating with Hector Garcia, CPA, the founder of Right Tool for QuickBooks.

Hector Garcia: In today's episode of the unofficial QuickBooks accountants podcast, [00:00:30] we're going to talk about Qbo slash Accounting Industry runoff, part one. So we're trying a new thing. We're putting all the things that irk us around around QuickBooks into it. Uh, third party apps that talk to QuickBooks banks, accounting industry. And we're putting it in this big wheel. And then we're going to spin the wheel and whatever it lands off is what we're going to rant off for. I would say 20 minutes or so. So Alicia, you're ready to spin the wheel.

Alicia Katz Pollock: I'm so looking forward to this.

Hector Garcia: Before [00:01:00] I spin. Before I spin it, I'll give you a couple of examples of what we have here. We have shvo price changes. We have qbo versioning issues. We have, uh, tax deadlines and some of the misconceptions around that. We have qbo so slow. We have API missing fields, we have Intuit cross-selling products. We have a whole bunch of things in this big wheel of potential topics to rant off. So we're going to spin the wheel. And tax deadlines. [00:01:30] And I know this is this is your entry, Alicia. Tax deadlines. Let's rant off around tax deadlines for the next 20 minutes or so.

Alicia Katz Pollock: Okay. So the reason why I put this on the wheel is as I am reading Facebook and LinkedIn and Twitter and everybody's like, oh my God, I'm killing myself over these deadlines. I'm working 60 hour weeks, 80 hour weeks. How do I reward my employees for all this time that they're putting in? And like our industries retention and the fact that we're [00:02:00] losing accountants, I believe, is really because we have this artificial deadline of having to have all the millions of businesses in the US all have their their taxes submitted on March 15th after two and a half months of the year, and then one month later, all of the other billions, millions of people who for their personal returns. And why? Why are there [00:02:30] two deadlines that you have to meet which when we have not enough accountants and all these small businesses and aren't they aren't people just like doing a mill and like, how are the tax returns even correct if you have 300 tax returns that you have to get out in six weeks. So why does our country have why don't we have a spread out tax system where businesses [00:03:00] that start with the letter A are doing it this time and businesses from, from, from letter E to J are doing this time. And you know, I guess we're going to name all our businesses so that they all start with Z. So I guess that's not quite the right standard. But isn't there a way that we can transform our industry by getting rid of these artificial benchmarks?

Hector Garcia: Okay, I got a lot to say about it. I got a lot to say about this. Uh, first of all, let me address the whole concept [00:03:30] of different, uh, potentially different deadlines based on the name of the business or whatever. So if the government were to implement something like that, it would make more sense to use the tax ID. Yes. And maybe if the last number is an even or odd or whatever, and do it like that, I think something like that could be could probably be the best you could do it. As simple as you know, if it ends with a one, your deadline is January 31st. If it ends with a two, your deadline is February. If it ends with a zero, your deadline is October, and there are no deadlines in November and December [00:04:00] because that's time to party. I mean, think about it. Yeah, should not be right. You could do something like that. Um, it gives me a little bit of PTSD. When I went to, um, Colombia recently, last couple of years. And in Bogota, the traffic is atrocious. I mean, it's just it's like unbearable. So what the government did to, like, solve the problem is they said, you know what, if your license plate ends with, um, a an even or an odd number, you can drive either Monday, Wednesdays or Fridays or Tuesday, Thursday or Saturday. [00:04:30] Everybody can drive on Sunday.

Hector Garcia: It's absolute chaos. So like thinking about how chaotic that is and how chaotic your idea could be and thinking, oh, I'm not sure if that's the the right thing. I believe that we do have cyclicality, and what I mean by that is, you know, years reset. Like every year we have a new New Year's resolution and every year we, we sing Happy Birthday. And every year, you know, you move to a different grade in school. Like as a society, [00:05:00] we measure everything. Thing in terms of years, so it's only normal and natural that once a year we have to wrap up the book. So that's I think that's, uh, that, that, that still needs to exist. So no matter what that needs to exist. The challenge you have is we have a time crunch between January and April 15th, where there are so many things to do for so many clients, with so little staff and resources to do it in, and it causes burnout. So there's a couple of potential [00:05:30] solutions for that. But solution number one is you could transform your practice to be in a less cyclical, intensive type practice work, which might mean that you don't do 1099, that you don't do payroll, that you don't do, um, uh, tax returns. If you want to kind of get out of get out of that. But the reality is someone has to do it.

Hector Garcia: So if you don't do it, somebody else will do it. So the second thing that you could do is you can delegate some of the deadline sensitive things [00:06:00] to your client. You know, maybe you prepare the sales tax report itself, but the client is the one that has to file it, because you can do that pretty quickly, you know, from from from QuickBooks. And you file it or you tell your client if you want your sales tax to be reported on time, there's two requirements. Requirement number one, I must have access to all your bank accounts, all your credit card accounts. I cannot wait anymore for you to bring me the stuff so I can complete your reports. Otherwise I cannot [00:06:30] engage in that particular piece. Send it back to your client. If the client wants you to take the time sensitive responsibility you have to require to be a bit more autonomous and not wait for them. Because most of these deadline problems are not so much created by a government, they're mostly created by us, not setting the expectation that the client can slack off and wait till the last minute. And that's kind of the challenge. Some things are very difficult to, to, to, to put off, which is [00:07:00] 1099. They're just so specific to a one month time period. I personally think that maybe the way we could solve this is we could do 1099 quarterly or something like that.

Hector Garcia: I think it'll make it much easier. Plus, the government would get better quarterly information about the revenue that's out there. It makes it much harder to game, you know? So I think quarterly 1099 could be a better approach. But that's not a thing. Of course it wouldn't work. Um, the other potential thing is to give a [00:07:30] little bit more time for the 1099 crunch. Like instead of, you know, January 30th 1st February. But then the problem is that then the individual people filed a tax return before the 1099 arrives, and then that causes another issue. But you know what? A lot of banks and financial institutions don't give their 1099 until mid-February and sometimes end of February, especially with, um, the wash sale rule and what I want to get down in the rabbit hole of a wash sale is. But basically, if you sell a stock December 31st, if you sell [00:08:00] a stock December 31st and you buy it again 60 days later, that is that if you lost money on that stock, you can recognize the loss. And that's called a wash sale. So sometimes you have to wait until the 60 days after the end of the period happen for you to get the 1099 from the bank. So long story short, many, many times, like no one really should be filing tax returns until March.

Hector Garcia: That's the reality. Long story short, no one should ever file a tax return until March, especially if you have anything going on where you can get [00:08:30] a a tax related form by the end of February or the beginning of March. So now we're down to okay, Hector, a great idea, but now we're down to like March 1st to April 15th. Then what happens is that's really deeply, deeply crunch time. But I'm going to tell you something. When you file extensions, you get an extra six months for that very reason, because it's not possible for professionals to do all the work between March 1st and April 15th. [00:09:00] The problem is that customers, taxpayers, they don't know how extensions work, and they bring that anxiety. They bring that anxiety into you. So the solution is when you bring in a client, you say, hey, I got two prices for you. This is the April 15th deadline pricing, which means I will meet that deadline. I have your return done by April 15th, and that's whatever, $5,000. And here's my extension, uh, pricing, which is $3,000 up front. Let the customer choose, you know, which [00:09:30] one they want. And customers will self-select to completely de-stress you out of April 15th and wait until the deadline. So that's one of the options you can you can do as a practitioner.

Alicia Katz Pollock: That's actually one of the things that I'm really I kind of feel like a therapist when I'm talking to my clients about this. They're like, oh my God, I can't file an extension. And I have to explain to them that actually, at this point, it benefits you to file an extension. It used to be like that meant you were a bad business owner because you missed your deadline. [00:10:00] And I think things have fully changed since. We have so many clients to file taxes for in so little time that I think you're going to get a better tax return if you wait until your accountant isn't just in in tax mill mode, where they're just churning them out as fast as possible when they can actually look at your at your records and make some choices and decisions and advisory. So I actually think extensions at this point are a benefit. Now you still have to pay [00:10:30] and figure out roughly what you owe, which I don't understand how you can possibly do. That's part of my rant on this. But, you know, for all of you business owners out there listening to this, if your accountant wants to file an extension, say thank you. Don't think there's something wrong.

Hector Garcia: You know what? Yeah, it's impossible to know exactly what you owe by April 15th. You know, prepare the whole return, but you can estimate it, you can approximate it. And I think a lot of us, and present company included, I [00:11:00] was horrible at this, and probably, probably the reason why I sold my tax practice wasn't so much because I didn't like doing taxes. Actually miss it now I miss doing taxes. I what I miss is the deadline pressure. Like I mean sorry, what I don't miss is that deadline impression, right? I miss the work. I miss the money around the work. It's just very lucrative work. Anything around that line is very lucrative. And I'll explain why in a second. Um, but the the stress of the time crunch, I [00:11:30] definitely don't miss. And the, the problem is that we don't offer enough planning services, proactive services. And sometimes it's because we want to and the client doesn't want to pay for it. Okay. That's possible. Uh, and sometimes it's because we don't know how to do it. And, and I would tell you to be honest with you, as much as I like to pride myself around studying and reading on things, this is an area that I never deeply studied. I got prepared for tax planning in general, [00:12:00] just proactive planning for our clients, and we just got more comfortable with getting things done when they give us the paperwork and that's it. And then every year we say, next year I won't take clients if they don't do tax planning. And then we tell the clients that we forget and then it comes, it comes back to us again. So I think that educating ourselves and being proactive around building a business model that only works and takes clients that agree to the additional work to do, planning is probably going to be the only way to get out of this.

Alicia Katz Pollock: I want [00:12:30] to actually throw in a shout out to Jackie Myers Tax Plan IQ software, because she's actually trying to solve this exact thing with a software package that plugs into your QuickBooks or into your general ledger, and helps you actually analyze so that you can do proactive tax planning. So it's called tax plan IQ. And um, it's great. It's great software.

Hector Garcia: And that was a free one Jackie. The next one you got a sponsor of the episode. Um, the last point [00:13:00] I wanted to make is there there are some there are some valuable aspects to the tax deadline. So number one, other than tax compliance, I, as an advisor, believe there's value on being able to give my client a year's worth of financial statements so they can compare the previous year, like forget about the tax compliance. I want to be able to say you did better, good job or you did worse. Stop it right. Whatever it is like as an advisor, I want to give, but I need that data like I need it to [00:13:30] reports. I need to be able to compare. I need to see your increase or decrease. I need to see if there are trends, if we're slowing down the trends, etc. etc. for that I need to finish the the financial statements. And if there wasn't a tax deadline, a lot of my clients wouldn't even bother to send me their bank statements. They wouldn't bother to send me the the, the documents, the closing documents of their property or whatever. So the reality is that tax day actually helps me because we have this like sort of a artificial phantom, [00:14:00] you know, uh, boogeyman that's going to get you if you, if you don't send me the stuff. So it does kind of put a rocket on their behinds to, to give you the stuff and get it done, uh, prior to it being too late. And you could argue that, you know, seeing your 2023 numbers by April, that might be too late. I mean, a whole quarter went by. I mean, how much change can you make? Obviously, it would be ideal that January 1st you have it ready, but it's just not realistic.

Hector Garcia: Um, but that looming tax deadline does urge people to take some priority. [00:14:30] And most small business owners, they don't take priority over this stuff. The reason why they have an accountant or a bookkeeper or even QuickBooks is because of the tax man, because of the boogeyman. So that's one of the sort of advantages. That there is one. So that way people had some priorities around that. The second piece is the lucrative nature of this look. Some people feel better and are willing to pay 20, 30, 40, 50% more, even double of what the average person would pay [00:15:00] if they got everything done in February or March. They do it. This is their nature, is to get accounting and taxes out of the way. They'll pay extra and they feel they breathe better and they're more worry free for the rest of the year, right? Some people don't give a crap, and I suspect that every single one of you have both of those clients. The problem is that you charge them both the same and. And the challenge with doing that is that you overserve [00:15:30] the the ones that don't care and you underserve the ones that care, and you end up losing the ones that care to other accountants are going to charge more and you end up overstressing about the ones that don't care. Um, uh, you know, and while you're losing your best clients. So the reality is price discrimination is the only type of discrimination that I support, right? Price discrimination is the best strategic element of leveling [00:16:00] the work and balancing the work around tax deadlines.

Alicia Katz Pollock: Now that's a great suggestion. I actually really, really like the idea of having, um, tax deadline pricing because that will allow you to kind of relax. I mean, it's a great solution to this inhumane situation that we're in.

Hector Garcia: So I don't think we need to extend it any more than that. This would be a short episode, so let us know what you think, right? Um, you know, email [00:16:30] Alicia or I go into social media. Do you like this rant off? Should we do more or should we just stick to like, QuickBooks new features, right. Um, because we have a lot of we have a bucket full of rants, uh, ready for you.

Alicia Katz Pollock: Well, I thought this was really fun. Thanks for the opportunity.

Hector Garcia: So with that being said, Alicia, what's going on in your world?

Alicia Katz Pollock: Well, on May 14th, I have a class on product Services and inventory in QuickBooks online, where it's two hours of literally every single thing that you need [00:17:00] to know about setting up your products and services in QuickBooks bundles and sales taxes and how to manage inventory and all of it. So if you're listening to this before May 15th, uh, May 14th, uh, join me and and participate in the live webinar. And if you're listening to this afterwards, it's going to be recorded so that you can watch it on demand. So two CPE, um, fresh information, including a lot of the changes that are being rolled out in Qbo right now. [00:17:30] Okay so visit learn Royal. Com and in the search search for products. And it will bring up the class where you can hit our class calendar in the upper right hand corner. All right, Hector, how about you? What's going on for you?

Hector Garcia: So, first of all, we had a date change in our reframe [00:18:00] conference titled Influential Conversations for accountants. This is actually the original date that we requested the hotel, which we wanted to do it right after tax season. It would be the perfect getaway after post extension tax season, which wouldn't be as bad as the April 15th one. So October 16th to October 19th come to Hollywood, Florida to the Diplomat Resort. We have a retreat conference thing going on. It's called Influential [00:18:30] Conversations for accountants. We're going to have open discussions around how to improve our communication skills, how to be better at communicating our value, how to be better at convincing other other people of our ideas, how to be more influential for your team members, even to your clients, so they listen to your advice and actually take action on the things that you suggest. So influential conversations for accountants October 16th to October 19th in Hollywood, Florida. Sign up. Come to the [00:19:00] conference Reframe 2020 For.com. Reframe 2020 For.com. And with that being said, we'll see you in the next one.

Alicia Katz Pollock: See you in the next one.